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January e-News

Financial Tips for the New Year

A recent survey found that 22% of Americans have already broken their New Year's Resolution. We can't guarantee you'll lose weight, or get to the gym more often, but we can give you some suggestions to help you whip your finances into shape and reach your financial goals this year.

1. Save and invest. Don’t underestimate your ability to save and invest. With compound interest, even modest investments now can grow over time.

2. Lighten your credit load. Paying off high-interest debt may be your best investment strategy. Few investments pay off as well, or with less risk than, eliminating high-interest debt on credit cards or other loans.

3. Boost your "rainy-day" fund. Many experts recommend keeping about six months of expenses in a federally insured account to cover sudden unemployment or other emergencies. Open a savings account that is strictly for emergencies.

4. Take charge of your money. If you don’t know where it goes, start keeping track. There are plenty of tools to help you set a monthly budget and stick to it. FinanceWorks a free online service available with any Washington Trust account that helps you see where you are spending your money, and how you can save. See all of your accounts from multiple institutions in one place.

5. Pay yourself first. Put yourself at the top of your "payee" list. Regular automatic deductions from your paycheck or bank account into a savings or investment account will keep you on track toward your short and long-term financial goals. With Bank to Bank Transfer, you can easily move your money between institutions and set up recurring transfers for extra peace of mind.

6. Know your investment self. You’re the best judge of yourself. Use that knowledge to find investments that are a good match for you, based on your goals and your ability to tolerate risks.

7. Make sure your older investments still fit you. Take time to review your holdings and see if they’re still appropriate for you. If you’ve outgrown them, it’s probably time to sell them and buy something better suited to you.

8. Don’t put all your eggs in one basket. One way to reduce the risks of investing is to diversify your investment holdings. Think twice before investing heavily in shares of your employer’s stock or any single investment. Washington Trust’s Wealth Management professionals can help you diversify your portfolio and manage your investments.

9. Ignorance isn’t always bliss, especially when it comes to your account statements. Sure, it can hurt to look at statements when investments are losing value. But if you don’t review your statements, you may miss problems in your accounts that are unrelated to performance.

10. Do your homework. Asking questions about financial opportunities and checking out the answers with unbiased sources can help you make informed choices and avoid fraud.

For more information about how Washington Trust can help you manage your money better in 2013, contact our Customer Service Center at 800-475-2265.

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Economic Outlook 2013

By: Mary McGoldrick, Senior Vice President, Director of Investments

The United States and global economies are showing signs of improvement as we enter 2013. Moderate earnings growth and benign inflation should support higher equity prices in both developed and emerging markets while central bankers continue to foster accommodative monetary policies. We expect real Gross Domestic Product (GDP) growth of 2.0% to 2½% in the US, 3.0% to 3½ % globally, and 6.0% in the emerging markets.

In the U.S., the last minute compromise to avert the "fiscal cliff" will result in a modest drag on growth and promote a lingering uncertainty that will contribute to market volatility in 2013. The deal signed into law by the President on January 2, 2013 essentially failed to address the larger issues of entitlement reform, a tax code overhaul, the debt ceiling, and the sequester (other than delaying implementation of spending cuts for two months. A repeat of the August 2011 debt ceiling saga, culminating in another downgrade of U.S. sovereign debt, looks increasingly probable.

Meanwhile, various sectors are showing new momentum. The recovery in housing supported by accommodative Federal Reserve policy is very encouraging. Existing home sales have been rising and the inventory of unsold existing homes is at the lowest level since the financial crisis. Rising rents have provided an incentive to encourage home purchases. Building permits, home purchases and homebuilder sentiment are rising. Residential construction is expected to contribute over 0.5% to GDP growth in 2013.

Additionally, GDP should get a boost as rebuilding in the wake of Hurricane Sandy gets under way in earnest. The East Coast was not the only region struck by natural disaster in 2012. A return to more normal weather after last year’s massive Midwest drought would add close to 0.5% to growth as agriculture rebounds.

