Riding the Wave: How the Smart Money is Investing in 2024
Riding the Wave: How the Smart Money is Investing in 2024 After an above average year for markets in 2023, investors are looking for signs of what 2024 has in store. They have many factors to consider, including the growing debt level, the rate of GDP growth, and the upcoming US elections. With all of…
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Increasingly Creative Scams
Remember the smooth attorney representing a Nigerian prince, who wanted you to help him launder millions of dollars? All you had to do was send him a few thousand bucks and before long you would be receiving bales of hundred dollar bills in the mail. Would that today’s scams were so easy to spot. With…
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New Highs. Now What?
New Highs. Now What? We’re all reading headlines telling us that the stock market has reached all-time highs, something that never happened in 2023. Many investors who have a worrisome mindset will think that means that there’s a high likelihood that we’ll see a downturn in the near future. The markets have nowhere to go…
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Taxes on the Horizon
Taxes on the Horizon Every year, taxpayers and financial professionals brace for a new round of changes to the tax laws, and it’s a huge understatement to say that constant fiddling with how we are taxed makes planning far more difficult than it should be. To make things even more complicated, the more recent tax…
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Taxes on the Horizon
Taxes on the Horizon Every year, taxpayers and financial professionals brace for a new round of changes to the tax laws, and it’s a huge understatement to say that constant fiddling with how we are taxed makes planning far more difficult than it should be. To make things even more complicated, the more recent tax…
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Wage Growth vs. Inflation
Wage Growth vs. Inflation The reason we have inflation is that, in this tight labor market, workers are demanding higher pay and they’re getting outrageous raises. Right? Actually, the numbers show that, even though there does seem to be a shortage of workers in a number of industries, employers are still getting a bargain with…
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Working Hours
Working Hours American workers typically get fewer paid vacation days than their counterparts in other countries—and, indeed, there is no federally-mandated number of paid vacation days in the American business ecosystem. But another way to measure the ‘workaholism’ of a country’s working population is the number of hours they work per week or year. The…
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Solar Credits and Pitfalls
Solar Credits and Pitfalls Chances are, you’ve been inundated with offers to install solar panels on your house, where the advertisements, fliers and email messages tout generous tax benefits and zero-cost electricity. Whenever you see aggressive advertising, there is usually a catch somewhere. So what is the truth about solar tax credits? The recently passed…
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Backdoor Loophole
Backdoor Loophole Maybe this financial planning strategy is a loophole, and maybe it should be closed based on current tax policy. But the recent tax act, and several previous ones, failed to prevent people from making so-called ‘backdoor’ Roth IRA contributions. The strategy is a workaround, around the fact that the IRS says that individuals…
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Rediscovering Budgeting
Rediscovering Budgeting When millions of Americans leave work, they also leave behind the comforts of a paycheck. Suddenly, in retirement, they are exposed to a chore that they last experienced in their 20s and 30s—managing a budget that might feel tight. Chances are, it was not a pleasant experience back then, and they are not…
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The Return of Local Manufacturing
The Return of Local Manufacturing Some economists have suggested that the global economy made a significant shift due to the rippling effects of the ongoing pandemic, which exposed some of the risks of the way manufacturing has been conducted for the past 20 years. At issue is globalization, which can be broadly defined as wealthy…
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Generous Americans
Generous Americans The ongoing humanitarian crisis in Ukraine has brought out the charitable in all of us; people around the world have been donating to relief organizations who are providing food, clean water and shelter to people who have been bombed out of their homes. Overall , the U.S. citizens and government have provided by…
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Look Less, Sleep Better
Look Less, Sleep Better The recent spate of choppy markets (up one day, down the next, up the next) has been accompanied by some articles suggesting that the fewer times we look at the markets, the less risky they seem to be. And you know that to be true based on recent experience. In late…
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Bear or no Bear? Does it Matter?
Bear or no Bear? Does it Matter? In U.S. stock market history, bear markets—defined as a drop of 20% or more for a broad market index—happen roughly every four years and eight months. With a couple of recent down days in the markets, we may be in the early stages of a new one. Or…
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Riding the Bitcoin Rollercoaster
Riding the Bitcoin Rollercoaster If you’re looking for a lot of excitement in your investment portfolio, and enjoy the panic-inducing roller coaster of rapid gains and vertiginous drops in value, consider Bitcoin. Over the last year, the coins have been valued at $30,000 last February and last July. They’ve been valued at more than $60,000…
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War and the Casino
War and the Casino Well, it’s happening. After all these months of troop buildups and all the warnings that Russia intended to move into the sovereign nation of Ukraine, and all the denials and hope that war could be averted, the invasion has begun. For the second time since 2014, Russia is using its army…
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Tax Code Anomalies
Congress is getting ready to revise the U.S. tax code once again, and you can bet that the final version won’t be subtracting any pages from a document that now contains nearly 10,000 selections and two million words. Over the past 10 years, alone, the tax code has been amended or revised over 4,000 times,…
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Will Social Security Go Bust?
You may have read that the Social Security Trust Fund is due to be depleted in 2033, a year earlier than previous projections. This sounds alarming, except for several caveats. First, the projected date of depletion has been in the 2035 range for the past decade, so this shift is really nothing new—or particularly alarming. …
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Tax Proposal Consequences
Despite the alarmist articles you might be reading in the press, most people won’t be affected very much, if at all, from the tax proposals that are percolating through Congress. If the bills pass in their current form, then individuals who make less than $400,000 a year won’t see any increase in their ordinary income…
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US Graduation rates then and now
U.S. Graduation Rates Then and Now Americans recently celebrated a new high school graduating class, and the good news is that a higher percentage of people are earning at least a high school diploma than ever before. Consider that in the year 1899-1900, only 6.4% of students made it all the way through high school,…
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Down stocks in an up market
Down Stocks in an Up Market We can probably all agree that 2020 was a unique investment year, with the pandemic ravaging the economy, reducing travel and even removing the normal commute to the office—and at the same time delivering above-average 15.76% returns on the S&P 500 index. But not every company sailed through the…
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Life Insurance in the Age of COVID
Life Insurance in the Age of COVID One aspect of the current pandemic that nobody seems to be talking (or writing) about is the impact of those hundreds of thousands of COVID deaths on the life insurance industry—and on policyholders. A recent panel discussion using actuarial data estimated that if the current pandemic were to…
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Gambling vs Investing
Gambling vs Investing The financial media took a brief break from predicting everything that will happen in 2021 (don’t laugh; it’s their yearly habit) to bring us the engaging story of how masses of small amateur investors managed to bid the share prices of three largely-unprofitable companies—GameStop, AMC Entertainment Holdings and Blackberry—up nearly 1,000 percent,…
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Where to Look for Inflation
Where to Look for Inflation Conventional economics tells us something that would seem to be obvious: when the government creates more money, there is more money available to buy things, and therefore the prices of things rise—and we get inflation. For some reason, this logical sequence of events seems not to be happening today. The…
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Social Security Trust Fund Woes
Social Security Trust Fund Woes The changes in Social Security benefits and taxes for 2021 were a bit controversial. Benefits will rise 1.3% this year, which is not expected to allow beneficiaries to keep up with increases in the cost of living. Meanwhile, the tax withholdings have risen faster than inflation; for 2021, workers will…
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New Shopping Habits
New Shopping Habits The pandemic has changed our shopping habits, but how? A recent study by the consulting firm McKinsey & Co. shows some obvious—and not-so-obvious—changes in consumer behavior due to the Covid-19 economy. Let’s start with the obvious. The report says that physical distancing and stay-at-home mandates have nudged more people to shop online. …
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Gold Run
Gold Run While all eyes are on the stock market’s inexplicable rise during a severe economic recession, another investment option has provided a very entertaining ride. The price of gold broke its all-time record value, rising almost 30% in value this year while breaching the $2,000-an-ounce barrier. Then, abruptly and unexpectedly, gold suffered the biggest…
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Falling Fund Fees
Falling Fund Fees Most investors never see the expense ratios of their mutual funds and ETFs, but financial planners know that those costs add up, and typically seek the thriftiest share classes for their clients. That job is getting somewhat easier. A recent industrywide review by the Morningstar fund research organization found that, on an…
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Lower rates, little impact
During times of economic crisis—like today—we read that the Federal Reserve Board has “cut interest rates,” or “lowered the Fed funds rate.” But what does that actually mean to you and me? The chart tells an interesting story; it shows the Fed funds rate—the rate that the Fed charges banks when they take out virtually…
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Who qualifies for the Home Office Deduction?
Who qualifies for the Home Office Deduction? Many people are doing their jobs from home on a sustained basis for the first time in their careers. They have had to set up a home office. Does that mean they can claim a home office deduction, even though they still have a workstation, cubicle or office…
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Instilling Discipline in Your Daily Life
You already know that life is full of distractions, from your phone, to email, to the Internet, to people who stop by to chat while you’re working. Successful people have developed a few tricks to instill discipline in their daily lives. First: keep a schedule. That tells you want you need to focus on and…
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What’s Your Capital Gains Tax Rate?
