U.S. inflation hit a six-year high in May, according to government data. The Consumer Price Index jumped 0.2% between April and May and is up 2.8% from a year ago.

While this is in line with Labor Department expectations, it’s one of the main reasons many Americans aren’t seeing much of an increase in their paychecks.

What does it all mean? In short, that everything is more expensive, and that your money is worth less than it was a short time ago. You aren’t necessarily getting paid less–but everything is getting more expensive.

Let us explain:

What’s inflation?

Inflation is the tendency of money to lose value over time. Or, in other words, it refers to the rising cost of goods and services over time. It’s a metric that measures the rising cost of living.

Listen up: Check out the “I Don’t Get It: What’s Inflation?” episode of Stash’s Teach Me How to Money podcast.

What’s the consumer price index?

The Consumer Price Index, or CPI, measures inflation. The Bureau of Labor Statistics releases monthly reports relating to prices, calculating the fluctuation in prices across different parts of the country and for different goods. From those calculations, inflation is expressed as the CPI.

How does inflation work?

There are numerous factors at play when it comes to inflation. But the main two are the ever evolving supply and demand mechanics related to the goods and services you buy, and consumer confidence, which is a measure of how consumers feel about the economy.

What you need to know, though, is that inflation slowly eats away at your money.

So, if you’re holding $1 in cash today and the inflation rate is 2%, it will be worth approximately $0.98 a year from now. That may not sound like much, but if you’re holding a lot of cash, inflation can leave a  significant dent.

Is there anything you can do to protect your money?

Analysts expect the inflation rate to drop a little by year’s end, but not by much.

As for guarding against inflation? Probably your best bet is to invest or deposit your money into something with a higher rate of return than the inflation rate. Most bank accounts won’t cut it–they will pay you interest, but even the highest rates are around 2%, which means you’re still a step behind inflation at its current rate.

By investing your money and leveraging compound interest, you can potentially shield it from inflation’s effects.

Fear of inflation? Stash has your back.

Learn more about investments that may help keep inflation from gobbling up your money on Stash.

The post How Inflation Could Be Eating Up Your Paycheck appeared first on Stash Learn.

A handful of headlines drove the Dow Jones down by as much as 500 points. The apparent cause? Banks, tariffs, and political woes in Italy.

So what does this all have to do with your portfolio?

Let’s start with the news first.

Bank losses

JP Morgan and Morgan Stanley both saw their share values fall on Tuesday, dragging many other stocks down with them.

Morgan Stanley shares fell by more than 6% after an executive said that the company’s wealth management division was looking at challenging business conditions in the second quarter. The comments spooked investors enough to send the share prices spiraling for its worst day in two years.

JP Morgan’s shares also fell after remarks from an executive, as the company’s co-president Daniel Pinto said that trading revenues were expected to be flat in the second quarter.

Other banks had a bad day as well. Goldman Sachs, Citigroup, and Bank of America shares all fell by more than 3%.

(More) Chinese tariffs and North Korea

While the on-again, off-again White House summit with North Korea appears to be on again, the biggest ripples coming out of Washington D.C. had to do with additional tariffs levied on China.

The White House announced that it will release a list of $50 billion in Chinese goods in June that will be subject to a 25% tariff. The Trump administration also said it would be implementing investment and export restrictions in an attempt to curb theft of intellectual property theft from U.S. companies.

The announcement follows previous rounds of tug-of-war with China regarding trade, which also caused the markets to tank.

Italy: The next Greece?

The Italian economy continues to struggle a decade after the Great Recession, and the country’s still wracked with debt. Fears are that Italy could enter a deep recession, much like what happened to Greece.

What has the markets even more on-edge is the fact that Italy’s economy is ten times bigger than Greece’s, and Italy’s turbulent political environment that hasn’t produced a plan to right the ship.

Italy is the third-largest economy in the European Union, and its economic troubles could create a backlash affecting the entire eurozone and markets around the world.

Other fears: Will Italy exit the EU? Analysts worry about another Brexit situation and its effect on the global economy.

What should you do?

Take your finger off the “sell” button. It’s easy to start panicking when the numbers seem to be going the wrong way.

When you sell, you’re effectively locking in any gain or loss you’ve made. Stay strong, don’t let your jitters get the best of you.

