On Friday, we got some good news- the majority of economists expectedunemployment to rise , but it actually ticked down from 10.2 to 10%- we lost about 11,000 jobs in November and they also revised the October down as well. So this is like many other things, we still had losses so we aren't out of the woods yet, but the losses were less than expected. Unemployment is suprisinging considered a lagging economic indicator, because in past recessions employers don't tend to really start hiring again until there is signs that we are for sure in a recovery.
Here is a good article from yahoo that I read this morning that explores if we are reaching the end of the recession.
Sunday, December 6, 2009
Thursday, November 26, 2009
Market Commentary from David Joy, Riversource
David Joy — Chief Market Strategist, RiverSource Investments
Slight Setback for Economic Growth
On the road toward a sustainable economic expansion, last week represented a modest setback. Weaker-than-expected reports on industrial production and housing starts suggested that the recovery remained fragile.
The weakness in housing may have occurred because of the uncertainty surrounding the status of the first time home buyers tax credit, since extended and expanded. Of course, we will find out the answer next month, but the weakness in the October report does exhibit just how dependent the housing sector is on government incentives. The strength in existing home sales as reported this Monday, which rose to the highest level since February 2007, was likely itself distorted by buyer anticipation of the expiration of the tax credit program.
The industrial production report showed a gain of just 0.1 percent in October after three successive, strong readings averaging increases of 0.9 percent in the third quarter. Both the manufacturing and mining components fell, while utility output rose sharply. A decline in auto production accounted for most of the manufacturing weakness.
Stocks mostly drifted lower last week in response to the softer data and a slightly stronger dollar, although the Dow Jones Industrial Average managed to eke out a small gain. Commodity prices were also generally higher, especially gold which rose another $30 to $1,148 an ounce.
Equity investors have been trying to come to terms recently with a number of indications that the recovery rally is showing signs of fatigue: light volume, relative weakness in financials and small caps, elevated sentiment, fewer new highs, full valuations and so on. This watchfulness is compounded by the suspicion that a correction might be due, since we haven't experienced one throughout the entire recovery from the March lows. But also causing some concern are divergent messages are coming from the bond market.
Last week, the yield on three-month Treasury bills turned negative. That's right, negative. In other words, some investors are willing to accept a return of less than zero for the assurance of getting their money back in January. Certainly part of the reason is related to large institutional parking of ample excess cash, but it also hints at some measure of concern. In addition, certain credit spreads have stopped contracting or have been widening recently, hardly a ringing endorsement of the momentum behind the budding economic recovery.
Assurances from central banks around the globe that liquidity will be maintained indefinitely do offer some comfort that the reflation story is still alive. But we are getting closer to the moment of truth when final demand will need to step forward, and corporate revenues will need to rise for this rally to keep going. Judging from investor response to recent statements from Federal Reserve officials, the easy money, weaker dollar story maintains the upper hand for now.
Slight Setback for Economic Growth
On the road toward a sustainable economic expansion, last week represented a modest setback. Weaker-than-expected reports on industrial production and housing starts suggested that the recovery remained fragile.
The weakness in housing may have occurred because of the uncertainty surrounding the status of the first time home buyers tax credit, since extended and expanded. Of course, we will find out the answer next month, but the weakness in the October report does exhibit just how dependent the housing sector is on government incentives. The strength in existing home sales as reported this Monday, which rose to the highest level since February 2007, was likely itself distorted by buyer anticipation of the expiration of the tax credit program.
The industrial production report showed a gain of just 0.1 percent in October after three successive, strong readings averaging increases of 0.9 percent in the third quarter. Both the manufacturing and mining components fell, while utility output rose sharply. A decline in auto production accounted for most of the manufacturing weakness.
Stocks mostly drifted lower last week in response to the softer data and a slightly stronger dollar, although the Dow Jones Industrial Average managed to eke out a small gain. Commodity prices were also generally higher, especially gold which rose another $30 to $1,148 an ounce.