This is a simple-sounding question that can be, in the real world of tax planning, very hard to answer. The simplest calculation is that, in 2020, under the just-released tax tables, single taxpayers will pay 0% capital gains taxes if their adjusted gross income is $40,000 or below, while joint taxpayers will pay 0% below…
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The SECURE Act: What It Means
A bill entitled The Setting Every Community Up for Retirement Enhancement (SECURE) Act passed the U.S. House of Representatives last May by an overwhelming majority, and it was called the most comprehensive, sweeping retirement security legislation in recent history. A few days ago, the Senate finally passed the same legislation by attaching it to its…
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Protecting Data Analysis
Protecting Data Analysis It’s pretty common knowledge these days that every time any one of us participates in Social Media (and “likes,” “retweets” or “posts,”) and whenever we buy something online, log onto an app or view an ad on our phones or computer, that information is collected, stored—and used. The music you download gives…
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A Recession On Our Minds
How should you invest in a down market? If you want a guidepost, let’s look back to the terrible, traumatic down market of 2008-2009. You’re going through relentless, daily and weekly losses (remember that?), and the feeling at the time was that the global economy had suffered a mortal blow. So you get to the…
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Straight Thinking About ETFs
You probably know that index funds and index ETFs are no longer just popular with financial planners and other insiders. Word has gotten out to the investment public about how difficult it is to beat the market, and how many index funds beat the majority of actively-managed funds—especially the expensive ones. But there’s a persistent…
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Retirement Tweaks
While partisan politics rages everywhere in sight, the U.S. House of Representatives quietly—and nearly unanimously—passed a bill that would reform various aspects of America’s retirement laws. The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was approved by a 417-3 majority of legislators, and the Senate is expected to pass a similar bill…
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What the Past Doesn’t Tell Us
The U.S. stock markets have entered another period of volatility, which reminds us a bit of last December before the market calm of January and February. Does this new bout of volatility mean that cautious investors should get out of the markets? What does history tell us about what to do when the markets get…
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Saving Transportation Costs
Most of us think of the cost of transportation as the monthly payment on our car, perhaps with gasoline prices factored in. But when you add insurance, maintenance, registration fees, taxes and depreciation (that is, having to buy a new car when your current one collapses into repair hell), you may actually be spending thousands…
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The Two Faces of Volatility
Buried in a recent report by Fidelity Investments was some remarkable news. Last summer, the mutual fund and retirement plan provider noted that there were more than a million people with more than $1 million in their 401(k) accounts. Then December hit, wiping out almost 20% of the value of the S&P 500 index, with…
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Habits for Entrepreneurship
Virgin Group founder and self-made billionaire Richard Branson dropped out of school at the age of 16 to start Student Magazine, and later founded Virgin Records—and a few other businesses along the way. Over time and various blog posts, he has recorded some thoughts on how to be successful in business and in life, apparently…
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The Perfect Pundit Interview
Chances are, you’ve already heard or read endless predictions about… everything. The direction of interest rates. Market returns and whether the markets will go down or up. When the next recession will hit. The movements of the cryptocurrency markets. If the market gurus were being honest, they wouldn’t give us definitive answers to any of…
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The Long Bull
You can be forgiven for wondering what all the hoopla was about when, on August 22, the newspapers erupted with the announcement that the current bull run in the U.S. stock market was the longest in history. Wasn’t the day before and the day before that part of that run? The answer is no. The…
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The Secret Recipe for Laziness
For many people, laziness is not a virtue; it is something that has to be overcome with daily habits and willpower. But what about the driven Type A personality who has been told by his/her doctor that the current lifestyle will almost certainly lead to a premature death? How can those people cultivate a more…
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Charitable Contribution Rules: 10 Years in the Making
Ten years ago, the Internal Revenue Service proposed regulations that would define how to value (and prove the actual value) of non-cash donations to charity. The regulations involved things like artwork, jewelry and other possessions whose value is often in the eye of the beholder. Now, a decade later, the Service has issued its final…
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Churning at the Top
Churning at the Top Index investing is boring, right? This seems especially true with the large cap indexes like the S&P 500, which includes big permanent, stable titans of the global economy. Not much changes from year to year, decade to decade. Or does it? In actual fact, the S&P 500 added and deleted three…
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Smartphone Addiction?
Smartphone Addiction? Have you ever wondered how often the average person interacts with his or her mobile device? As it turns out, the mobile research firm Dscout, Inc. has the answer. According to its statistics, the average person taps, pokes, pinches or swipes his/her personal phone an astonishing 2,617 times a day. It adds up…
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Deficit Funding
Deficit Funding Many were alarmed when, on June 5, the good people who run Medicare and Social Security released a report that said that the Medicare program will become insolvent in 2026 and Social Security will face a similar fate in 2034. The Medicare projection is three years earlier than the previous report, while the…
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Why Rebalance?
Why Rebalance? You probably know that your investment portfolio is being rebalanced on a regular basis, but you might not know why. Is it for higher returns? For maintaining the agreed-upon balance of investments that is in your risk tolerance comfort zone? Does rebalancing help manage portfolio risk? The answer to the above is “yes,”…
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Life Formula
Formula for life If you’re looking for a quick list of ways to improve your physical and mental health, you could do worse than follow a list compiled by Bala Afshar, author of The Pursuit of Social Business Excellence, who works as “chief digital evangelist” for the Salesforce CRM organization. His list looks like this:…
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Measuring the Market
Measuring the Market Have you ever wondered what stock market professionals and equity analysts talk about in their spare time? Recently, the Bloomberg website featured a debate about something that is getting a lot of attention recently: the historically high, and still-rising U.S. stock market valuations. People have been willing to pay more, and more,…
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Aging Dilemma
Aging Dilemma Should today’s 70-year-old American be considered “old?” How do you define that term these days? Statistically, your average 70-year-old has just a 2% chance of dying within a year. The estimated upper limits of average life expectancy is now 97, and a rapidly growing number of 70-year-olds will live past age 100. Perhaps…
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How to respond to data breach
How to Respond to a Data Breach You may have read that hackers broke into the Equifax database and stole personal information tied to 143 million people. The hackers accessed people’s names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. They also stole credit card numbers for about 209,000 people…
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Exercise for Life
By now, you’ve probably read about surprising new scientific research that has shown that physical exercise is not—despite what we’ve heard for generations—a very effective weight loss technique. So is there any good reason to hit the gym, or might you as well hang out on the couch? While the weight loss effect has been…
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Our Driverless Future
By now, you’re familiar with at least the concept of driverless cars—a new technology where computers will replace humans behind the wheel, gradually at first, and then all at once ten or more years down the (pun intended) road. But what you probably haven’t seen is a comprehensive review of the interesting social changes a…
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Who’s On Your Side?
Friday, June 9 quietly marked an historic day in the financial services world. On that date, all financial advisors will be required to forego any sales agenda and give advice that would benefit their clients or customers—or, if they decide otherwise, to explain how and why they intend to give advice that instead primarily benefits…
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Longer Lives, Here and Abroad
Longer Lives, Here and Abroad For years, the U.S. life expectancy was among the longest in the world, a natural byproduct of the fact that the U.S. is wealthier, per capita, than other nations. Indeed, a research report in the medical journal The Lancet projects that between now and 2030, women in the U.S. will…
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The Good and Bad of Millennial Finances
The Good and Bad of Millennial Finances Millennial Americans saving their money at a higher rate than their Baby Boomer counterparts at a similar age. Research from the Transamerica Center for Retirement Studies shows that nearly three-quarters of Millennials are saving for retirement at an earlier age than past generations. Half are putting away 6%…
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What a Market Top Looks Like
What a Market Top Looks Like The current bull market in stocks will reach its 8th anniversary this month, and for about the last four years, professional investors and financial planners have been scratching their heads. The markets have gone up and up and up, and we all know that they won’t go up forever,…
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The Employed and the Drop-Outs
The Employed and the Drop-Outs Headlines told us that the U.S. economy added 178,000 jobs in November, dropping the unemployment rate to 4.6%—the lowest level since August 2007, and surely an improvement over the 10% rates of the Great Recession. Those numbers represent great news, and indicate that the country is in strong shape as…
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Preliminary Tax Forecast
Preliminary Tax Forecast Many of President-Elect Donald Trump’s policy proposals are too vague to analyze, but one area where he has been clear is on reforming our tax system. Here’s a quick primer on the changes that you can expect to be introduced to Congress in the coming year. 1) A shift from seven…
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Beverage of Choice
Beverage of Choice Which is America’s most popular alcoholic beverage: beer, wine or liquor? The Gallup organization found that beer is America’s choice when it comes to alcoholic consumption, and that has generally been true since the polling company has been asking the question. Today, 42% of Americans answered “beer” when asked which beverage they…
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Can I trust the return calculation on my Brokerage's website?
In short, no! This may surprise you, and it surprised me when I discovered it. I stumbled across the issue several years ago. On August 15, 2012 I invested $5,000 in a mutual fund at Fidelity. On December 31, 2012, this position was worth $5,237.47. In doing the math, this would reflect an increase of…
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Riding the coaster
With the benefit of hindsight, we can see that it would have been a bad idea to sell your stock holdings after the Brexit vote; you would have locked in a 5% to 10% loss in a market that eventually trended upward to new record highs. The same is true of the aftermath of the…
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Cost of living
What is a dollar worth? If you answered that it’s worth a dollar, you must be living in Illinois. A research report by U.S. Bureau of Economic Analysis found that the prices for a particular basket of goods and services—food, transportation, housing and education—are higher in some states than others. Illinois came in at almost…
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Can I trust the return calculation on my broker’s website?
In short, no! This may surprise you, and it surprised me when I discovered it. I stumbled across the issue several years ago. On August 15, 2012 I invested $5,000 in a mutual fund at Fidelity. On December 31, 2012, this position was worth $5,237.47. In doing the math, this would reflect an increase of…
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Are Brexit Fears Overblown?
