Facts About The Coming Baby Boomer Retirement

#1 According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#2 According to a recent poll conducted by Americans for Secure Retirement, 88 percent of all Americans are worried about "maintaining a comfortable standard of living in retirement". Last year, that figure was at 73 percent.

#3 A study conducted by Boston College's Center for Retirement Research has found that American workers are $6.6 trillion short of what they need to retire comfortably.

#4 Today, one out of every six elderly Americans lives below the federal poverty line.

#5 On January 1st, 2011 the very first Baby Boomers started to retire. For almost the next 20 years, more than 10,000 Baby Boomerswill be retiring every single day.

#6 At the moment, only about 13 percent of all Americans are 65 years of age or older. By 2030, that number will soar to 18 percent.

#7 Right now, there are somewhere around 40 million senior citizens. By 2050 that number is projected to increase to 89 million.

#8 Back in 1991, half of all American workers planned to retire before they reached the age of 65. Today, that number has declined to 23 percent.

#9 According to one recent survey, 74 percent of American workers expect to continue working once they are "retired".

#10 According to a recent AARP survey of Baby Boomers, 40 percent of them plan to work "until they drop".

#11 A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

#12 A study by a law professor at the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States. Back in 2001, they only accounted for 12 percent of all bankruptcies.

#13 Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

#14 What is causing most of these bankruptcies among the elderly? The number one cause is medical bills. According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

#15 Public retirement funds all over the United States are woefully underfunded. For example, it has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of complete collapse.

#16 Most U.S. states have huge pension obligations which threaten to bankrupt them. For example, pension consultant Girard Miller told California's Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities. When you break that down, it comes to $22,000 for every single working adult in the state of California.

#17 Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management have calculated the combined pension liability for all 50 U.S. states. What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds. That is a difference of $3.2 trillion. So where in the world is all of that extra money going to come from?

#18 According to the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010. That was not supposed to happen until at least 2016. Sadly, in the years ahead these "Social Security deficits" are scheduled to become absolutely nightmarish as hordes of Baby Boomers retire.

#19 In 1950, each retiree's Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 private sector workers for each person that is receiving Social Security benefits in the United States.

#20 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#21 The total cost of just three federal government programs - the Department of Defense, Social Security and Medicare - exceeded the total amount of taxes brought in during fiscal 2010 by $10 million. In the years ahead expenses related to Social Security and Medicare are projected to skyrocket dramatically.

#22 The Pension Benefit Guaranty Corporation is the agency of the federal government that pays monthly retirement benefits to hundreds of thousands of retirees that were covered under defined benefit pension plans that failed. The retirement crisis has barely even begun and the PBGC is already dead broke. The PBGC says that it ran a deficit of $26 billion during the fiscal year that just ended and that it will probably need a huge bailout from the federal government.

#23 According to a survey by Careerbuilder.com, 36 percent of all Americans say that they don't contribute anything at all to retirement savings.

#24 More than 30 percent of all investors in the United States that are currently in their sixties have more than 80 percent of their 401k plans invested in equities. So what is going to happen to them if the stock market crashes?

#25 A survey taken earlier this year found that 20 percent of all U.S. workers admitted that they had postponed their planned retirement age at least once during the last 12 months. Back in 2008, that number was only at 14 percent.

Excerpted from: Michael Snyder

Lower your 2011 tax bill - Part 2

Consider contributing to charity

Contributions to public charities can be an attractive strategy for reducing taxes. The amount of your deduction for charitable contributions is limited to 50% of your AGI, and may be limited to 30% or 20% of your AGI, depending on the type of property you give and the type of organization you give it to.

Long-term appreciated securities that have been held for more than one year and have increased in value may also be donated to any charity, whether a public charity or a private foundation. In this case, you are typically able to deduct the fair market value, and potentially eliminate capital gains tax on the appreciated value of the contribution.