Equity investors have been trying to come to terms recently with a number of indications that the recovery rally is showing signs of fatigue: light volume, relative weakness in financials and small caps, elevated sentiment, fewer new highs, full valuations and so on. This watchfulness is compounded by the suspicion that a correction might be due, since we haven't experienced one throughout the entire recovery from the March lows. But also causing some concern are divergent messages are coming from the bond market.
Last week, the yield on three-month Treasury bills turned negative. That's right, negative. In other words, some investors are willing to accept a return of less than zero for the assurance of getting their money back in January. Certainly part of the reason is related to large institutional parking of ample excess cash, but it also hints at some measure of concern. In addition, certain credit spreads have stopped contracting or have been widening recently, hardly a ringing endorsement of the momentum behind the budding economic recovery.
Assurances from central banks around the globe that liquidity will be maintained indefinitely do offer some comfort that the reflation story is still alive. But we are getting closer to the moment of truth when final demand will need to step forward, and corporate revenues will need to rise for this rally to keep going. Judging from investor response to recent statements from Federal Reserve officials, the easy money, weaker dollar story maintains the upper hand for now.
Tuesday, November 17, 2009
Year End Tax Planning
While the last thing you think about as the holidays approaches is your tax planning, you really should, if you want to make sure you save dollars come tax time in April. Here are my top tax planning tips before December 31st:
1) If you do not qualify for a Roth IRA because of your income ( phase out starts at $166,000 AGI for married couples, $105,000 for single filers) then you should consider making a Non Deductible Traditional IRA contribution- you will be able to convert that in 2010.
2) If you are in over a 28% tax bracket, you should consider maxing out your 401(k) before the end of the year. Look at your remaining paychecks and see what you should increase your deductions to in order to reach the max.- $16,500 for individuals under 50, and $22,000 for over 50. This will help you save more in your tax bill for 2009 as well as save more for your retirement and take advantage of some STILL market lows.
3) Evaluate your nonqualified investment portfolio. ( these are assets that you hold outside of your IRA's and 401(k) plans). For example, stocks or mutual funds you hold in a brokerage account. Look to see if you should sell any losers to reinvest into something better and take a bad situation ( no one likes to admit to having a loss BUT it does happen) and turn it into a tax savings.
EX: I bought GE at $30 and it is now worth $16 per share- if I sell to reinvest in a potentially better performing company, I can write off that loss- up to $3,000 a year right OFF my EARNED income- so if I made $150,000 this year, now my income is $147,000. you can also use it to offset future capital gains! Keep in mind, if you want to buy back the same position, because of wash sale rules, you have to wait 31 days. If you are concerned about not being in a position over those 31 days, then you can still invest in something else. For example, if I sell my gold mining stock at a loss, but still believe in my gold mining stock, I could buy a GLD etf for those 30 days to make sure I still have exposure to the gold market.
1) If you do not qualify for a Roth IRA because of your income ( phase out starts at $166,000 AGI for married couples, $105,000 for single filers) then you should consider making a Non Deductible Traditional IRA contribution- you will be able to convert that in 2010.
2) If you are in over a 28% tax bracket, you should consider maxing out your 401(k) before the end of the year. Look at your remaining paychecks and see what you should increase your deductions to in order to reach the max.- $16,500 for individuals under 50, and $22,000 for over 50. This will help you save more in your tax bill for 2009 as well as save more for your retirement and take advantage of some STILL market lows.
3) Evaluate your nonqualified investment portfolio. ( these are assets that you hold outside of your IRA's and 401(k) plans). For example, stocks or mutual funds you hold in a brokerage account. Look to see if you should sell any losers to reinvest into something better and take a bad situation ( no one likes to admit to having a loss BUT it does happen) and turn it into a tax savings.
EX: I bought GE at $30 and it is now worth $16 per share- if I sell to reinvest in a potentially better performing company, I can write off that loss- up to $3,000 a year right OFF my EARNED income- so if I made $150,000 this year, now my income is $147,000. you can also use it to offset future capital gains! Keep in mind, if you want to buy back the same position, because of wash sale rules, you have to wait 31 days. If you are concerned about not being in a position over those 31 days, then you can still invest in something else. For example, if I sell my gold mining stock at a loss, but still believe in my gold mining stock, I could buy a GLD etf for those 30 days to make sure I still have exposure to the gold market.