In the wake of the so-called “Brexit” vote in the United Kingdom, and the possibility (though not the certainty) that the U.K. will leave the European Union, you’re likely reading a lot of alarmist stories about the vote’s impact on the U.S. and your portfolio. Don’t believe half of what you read. Here are some…
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Not So Powerful Powers of Attorney
Not-So-Powerful Powers of Attorney Everybody should have a power of attorney—that is, a legal document that gives a designated individual the right to act on their behalf when making financial decisions. The power of attorney is most often used by adult children to make decisions on behalf of aging parents when they are no longer…
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New Guidelines, better advice?
Most people think that the Securities and Exchange Commission (SEC) regulates the investment markets and providers of investment advice, and that the Financial Industry Regulatory Authority (FINRA) regulates the Wall Street sales agents. But in fact, when it comes to your retirement plan, like a 401(k) account, the chief regulator is actually the United States…
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Brexit Aftermath
Welcome to Brexit Yesterday’s vote by the British electorate to end its 43-year membership in the European Union seems to have taken just about everybody by surprise, but the aftermath could not have been more predictable. The uncertainty of how, exactly, Europe and Britain will manage a complex divorce over the coming decade sent global…
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What’s Riskier Than the Riskiest Stocks?
Any seasoned investor will tell you that buying one stock is riskier than buying a basket of stocks. The underlying concept is diversification—the idea that the movement of the shares of many different companies, taken together, will be smoother than the trajectory of any one of them. But the ETF market has managed to create…
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Beware the bogus IRS
Most people have seen bogus emails purported to be from the executors of the estate of Nigerian princes or other obscure foreign notables who want to give them millions of dollars, and sometimes they get bogus calls telling them they can win a lottery sweepstakes or receive debt relief. But apparently one of the most…
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Avoiding the Pain
There’s no question that we experience emotional pain and anxiety when our portfolios are losing money due to market downturns. Behavioral scientists tell us that we feel losses twice as keenly as positive returns. But that doesn’t tell us what we really want to know, which is: other than selling at the wrong time and…
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The Deficit Shrinks Again
You might remember some years back when the U.S. budget deficit was one of the biggest political issues on the campaign trail. Yet this year, after one Republican debate and a lot of jockeying for political position, the subject seems to have gone away. Why? The most probable reason is that the U.S. has retreated…
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You May Be Able to Avoid Higher Medicare Premiums Expected for 2016
Due to the combination of currently low inflation and a variety of rules governing Social Security and Medicare, Medicare Part B premiums are likely to skyrocket as much as 50% in 2016 (2015 premiums are $104.90/month for most beneficiaries). Most current beneficiaries will not be subject to the increase, but those above a certain income…
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Investment Commentary
U.S. stocks were positive during May with small cap stocks moving higher than large cap stocks. Year-to-date through the end of May, Large Cap stocks are up 3.2% while Small Caps are up 3.9%. The market continues to teeter on the back of mixed economic data. New home sales and construction has continued positive movement…
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Donor-Advised Funds for Charitable Giving
A Donor-Advised Fund (DAF) provides opportunities for various strategies when it comes to charitable giving. The basic concept of a DAF is that it’s a separate account, that in some cases can be invested, and is specifically held for charitable giving. All contributions to this fund must be used for charitable purposes to any eligible…
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What's Next For Illinois?
The Illinois Supreme Court recently ruled that the state’s 2013 pension overhaul was considered to be unconstitutional according to the Illinois constitution. This is a major blow for the efforts of many politicians attempting to chip away at the state’s estimated $111 billion pension shortfall, which is one of the largest deficits nationally. It is…
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The S&P and 2014
As annual reviews roll around for 2015, advisors around the country have the task of explaining how their portfolio strategies lagged so badly against the S&P 500 last year. For most truly diversified portfolios you would realize a return less than 5% for the year. History continues to prove that diversification rules the day and…
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The Future of Social Security
Social Security’s future solvency has become one of the most commonly-discussed issues in retirement planning—and for good reason. Gallup polls show that an estimated 57% of retirees rely on Social Security as a major source of retirement income—a number that has held steady since the early 2000s. But when Generation X and Y individuals plan…
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State of the Union 2015
Earlier this week, President Obama took to the podium to deliver his penultimate State of the Union Address. Every president announces a variety of initiatives and proposals for their year in office. However, for the first time in his presidency, Obama delivered his address to an auditorium of new Republican control of Congress. In case…
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Relative Prosperity
Over the last several months, many pessimists have discussed how slow the economy is growing on the heals of one of the greatest recessions in the history of the markets. Maybe some of these headlines sound familiar. Greece Has Defaulted. Europe On The Brink of Recession. America’s Economic Crisis: the Fiscal Cliff. With each…
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Election Returns
Now that the midterm elections are safely behind us, a lot of people are wondering how politics will impact their investment returns. The conventional wisdom is that divided government–where one party holds the White House while the other controls the House, the Senate or both–is good for the markets. But is that true? While each…
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Volality and Long-Term Investing
Professional investors know something that most people find impossible to believe: that the threat of volatility (ups and downs in the markets) is by far the best friend of the long-term investor. Why? Because over the long term, stocks have provided returns far higher than bonds or cash. If it weren’t for the occasional volatility,…
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Student Loans Impact the Next Generation
A recent study by the CFP Board shows that student loans are impacting parents ability to pay for their children’s college educations. Nearly half (47%) of parents in the United States had to borrow in order to get their own education. Of those parents, nearly 33% are still paying back their own loans and 15%…
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Looking Towards the Next Generation
For decades, financial planning has been considered a service that meets the needs of a generation that is now moving into retirement and beyond. The industry was built around traditional practices that met the needs of the largest generation in history: the baby boomers. In today’s market, a generational shift is already occurring that will…
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Should we worry about Social Security?
In a recent Marketwatch article, writer Andy Landis provides an overview of the most recent Social Security Board of Trustees report which dismisses many rumors about the depletion of Social Security over the next 20 years. In July 2014, the board gave its annual report which brought about some interesting findings. Social Security currently has…
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Who Should Investors Turn to For Financial Advice?
In a recent article in the Wall Street Journal, the writer compares and contrasts the different training and credentials surrounding financial brokers, advisers and planners. It is important for investors to understand the professional standards and practices that come with each title. The most important point is that investors should interview investment professionals just…
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Don't Fear the Correction
At of the end of June, the Standard & Poors 500 index has completed 32 full months without a correction of 10% or more. We are living in a remarkably long bull market; the average time span without a full-blown correction is just 18 months. Since the last correction in September of 2011, the S&P…
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Affording Retirement
What are the factors that you find in those fortunate people who are on track to funding an affordable retirement, vs. those who are not? An ongoing study by a mutual fund organization, drawing on data from 4,100 working adults age 18 to 65, found that the answers might be more simple than you think.…
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The Pros and Cons of Target-Date Funds
In a recent article from Advisor Perspectives magazine, Wade Pfau, a professor of retirement income in the Ph.D program at American College, tackles the pros and cons of target-date funds for investors. Target-date funds (TDFs) are meant to serve as a default investment option for investors who are unable or unwilling to manage the investment…
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How Much Will You Spend in Retirement?
How much are you going to spend in retirement? What once seemed like a simple question has become incredibly complicated in recent years. Why? First of all, a diminishing number of people actually plan to leave work and embrace leisure on a full-time basis, and those who do seem to be doing it later than…
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Your Tax Receipt
As tax day has come and gone, have you ever wondered what Uncle Sam will do with those tax dollars? How will the government allocate your contribution to the overall budget? Recent research shows that tax dollars are divided a number of different ways. Your Social Security payments are easy; they go to pay Social…
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Are HSAs right for you?
In a recent article from Financial Planning magazine, Donald Korn writes about the thriving low-deductible plans under Obamacare. When the Affordable Care Act was signed into law four years ago, it seemed that the new law would all but bring an end to health savings accounts (HSA). Similar legislation in Massachusetts, has caused a dramatic…
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Should You Delay Social Security?
In a recent article from the Wall Street Journal, advisors debate the benefits of retirees delaying Social Security until age 70. Do you accept a smaller amount by choosing benefits at the first year of eligibility-age 62? Or do you defer until age 70 and receive the maximum payment based on your salary history? The…
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What about myRA?
Chances are, you have heard about the new myRA retirement savings program that was proposed by President Obama during his State of the Union speech. But what is it? And how does it relate to the array of other retirement savings options you already have (i.e. Traditional and Roth IRAs, 401(k) and/or 403(b) plans)? The…
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Has a Correction Started? Does it Matter?
