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The Journal Gazette

  • Tierney

Monday, December 03, 2018 1:00 am

Five questions with Heather Tierney

Associate professor of economics, Purdue Fort Wayne

1 The economy has been racing along most of this year, with a few stumbles lately. Should we be worried?

Not necessarily. One should always have an emergency fund whether or not the economy is doing well as a way of preparing for the unexpected as best as one can. The unemployment rate is at 3.7 percent nationally and is at 3.3 percent in Indiana. Wages are steadily increasing, but not enough to cause cost-push inflation at the moment. There are lingering concerns about the ripple effects of tariffs on the local economy, especially since the tariffs are affecting agriculture and manufacturing in the local economy.

 

2 What signs do you look for to determine whether Fort Wayne's economy is improving? What is the outlook for Indiana this coming year?

A leading indicator would be housing, and the housing market is doing very well in Fort Wayne. Unemployment is a lagging indicator, and it is also showing that the economy is doing well. I would say that the outlook for Indiana is cautiously optimistic, but we need to wait and see what the effects of the tariffs will be on the local economy.

 

3 Given the uncertainties of the world, what's the best way to plan for the future? If you can afford a nest egg, what are the best places to put your money?

My three suggestions are as follows: 1) Pay off debt as soon as possible; 2) Have an emergency fund that covers at least six months of your expenses but covering one year's worth of your expenses would be better; and 3) Safeguard and build your credit scores.

A relatively safe investment is to put some money each month in an index fund such as the S&P index fund that many brokerages offer. You do need to be careful of fees. Since we are dealing with the stock market, there will be some ups and downs, but if you can play the long game, there should be gains without as much risk due to diversification.

 

4 What are the worst types of nesting places for your money?

Anything with high volatility might not be a good idea. You can win big, but you can lose big also. So, investing in bitcoin, options, futures, etc. could be very risky. I would be very leery of anything that is trendy as well, such as bitcoin.

 

5 What is your greatest money-related worry?

I am concerned that I am not saving enough for the unexpected emergency or for my retirement. I know I need to do better in these two areas. Saving is hard especially when your family and friends need some financial help and it is very hard to say no.