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Archive for December, 2010

27
Dec

“The 2011 Economic Outlook—and What It Means to You”

Alan Murray’s Dec. 26th articles in the online Wall Street Journal highlights some of the clouds over the economic outlook.  Paul J. Lim’s Dec. 26th article in The New York Times, “Why Investor Optimism May Be a Read Flag” is concerned about investors attitudes.  His article includes:  “In October 2007, a survey by the American Association of Individual Investors found that 55 percent of investors were bullish: in the 12 months that followed, the S.&P. fell 37%.  Similarly, in March 2000, investor bullishness reached 66 percent. And a year after the fact, stocks were down 25 percent.”
Studies in Behavioral Finance continue to find that investors’ timing is often wrong.  When the market is going up, many people buy.  Those are generally the same people that sell when the market goes down.  Markets past behavior does not always indicate how the market will move in the future or when it will move. 
Investors need to know where they want to be, understand their risk for loss, understand their time horizons, and much more.  They should structure their portfolios to their individual situation.  Monitoring and adjusting for the long term are actions that will increase the achievement of their goals.

Click to read original article…


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24
Dec

“Free lunch seminar may serve up a trap for dessert”

The title of this article could have been “A statement may be strictly accurate … and be misleading”.  Humberto Cruz highlights statements about newsletters and mutual fund fees.  You must be critical of articles or presentation relating to financial planning.  Pay special attention to subjects relating to investments returns, tax strategies, guarantees and costs.  Most importantly consider how the subject relates to you individual situation, your risk tolerance, your short-term goals, your long-term goals, etc.  


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20
Dec

How to Get Fiancially Fit in the New Year

This article outlines some of the steps that can be taken throughout the year.  Although this will not be a comprehensive plan, it is better than doing nothing.   Planning requires knowing where you are going.  Each financial need, want and wish needs to be considered.  View these as steps in your financial journey.   Be realistic in setting these steps.  Also consider what keeps you up at night.  Some of the other ingredients include: your risk tolerance, your health, you income tax, you charitable intent, special needs of your family and/or heirs.  Then co-ordinate these and provide flexibility and you will be making progress on meeting you financial goals.

Click here to read original article.

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19
Dec

Don’t pay a fee to enroll in a biweekly mortgage.

Whether making extra payments or paying off a mortgage early, like most financial decisions, depend on the particular circumstances.  If it fits your particular situation check with your financial institution holding your mortgage before making the payment.  Do not assume how they will handle extra payments.  Some financial institutions hold the extra payments and apply them to the extent of the scheduled payments as the payments come due.  This will not result in the intended result.  You may need to send a letter with each payment directing them to apply it to the principal.  Follow-up and check how they applied the payment.
If you read the attached article you will note that generally there is no reason to pay a fee.  It goes without saying that normally you should not borrow to make extra payments, especially if you are incurring a higher interest rate.


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13
Dec

“Tis the Season to Be Stupid”

This article discusses some financial mistakes that are made when giving to charities. 
I have observed that those who annually make their contributions make fewer mistakes.  There are advantages of doing this in November.  This allows time to make sure they are made by December 31.  This is particularly true for those who contribute appreciated securities.  If you do use appreciated securities, check with the charity to see that the account information you have for the charity is still active.  If you have to use securities to fund your contributions that have not appreciated, sell them and contribute the proceeds.  This preserves the deductibility of the loss.
Another advantage of this approach is that it minimizes the chance that more is given than intended.  Many people contribute when they receive a solicitation.  This could result in making multiple contributions, each for the amount you planned to give for the year.

Click here to read original article.

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12
Dec

“Be sure you understand that annuity before buying”

Humberto Cruz provides a concise summary of some terms needed to understand annuities in this article.  He concludes that in the right circumstances some annuities may be appropriate.  Of the drawbacks he discusses, the one I see most frequently is the lack of understanding by the consumer/annuitant about the costs, terms and limitations of the annuity purchased.  The other relates to the lack of understanding as to how the annuity impacts the rest of the financial plan.  In some case an annuity my be appropriate.  In thos situations the type of annuity and how it is owned require careful planning.


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10
Dec

Investor Survey Says: Bet Oppositely

This article from the “Wall Street Journal” discusses a survey who’s followers do the opposite of what it indicates.  Daily we hear changes in: various stock markets, interest rates, analysts recommendations, “journalist’s” opinions and many more.  Even when the information is accurate, it is usually not helpful in the long run.  Reacting to this “static” can be harmful.  Actions should be based on your individual goals, risk tolerances and asset allocations.

Click here to read original article.

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7
Dec

“Retiring in 10 Years? Uh-Oh.”

This article has messages for everyone, not just those planning to retire within 10 years.  Some key themes include:  1) The earlier planning starts the greater the number of alternatives will be available. 2) Starting planning within 10 years of planned retirement is NOT early. 3) Not all alternatives apply to everyone. 4) People have a tendency to be too conservative or too aggressive.  5) The asset mix must meet the individual circumstance.

Click here to read original article…

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4
Dec

Some 401(k) investing sins

It is hard to identify the worst sins in this MarketWatch article.  “Wrath” and “Pride” highlight some of behavioral issues that impact investment returns.   This article provides food for thought.  Each person must determine the actions to take for their unique circumstances.

Click here to read the original article

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4
Dec

Last-Minute Tax Checklist

This article from MarketWatch contains more ideas for year-end tax planning.  You need to allow enough time to complete these by December 31.  A list of what you want to do will help get your planning implemented.  Knowing what you want to accomplish will be even more beneficial if you delay to see if any tax legislation is passed before year-end.

Click here to read original article

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