So far in 2014, the U.S., Europe and Asia markets have dropped due to speculation and fears surrounding the stability of the global economy. This market downturn was enough to cause pundits and investors to ask whether we are now in the early stages of a bear market or, indeed, if the past almost-five years…
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A Year To Remember
The U.S. stock market punctuated an extraordinary year with gains on the last trading day, moving many of the American indexes to record highs on the final trading day for only the sixth time in history. Despite all the uncertainties that we faced, people will look back at 2013 as one of the most profitable…
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Let the Taper Begin
The Federal Reserve Board has made its long-awaited announcement that it will begin to scale back (“taper,” in WallStreetSpeak) its QE3 stimulus program. The last time the Fed even mentioned starting to taper back, last Fall, global stock markets and bond investors panicked and sent the markets reeling. Now, the Fed says that instead of…
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Healthcare Plan Transition
The Affordable Care Act (ACA) has received its share of bad publicity recently with the complications of the federal exchange website for people who need to sign up. The original roll out in October was not as successful as planned and continues to be a work in progress as the initial deadline of December 31…
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How You Probably Won't be Impacted by Expiring Taxes
In a recent article by Inside Information, Bob Veres attacks the topic of expiring tax credits at the end of the 2013 calendar year. Undoubtedly, you’ve heard or read about the estimated 57 tax deductions scheduled to expire on December 31 unless Congress chooses to extend some of them. As it stands now, these 57…
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Obamacare Impact
A recent article by Forbes features the Manhattan Institute research surrounding the impact that the Affordable Care Act (“Obamacare”) will have on future health insurance premiums across the country. This comprehensive survey of 49 states conducted an analysis on premiums under Obamacare for people who are shopping on their own in the individual marketplace for…
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MissingMoney.com
While researching recently, we discovered MissingMoney.com. What they provide is a service that assists you in thoroughly searching participating states to find your family’s missing, lost or unclaimed property, money and assets. This website is officially endorsed by the National Association of Unclaimed Property Administrators (NAUPA) and all participating states and provinces. They allow you…
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Why Investors Need a Little Pain in Their Portfolios
Financial Planning Magazine came out with an article of interest highlighting “why investors need a little pain in their portfolios.” Behavioral finance has consistently shown that investors have a tendency to act predictably irrationally. We learned from the last two stock market downturns since the year 2000 that money has flowed out of stock…
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Interest Rates are Trending Up. So What?
If you haven’t already, you will soon be hearing alarming reports of the “dramatic rise of Treasury bond rates” that this will have a disastrous effect on bond owners and the economy in general. Higher interest rates! More inflation! Lower economic growth! More competition for the stock market, and therefore lower stock prices! If you…
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Mark Berg Quoted in US News & World Report
Mark Berg was recently quoted in an US News & World Report article. The article identifies alternative solutions to consider for education savings flexibility. He discusses how 1) Coverdell Education Savings Accounts can provide for greater flexibility when evaluating tax-advantaged plans, and 2) in rare circumstances, Roth IRAs can make sense for parents who…
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College Checklist
Are you planning to send your child off to college? Then you’ve probably bought the books, comforters, towels, snacks, cellphone and other supplies that a new freshman typically needs. You probably gave them some sage advice about being on their own. You might have gotten them a credit card, helped them join some student clubs…
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Teaching Your Kids the Value of Money
Bob Veres, from Inside Information, shares some ideas on how we can better educate our children on the concept and uses of money in today’s world starting at a young age. While this may not be currently applicable to you, Bob outlines an age-appropriate curriculum for developing money mastery in your children that may come…
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Frontline for Fiduciaries
Many have recently learned for the first time that corporations have offloaded the decision-making for retirement portfolios on their (not always financially sophisticated) employees, but provided virtually no guidance. The 2008 market crash wiped out investors who had naively put their entire retirement savings in stocks and then sold out at the bottom in a…
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Mark Berg Quoted in the Chicago Tribune
Mark Berg was recently quoted in an April 21st article in the Chicago Tribune newspaper. The article identifies sound financial reasons for contributing to an IRA. The article discusses how 1) IRA’s provide an opportunity to further grow your retirement nest egg and diversify retirement assets, 2) you can generally participate as long as you…
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First Quarter Review - Strong out of the Gates
The investment markets offer no guarantees; you lay your money on the table and take your chances. In the first quarter, those who placed their bets that U.S. stocks would enhance their wealth–plus, of course, those of us who stayed the course with our investment portfolios–were rewarded handsomely. When you look at global returns, it…
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Estate Planning Relief
The conventional wisdom among the attorneys and CPAs who plan for estate taxes, right up until the new Fiscal Cliff legislation was signed into law, was that the $5 million exemption was probably too good to be true. Couples could gift up to $10 million to their heirs without paying any gift taxes, and if…
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2013 Tax Law Changes: What Affects You Personally?
On January 2, 2013 President Obama signed into law The American Taxpayer Relief Act of 2012. This was robust legislation, in some ways temporarily and in other ways “permanently” addressing various tax issues. The following is a summary of some highlights of the 59 page bill that might affect you. This will be followed in…
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2013 Tax Law Changes: What Affects Your Business?
For small and large business owners alike, clarity was brought to several areas of taxation that have been in limbo. The following is a summary of the highlights. The payroll tax holiday for the Social Security tax was allowed to expire. Consequently, the employee-share of OASDI taxes reverts back to 6.2% (from 4.2%); 50% first-year…
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2013 Tax Law Changes: What Affects Your Estate?
For estate, gift, and generation-skipping transfer tax purposes, for individuals dying and gifts made after 2012, there is a $5 million exemption (adjusted for inflation). The top estate, gift and GST rate was increased from 35% to 40%; The 2010 Tax Relief Act introduced the “portability” rules into the federal estate transfer tax system. Under the portability rules,…
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Mark Berg Quoted in U.S. News & World Report
Mark Berg was recently quoted in a November 21 article in U.S. News & World Report. The article discusses how to maximize the federal tax benefits of 529 plans by 1) scheduling regular contributions 2) combining federal tax benefits with state tax deductions 3) not limiting investments during poor stock market years and lastly 4)…
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Hoan Taussig Receives Award
Timothy Financial is proud to announce that Hoan Taussig has been named a 2012 FIVE STAR Wealth Manager, which was published in the November 2012 issue of Chicago Magazine. After a thorough review of criteria ranging from Customer Service, Integrity, Knowledge/Expertise, with adjustments to reflect inputs from peers, regulatory compliance reviews and Blue Ribbon Panel…
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A Time to Give Thanks...
At Timothy Financial Counsel, we have a lot to be thankful for. Most of all we are thankful for our families. Our families always come first whether it’s baseball games, piano recitals or preschool graduations. We are also thankful that we can give back to the community. Timothy Financial Counsel is proud to be a…
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A Tax Advantage for 2012 Investment Income
For 2012, the federal income tax rate on long-term capital gains and qualified dividends is 0% for taxpayers in the 10% to 15% federal income tax rate brackets. This applies to you if your taxable income (including long-term capital gains and qualified dividends) does not exceed $70,700 if you are married and filing jointly ($35,350…
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The One Percent Solution
With this week’s Presidential and Congressional elections, you might sometimes get the idea that certain voters line up reliably behind certain policies. In fact, the biggest stereotype has been that people with above-average wealth (i.e., the “one-percenters”) never want to pay any taxes. But in the real world, business leaders are trained to apply business logic…
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Sandy's Impact
People living in New Jersey, New York city and surrounding areas are recovering from under the worst storm ever to hit the U.S. north of the Carolinas. The rest of the country has been looking at terrible pictures of the flooding and property damage caused by Hurricane Sandy. Continuing power outages for more than 8 million…
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EPS Roller Coaster
One of the most common ways to measure the health of the stock market is to calculate the earnings per share of the stocks in an index–like, say, the S&P 500. The mathematics is not hard: you simply divide each company’s after-tax profit divided by the number of shares outstanding. Theoretically, this tells you how…
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The Value of Estimates
In this age of ever-expanding technology, the data-gathering process for a financial plan has gradually become less complicated and intrusive. Computers can now pull the latest values of your 401(k) plan and bank account balances into various evaluative software programs, and update them automatically. We can model future returns on a variety of different portfolio…
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Does QE3 Matter to You or the Economy?
On September 13, Federal Reserve Chairman Ben Bernanke announced that the Fed would undertake a new program “QE3” to stimulate the U.S. economy. But what, exactly, is it, and how is QE3 likely to affect you and the rest of us? “QE,” stands for “quantitative easing,” a term which refers to a simple tool that…
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Buying vs. Renting Revisited
For people of a certain age, who remember taking out a home mortgage at or above 15%, the astonishingly low rates that banks are charging today are a little hard to believe. Mortgage rates have been historically low for years, and they have been trending lower ever since the bottom fell out of the real…
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Over the Cliff
What is this fiscal cliff? Why are economists so frightened of it? The term refers to a sudden change in a lot of different tax policies that is scheduled to take place automatically at midnight on December 31st. As soon as the clock strikes twelve, the Bush-era tax cuts will expire, eliminating the 10% tax…
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"Declutter" Your Portfolio
“Take My Stuff. Please.” is an interesting article in Advisor Perspectives magazine that talks about how investors can “clutter” their portfolios like objects in their home. The author, Mariko Gordon, believes people tend to hold onto investments based on various factors, such as how they feel, instead of deciding if the investment is truly useful…
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"Begging for Trouble"
An interesting article by John Hussman, who runs the Hussman Funds, that provides insight into his management strategy. His belief that companies are over-valued because “Wall Street is quite happy to look at the ratio of prices to near-term earnings estimates and conclude that valuations are satisfactory. But stocks are not a claim on one year…
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Medical Insurance Tax Penalties
After the Supreme Court ruling upholding the recent Health Care Act, everybody is required to buy health insurance. Or are they? People who earn less than $9,500 are exempt from the requirement; above those income levels, you would have to pay a tax that depends on your income level. There is a phase-in of rates…
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How the New Medicare Tax May Affect You
Recent Supreme Court ruling on “Obamacare” (2010 Patient Protection Affordable Care Act) has taken one tax uncertainty off the table. We now know that the new 3.7% “Medicare Contribution” tax is planned for January 1, 2013. What does that mean to you? For 97% of all households–individuals whose current taxable income falls below $200,000, or…
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Do you want to delay wealth transfer to your children?
