Sandy was asked to be the advisor on this month's LA Times money makeover.
Click here to check it out.
Our government shut down October 1 with both sides vowing to not bend and give in. The last time we had an impasse was in 2008, during the passage of TARP, and the market reacted by falling 777 points. That was enough to get both sides negotiating a bit quicker. We also have the debt ceiling to deal with later this month. Failure to act would be very negative for the financial markets and the world economy. This is really the ordeal to watch- the debt-ceiling extension and our debt ceiling now stands at 16.7 trillion. If we reach an impasse, our debt will default. While the market has reacted in the past, I also believe it is becoming somewhat immune to the actions of our government.
How does this shutdown impact government services and benefits? People will still receive their mail from the U.S Postal Service, Social Security benefits and changes in address, food stamps, school meals, veteran compensation and burial benefits. National parks, museums, federal home loans, VA home loans, IRS suspension of all audit activities and passport operations are all affected by the shutdown and will be suspended until further appropriation of congressional funds. Unfortunately for our economy, it is projected that the shutdown will impact our economic growth by as much as 1.3 % in the 4rth quarter if it continues two weeks.
I had the pleasure of being asked to be the financial advisor for this month's Los Angeles Times Money Makeover. Here is the link to the article:
I hope you enjoy this article regarding the state of bonds by James A Klotz, President of FMS Bonds, Inc.:
Have you heard the clucking?
It’s the sound of Chicken Little returning to the municipal bond market.
In 2008, he paid a visit during the mortgage crisis. At the time, bond insurers were downgraded when they strayed from their traditional market and ventured into exotic – and toxic – financial products, while major banks, brokerages and hedge funds, which traditionally provided support to the muni market, became net sellers to enhance their own liquidity during the tumult.
Munis themselves were fine, but the chickens clucked, bond prices slumped and too many average investors panicked and sold. Veteran bond investors, meantime, did what they always do: take advantage of the disruptions and feast on fatter yields.
Two years later, Chicken Little reappeared, this time in the guise of a banking analyst whose comments on state and local finances during a TV interview spooked investors and spurred a muni selloff. Nevermind that her warnings of Armageddon were wildly off the mark; many took heed and, as a result, blew a hole in their portfolios.
Today, Chicken Little has returned, with the same, equity-oriented pundits warning of a calamitous interest-rate spike and urging investors to shed their bonds.
Which bonds are they referring to? We’re not sure, and due to their lack of expertise in bonds, they’re probably not either. We only hear about Treasury bonds, but we don’t know of a single individual investor who owns any.
And that’s the rub.
Successful tax-free bond investors don’t buy and sell based on prognostications. Their goal is to generate a steady and dependable stream of tax-free income. Because investors know they have a promise to be paid at a specific time – a maturity date – unrealized losses or gains are irrelevant. They know that over the life of their long-term bonds, they will sometimes be worth more than they paid for them and sometimes less. Neither scenario should initiate a sale.
In fact, a substantial number of municipal bond buyers welcome higher interest rates to boost their tax-free income, which is the reason they buy tax-free bonds in the first place.
A buying opportunity
Chicken Little’s most recent cry to indiscriminately sell an entire asset class is reckless and can once again be catastrophic for investors.
Unique opportunities abound as muni bond fund shareholders panic and rush to the exits. This forces fund managers to reluctantly toss good bonds overboard to meet redemptions.
With high-quality municipals now yielding 4.25% or more (a tax-equivalent yield of 6.54% for investors in the 35% federal tax bracket), successful long-term investors hear the shrieks for what they really are: a signal to buy.
For more information follow the link: http://www.fmsbonds.com/News/bond_article.asp?id=444
In a recent study by deVere Group, one of the world's largest independent financial consultancy groups, they asked clients with investable assets over $1,000,000 what was their number one financial regret. The top 3 answers:
While this survey only surveyed high-net worth families, I think middle-class families would answer the question with similar results. It is clear the benefits of long-term financial planning and routinely reviewing or revising the plans help keep families on-track to reach their financial goals.
It is interesting to note that all those surveyed have done well financially, but the regret is that it might have been less stressful if they had a plan in place and were monitoring it consistently.
It is never to early to begin planning for next year's tax return. Planning ahead can save you time and money in 2014. Here are six simple steps to take to make your next tax return easier.
1. Adjust your withholding
Now is a good time to review your withholdings to make the taxes withheld from your pay closer to the taxes you will owe for this year. You can use the IRS Withholding Calculator at IRS.gov to complete a new Form W-4.