Friday, October 9, 2009
Lay Away is back
It's no longer unfashionable to be thrifty- we are all trying to save money and cut back. With the holiday season right around the corner and holiday sales predicted to be sluggish, stores are getting back to using LAY AWAY- Kmart is already running commercials for the holiday season. I think this is a great way to start your christmas shopping- most of us don't have the discipline to save for a christmas fund and end up using our credit cards- which ends up costing a lot of money through the high interest we pay. Lay away allows you to set up a payment plan in the weeks leading up to christmas. You receive your items when you make your last payment- usually just in time for Christmas. If you like this idea, consider looking into it soon. Here are the terms of the Kmart Layaway program.
Oh and PS Use your cash flow to make these payments, not your credit cards ( unless you DO pay off your credit card each month)
Oh and PS Use your cash flow to make these payments, not your credit cards ( unless you DO pay off your credit card each month)
Sunday, October 4, 2009
Open Enrollment
The season is upon us for open enrollment. Time to make sure all of your benefits are up to date and to make any changes.
One of the biggest missed areas is short and long term disability. Remember, your income is your biggest asset- if your ability to wake up and go to work to earn your paycheck is compromised, that can be HUGE financial problems. Did you know that 48% of foreclosures result in disability? Only 2% result from death, but more people life insurance than disability insurance.
Make sure you are enrolled for both- if STD is expensive and you have at least 6 months of expenses in a cash reserve, you can consider skipping, but never skip the LTD- it is almost impossible to insure yourself against a permanent disability.
Most LTD lasts until you are age 65 and can pay anywhere between 50-66% of your income- make sure to opt for the max!
If 66% is not enough, you can also purchase private disability policies to cover more of your income. Another big advantage of private vs. your group disability policies is occupation protection.
Also, if you are pregnant, short term disability can be very valuable if you encounter any pregnancy complications or need time to recover from childbirth!
One of the biggest missed areas is short and long term disability. Remember, your income is your biggest asset- if your ability to wake up and go to work to earn your paycheck is compromised, that can be HUGE financial problems. Did you know that 48% of foreclosures result in disability? Only 2% result from death, but more people life insurance than disability insurance.
Make sure you are enrolled for both- if STD is expensive and you have at least 6 months of expenses in a cash reserve, you can consider skipping, but never skip the LTD- it is almost impossible to insure yourself against a permanent disability.
Most LTD lasts until you are age 65 and can pay anywhere between 50-66% of your income- make sure to opt for the max!
If 66% is not enough, you can also purchase private disability policies to cover more of your income. Another big advantage of private vs. your group disability policies is occupation protection.
Also, if you are pregnant, short term disability can be very valuable if you encounter any pregnancy complications or need time to recover from childbirth!
Saturday, September 12, 2009
Interest working against you
My husband, Evan, loves to fish. It serves as his escape from his demanding job as a surgery resident at the hospital. I get this- we all need our escape or something that gives us that natural flow.
For a few years now, Evan has wanted a fishing boat. He has spent hours and hours reading about the hulls, the best engines, all the different makes, horsepower etc. etc....and finally was ready to purchase a boat- a beautiful 20 foot Angler bay boat became ours 2 weeks ago. Even I can't help it- she is wonderful!
To purchase this boat, we first sold our previous boat- a yamaha jet boat that we sold for $8,500. Using this as a dowpayment, our boat sold for $20,000 and we ended up financing about $12,000.
Now the financing- with the recession and my income not where it used to be, we wanted low payments. Evan came home and told me he was told by the boat dealer we could get a boat loan for 8%.