Several options exist for parents who want to delay the distribution of assets to their children. Choosing the right option should be based on 1) the type of support you want to give your children, 2) how long you want to give that support, and 3) how you want to contribute funds. Here are five…
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Fight for Fiduciary Standard
Powerful House Financial Services Chairman, Spencer Bachus is working on a bill that will hurt small business owners who provide sound financial planning to consumers and who put their clients’ interests first. We should be alarmed and we should be furious that this bill would allow the foxes to rule the henhouse. HR 4264…
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Liquidity does not fix insolvency
In his weekly market comment of June 18, 2012, John Hussman, manager of four Hussman funds, provided a detailed discussion of the origins of the European financial crisis and listed possible solutions. While the stock market likes liquidity – which comes in the various forms with monikers such as QE, Twist, or LTRO – the…
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Savings Income and Retiree Spending
An interesting data point shows the rapid decline of savings income (primarily interest from bank savings) as a percentage of total income in the US. While it is no surprise given the paltry interest offered these days, the data point is interesting given that it is occurring as many boomers are retiring. Prior to the…
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PBS Frontline: Money, Power and Wall Street
PBS recently aired a four part series on April 24 and May 1 about the origins of the 2008 financial crisis. The program did a fantastic job of detailing the history with interviews of numerous decision makers at the time. While there were several interesting themes, the most profound was the philosophical battle between the…
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Bond Anomalies
Here’s a trivia question to startle your friends with. According to International Monetary Fund statistics, what country has the highest government debt levels, compared with its economic output, in the world? You might be inclined to guess troubled or developing nations like the African nation of Eritrea (134% of its 2011 GDP), Lebanon (136%), or…
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Too much information?
Knowledge is power, but is there such as thing as too much information? In this day and age of technology, it’s so easy to get information. Want to know how to replace a laptop screen? Watch a YouTube video. Should you refinance your mortgage? Check out bankrate.com for current rates. Should you invest in a mutual fund…
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Long Term Care Changes
Prudential is exiting the long term care field on 3/31/2012. John Hancock policy owners are realizing a 30-90% rate increase on customers existing policies. What is happening? 1. Insurance companies assumed their reserves would rise at 7.5% per year. That didn’t happen. 2. They had a lower lapse rate. This means that fewer people dropped…
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Compensation causes manipulation of corporate earnings?
Whenever TV pundits talk about investments, you generally hear them mention price/earnings (PE or P/E) ratios as the best way to value a stock, and there is usually talk about earnings estimates and whether a company beat or failed to live up to analyst forecasts. But behind the camera, most investment professionals recognize that a…
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Tips on Applying for Insurance
At a recent informative presentation, Judith Mauer, CEO of Low Load Insurance Services presented some tips on applying for insurance (any type including life insurance and long term care). After going through the underwriting process for the various forms of insurance, she highlighted two items for anyone who is seeking new insurance coverage to consider: Be…
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Behind the curtain of broker firms like Goldman Sachs
In a surprisingly candid opinion piece in the New York Times yesterday, recently resigned Goldman Sachs executive director Greg Smith essentially pulled the curtains opened and showed how Wall Street really works. Smith declared that he was resigning from the large brokerage firm because, in his view, its culture is all about putting the client’s interests last. “To put the problem…
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The last headline of Greek debt?
Most of us have heard way too much about the finances of a relatively small member of the global economy: Greece, and its debt crisis. Recently one economist described the Greek debt default as “the slowest-moving train wreck in history.” But now, the constant parade of headlines may be over. On Friday, March 9, holders of…
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Fiduciary Delay
There is a good chance you missed the article on page C7 of the Wall Street Journal on January 24, but the events discussed caused quite a stir in the financial planning world. As the article stated, the Securities and Exchange Commission has delayed implementing a key part of the Dodd-Frank Act, which required fiduciary…
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Interesting Quote of the Week
An interesting quote by Jean-Paul Kauffmann reminds us that we live in an uncertain world so no amount of technical research can provide an analyst all the right answers: “The economy depends about as much on economists as the weather does on weather forecasters.”
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2011: A Year Worth Sleeping Through
If Rip Van Investor had fallen asleep at the start of the 20th century, and woke up with a yawn 100 years later at midnight, December, 1999, he would have been startled to see that his investment in the S&P 500 had gained more than 10% a year, on average, during his 100-year nap. He…
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Ways to see if your money is safe
An article by MorningstarAdvisor begs the question: “How Safe Is Our Clients’ Money?” We thought you might like some of the insights we found in the article. It highlights the downfall of MF Global, who filed for bankruptcy on October 31, 2011 as a recent example of why broker-dealer firms fail. However, the article argues that despite the…
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An Interesting Time to Be An Investor
When all is right in the world, investors have to make a choice between the steady income gained from purchasing bonds, or forfeit this steady income for the growth potential of stocks. Since the 1950’s, this has been true, but recently, as stock prices have leveled out and Treasury rates have dropped, the U.S.markets have given us something that experienced investors haven’t…
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Congratulations to Hoan Taussig, CFP®
Congratulations to Hoan Taussig on successfully completing the rigorous requirements of becoming a CERTIFIED FINANCIAL PLANNER™ professional. Hoan has been an integral part of the Timothy Financial team for several years but we look forward to her taking on a bigger role in serving our clients. What does the CFP® designation really mean? Many people don’t realize that anyone can…
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Planning for RMDs
One of the strangest laws on the books, when you think about it, is the rule that at an arbitrary age–when you reach age 70 1/2–you have to start taking mandatory distributions (RMD) from your IRA accounts. Of course, that also means you have to stop the tax-deferred compounding on those distributions and pay taxes on…
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Mark Berg: 2011 Five Star Wealth Manager Award
Five Star Professional, a company that provides research and evaluations of a variety of top professionals, recognized Mark Berg and Timothy Financial Counsel to receive the 2011 Five Star Wealth Manager award. The Five Star Wealth Manager Award is given to professionals that have received the highest overall satisfaction score based on feedback from customers, peers, and regulatory…
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Greek Default: Impact on Financial Markets?
Amazingly, the inevitability of Greek sovereign default has really been known for more than a year now but European political leaders have not publically acknowledged that they have received the memo. We have lost count of the short-term fixes they have tried over the past 12 months. Obviously none of them have provided lasting reprieve. …
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News: Sensational or "Sensational"
What do the weather forecast and the daily stock market movements have in common (sounds like an introduction to a bad joke, right)? To illustrate, let me quote a portion from a column I read this week by Vitaliy Katsenelson, the CIO of Investment Management Associates. “Serious business news that lacked sensationalism, and thus ratings, has been replaced by a new…
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The Debt Deals Impact on Seniors
Many Americans are relieved that lawmakers have agreed upon a deal to raise the debt ceiling. These Americans include the seniors whom were worried about their Medicare and Social Security but now believe they can rest assured that the issue has been resolved. But, although a deal has been made, there are still several areas…
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The U.S. Downgrade
By now, you’ve probably heard that the Standard & Poor’s debt rating agency has downgraded all U.S. government debt with more than a year of maturity, from the top AAA rating down to AA+. To put that in perspective, now only 17 countries enjoy the AAA rating on their government bonds. Typically, that means that…
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Investing With Current Inflation
With inflation continuing to rise in today’s economy, how do we best plan clients’ portfolios to combat this issue? There is no surefire way to beat the inflation problem, but there are several strategies which can help defend against the current economic situation. With CPI currently running upwards at 3% and rising, there definitely needs…
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Diversification is Key in Tough Market
The U.S. just recently finally came to terms on the debt deal, but there is another large dilemma to face: the free-falling stock market and growing concerns that have ensued and further curb the already slow economy. Signs of further slow growth have been building. Unemployment remains high, consumer spending is low, and lending is…
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Why Do We Have a Debt Ceiling?
Until recently, the U.S. government’s debt ceiling didn’t get a lot of publicity; it has been raised without fanfare 70 times in the last 50 years. Now that it’s front page news, some analysts are wondering why we have such a thing in the first place. An article in the August 1 issue of The…
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Mark Berg Quoted in Yahoo News
Linda Stern, a writer for Reuters, recently published an article discussing the repercussions of the recently decided debt deal and how it is affecting many Americans and their financial situation. The article was highlighted by Yahoo News and can be found here. Stern begins by addressing the questions that should be raised from the debt…
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Mark Berg Quoted in The Wall Street Journal
One of the advantages of Timothy Financial is our hourly model where clients can call in any time any where with any question and this week is no exception. As the market does cartwheels and somersaults, we’re here to help you navigate the circus. Mark Berg even gave an example to the Wall Street Journal and…
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Further Negotiations for the Debt Ceiling
Chances are, you noticed that Moody’s Investors Service, the credit rating service, has placed the U.S. government’s sterling AAA bond rating on review for a possible downgrade. The reason was clear, but Moody’s spelled it out anyway: there is uncertainty whether Congress will raise the U.S. government’s debt ceiling by August 2. If it doesn’t,…
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Financial Planners vs. Brokers: What's the Difference?
