Goodbye 2011 and Hello 2012

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary. Steve Jobs

Notes from Sandy:

It was quite a year of big stories for 2011. Osama bin Laden, Muammar Gaddafi, Steve Jobs, Kim Jong-il, all leaders of a different nature, are gone. We had global events with the earthquake and tsunami in Japan and the Royal wedding in England. The United States of America lost its triple A credit rating and Occupy Wall Street grew across the globe as the 99% expressed their displeasure with greed, big banks and Wall Street in general. I witnessed Occupy Irvine which reminded me more of a soccer event with nice pop-ups, organized bake sales with a bounce house and games for kids. It even had signs in the street announcing a “quiet zone” ahead. No chanting, just signs resting next to people sunning in chairs.

After a very volatile and bumpy ride, the Dow ended the year up 5.5% while the S&P 500 finished flat and the NASDAQ was down 1.8%. As the news on Spain, Greece, Italy, Portugal and France kept the averages moving, it was a wild swing from positive 8% in April and negative 17% from those highs by October. China finished down 21.7%, France down 17.3%, Germany down 15% and Canada down 11%. Gold hit an all-time high at $1,778 per ounce and finished the year at $1,566. We also begin 2012 with the dollar equal to 1.2958 Euros after hitting a high of 1.4882 in May, 2011.

I see some positive changes ahead in 2012. I think real estate is beginning to slowly rebound as buyers are jumping through hoops to qualify to buy properties. I think mortgage rates will remain low throughout 2012. As unemployment numbers start to decline, the glut of properties in foreclosure should also decline. I see foreclosures and short sales being worked out so it appears the banks are moving faster on these sales.

Our charity golf event raised over $10,000 for Breast Cancer Angels thanks to our clients, sponsors and friends donating to the event. It was a beautiful sunny day and everything was perfect. Asset Planning also supported the Seal Beach Victims fund for the families that lost loved ones in the horrible Salon Meritage shooting.

Have you set your goals for the New Year? Unless you know where you are going, you won’t know when you get there. I am still working on my goals for 2012 but I plan on many ocean swims this coming year. Nikki is playing water polo and swimming for Los Alamitos High School and I love attending the games and cheering.

Notes from Carol:

Europe and the Stock Market

The stock market is hungry for reasons to go up. That was shown in the last two months. With any news or comments which can be interpreted as positive, the market reacts strongly to the upside. The positive moves

toward the end of November and December had largely to do with announcements regarding the debt crisis in Europe which were in the direction of a solution. The market reacted favorably. But, does this mean we are out

of the woods and on our way to a permanent solution in Europe? Maybe. It will take additional follow through on the part of the central banks to solve the immediate issues and provide some assurance that the crisis can avoid catastrophic levels. The economic data in the U.S. has been relatively upbeat lately. Retail sales for Black Friday exceeded expectations, with the average shopper spending 9.3 percent more, and total spending coming in at a record $52.4 billion. The numbers show the American consumer, the driving force behind our economy, still has the capacity to spend.

Our portfolios have become a bit more defensive without taking us out of the game for the positive moves.

Roth IRA:

One of the best ways to get young people to save and think about their future is to help them set-up a Roth IRA. As long as they have earned income, they can open a Roth. For example, my daughter made $2,000 working at a retail store. I opened the Roth for her and I gifted the money to start the account. She is very excited about the account, especially when I showed her how much her money will compound over the next 50 years. A Roth IRA is made with after-tax contributions and earnings are tax-free for withdrawals made after age 59 ½.

You can gift up to $13,000 to any number of people without facing gift tax consequences.

Realized Losses and Gains for 2011

We will be mailing out the 2011 realized Capital Gains and Loss reports by the first week of February. 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:

Changes for retirement contributions beginning in 2012:

401k, 403b, & 457 maximum employee contributions increase to $17,000 per year. The catch up contribution, for those ages 50 and above, remains at $5,500 per year.

IRA contributions remain unchanged at $5,000 plus $1,000 catch up per year for those above age 50.

Adjusted Gross Income (AGI) phase outs increase for those that can deduct IRA contributions and still participate in a qualified retirement plan (QRP). All Fliers (except Married filing Separately) that don't participate in a QRP can deduct IRA contributions from their taxes regardless of AGI. Those participating in a QRP can only deduct IRA contributions if AGI is under $58,000 for Single Filers and $92,000 for Married Filing Joint. Partial deductions are allowed for Fliers with AGI between $58,000-68,000(Single) and $92,000-110,000 (MFJ). For an IRA contributor who is not covered by a QRP but his or her spouse is, the deduction is phased out between $173,000-183,000 (MFJ). Remember if you make a deductible IRA contribution, always keep track of your basis by filing an 8606 with your tax return.

You can make a full Roth IRA contribution if your AGI is under $110,000 (Single) or $173,000 (MFJ). Partial contributions are allowed for fliers with AGI between $110,000-$125,000 (Single) and $173,000-$183,000 (MFJ).

Please send your SEP, Roth and Traditional IRA contributions for your accounts to API by Monday April 9, 2012.

Wishing you a Happy, Healthy and Prosperous New Year! Sandy, Carol, and Erin J