Lower your 2011 tax bill - Part 1

Max out your tax-advantaged retirement accounts

A simple yet potentially powerful way to lower your tax bill and save for retirement is to max out your tax-advantaged retirement accounts—such as a 401(k) plan, 403(b) plan, or IRA. Contributions generally are not included in your taxable income for the year, meaning that your tax liability could be reduced by your marginal tax rate, multiplied by the amount of your contributions—for example, 28 cents on the dollar if you’re in the 28% tax bracket.

The 401(k) plan contribution limit for 2011 is $16,500, which could translate into a $4,620 current-year tax savings if you’re in the 28% bracket. And, if you reach age 50 before the end of the year, you can kick in another $5,500 as a “catch-up” contribution. The ability to contribute at this level depends on your income and plan contribution rules.

For IRAs, the contribution limit for the year is $5,000, or $6,000 if you’re 50 or older in 2011. You don’t have to make a contribution before the end of the calendar year, as you do with a workplace savings plan. You can contribute to an IRA for 2011 right up until the tax-filing deadline of Monday, April 16, 2012. Remember, there are income restrictions for deductible contributions into an IRA. The deduction phaseout starts at $90,000 of modified adjusted gross income for couples filing jointly and $56,000 for single filers. And don’t forget about low-cost, tax-deferred annuities as another option because, unlike an IRA or 401(k) plan, there are no annual contribution limits.

Although you’ll have to pay taxes on your workplace savings plan, IRA, and annuity savings when you withdraw them, you’ll potentially have benefited from years of compounded growth.

Some more year-end tax moves

Although it’s been a volatile year for stock markets, it doesn’t mean your tax picture has to suffer. By taking advantage of some strategies before the end of the year, you could potentially find yourself with a smaller tax bill next April.

Consider tax-loss harvesting

Tax-loss harvesting is the process of selling investments that have lost value in order to offset any capital gains you realized during the year. This may be a strategy to consider using this year due to the stock market’s turbulent performance. If you end up with more losses than gains, you can use the remaining losses to offset ordinary income up to $3,000. If you still have excess losses, you can carry them over to offset capital gains and ordinary income in future years.

Itemizing deductions and delaying income

By bunching deductions in the current year and pushing income into next year, you may be able to lower your 2011 tax bill. Among the candidates for deduction bunching are charitable contributions, elective surgery, and unreimbursed work expenses, such as travel, professional education, or uniforms. Keep in mind that you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI), and miscellaneous expenses, as defined by the IRS in Publication 529, above 2% of AGI.

On the income side, you could consider delaying payment for freelance or self-employment work, or asking your company to defer any year-end bonus, until the new year begins.

To make this strategy work, you will need to itemize your deductions when filing taxes rather than take the standard deduction ($11,600 for joint filers and $5,800 for single filers). Keep in mind that this strategy may not be effective if you’re subject to the alternative minimum tax (AMT). And you may not want to pursue it if you expect Congress to increase tax rates for 2012, or if you think the additional income could push you into a higher tax bracket next year.

Consider opening a 529 college savings plan

A 529 College Savings Plan is a tax-advantaged vehicle for putting aside money for the education of a child, grandchild, or loved one.

You can contribute up to $13,000 ($26,000 per married couple) per beneficiary, per year, without incurring federal gift tax, and the contributions are generally considered to be removed from your estate, even though you retain control over the distribution of the funds. For an accelerated transfer, you can contribute up to $65,000 ($130,000 per married couple).⁴

Any earnings are tax deferred, and withdrawals are tax free if they’re used to pay for qualified higher education expenses of the beneficiary.

Will the roller-coaster ride ever end?

By Jurrien Timmer, Manager of Fidelity Global Strategies

It is not a stretch to liken the stock market action of the past decade to a roller coaster. There seems to be no flat ground. It has been all up or all down.

We have seen this cycle play out twice since 1998: first among corporations in the early 2000s and more recently among consumers. Soon it will be governments. In fact, this is happening in Europe, as well as in the United States at the state and local government level.