Sometimes it can be difficult to explain the cultural differences between financial planners and wirehouse brokers, especially when many wirehouse brokers give their agents the job title “financial planner”. However, there are very distinct differences. Below is a short explanation of the general differences in nature of fee-only financial planners opposed to brokers. Financial Planners…
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Fixing Social Security: A Complicated Issue
As Congress is currently debating the debt ceiling issue, Social Security is suddenly front page news again. The first thing to understand is that there IS a solvency problem with Social Security. Alice Munnell, Director for the Center for Retirement Research at Boston College University points out that, according to the Congressional Budget Office, the…
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Intelligent Tips for Retirement
We are becoming more aware that a lot of Americans are not financially prepared to fund their own retirement, especially with the recent headlines. The difference between being able to afford retirement and not, can be surprisingly thin if you know the right levers to push. A recent article in SmartMoney magazine illustrates the point…
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U.S. Aggregate Wealth: Making Our Way Back
If you’re curious about how much, in aggregate, U.S. citizens are worth, and how that worth compares to the value in 2007, you can visit The Big Picture and see a variety of charts, created by an organization called The Chart Store. The second set of charts on the web site shows that in the…
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Tax Rates Yesterday, Today, and Tomorrow
We’re hearing a lot about taxes these days, mostly about the need for Congress to raise or lower them, make them more fair or simpler, or perhaps do away with them altogether. If this feels like a familiar discussion, it is. Since the passage of the Tariff Act of October 3, 1913 (which implemented the 16th Amendment…
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Life Insurance: What Type is Best?
The recent market meltdown actually aided the sales of permanent life insurance. Insurance agents are known for promoting permanent life insurance because of its key features such as the savings account supplementing the insurance policy. Safety has been the biggest part of their pitch because of the bond-heavy investing strategy that permanent life provides. Is…
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Banking system: clear as mud
Either wonder how the banking system works? This YouTube video provides a less-than-serious discussion on it, but sadly the humor is probably loss on most of us because it certainly feels like the banking system really does work this way. http://www.youtube.com/watch?v=M_3T-Af57Pg&NR=1
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Roth IRA Conversion
Roth IRA conversions aren’t the news of the day any longer, but they are still a great financial tool for many. Thanks to Obama extending the Bush tax cuts, individuals considering a Roth conversion are paying their “tax dues” at attractively low rates. The pros and cons of a Roth conversion does usually involved a complex…
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See Mark run...
Ever wonder how Mark stays so calm and cool during your hard hitting financial questions? That’s because he sweats it out on the race course. On June 11th, 2011, the 8th annual Run for the Stars 5k will take place in Wheaton and Mark Berg and his family will be competing in the event. The race…
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Another Tech Bubble?
Those of you who watched the LinkedIn initial public offering may have experienced a strange sense of deja vu. The social media company was offered to the public at $45 a share, and an unexpected buying frenzy took the price up 171% on the first day of trading, before the company settled back to just over…
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Debt Crisis Still?
We recently were able to hear David Gergen, a Washington insider, speak at the NAPFA conference in Salt Lake City this month. Among other thoughts about the US debt crisis, he commented on the political workings of the issue. Gergen told the audience that, despite all the bickering, both sides of the aisle see the…
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Is Inflation Fear Valid?
Recently, we’ve been hearing a lot about inflation, and the government statistics released on April 15 didn’t do a lot to quiet the chatter. The government reported that the Consumer Price Index for All Urban Consumers rose to an annualized 2.7% in March, up from 1.6% in February. Troll through the latest batch of YouTube…
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On the Flip Side of Debt
While the U.S. wallows in debt (and suffers the political recriminations that come with it), another country has an astonishing surplus of capital. By the end of 2010, according to an article in the Economist magazine, The Central Bank of the People’s Republic of China had $2.85 trillion in foreign exchange reserves. That figure reached…
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Should we fear US Downgrade?
As an investor, you probably noticed, among the screaming headlines and constant media coverage, that the Standard & Poors bond rating division has threatened to downgrade the credit rating of U.S. Treasury bonds. The U.S. markets dropped 1% almost immediately after the news broke, and the S&P 500 index of large cap stocks finished the…
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Retirees surviving another bear market
A new study by T. Rowe Price draws an interesting lesson on investing: the best strategy to surviving big stock market losses is to cut spending for about three years after bear markets. The study looked at investors who retired on 1/1/2000 with a portolio of 55% in equities and 45% in bonds, taking monthly…
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Some food for thought on inflation
According to a website called The Food Timeline, back in 1916, a loaf of break cost 5 cents, a pound of sugar was 8 cents and a 10 pound sack of potatoes was 27 cents? OK; that was a long time ago, you say? How about 1962? A loaf of bread cost 20 cents, a movie ticket…
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Nuclear fallout from Japan?
Will U.S. citizens face any danger from the fallout from nuclear reactors? Over the next week, you’ll hear exaggerated estimates of the danger. Some news reports are saying that low levels of radiation have been detected as far away as 200 miles from the nuclear plant, but the radioactivity that has been released into the…
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Tragedy in Japan
The news from Japan should, first and foremost, be viewed as a human tragedy of horrific proportions. We extend our prayers to the people affected by the earthquake, tsunami and nuclear reactor crises in Fukushima. The American people are really stepping up to the plate by pledging their support for the humanitarian efforts. The easiest…
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The stock market bounces back...
This month, we observed an unusual two-year anniversary: 24 months from the low point in the global markets, the point of maximum pain and panic following the 2008 economic meltdown and so-called Great Recession. On March 9, 2009, the S&P 500 had fallen to its low of 676, the lowest it had been in 13…
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Retirees getting the 5% IL income tax?
Retirees may start to “feel” the tax pain with the rest of us. The Chicago Tribune reported that John Cullerton (D-Chicago), IL Senate President, suggested that retirement income be taxed at the new 5% rate. Currently, retirement income such as pension funds, social security and 401(k) distributions are not taxed in Illinois. If Cullerton succeeds retirees would experience an immediate 5%…
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The jobs are coming, the job are coming...
Today, March 9, 2011, marks the two-year anniversary of the stock market bottom following the credit crisis of 2008. The official bottom of the recession (per NBER, an ad hoc group of economists that officially determines the peaks and troughs of recessions) occurred a mere three months later in June 2009. Following the official end to…
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Cautious Optimism?
In a keynote presentation in Las Vegas, David Kelly of JP Morgan Chase addressed an audience of financial advisors. His presentation provided a cautious optimism about our economic growth for 2011. The current economic recovery has been slow by historical standards. Usually, economic growth roars back after a deep recession, but the latest numbers show…
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Should you buy funeral insurance?
You may not be aware that we are licensed for insurance. We do this so that we can provide advice on insurance products, though we never have – nor ever will – sell life insurance or any other commission product. However, since we are licensed, we receive dozens of spam e-mail via sold lists of insurance providers, which we don’t mind since it…
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Timothy Financial participates in live discussions
Mark and Kris participate in a free consumer event sponsored by Kiplinger Magazine: “Jump-Start Your Retirement Plan” that provided financial advice via Kiplinger’s online chat room. See the retirement planning questions and the answers provided by financial planners across the nation discussed during the live sessions. January 21, 2011 Live Discussions January 25, 2011 Live…
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Are Fee-Based and Fee-Only Advisors the Same?
I received a link to an article from Morningstar from my good attorney friend, Jeff Van Dyke. Jeff and I have talked over the years about the title of the article, “The Difference Between Fee-Based and Fee-Only Advisors“. I have found that even long-time clients of ours are confused, saying nothing of the public-at-large. For…
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Timothy Financial lauded as successful fee-only firm
Timothy Financial Counsel highlighted in the lead of an article, “The Fiduciary Standard…” originally published in RIA Biz and posted to Forbes.com. The topic centered around whether objective, non-commissioned financial planning is available to middle America. We were cited as an example of an hourly firm that says, ‘Yes it is!’ and we are not alone. There are…
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Roth Conversion Deadline 12/31/10
Given all the attention that Roth Conversions have garner this year, many people are surprised to learn that Roth Conversions have actually been allowed for quite some time now. However, the year 2010 provides the opportunity for individuals/couples with modified adjusted gross income over $100,000 (who were previously ‘disqualified’ from doing conversions) to join in the…
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Retirement Planning for the Distribution Stage
There is a plethoria of information and financial planning aimed at helping people prepare for retirement. In industry lingo, this is the accumulation stage. Max your 401(k) contributions. Consider a Roth conversion. Use tax deferred investment vehicles. However, there is also important planning that needs to be done for the “distribution stage” of retirement, the period…
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Mark quoted in Chicago Tribune
Mark was quote in the Chicago Tribune on an article about DRIPs (dividend reinvestment plan), “Money Down the Drain?” by Carolyn Bigda. Previously a low cost way to own individual company stock by offering small investors an opportunity to buy company stock directly (instead of through a brokerage who would charge trading or account fees), DRIPs have been adding…
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The Importance of Rebalancing Your Portfolio
An article, The Balancing Act: The Importance of Re-balancing your Portfolio, by a fellow NAPFA member – Jim Shagawat, helps explain why consistent rebalancing is so important to your financial success. Timothy Financial has long advocated consistent rebalancing as a critical component to any healthy portfolio. Among other advantages, rebalancing forces you to have the disciplined plan…
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Do elections affect market performance?