2.Store your return in a safe place.
Doing so can facilitate locating it in case you need to refer to your return. For example, you may need a copy of your return when applying for a home loan or financial aid.
3. Organize your records
These record include your receipts from big purchases, mileage logs, and other deductable expense.
4. Hire a tax professional
If you already have a tax professional consult with them now to tart your tax planning for next year.
5.Consider itemizing deductions
If your itemized deductions typically fall just below your standard deduction you can bundle your deductions. If you usually claim a standard deduction, you may be able to reduce your taxes.
6.Keep up with changes
its always good to keep up with changes in the law especially taxes. For helpful tips, and IRS announcements, visit the IRS website, www.IRS.gov
Deciding how to manage one's digital legacy has turned into one of the trickiest estate-planning tasks. Facebook status updates, blogs posts, tweets, digital music libraries and other digital remains may have significant financial or personal value to the families. Failure to plan ahead may prevent loved ones from recovering these digital items of personal value and information pertaining to bills or other financial liabilities. It could also leave your estate vulnerable to identity theft.
Retrieved from Kiplinger's Retirement Report
Need money from your IRA or Trust accounts? No problem; securities, mutual funds and bonds can all be sold on the same day and the cash is settled into your account in approximately four business days; however, giving your financial advisor prior notice can get you more money from the sale of your investments.
If you need more than $15,000 in cash, it is advisable to give your advisor a one month notice to take advantage of market sales. This means your advisor tries to sells the investments when markets hit a high price in order to get the greatest amount of cash from the sale of from a stock, bond or mutual fund. Once the investments are sold it does take time for the cash to settle into your accounts. Mutual funds for example, can be sold on the same day but the cash doesn't settle into your account until the next business day. Stocks can too be sold on the same day; however, the cash takes three days to settle. Bond sales are unique since they are placed on a bond trading desk and wait for a reasonable bid. In our case, we would wait for the highest bidder.
Giving your advisor a month's time notice not only facilitates the selling process, but also allows us to search for the best selling prices for your investments, providing you with more cash.
Every time you apply for a personal credit card your average time length of your credit accounts decrease and in turn decreases your credit score. It is sad news if you were looking to open a new personal credit card account; however, applying for a business card will not reduce the average time length of your credit accounts. The personal credit bureaus do not receive reports on the amount you spend on a business credit card, as well as your credit line.
For Example, theoretically speaking if one was to use up an entire credit limit from a business credit card, it would have no impact on a personal credit score. In contrast, if the same was done a personal credit card, it would dramatically reduce your score even if the balance was paid in full when the statement arrives.
Bottom line, not only do business credit cards provide more sign-up bonuses, they also have less of an impact to your personal credit score. You don't need an established business to get approved for a business credit card and you can often get approved for existing businesses which you run as the sole owner or which you are thinking of starting. It is advisable to be cautious of what you apply for, the interest rate and any penalties that come with any credit card including business credit cards.
President Obama's budget proposal would cap multimillion-dollar tax-favored retirement accounts. The budget plan would prohibit tax payers from accumulating more than $3 million over all IRA accounts. The proposal would generate $9 billion in revenue for the Treasury over the next decade.
According to Ed Slott, an IRA specialist and certified public accountant, IRAs have evolved from a retirement-planning technique into an estate-planning tool for some wealthy families because tax laws allow the accounts to be passed onto heirs. The cap would apply to the total of all of an individual's tax-favored retirement accounts.
The plan was unveiled on April 10 as part of the proposed budget for 2014.
Congratulations to Sandra C. Field and Carol Somoano for being the recipients of the 2013 Orange Coast Five Star Wealth Managers. This was published in the April issue of Orange Coast magazine.
They were among 2,293 award candidates considered in the Orange Coast area of which only 19% of the candidates received the award. The award candidates were identified and considered by one of three sources: firm nomination, peer nomination, or prequalification based on industry standing. Self-nominations are not accepted.
Our two award recipients satisfied a 10 objective eligibility evaluation criteria associated with quality service providing wealth manager split into two parts, eligibility criteria and evaluation criteria.
The required eligibility criteria are as follows:
Credentialed as an investment advisory representative (IAR), a FINRA-registered representative, a CPA or a licensed attorney.
Actively employed as a credentialed professional in the financial services industry for a minimum of five years.
Favorable regulatory and complaint history review.
Fulfilled their firm review based on internal firm standards.
Accepting new clients.