8%!! I about fell out of my chair, just 2 years ago a financed my car at 4% how can the rates be so high now?! Welcome to the result of the credit crisis. After inquiring at several banks and credit unions, I found that this 8% rate was on the low side for boat loans now. So when we received our note from the bank, I looked at the total interest that will be paid over the duration of the loan- $8,900!!! That is how banks stay rich, and consumers stay poor. You bet your butt we will be paying off this loan much faster than the set payment plan? How...increasing our monthly payment from $175 to at least $250 a month and making lump sums from extra cash flow each month.
Have you ever looked at how much interest you are paying on your loans and credit cards ( which the average rate on right now is 9.53%)? Pay attention, it can really open your eyes and help you save thousands in interest that you can have to save for retirement, where you can earn interest on your money, not someone else earning interest!
For a few years now, Evan has wanted a fishing boat. He has spent hours and hours reading about the hulls, the best engines, all the different makes, horsepower etc. etc....and finally was ready to purchase a boat- a beautiful 20 foot Angler bay boat became ours 2 weeks ago. Even I can't help it- she is wonderful!
To purchase this boat, we first sold our previous boat- a yamaha jet boat that we sold for $8,500. Using this as a dowpayment, our boat sold for $20,000 and we ended up financing about $12,000.
Now the financing- with the recession and my income not where it used to be, we wanted low payments. Evan came home and told me he was told by the boat dealer we could get a boat loan for 8%.
8%!! I about fell out of my chair, just 2 years ago a financed my car at 4% how can the rates be so high now?! Welcome to the result of the credit crisis. After inquiring at several banks and credit unions, I found that this 8% rate was on the low side for boat loans now. So when we received our note from the bank, I looked at the total interest that will be paid over the duration of the loan- $8,900!!! That is how banks stay rich, and consumers stay poor. You bet your butt we will be paying off this loan much faster than the set payment plan? How...increasing our monthly payment from $175 to at least $250 a month and making lump sums from extra cash flow each month.
Have you ever looked at how much interest you are paying on your loans and credit cards ( which the average rate on right now is 9.53%)? Pay attention, it can really open your eyes and help you save thousands in interest that you can have to save for retirement, where you can earn interest on your money, not someone else earning interest!
Wednesday, September 9, 2009
a sad day
I had a client call me today with some horrible news- his wife, Laura, had passed away at 46 years old. I was shocked, she had been in and out of the hospital the last year but I had no idea it was life threatening.
The first thing I did was check his accounts- yes I was 95% and I was then 100% relieved. In 2007, when I met these clients, the husband, Marshall, was the primary breadwinner and Laura did not work. Most of the time when the non-working spouse does not bring any monetary value to the household, he or she does not have life insurance.
I convinced them in 2007 to buy a policy on her "just in case"- to cover funeral expenses and give Marshall some time to take off to spend with his daugther and not have to worry about money for a while.
I'm glad I was able to give Marshall and their daughter this one thing in such a tragic time.
Life insurance is important, I hope this reminds everyone of that.
Laura was also a donor, so her passing allowed 5 people to have better lives through donations of her liver, skin and other organs.
RIP Laura
The first thing I did was check his accounts- yes I was 95% and I was then 100% relieved. In 2007, when I met these clients, the husband, Marshall, was the primary breadwinner and Laura did not work. Most of the time when the non-working spouse does not bring any monetary value to the household, he or she does not have life insurance.
I convinced them in 2007 to buy a policy on her "just in case"- to cover funeral expenses and give Marshall some time to take off to spend with his daugther and not have to worry about money for a while.
I'm glad I was able to give Marshall and their daughter this one thing in such a tragic time.
Life insurance is important, I hope this reminds everyone of that.
Laura was also a donor, so her passing allowed 5 people to have better lives through donations of her liver, skin and other organs.