The Internet bubble ride

First we had the Internet bubble during the late 1990s. This so-called tech bubble was fueled in part by the era of “creative” accounting, which eventually brought the price to earnings ratio on the S&P 500 up to 48 (which was three times the historical norm). Then the bubble burst and the S&P 500 declined some 53% from March 2000 to October 2002 as corporate valuations plummeted back down to earth. This decline was further compounded by 9/11, as well as several major accounting scandals (Enron, WorldCom).

The Fed responded to this downturn with aggressive monetary easing. Then-Fed-Chairman Alan Greenspan lowered short rates to 1%, and brought real (inflation-adjusted) rates below zero. Then, in 2003, the globalization boom took off, lifting emerging market stocks and commodities, as well as almost all U.S. stocks (especially small caps). In fact, by in 2003 an incredible 98% of all stocks went up. And so another thrill ride was under way, from late 2002 to late 2007, driven by global growth and ample liquidity.

This liquidity surge was the result not only of an easy Fed but also of a significant relaxation of bank lending standards. This was, after all, the era of “no-doc” lending. The result of easy credit and rising home prices was a housing bubble in the United States.

The housing bubble ride

By 2005, the market’s volatility had plummeted, creating a sense of complacency among investors, and with it a great buildup of debt among banks and consumers. But then the music stopped and the housing bubble burst, and down went the roller coaster, again. The S&P 500 lost some 57% from October 2007 to March 2009, as a massive deleveraging took hold among banks and households, which nearly brought the financial system to its knees.

But then, in 2009, the Fed and the rest of the world’s central banks responded once again, only this time not just with lower rates but also with quantitative easing. As a result, liquidity soared and growth came back, thanks also in no small part to a massive fiscal stimulus by China. Once again the roller coaster went up, with the S&P 500 rallying some 100% from March 2009 to May 2011.

Then, six months ago the roller coaster turned down once again, on weaker growth, a retreat of the liquidity wave, and a debt crisis in Europe. The S&P 500 declined some 20% in the span of only a few weeks. Global markets declined even more.

Will the ride stop?

The irony is that investors have had to endure these massive swings in stock prices for over 10 years, and right now have little to show for it. Today the stock market is more or less where it stood a decade ago, and almost any other asset class has beaten stocks over this time frame, from bonds to gold to cash. The action is frustrating enough to make even the most seasoned investor consider giving up on investing in stocks.

Why are we stuck in this deflation-reflation spiral? In my opinion, the past decade or so has been part of a major unwinding of debt, first among corporate balance sheets, then among households, and now among governments. Whenever deleveraging takes place, it is by definition deflationary. Balance sheets are literally being deflated, either through liquidation or an erosion of value. Stocks and other risk assets don’t like deflation (but Treasuries do). Earnings go down during deflation, along with stock prices. But then the central banks have responded when the pain gets to be too much to bear, and balance sheets and asset prices eventually get reflated again. It’s the cycle of reflation and re-leverage (eventually) leading to bubbles, which then burst, leading to a spiral of deleveraging and deflation. Deflation-reflation: That is what this cycle is all about.

Which begs the question: When can we finally get off this roller coaster and go back to the good old days of investing, when a well diversified portfolio could achieve reasonable returns in up markets, while helping to protect downside risk in down markets?

I think it won’t likely happen until all this debt has been purged from the system. The corporate sector has already done this, and today companies are lean and mean and flush with cash. Since 2008 it has been consumers who have been purging themselves of debt, either by choice through higher savings or by force through layoffs and foreclosures. Some progress has been made, but in all likelihood more time will be needed for the cycle to fully run its course.

This leaves the government. Since 2010, it has been the state and local governments that have been going through fiscal austerity, driven by the unwinding of fiscal stimulus and a reduction in tax revenues. Now with the Super Committee trying to come up with a deficit reduction plan, chances are that we will have some form of fiscal austerity at the federal level as well.

And, of course, we all know about the debt deleveraging in Europe.