These statistics are fun thoughts to chew on, but completely anecdotal. Sound investment decisions should not be made based on just past trends but who knew our ballots affected our wallets in more ways than one. Market Returns from 1940-2008 by Political Party Control (Senate/House/President) 15.3% – R / R / D 10.5% – R /…
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Mark Berg quoted in International Business Times
Mark was recently quote in an International Business Times article about refinancing and how difficult the process has become – even for stellar borrowers. Al Yoon’s “Special Report: What’s it take to get a loan in this town?” discusses how far the pendulum has swung from the easy credit days of the ‘no income, no…
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Timothy Financial Named 2010 5-Star Wealth Manager
We are thankful that we have been named a 2010 FIVE STAR Wealth Manager, which will be published in the November 2010 issue of Chicago Magazine. Unbeknownst to us, we had been recommended by one of our clients. The process involves the independent firm QMI Research to administer a survey by mail and phone, to…
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SEC Report on May 6th Flash Crash
A report by the SEC (Securities and Exchange Commission) indicated that the May 6th Flash Crash was caused by a large, automated trade by one company during a time when the market was already under stress. Although the SEC report does not name the company, other media has identified the company as Waddell & Reed Financial Inc. of…
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Risk Tolerance - Human Nature?
Suddenly, in the past few weeks, the markets have looked a lot scarier to a lot of nonprofessional investors. Why? The answer probably has something to do with human psychology. An Australian company called FinaMetrica has been giving lay consumers a scientifically-designed risk profile questionnaire for the past 12 years, helping financial advisors evaluate whether…
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Consumer Webinar Series
A free consumer webinar series is being offered by the National Association of Personal Financial Advisors. It is designed to help consumers across the country better understand personal financial matters. Each session will be led by a NAPFA-Registered Financial Advisor and are for educational purposes only so you know you’re getting expert, conflict-free advice. The sessions are web-based so…
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Do it yourself or hire someone? Time vs. Money
Are you planning on doing a project yourself because you think it will be cheaper? Think again. An article entitled “Your Money or Your Time” in the magazine Real Simple jumped out at me because it explores and explains this dilemma in a scientific fashion. The article explained why three factors hinder you from making a…
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Saving for college
August: The time of year that you see extra-long twin sheets on sale, cars jam packed with stuff traveling down the highway, and now smaller and smaller laptops being bought at Best Buy. Yes, August is the time for college freshmen to embark on a new stage of life called “independence” or at least “live outside of mom…
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Leave your cash to the ones you love
Most people understand that a well designed estate can help them leave their loved ones with the most assets possible. They go through great lengths to develop a strong trust or will, get expensive life insurance policies or jump through hoops of other complex vehicles. And when it’s signed and notarized, clients sit back and relax, mistakenly…
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Why real estate investing is not as "easy as it sounds"
Now that the market is flooded with “low” prices on real estate, people are looking for that great deal. Buy low, rent or sell high and make quick money. Seems easy, right? Read this excellent article, “Real Estate Horror Tales” by Caren Chesler in Financial Advisor Magazine to find out why real estate is not…
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Finding an advisor
Have you ever wondered what the difference is between an investment representative, financial advisor, financial planner, wealth manager, or investment broker? Most people who use these titles claim to provide financial advice, but the similarities may stop there. The first step is to ask if your advisor has a fiduciary duty to you. Some advisors are only held to…
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Gold: Another market bubble?
We get asked about investing in gold from time to time and our advice is usually the same (see our 11/20/09 blog). A recent article by The Economist entitled “Gold: Store of Value”, helps explain why the “value” of gold is based on uncertainty of the major economies and currencies, not sound investing principles. The article points out the following ideas listed…
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Possible Extension for Charitable Rollover
Congress has made moves to retroactively extend the IRA charitable rollover for 2010. The rollover would allow IRA owners age 70 1/2 and older to make tax-free charitable gifts of up to $100,000. The IRA charitable gift could satisfy your annual minimum required distribution. A great resource for more information on gifting to an educational…
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Estate Planning Involves Multiple Decisions
You’ve drawn up wills. You have Power of Attorney assigned. You may even have trust documents. You’re all set and don’t need to do any more planning, right? Not necessarily. If the uncertainty of the estate tax laws (set to expire this year unless Congress acts to repeal or change it -again) teaches us anything, it should…
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US News & World Report quotes Mark Berg
Mark Berg was recently interviewed by Emily Brandon for a US News & World Report article on the first steps of good retirement planning for new graduates as they become employees. Start Early. Money you tuck away for retirement in your 20s has decades to compound. Make savings automatic, beginning with your first paycheck, and try…
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Estate Tax Planning May Affect Middle Incomers Too
Estate tax law has been a hot topic this year for the financial industry, but not many individuals are concerned about it because they assume it is a “rich person’s” problem, not theirs. Congress let 2009 finish without taking any action to address the expiring estate tax law. No action in 2010 by Congress would mean…
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Retirement Planning: New Decisions to Make
The fastest-growing age group is now the “100-plus.” Their numbers have tripled in the last 20 years, jumping from 37,000 in 1990 to more than 96,000. The Census Bureau estimates that by 2040, American centenarians will number 580,000. Many of us are now blessed with this longevity. Retirement no longer just means a beach home…
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Annuities
Annuities sound like a great idea – “guaranteed” returns with income for life – but in reality annuities have yet to live up to the hype and are extremely complex products. 1. Unfavorable tax treatment. Any growth is ordinary income (not capital gain), and you can never take a loss. 2. Annual Expenses. You can find some…
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COBRA subsidy extended
In April, Congress passed and the President signed the Continuing Extension Act of 2010 which extends COBRA subsidy eligibility period for the third time for individuals who are involuntarily terminated on or before May 31, 2010. The subsidy covers 65% of the cost of COBRA coverage. It also extends eligibility retroactively from the previous deadline of…
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Mark quoted in The Fiscal Times on asset allocation
“What we find is that people don’t really understand what asset allocation means,” says Mark Berg, CFP, national board member of the National Association of Personal Financial Planners and the president of Wheaton, Ill.-based Timothy Financial Counsel Inc. See the full article “Asset Allocation in Hard Times” by Data Dratch in The Fiscal Times that…
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Reaction to 5/6/10 Stock Market Plunge
At 1:40 PM (CST), something unusual occurred: I watched the stock market ticker. Most of you know that we have a long term perspective and watching the day to day market fluctuations, much less the intraday movements, has little to no appeal to us. Nevertheless, I happened to be looking up the current price of…
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Potentional Roth conversion missteps
Before you consider doing a Roth conversion, carefully consider the following issues first: 1. If you are 70 1/2 or older, RMD’s for the current tax year are required to withdrawn before a conversion takes place. If this not done in advance, it will be considered a failed conversion. 2. If an annuity is held…
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Wash sale rule - be careful and you can avoid it
Most people know that if you sell a security for a loss, you can use this loss to offset capital gains as well as up to $3,000 of ordinary income (only after you have no cap gains). However, the The Wash Sale Rule applies if you buy sustantially identical securities within 30 days. But of course, like most IRS…
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Planning for retirement: not just about money
Are you dreaming of Florida beaches, secluded fishing lakes or endless rounds of golf for your retirement? Warm weather and quiet time do sound great, but do 15-20 years of endless golf sound as great? We find that some people may be diligently planning and saving for retirement but have never given a thought as to what…
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Is your mortgage really underwater?
This is a challenging situation that many are facing right now in America. Even families who ‘followed the rules’, putting 20-30% down on their home are falling into this if they did it at the wrong time (peak of the housing market). Being underwater means their home will no longer sell for what the mortgage…
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HSA vs. medical flexible spending account
Health savings accounts are similar but different to medical flexible spending accounts. Health savings accounts (HSA) are connected to high deductible health insurance policies typically owned by individual whereas medical flexible spending accounts (FSA) are offered through an employer. While they are offer the same tax benefit (pre-tax deduction), the one significant difference is that HSA funds…
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Support Kohl provision and help curb consumer abuse
Do you know that our CFP certification means we adhere to a strict code of conduct that requires us to put our client’s best interest first and foremost (even above our own)? Seems simple, right? However, there are many planners out there who do not adhere to this code of conduct (the fiduciary standard) and some don’t even…
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Don't Waste A Crisis
From time to time, I work on a volunteer basis to help people who are in financial crisis. I was recently asked to work with a couple who had found themselves in this situation due to a job loss, and given the current economic environment, I presumed that some of our readers could relate. The following…
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Smart Shopping Moves
While there’s no special secret formula to making money, there are some smart steps you can take to keep your hard earned money. Research your purchases: The Internet is a great place to make sure you’re getting the best price. Even if you don’t feel comfortable buying online, there’s so much information out there for consumers…
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Should you roll your 401k to an IRA?
There is often pressure to rollover a company 401(k) into an IRA as soon as possible after your departure from an employer. That may not always be prudent, though it depends. A few reasons to consider keeping them at your old employer: Stable Value Fund availability: These are similar to CD’s and they can only…
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Wheaton spirit represented at the Olympics
Winter always seems to drag long, especially when that pesky groundhog sees his shadow. But every four years, we have something exciting to look forward and this year’s Olympics are no exception. Sports are often discussed here at Timothy Financial’s headquarters and the Olympics are especially fun because there’s always such wonderful stories along with the…
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New Credit Card Rules
The Federal Reserve Board has released some new rules to help protect credit card consumers and the new rules will be effective on February 22. If you are a credit card user, take a moment to read the Federal Reserve’s article “What You Need to Know: New Credit Card Rules” to get all the details on how…
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Financial Advisors like Doctors?