RIP Laura
Tuesday, June 23, 2009
Quirky
Check out this Yahoo article for some out of the ordinary economic indicators
http://finance.yahoo.com/banking-budgeting/article/107186/10-quirky-economic-indicators;_ylt=At9Ev1J0uTyd5.7iPwtZXdiCfNdF?mod=bb-budgeting
http://finance.yahoo.com/banking-budgeting/article/107186/10-quirky-economic-indicators;_ylt=At9Ev1J0uTyd5.7iPwtZXdiCfNdF?mod=bb-budgeting
Monday, June 22, 2009
What to do with your 401(k) when you leave your job
I'm willling to bet that the LAST thing on your mind when you leave a company ( nowadays bc of a lay off) is what to do with your 401(k) plan. Here are your options...
1) Rollover to a Traditional IRA- your investment options are now LIMITLESS inside your IRA, well almost, you can't buy gold bullion BUT you can buy a GOLD ETF, along with individual stocks, thousands of mutual funds, and of course CD's and money markets. The point is you have more flexibility and choices to build the optimal portfolio- if you are a do it yourself type investor, try Charles Schwab or Scottrade, if you want professional investment advice on how to build and manage a portfolio, try something like Ameriprise
2) Leave it where it is- if you leave it as is, there is a good chance you'll lose track of it in that since you are no longer working with the company, you won't be as up to date on fund changes or have access to the 401k administrator coming into your office. Your investment options are not limitless and you can only invest in the 10-15 funds available within the 401k.
3) Convert to a Roth IRA- if you are under the $100,000 income limitation, you rollover your 401k directly to a Roth IRA.
Ex:
Jenn, whose AGI ( adjusted gross income) is $65,000 for 2009, leaves ABC Corp. with $25,000 in her 401(k) plan. Jenn decides to convert her 401k to a Roth IRA- the $25,000 she adds on to her income for the year, making her income $90,000 and pays a one time income tax (20%) on her $25,000- $20,000 is the net that is deposited in her Roth, which will now grow to be tax free when she withdraws the funds for her retirement.
1) Rollover to a Traditional IRA- your investment options are now LIMITLESS inside your IRA, well almost, you can't buy gold bullion BUT you can buy a GOLD ETF, along with individual stocks, thousands of mutual funds, and of course CD's and money markets. The point is you have more flexibility and choices to build the optimal portfolio- if you are a do it yourself type investor, try Charles Schwab or Scottrade, if you want professional investment advice on how to build and manage a portfolio, try something like Ameriprise
2) Leave it where it is- if you leave it as is, there is a good chance you'll lose track of it in that since you are no longer working with the company, you won't be as up to date on fund changes or have access to the 401k administrator coming into your office. Your investment options are not limitless and you can only invest in the 10-15 funds available within the 401k.
3) Convert to a Roth IRA- if you are under the $100,000 income limitation, you rollover your 401k directly to a Roth IRA.
Ex:
Jenn, whose AGI ( adjusted gross income) is $65,000 for 2009, leaves ABC Corp. with $25,000 in her 401(k) plan. Jenn decides to convert her 401k to a Roth IRA- the $25,000 she adds on to her income for the year, making her income $90,000 and pays a one time income tax (20%) on her $25,000- $20,000 is the net that is deposited in her Roth, which will now grow to be tax free when she withdraws the funds for her retirement.
Sunday, May 31, 2009
Good article
If you would like an easy to read recap of what the heck has happened to our economy over the last year and a half that has shot us into this recession, you need to read this article from Junior Achievement.
CFP
Last week, I got the good news that I passed my CFP ( CERTIFIED FINANCIAL PLANNER) exam. The journey to acheive this took me two years, I began my studies in the beginning of 2007. This certification requires that you pass 6 modules before you can sit for the comprehensive test that ultimately gives you the CFP title. The modules include Principals of Financial Planning, Insurance, Income Tax, Retirement Planning, Investment Planning and Estate. Each module consists of about 10 books of information. Soo with working 50-60 hours a week and everyday life, it can take some time to get through it all.
In the fall of 2008, I discovered the Ken Zahn program which was very helpful at getting me prepared for the final. You can visit his website at www.kenzahn.com. I highly recommend his program if you are looking to get this certification in a decent amount of time.