Take a deep breath and take the long view. On average, if you look at the last 100 years, markets have grown a little over 8% a year. Going forward, many experts predict a long-term expected annual return for US large cap stocks (i.e., the S&P 500) of 5.9%.”

Here’s the hard truth: There are years where the market is strong and some years where the market struggles. You can’t sweat day to day market ups and downs when you’re investing for a lifetime.

We have a saying at Stash. It’s all about “time in the market, not trying to time the market.”

Stay strong. Stay the course. Stay diversified. It’s the Stash Way.

The post Why Did the Market Drop 500 Points? appeared first on Stash Learn.

Yes, we’re talking about the marijuana industry. In the last few years, perhaps no other sector except technology has generated so much–well, buzz.

In California, for example, which legalized recreational use of marijuana at the beginning of 2018, people are lining up for blocks to buy from pot dispensaries for the first time. People are also congregating at gatherings some have compared to modern-day tupperware parties to sample and exchange marijuana products in busy cities including Los Angeles and San Francisco.

And cannabis entrepreneurs are digging in for what’s expected to be a long, lucrative slog.

“The U.S. is  creating the first truly scalable cannabis industry, and the rest of the world is looking at what is taking place,” says David Rheins, the chief executive and co-founder of the Marijuana Business Association, a trade group based Las Vegas, devoted to the cannabis industry and cannabis business owners.

State Laws  vs. Federal Laws

While federal law still considers pot use and possession illegal, eight states and the District of Columbia have legalized cannabis for recreational purposes in recent years. Colorado was the first in 2014, but California is the the largest state allowing purely personal use of marijuana, with a market that’s expected to top close to $4 billion in 2018.

Cannabis entrepreneurs are digging in for what’s expected to be a long, lucrative slog.

There are now also 29 states that allow doctors to prescribe cannabis for medical purposes, which can include helping to alleviate nausea related to chemotherapy, stimulating appetite for people who are chronically ill, and curing insomnia.

Meanwhile, attitudes are changing. Nearly two thirds of Americans say marijuana should be legal, according to a 2017 Gallup poll. That’s up from 60% in 2016, and just 34% in 2002.

An economic boon?

And this is potentially just the beginning. The marijuana industry is expected to add 200,000 new jobs in the U.S. by 2020, according to New Frontier Data, which provides research on the cannabis market.

Growth is expected for a long list of businesses, such as the cultivators and packagers of the plants, dispensaries for medical and recreational weed, not to mention companies creating products that use cannabis byproducts called CBDs. CBDs are non-pyscho-active derivatives of cannabis, which can be used for a variety of purposes, including helping with inflammation, chronic pain, and depression.

Companies are also capitalizing on industrial uses for cannabis, including the production of hemp, which can be used to make fabrics and textiles, as well as being used as additives to health food and body care products.

And it all makes for big business. Total legal sales of cannabis were about $10 billion in 2017, and are expected to grow to $24.5 billion by 2021, according to reports.

The business of marijuana: The legal landscape

Certainly legal challenges remain for the cannabis industry. In January, for example, the U.S. Department of Justice reversed an earlier policy of non-interference toward states that have legalized pot. That could make things more complicated for growers and sellers in these states. Meanwhile, banks, which are federally regulated, can’t legally take deposits from cannabis businesses.

Nevertheless, lawmakers seem to be working slowly toward a resolution. The Congressional Cannabis Caucus, a bipartisan group of senators and representatives, hopes to resolve the conflict between federal laws banning marijuana use, and state laws that allow it.

And in January, attorneys general from 19 states including Hawaii, Alaska, and Colorado sent a joint letter to members of Congress, urging them to introduce legislation that would allow legal marijuana businesses to access banks and other financial services companies in the U.S.

And momentum seems to be with the industry, especially as it’s already providing important tax revenue to states–since legalizing marijuana, Colorado has pulled in $500 million in tax and related revenue, according to reports. And that could ultimately add billions to federal coffers too.

“There are millions of customers who are excited about legal cannabis,” Rheins says. “[The industry] is getting bigger and bigger and it’s not going to stop.”

The post The Marijuana Business: What You Need to Know appeared first on Stash Learn.

The DJIA reached a previous milestone in August, when it surpassed 22,000. This is also the fourth 1,000-point climb for the DJIA in the past year, according to MarketWatch. The index is up 15% for the year.

What is the Dow Jones Industrial Average (DJIA)?

