We initially scheduled an article focused on the banks industry for this month’s issue. Then Silicon Valley Bank and Signature Bank failed, Credit Suisse incurred even more troubles and First Republic Bank required help from other banks.

There is a lag between when articles are written for the AAII Journal and when they are finally delivered to you online or in print. This is due to the editorial process and printing schedule. When a situation is still developing—as is the case for banks—we take it into account.

So instead, assistant financial analyst Jack Gilleland focuses on oil and gas stocks and exchange-traded funds (ETFs) in this issue. Jack shows key metrics for analyzing upstream companies (aka exploration and production stocks) and metrics for valuing downstream companies (e.g., refiners) as well as what to look for in oil and gas ETFs.

When it comes to banks, there are some key metrics you can use to assess the health of those that are publicly traded. Tier 1 ratios show how well the bank is capitalized. As a rule of thumb, low double-digit percentages are good. Net charge-off ratios and loan loss provisions offer insight into the health of the bank’s customers: A rising trend suggests the bank’s borrowers are struggling more and/or at increased risk of not making loan payments.

This information is usually reported in a bank’s earnings release or its earnings presentation slides. You can also look at a company’s quarterly (Form 10-Q) and annual (Form 10-K) filings with the U.S. Securities and Exchange Commission (SEC) in the EDGAR database at www.sec.gov/edgar.

As a banking customer, it is prudent that your accounts are insured by the Federal Deposit Insurance Corp. (FDIC). FDIC insurance covers checking, savings and money market deposit accounts as well as certificates of deposit (CDs) and other similar bank products up to “$250,000 per depositor, per insured bank, for each account ownership category.”

Similar protections are provided by the National Credit Union Share Insurance Fund (NCUSIF). Managed by the National Credit Union Association (NCUA), NCUSIF covers single accounts such as “regular shares, share drafts (similar to checking), money market accounts, and share certificates” up to “$250,000 per share owner, per insured credit union, for each account ownership category.”

Brokerage accounts are covered by the Securities Investor Protection Corp. (SIPC). It provides protection of “$500,000, which includes a $250,000 limit for cash.” I’ll refer you to John Deysher’s article in the January 2021 AAII Journal, “Are You Protected If Your Broker Goes Bankrupt?”

National Financial Capability Month

Since April is National Financial Capability Month (formerly National Financial Literacy Month), we have three articles to improve your financial knowledge.

First, contributing editor Paul Merriman shows how big of a role time plays in building wealth. Gifting $1 per day to a child’s or grandchild’s future retirement savings from their birth to age 18 has a very significant impact on their lifetime wealth. Spoiler alert: It turns into a very large balance at retirement if left untouched. The recipient of the gift would have to save aggressively during their working years to match the gift’s balance at retirement.

Second, we provide a one-page wealth-building plan with guidelines and clarity needed to reach one’s goals—in this case, saving for retirement. It’s based on the AAII PRISM Wealth-Building Process and feedback we received from AAII members about improving PRISM. You’ll notice a revised discussion of assessing risk and an expanded section on preferences and constraints.

Most importantly, you’ll see that something comprehensive doesn’t have to be lengthy or complex. A simple plan hitting the main considerations can provide a great roadmap for navigating ever-changing market conditions. The article focuses on an investor who is in their mid-30s. (If you are older but have children or grandchildren in this age range, share the article with them.) We plan to introduce more of these one-page plans for investors at different life stages in future issues of the AAII Journal.

Third, we’ve tapped into the collective wisdom of AAII members with our latest Big Question survey. You’ll discover how your fellow members built their savings, what worked well for them, what mistakes they made and the guidance they have for others.

Wishing you prosperity and good health,