The auto industry also continues to rebound. November sales were at their highest level in nearly five years. Industry observers are optimistic given the record age of the U.S. auto fleet which has been described as a “rolling junkyard”.

Better demand overseas should help boost global trade. U.S. exports already show signs of strengthening. The U.S. is en route to becoming a global energy powerhouse and that alone will result in a significant improvement in our balance of trade over the coming decade. U.S. oil and gas production is surging due to the ample yield from shale based oil and gas deposits.

Employment numbers will likely remain a focus throughout 2013. The U.S. economy added just over 150,000 jobs on average per month in 2012, a fair showing. While the unemployment rate declined a full percentage point to 7.7%, the labor participation rate also declined, somewhat exaggerating the apparent improvement in the unemployment rate. Nonetheless, this performance is more than adequate to absorb population growth and increase confidence in a self-sustaining recovery.

The Federal Reserve remains dissatisfied with the pace of job creation. As such, the Fed will continue to inject massive amounts of liquidity into the economy via quantitative easing. In December, the Fed announced that in addition to ongoing monthly purchases of mortgage-backed securities, they will target for purchase an additional $40B per month in long term Treasury bonds, bringing total purchases to $85B per month.

The Fed recently modified its guidance on monetary policy. Previously, the Fed indicated short rates would remain in the 0 to 25 basis point range until 2015. Based on new guidance, rates will remain near zero until unemployment decreases to 6.5% or inflation persists at more than a half percent in excess of their target rate of 2.0%. Given the amount of slack in the labor market, and expected modest wage growth, inflation is likely to remain benign, thus we see little chance the Fed will raise short term rates in 2013.

In summary, we anticipate that with progress towards resolution of many uncertainties that concerned investors in 2012 (fiscal cliff, European debt crisis, Presidential election, etc.) , we will see less volatility in 2013. While risks are always present, including unrest in the Middle East and Asia and continued disagreement in Washington regarding fiscal policy, we believe that 2013 will be a year of moderate growth in the economy and corporate profits coupled with price stability and relatively low interest rates.

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Black & White Masquerade

Fundraiser to “Bring Back the Beach”

The Ocean House channels Truman Capote and his famous 1966 “Black & White Masquerade” event on February 23rd to benefit our neighbors in Misquamicut devastated by Hurricane Sandy.

Put on your best black and/or white cocktail attire and add a little mystery with a creative mask. 100% of the proceeds will benefit “Bring Back the Beach”, a Westerly Chamber of Commerce initiative to support the Misquamicut Beach recovery efforts.

In late October, Hurricane Sandy wrecked havoc on much of the east coast. The Rhode Island coastline has felt the effects of this storm and many homeowners and business owners are still trying to rebuild and pick up the pieces left by Sandy. In the aftermath of the storm, thousands of Rhode Islanders banned together to help their neighbors in need. Volunteers spent day and night working to clean up the streets and beaches and provided a much-needed helping hand to those in affected areas. Donations of food, water, supplies and money came pouring in to local non-profit organizations, as well as the United Way and Red Cross.

Rhode Island is on the road to recovery, however there is still a lot of work to do before these businesses and homeowners are back on their feet. Join in the relief efforts on February 23rd by attending the Black & White Masquerade. 100% of the proceeds will go to support the Misquamicut Beach Recovery efforts. Tickets for the event are $125 per person and include an open bar and food stations from 7:00pm to 11:00pm. For reservations, please call 401-584-7000 or book online at www.OceanHouseEvents.com.

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Resolve to stop the clutter in your mailbox!

Turn off your paper statements:

1. Log On to Personal Online Banking and click on Account Summary.?
2. Click on the "Waive Your Paper Statements".
3. Select "Waive the mailing of your monthly paper statement."
4. Click on the "Change Online Statement Options" button to save your changes.

That's it - you're done...now you'll receive secure statements online!??

If you have any questions about online statements, please call our Customer Service Center at 800-475-2265 or email us at info@washtrust.com.


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