The combination of a still-retrenching consumer and now potentially a retrenching government suggests that the forces of deflation and deleveraging are going to be with us for some time to come. This suggests further downside pressure on risk assets. However, offsetting these deflationary forces are more and more hints from the Fed that some sort of renewed reflation effort may be coming, most likely in the form of a QE3 consisting of large-scale asset purchases of mortgage-backed securities.

And it’s not just the Fed. The Bank of Japan has committed to more asset purchases, as has the Bank of England. And even the historically hawkish-sounding European Central Bank (ECB) has been buying Italian debt and has been expanding its balance sheet. On top of that, Brazil has been cutting rates, along with Australia, and now even Indonesia.

So it is entirely possible, if not likely, that a new reflation ride is starting, which could lift stock prices all over again. In fact, I suspect that the sharp rally in the stock market since October 4 is due to this renewed perception that the Fed is about to become proactive again with its monetary policy.

So the deflation-reflation cycle continues. Hopefully, we are embarking on another reflationary wave now, but until imbalances have been worked off, the cycle will likely continue. Some day it will come to an end and markets will become stable again. But my guess is that it won’t be anytime soon. In the meantime, the roller-coaster ride continues. Right now there are few good options, and you need to have realistic expectations regarding returns and volatility. In these times it makes sense to have a diversified portfolio and an investment plan that you are comfortable with and can stay with throughout the roller-coaster ride.

No budget deal: Now what?

A Deadline with no consequences - Until 2013

By Shihira Knight, VP Government Relations & Public Policy at Fidelity Investments

Many people expected an 11th hour deal, much as we saw with the debt limit last summer. I think the big difference was that the debt limit was viewed by most lawmakers as a real deadline with a major consequence: a potential U.S. government default. By contrast, November 23 was a legislatively fabricated deadline with no real consequences until 2013, when the spending cuts are supposed to take effect. One year is an eternity in politics.

So what happens now? Immediately, nothing. But starting in 2013, $1.2 trillion of spending cuts will begin to take effect, unless Congress rescinds them. The spending reductions will be spread out over 10 years. Half of those cuts will affect defense spending and the other half will affect domestic programs, including Medicare provider benefits. However, a host of programs are not affected by the cuts, including Social Security and Medicaid.

In the coming weeks and months, there are two questions to monitor. First, will these spending cuts actually happen, or will Congress intervene to reverse or modify them? Making any changes would require a new law, which may be challenging to enact in 2012, but it’s another story in 2013 or beyond, when a new Congress will be in place. Some lawmakers have already started talking about changing the mix of spending cuts.

The second question is, what happens to the temporary payroll tax relief and extended unemployment insurance benefits that are set to expire at the end of this year? It was assumed these items would be extended in the Super Committee bill. Now that there is no bill, their fate is less clear.

The risk of living too long

Older Americans must address the very real risk of living too long, of outliving their assets. Consider: In 2005, a 65-year-old male in 2005 could expect to live on average another 16 to 18 years, while a 65-year-old woman could expect to live on average another 19 to 21 years.

What’s even worse, though, is that most Americans are not factoring in the odds that they may live past life expectancy. For instance, a 65-year-old man has a 41% chance of living to age 85 and a 20% chance of living to age 90, according to published reports. A 65-year-old woman has a 53% chance of living to age 85 and a 32% chance of living to age 90. And, when it comes to a married couple, there’s a 72% chance that one of them will live to age 85 and a 45% chance that one will live to age 90. And if that wasn’t bad enough, there’s an 18% chance that one of them will live to age 95.

Sadly, however, most Americans — two in three — underestimate the possibility that they will live to average life expectancy. And that suggests that many Americans are likely unprepared not only for living to life expectancy, but into their 80s or 90s.

Those folks will learn, perhaps too late to do anything about it, that they have not saved enough money. Or perhaps, they will have to return to work or stay in the workforce to maintain their standard of living. Or perhaps, they will be forced to reduce their standard of living as they live past average life expectancy or whatever age they planned on living to in retirement.

