Happy New Year and Welcome to 2011
Notes from Sandy
“I’ve got a feeling” (Black Eyed Peas) this is going to be a good year. 2010 turned out to be a good year for returns in the markets but it certainly had the ups and downs of an amusement ride, from start to finish. I began New Year’s Day with a Polar Bear Plunge in the Huntington Beach Ocean. I kept yelling “my feet hurt!” until they went numb. It was a crazy, exhilarating and a bold way to start the New Year!
In the final two weeks of 2010, President Obama and former President Clinton worked with the Senate and Congress to get the Bush tax cuts extended for two more years. We were all on hold for trading until we knew for sure the income tax rate brackets would not be raised in 2011. I was very busy trading in the portfolios and accounts after we had a better vision of the next two years, in terms of capital gains taxes and income tax. Estate taxes were also clarified and a choice was given to those families that lost a family member in 2010 with regard to step up in basis.
Republicans in the house have vowed to repeal the Obama health care overhaul and bring it to vote before the State of the Union to be held later this month. Another item under attack is the proposed limits on emissions of greenhouse gases from oil refineries and power plants. Even as the federal government plan is under pressure, California has vowed to uphold it. Jerry Brown is our new governor and will try to guide California away from the brink of budget crisis.
I still believe the key to the recovery is in job creation and lowering the unemployment problem facing all states. I think real estate will still have problems and I have seen values soften and fall in the past month. Mortgage interest rates rose in November and December and that will be enough to choke any recovery in the housing market for the short term.
Set new goals for 2011! Set them high and dream big. Chase your dreams, and live your life bold.
Life is too short to wake up with regrets. ♥So love the people who treat you right. ♥ Forget about the ones who don't. Believe everything happens for a reason. If you get a second chance, grab it with both hands. If it changes your life, let it. Nobody said life would be easy, they just promised it would be worth it. Catherine Yen
Notes from Carol:
How the bond and equity markets fared in 2010
It was a solid middle-of-the-road performance for the stock market. Barclays U.S. Aggregate Bond Index closed up 6.24%. The S&P 500 stock index closed up 12.8% for the year and the Dow Jones industrial average closed up 11%. The majority of the gains came in the last quarter of the year. The stock market is still well short of its pre-crisis high: The S&P 500 would need to rise another 24%. The threat of a double dip recession appears to have passed. The wild swings in the market have calmed down. The VIX index, which measures investors’ expectations for future volatility in stock prices, reached its lowest level in 3 years in December.
You will find an additional report in your year-end report package. It is the Portfolio Performance Summary. It shows you the total amount your portfolio gained in dollars and percent for 2010.
IRA and 401K:
The maximum 401K, 403B and 457 contribution stays at $16,500 and anyone born in 1961 or earlier can contribute another $5,500, for a total of $22,000. IRA limits remain at $5,000 plus $1,000 if you are born in 1961 or earlier.
Roth IRA:
There is no income limit if you want to convert all or part of your IRA to a Roth IRA. Congress left this alone for 2 years. There is still an income limit for contributing to a Roth. The Roth contribution limit phase out for couples is when AGI (adjusted gross income) is $169,000 to $179,000 and for singles it is $107,000 to $122,000.
Realized Losses and Gains for 2010
I will be mailing out the 2010 realized Capital Gains and Loss reports the last week of January. This will have the cost basis and net proceeds for any sales. It will also have the capital gains and dividends paid for the year. You will need this in addition to the 1099s that you will receive from Schwab or TD Ameritrade to give to your tax preparer.
Notes from Erin:
The beginning of the New Year is always a good time to reflect, reorganize and try to scratch a few things off the to-do list. An important and often overlooked task is preparing for unforeseen life events. In 2010 we had a number of families come to us in crisis after a death of a close loved one. Transitions like these are never easy but I offer three items to add to your 2011 checklist to help you and your family be more prepared and avoid a family crisis.
- Create a detailed contact list for everything and anyone your loved ones would need to know in your absence. Organize all your bank accounts, investments, debts, insurance policies, annuities, recurring bills, advisors, etc. in one document and store it in a secure place your beneficiaries can access. You should include account numbers, contact numbers, online log in information along with any other pertinent information.
- Review all your account titles & beneficiaries. Trusts are ineffective unless you titled your property in the name of the trust. Typically, you want all your taxable accounts and real estate in the name of the trust. IRAs can be titled in your name and list beneficiaries. If you would like to change the beneficiaries on your accounts with us, please contact the office.
- Do your loved ones know who your regular doctors are and current medications? I recently listened to another advisor’s story of losing his wife prematurely. The emergency room doctors urgently needed to know his wife’s medications and the husband had rush back home to find out. Keep a card in your wallet of your immediate family members’ current medications and doctors’ phone numbers. Sometimes having your medical history readily available makes all the difference.
Wishing you a Happy, Healthy and Prosperous New Year! Sandy, Carol, and Erin