The DJIA is an index of 30 of the largest companies in the U.S., often referred to as blue chip stocks. The index includes familiar company names such as consumer products company Procter & Gamble, fast food chain McDonald’s, and footwear manufacturer Nike, among others.

Could it go higher?

Although there’s plenty of talk about about a bubble in stock market prices, the economy continues to be on sound footing, many financial experts say. The unemployment rate in the U.S. is 4.2%, its lowest level since 2001. Interest rates, which affect business borrowing and consumer spending, continue to be low. And for many, hiring remains strong.

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In addition, a slew of big company names from Netflix to Bank of America have reported stronger than expected earnings for the third quarter, which has helped to push indexes into historic territory.

The DJIA is an index of 30 of the largest companies in the U.S., often referred to as blue chip stocks.

“Corporate profits are strong,” David Wessel, director of the Hutchins Center at the Brookings Institution told National Public Radio on Tuesday. “Interest rates are low, which is good for stock prices because investors are looking for someplace to put their money [where] they get a better return than in bonds or bank accounts.”

Here are some other reasons why financial experts postulate the stock market indexes continue to climb:

• Congress is getting ready to debate tax reform, which could include major cuts to the corporate tax rate, a reduction in the number of tax brackets, and cutting the tax rate for the highest earners.
• President Trump has made deregulation one of his top priorities, which has a potential impact on businesses in just about every sector.
• The DJIA is made up of big companies, and many are releasing better than expected corporate earnings for the third quarter, which ended September 30. Investment banks Goldman Sachs and Morgan Stanley beat analyst expectations, according to reports.
• Healthcare stocks are also up, according to the Wall Street Journal, and are helping to drive gains in the DJIA.

The post Dow Hits 23,000: Will It Go Even Higher? appeared first on Stash Learn.

The value of a key stock index that comprises the major airlines fell by 7.5%, and in aggregate lost close to $10 billion of market value in August, according to a recent report from Bloomberg.

The major airlines include American, Delta, United, JetBlue and Southwest.

Bad for investors, good for consumers?

Big airlines have suffered a double whammy of economic forces–some of them prompted by the weather.

These air carriers are under increasing pressure from smaller airlines that have cut the cost of tickets on a wide range of routes. In June, for example, the ultra-low cost airline Frontier announced it would more than double the number of routes it flies in the U.S., with teaser rates for some one-way tickets as low as $20.

To keep up, major airlines have been cutting ticket prices. The average domestic airline ticket departing from Los Angeles International, for example, fell by 5%, according to the Bureau of Transportation Statistics.

Adding to the pressure recently, the price of jet fuel has also increased since Hurricane Harvey hit Houston in late August. The storm reduced by 4.4 million barrels, or 24% of the oil refining capacity, according to reports.

Economic challenges for the airlines are likely to continue.

Delta, Spirit Airlines, and JetBlue all reportedly cut their revenue forecasts for the coming months.

Top Takeaways:

• It’s been a tough few months for the airline industry.
• Competition from low-cost air carriers has forced major airlines to cut prices for domestic air travel.
• Hurricane Harvey has taken about a quarter of oil production offline, and that’s led to increases in fuel costs for major carriers.
• These factors have all cut into airline profits.
• While airlines compete on cost, consumers are benefitting from cheaper tickets.

Read more: Hurricane Harvey: How a Big Storm Affects the Market

The post How Discounters (And the Weather) are Making it Tough for Big Airlines appeared first on Stash Learn.

What is DACA?

The DACA program was created by an executive order in 2012 by President Obama. It gave the children of undocumented immigrants–people who moved to the U.S. without immigration paperwork–protection against deportation, allowing them to work and attend school. (They are often called DREAMers, short for the Development, Relief, and Education for Alien Minors Act–a bill that has been introduced, but not passed in Congress.)

Immigration is an emotional issue for many in the U.S., who worry about the impact of undocumented workers on domestic jobs.

Emotions aside, there’s general agreement between economists, immigration experts, and politicians of both parties that winding down the program will have a negative impact on the economy, not to mention the lives of the nearly 1 million young people enrolled in the program. Most of the DREAMers were brought to the U.S. when they were still children, and have not returned to their countries of birth since then.

Here’s a quick look at what’s at stake.

Who are DACA recipients?