One-year client retention rate
Five-year client retention rate
Non-institutional discretionary and/or non-discretionary client assets administered
Number of client households served
Education and professional designations
It is very easy to want to sign up for credit cards that offer miles and points for purchases you make, especially with sign-up bonuses offering 50,000 miles or points when you apply and receive the credit card. Yet, you should take into consideration how this might impact your credit score.
You should think twice on getting these kinds of credit cards if:
1. Interest rates on these are especially high.
2. You shouldn't apply for them unless you know you can definitely pay off the entire balance each month
3. You are having trouble budgeting or you can't resist making unnecessary purchases just for the sake of increasing your points or miles.
4. You have a score lower than 700
5. Don't apply for these kinds of credits cards if you seek to increase your credit score, especially if you are thinking of taking out a home loan in the near future.
In the short-term your score could decrease; however if you are strict with yourself, make considerable purchases and pay your balance off in full each month, then the score will increase and also you will be able to redeem points and miles.
Your credit score is determined by the following:
-35% payment history
-30% amount owed
-15% length of credit history
-10% new credit
-10% types of credit.
The percentages are based on the importance of the five categories for the general population. For particular groups; for example, people who have not been using credit long, the relative importance of these categories may be different.
PAYMENT HISTORY is considered the most important variable. The next most important variable to watch are the AMOUNTS OWED. Having debt doesn't mean you are a high-risk borrower. Keep in mind that if a high percentage of your available credit has been used, it may suggest that you take on more debt than you can probably handle. This might reflect as a risk of you not being able to pay back your loans.
It is important to not max out your credit cards and keep a low credit utilization rate. Example:
If your credit limit is $5,000, don't charge more than a $1,000 if you want to keep your utilization rate below 20%.
Spend healthy and keep that payment history a priority!
First: What is a credit score?
In the U.S, a credit score is a number used to predict the likelihood of you not paying back loans. There are three main credit bureaus in the US A and they are Equifax, TransUnion and Experian; however Fair Isaac Corporation dominates the US credit score business and issues FICO scores ranging from 300 to 850.
The higher your credits score the better; however there is a limit. A score of 650 is always better than a score of 550 and a score of 750 will get you access to lower interest rates than a score of 650. Here is the catch, after a gaining a score of 760 you won't necessarily get lower interest rates than someone with a score of 830. As long as you maintain a score above 750 you will be in great shape.
Please stay tuned for our weekly series on credit cards and FICO. Next week I will post on what your FICO score is, what it means and how it is calculated. Feel free to share with other family and friends!
Neither a Democratic nor a Republican bill aimed at replacing the so called sequester was able to get enough support to win a test vote on Thursday. The budget cuts for fiscal year 2013 will not take effect all at once on Friday. Instead, they will go into effect gradually through the end of the fiscal year on Sept. 30. The sequester would cut about $1 trillion over nine years.
-Across-the-board cuts under sequestration formally take effect today. The cuts amount to "only" 2.3% of total federal spending.
-Sequestratoin is likely to reduce real GDP growth in 2013 by 0.6%, with the effects concentrated in the second and third quarter.
-Having passed the March 1st deadline to avoid sequestration, the next date to watch will be March 27th when current spending authority expires.
-Social Security, Medicaid, veteran benefits are exempt from the sequester.
U.S markets on Thursday shrugged off the budget drama in Washington. Financial stocks held their ground Friday as investors, with plenty of time to adjust their portfolios, looked past looming federal spending cuts.
Mortgage rates recently hit an all time low & if you haven't already refinanced your mortgage, now might be the time to do so. We have found a new mortgage resource that is very professional, timely, and offers competitive rates. If you would like a referral, please feel free to contact us.
Last year, to reduce costs, the Social Security Administration (SSA) stopped mailing annual paper statements to anyone under age 60. These statements are a great tool to use for retirement planning. The statements provide a history of your annual earnings and estimates of your social security benefits at various retirement ages, along with estimates for disability and survivor benefits.
Last week, the SSA added the ability to access your Social Security statements online. Here is the website to start the process to access your statement:
I recommend that you review this at least once a year to make sure that your income is recorded accurately in the Social Security database. Your future monthly benefit is based on your average earnings over your lifetime. If your earnings are incorrect, your benefit will most likely be wrong.
Follow this link, to read Sandy's feature in this month's Financial Planning Magazine. The print edition of the article Opportunistic Retirement Investing has pictures from the photo shoot the magazine did of Sandy at our office.