So, once the CFP board confirms that I am a college grad and have 3 years of work history, I can start using the designation, and I can't be more excited! I'm hoping it will help my practice aquire more high value clients- as most smart investors look for an advisor that is a CFP.
I was also happy to discover that only 26% of CFP's are female, and 3% are in the age range of 20-29! You can read more about the CFP designation at www.cfp.net.
In the fall of 2008, I discovered the Ken Zahn program which was very helpful at getting me prepared for the final. You can visit his website at www.kenzahn.com. I highly recommend his program if you are looking to get this certification in a decent amount of time.
So, once the CFP board confirms that I am a college grad and have 3 years of work history, I can start using the designation, and I can't be more excited! I'm hoping it will help my practice aquire more high value clients- as most smart investors look for an advisor that is a CFP.
I was also happy to discover that only 26% of CFP's are female, and 3% are in the age range of 20-29! You can read more about the CFP designation at www.cfp.net.
Tuesday, May 26, 2009
Uncle Sam, may I refinance or not?
Many Americans bought a house that they now owe more on than it is worth, and are being crushed by payments and can't sell. Obama has come up with some solutions, one of them being The Home Affordable Refinance plan: here is the scoop~
While mortgage rates are now at historic lows, many homeowners with mortgages owned by Fannie Mae or Freddie Mac are unable to refinance their higher-rate mortgages because they have lost equity in their properties due to falling home prices. Under current rules, Fannie Mae and Freddie Mac cannot guarantee a mortgage that exceeds 80 percent of the home's value. The Home Affordable Refinance plan removes this restriction, allowing certain homeowners to refinance their mortgages.
A homeowner qualifies for this refinancing if:
The property is owner-occupied and the existing mortgage is current
The existing mortgage is owned by Fannie Mae or Freddie Mac
The new mortgage balance will not exceed 105 percent of the home’s current value
The mortgage balance must not exceed $729,750 for single-family homes
The plan runs until June 1, 2010.
If you think you qualify, call your lender!
While mortgage rates are now at historic lows, many homeowners with mortgages owned by Fannie Mae or Freddie Mac are unable to refinance their higher-rate mortgages because they have lost equity in their properties due to falling home prices. Under current rules, Fannie Mae and Freddie Mac cannot guarantee a mortgage that exceeds 80 percent of the home's value. The Home Affordable Refinance plan removes this restriction, allowing certain homeowners to refinance their mortgages.
A homeowner qualifies for this refinancing if:
The property is owner-occupied and the existing mortgage is current
The existing mortgage is owned by Fannie Mae or Freddie Mac
The new mortgage balance will not exceed 105 percent of the home’s current value
The mortgage balance must not exceed $729,750 for single-family homes
The plan runs until June 1, 2010.
If you think you qualify, call your lender!
Thursday, April 9, 2009
I'm back
So I haven't blogged in 4 months...what is my excuse? Well I took the CFP last month ( please God I hope I passed) and I'm getting married next week....not to mention I've also been fixing up a rental house that my fiance and I bought for $37k, yes that's right $37k= positive cash flow galore. Oh yeah and trying to keep my clients calm and managing my practice, and it seems like the sky is falling. NO IT's not.
So here I am. AGAIN...here we are again...
I'll start off with something simple. Hmmm....
1) If you have bought a house in 2008 and wait they just extended it to dec 2009, you should check out this link - keep in mind it does have to be paid back.
2) You can still fund your 2008 Roth IRA until April 15th, that is $5,000 or $6,000 if you are over age 50. What are you going to buy in your Roth IRA, do you think they're might be some good buying opportunities?
3)
That's all I got for now, stay tuned.
So here I am. AGAIN...here we are again...
I'll start off with something simple. Hmmm....
1) If you have bought a house in 2008 and wait they just extended it to dec 2009, you should check out this link - keep in mind it does have to be paid back.
2) You can still fund your 2008 Roth IRA until April 15th, that is $5,000 or $6,000 if you are over age 50. What are you going to buy in your Roth IRA, do you think they're might be some good buying opportunities?
3)
That's all I got for now, stay tuned.
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