If you found out your doctor was really the employee of a pharmaceutical company, you’d be concerned. Did you know that financial advisors have the option of following a fiduciary standard, which is similar to the Hippocratic Oath doctors follow? However, some financial advisors work for product providers and have to meet sales goals. Know…
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Estate Tax in Limbo... Still
It might surprise you that the hot topic in financial planning right now is not the stock market or the economy. The subject matter revolves around death. With the economy and health care capturing all of the attention of Congress in 2009, no time or energy was paid on the repeal of the estate tax. …
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To Convert or Not Convert to Roth
Converting from a Traditional IRA to a Roth IRA has been allowed since 1997. However, until 2010, taxpayers with an Adjusted Gross Income (AGI) of $100,000 or more were not allowed to convert. Beginning in 2010, this income limitation is no longer in place. As a result, there have been many articles in the press…
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Market News Q4 2009
The S&P 500 has moved over 20% since July 2009, the equivalent of two good years in the stock market. Call today to see if you need to rebalance. Once again, all asset classes in the table below were positive for the 4th quarter though more muted than the substantial 3rd quarter rally. In our…
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Timothy Financial part of community service team
When an established doctor accepts a new practice opportunity in a distant city, or a graduating physician completes their medical training, they often discover that the demands of their profession make it difficult to devote enough time to the relocation process. Mistakes happen and the consequences can affect the physician’s personal and professional life. Real…
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Fiduciary Standard
Reaching your financial goals is harder now than ever before. Many messages tell you it’s all about how to play the market, but true financial experts will share that it’s more about making the right decisions with your money. It takes a true fiduciary who’s willing to put your interests first to guide you through…
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Frugal but fulfilling...
Take a walk with your spouse. Tell your children a story from your childhood. Build a snowman. Hold the door for someone else. What do these activities have to do with financial planning? An interesting article we read in Financial Advisor Magazine entitled, “Fulling Frugality” by Raymond Fazzi showcased a concept called Live Big which…
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Losing your COBRA subsidy
The government COBRA subsidy only lasts 9 months and is set to expire within the next week. It is uncertain whether it will be extended. CNNMoney published an article by Gerri Willis on what your next steps should be if you are currently taking advantage of the government’s subsidy of COBRA coverage. Go to http://ow.ly/HD0i. …
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Timothy Financial offers specialize service to physicians
Timothy Financial Counsel is been a proud affiliate of MD Preferred Financial Advisor, an independent, web-based resource for more than 830,000 medical professionals that provides access to top-rated financial advisors who specialize in assisting physicians with their unique financial challenges. And now with the announcement of a new service, Timothy Financial is even prouder of that affiliation.…
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Upcoming Sessions on Free Consumer Webinar Series
Make sure to check out the new webinar series for consumers that NAPFA (National Association of Personal Financial Planners) is offering for free. The current session is Investments: The Basics on December 4th at 12:00 (CST) and will provide information to help you better understand the basics of investing and how to determine if an…
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Join the Gold Rush or Not?
In ancient times, the most valuable financial assets were gold coins. Throughout world history, individuals have wanted to own gold in times of political and economic turmoil. Since the Basel Accord established the current floating exchange rate regime in 1973, the price of gold has generally risen in times when the value of the U.S.…
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Market timing not necessary for investment success
Our concerns have not changed that the rally may be temporary euphoria, but it should be clear to you why we don’t promote market timing. If anyone can consistently synthesize all the necessary factors to get you in and out at exactly the right time (and all known empirical data suggests that person has not…
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Market News Q3 2009
The trend in consumer retrenchment has not changed with the strong stock market performance. Outstanding consumer credit continues to drop by more than $10 billion per month. As we have said before, we believe this to be a multi-year trend rather than a short-term phenomenon. Anecdotally, many of you are feeling the wage pressures and…
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Borrower Beware - Student Loans
High school seniors and their parents will soon be sifting through college applications. Michele Singletary’s September 20th Washington Post column included some important cautionary figures. The percentage of student loans in default is now 6.7% – up from a record low of 4.5% in 2003. Though I firmly believe that individuals should pay what they…
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New Free Consumer Education Webinar Series
The Consumer Webinar Series is designed to help consumers across the country better understand personal financial matters. Presented by the National Association of Personal Financial Advisors (NAPFA), each session will be led by a NAPFA-Registered Financial Advisor who commits to the highest of standards in the financial planning industry. The Consumer Webinar Series sessions are FREE…
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Index Annuities' bad press - valid?
There are times when I read Investment News and it reads more like a Dave Berry humor column than serious news to me. A September 14th column entitled “Index-annuity crusader” is an example of this. It began with the statement, “Sheryl J. Moore is mad as hell at the media, and she’s not going to…
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Health Care Choices Required Soon
You don’t have to be a member of the House or Senate to have important choices to make soon regarding your health care. The majority of those covered by large employer health plans will soon receive information about their health care options for 2010. If you’re one of the fortunate individuals, here are some tips:…
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Is It “Time to Get Back In the Market” or “Time to Rebalance your Portfolio?"
There are a number of stories in the consumer press in recent weeks taking one side or another of this “debate.” Some argue that the so-called “Armageddon” scenario is no longer a realistic probability – and therefore it is now “safe” to pile back into equities – while others say the 50%+ rally from the…
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Timothy Financial recognized as preferred provider
Timothy Financial is now a preferred financial advisor for doctors and other medical professionals who are part of the MD Preferred Service Network. Physicians take the Hippocratic Oath which compels them to act solely in the best interests of the patients they serve; therefore, it only makes sense that they work with firms such as…
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Annuity Guarantees are “No Free Lunch”
Variable annuity guarantees are no “free lunch.”‘ A recent Wall Street Journal article, “Long Derided, These Investments Now Look Wise Thanks to Guarantees, Variable Annuities Paid Even When Stocks Didn’t” touts the benefits of the guarantees in some variable annuity contracts. However, it did not discuss the pitfalls that could reduce those benefits. Most investors can’t easily read…
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Can product salespeople be objective?
I was reading a June 29, 2009 article entitled “Insurance-affiliated brokers face major changes under Obama plan” in Investment News recently. For those who are new to the administration’s proposed regulatory reforms, there is an attempt to force all brokers and advisors to act as a fiduciary. What is a fiduciary? It revolves around always…
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Kris Johnson to be Expert Advisor, in Money Magazine Upcoming Money Makeover
Kris Johnson, CFP® Senior Financial Advisor at Timothy Financial Counsel, Inc. will be doing a “money makeover” for a reader of Money Magazine. He will be providing advice on the individual’s financial situation in an issue coming this fall. Kris will be answering some core questions on saving, real estate and preparing for retirement.
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Exploring A Job Change
As I meet with clients, it is not uncommon to discuss the prospect of changing careers. In this environment, it is sometimes forced upon them in the form of a pink slip. If you have always dreamed of doing something different, even if you are still employed, let me share an idea with you that…
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Mutual Funds: Survival of the Fittest
“Given the record number of new funds that have come to market over the past 10 years, we are seeing a bit of survival of the fittest in this environment,” said Mark Berg, president of Timothy Financial Counsel Inc. of Wheaton, Ill., a fee-based advisory business that doesn’t manage assets. Mark was quoted in a…
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Stimulus for a Few, Maybe Not Me and You
There’s been a lot of buzz about the tax goodies. Congress has doled out to shore up the housing market and stimulate the economy. You may have heard you can get a break for “going green” expenditures at home. Potential first time home buyers are asking about the credit for a 2009 home purchase. And…
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Green shoots or weeds?
The strenuous debate about whether the recent rebound is the beginning of the next bull market or just another “bear market rally” has most recently been discussed in terms of “green shoots.” The “green shoots” thinking implies that the economic data that has been “less bad” than prior months indicates a reversal to suddenly positive…
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Timothy Financial in the News
Kris has been interviewed by Cole Publishing and Discover Edge. Leisa was interviewed by WGN radio host Bill Moller and held two seminars for federal employees. Mark was interviewed by Smart Money Consumer Reports and The Chicago Tribune. Maintaining life balance has been challenging for us as of late but we love spreading the word about the…
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Temporary Euphoria?
We tend to view the rally as temporary euphoria over the fact that the economy no longer appears to be contracting as fast as the last several months. While it is very likely that the pace of decline will now begin to slow, we remain skeptical that the subsequent economic rebound (yes, it will come)…
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Comments on the Market Q1-2009
Given the events of the past 8 weeks, we felt it prudent to communicate with you regarding our outlook on the economy and financial markets. We do not intend to drive you toward putting all of your money in gold and cash, nor toward putting all of your money in stocks. It is simply to…
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Kris and Leisa in Business Week
Leisa Aiken and Kris Johnson, senior financial advisors at Timothy Financial Counsel, provide solid financial advice to young investors in Business Week’s investment article, “Advice to Young Investors” by Ben Steverman. http://www.businessweek.com/bwdaily/dnflash/content/feb2009/db20090211_902509.htm
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Uncertain economic future
While much about our economic future remains uncertain, we view the historic drop in the markets in 2008 as an opportunity to achieve much better returns in the broad equity markets over the coming decade than the past decade. As you can see below, that should be a fairly low hurdle to overcome. It is…
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Does it make sense to rebalance your investments?
As December draws to a close, it is time to catch your breath and assess the damage. With the exception of the few who were sitting in cash and CD’s, no one escaped 2008 undamaged. Even gold, once considered the haven for tough times, has sunk 15% from its peak in ’08. There was similar…
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