• 800,000 teenagers and children of undocumented immigrants are protected by the program.
• The average age of DREAMers is 25; most arrived at the age of 10 or younger and have little or no connection to the countries from which they’ve immigrated.
• The majority come from Mexico, El Salvador, Honduras, and Guatemala, according to U.S. Citizenship and Immigration Services. Significant numbers also come from South Korea, and other Asian countries.
• They live in all 50 states.
• 45% are in school, and three quarters of those getting an education are pursuing a bachelor’s degrees or higher, according to a study.

What’s being proposed?

DACA gives recipients protection against deportation and the right to work and pursue an education, in two-year increments. Starting September 5, DACA will no longer accept new applicants to the program. Those whose status expires in March, 2018 must apply for a two-year extension by October 5.  

Conservatives argue Congress is the appropriate rule-making body for any such legislation. Congress will have the opportunity to revisit and create legislation around DACA, also in March.

But with no renewals possible after that point, current recipients will exit the program at a rate of 32,000 per month, according to estimates.

What’s the impact on the economy?

Calculations of the economic damage caused by ending DACA vary. But both conservatives and progressives agree that ending DACA is likely to have a negative impact on the economy.

The Cato Institute, a Libertarian think tank, estimates $280 billion would be taken out of the economy over the next ten years.

“The repeal or rollback of the DACA program would have a significant and negative fiscal and economic impact on the country, and disproportionately affect the various states in which DACA recipients are most prevalent,” Ike Brannon, a visiting fellow for Cato, wrote in a blog post in August.

On the other side of the aisle, the progressive Center for American Progress suggests that figure could be closer to $460 billion over the next decade.

Here are some reasons why:

• 91% of DACA recipients work and pay taxes.
• 5% have started their own businesses.
• Their average earnings are $36,232
• 16% have purchased a first home since receiving DACA, and nearly two thirds have purchased a first car.
• Nearly three quarters of the largest Fortune 500 companies employ DACA workers.

“The data illustrate that DACA recipients continue to make positive and significant contributions to the economy, including earning higher wages, which translates into higher tax revenue and economic growth that benefits all Americans,” the Center for American Progress wrote in a recent blog post.

Key Takeaways:

Without DACA, nearly 1 million children of undocumented immigrants will lack protection against deportation, and will lose their legal work status. DACA recipients make important contributions to the U.S. economy, worth as much as $460 billion, from taxes, home and car ownership, and starting their own businesses.

Keep reading: Hurricane Harvey: How the Storm Affects the Economy

The post What is DACA? The Effect of Dreamers on the U.S. Economy appeared first on Stash Learn.

That’s one reason you may want to pay attention to drug company Gilead Sciences, which announced on Monday that it will purchase Kite Pharma, in a deal worth nearly $12 billion.

Kite, based in Santa Monica, California, produces an immunotherapy drug that reportedly stimulates the body to fight cancer with its own cells.

Why is this a big deal?

• Gilead is one of the largest pharmaceutical drug makers in the world. And by focusing on a biotech company that has pioneered novel therapies for cancer treatment, it’s taking a bet on a new market with a huge potential for growth.
• The biotech market has shown a lot of strength this year, with major indexes that include pharmaceutical stocks increasing in the double-digits. One reason for the gains, financial experts say, is the potentially favorable environment for drug companies created by the Trump administration, which continues to roll back business regulations, and a Food and Drug Administration chief who has promised to speed the approval process for new drugs.
• Gilead hasn’t made a major acquisition of another business since 2011, and this is the company’s largest purchase to date.
• Gilead has reportedly amassed billions of dollars in recent years from top-selling antiviral drugs that help fight HIV, hepatitis B and C, and the influenza.

“The acquisition of Kite establishes Gilead as a leader in cellular therapy and provides a foundation from which to drive continued innovation for people with advanced cancers,” Gilead chief executive officer John Milligan said in press release on Monday.

Key Takeaways: Gilead is one of the largest drug manufacturers in the world, and it’s developed critical drugs to fight HIV, hepatitis B and C, and influenza. Its multi-billion dollar purchase of Kite is a significant bet on new advances in fighting cancer, as well as a further demonstration of the strength of the pharmaceutical industry in recent months.

Want to learn more about investing in healthcare?

Check out the Modern Meds and Doctor, Doctor ETFs on Stash.

The post Gilead to Purchase Cancer Drug Maker Kite Pharma in $12B Deal appeared first on Stash Learn.