To be sure, planning for the possibility that you might outlive your assets might seem like a difficult task. After all, you really don’t know how long you’ll live in retirement. It could be 20 or 30 years. Or it could be much less.

Excerpted from Robert Powell, MarketWatch

4 Addictive Brands Consumers Crave

Brand addiction is a subject that can generate tons of debate, because brand loyalty is personal and your list can reflect your preferences and be influenced by where you live. This makes the level of addiction highly subjective and difficult to measure. With those qualifiers in mind, here are four brands that have crossed the threshold into iconic brand-land.

Coca-Cola

By almost any measure, this carbonated beverage is king of the hill of brand loyalty. What separates Coca-Cola (from most other companies is that it has proven its durability through the passage of time. It was 125 years ago, when pharmacist John Pemberton mixed his syrup with carbonated water at Jacob's pharmacy in Atlanta, Ga. That original concoction sold for a nickel a glass, and sales averaged nine per day for the first year.

The company now sells over 500 brands in more than 200 countries, making it the first truly global brand. It's now the most recognized trademark in the world and the flagship product is still based off the same carbonated drink created in Atlanta, Ga.

Daily sales volume now numbers 1.7 billion, and the brand has evolved into a generic name, used around the world. When many people order a cola drink, they simply ask for Coke, whether it's available or not. Coke is a cultural phenomenon that has spawned hit songs and a treasure trove of old signs, coolers and other marketing items hunted by avid collectors.

Google

The reach of Google may now surpass even that of Coke, but who knows what this company will look like in over a hundred years. In the meantime, Google has become synonymous with internet search engines, gobbling up 65.6% of the U.S. search market. It's clearly the gorilla in the room, leaving second-place Yahoo far behind at 15.2%.

During the month, Google accounted for 11.9 billion of the roughly 18 billion searches that were conducted. Again, it crushed the competition, with Yahoo and Bing logging 2.7 billion searches each.

When the first plain paper photocopier was introduced by Xerox in 1959, the xerographic process invented by Chester Carlson became the standard of a dynamic new industry. "Xerox" became a verb, even if you were making a copy with another company's machine. Google now finds itself in the same position, as "Google it" has become the go-to method for searching the internet. Xerox lost its luster, so it remains to be seen how long Google can maintain its current dominance.

Disney

It's hard to imagine a world without Mickey Mouse, Donald Duck, Snow White, Tinker Bell, Bambi, Winnie the Pooh and hundreds of other memorable characters. What started as a small cartoon studio in the 1920s, has grown into a sprawling entertainment and merchandising empire that circles the globe. Disney now has a giant presence in film making, television, hotel resorts, vacation clubs and cruise ships. Besides its two major theme parks in California and Florida, it has opened parks in Tokyo, Paris and Hong Kong.

Disney is a classic American brand, recognized and admired almost everywhere on the planet. The vision of founder Walt Disney permeates the company and everything it produces. No child will ever forget their first visit to Disneyland or Disney World; mere mention of the name will bring a smile to the face of a child touched by a Disney experience. With annual revenues of $40 billion and net income of almost $5 billion, no other company in this industry even comes close.

Apple

It's not an overstatement to say that owners of Apple products are passionate and can be borderline obsessive. Many of them won't even consider buying an electronic device that doesn't have the famous bitten apple logo, and they don't seem to mind that Apple products usually cost more than the competition. This is just the way Steve Jobs wanted it, and it's no accident. Subscribing to the "less is more" theory of product marketing, he created and designed products that people wanted, before they knew they needed them. His products defined the consumer, not the other way around.

All you have to do is review the statistics to see how powerful this brand is. In the company's last quarter, Apple sold 17.1 million iPhones, 11.1 million iPads and 4.9 million Macintosh computers. That was the best quarter ever for the venerable Mac. The new iPhone 4S sold more than 4 million units during the first weekend on the market, the most ever for any phone. Those are impressive statistics, for a company that was given up for dead just 15 years ago, and ample proof that design purity and magic can work wonders in the marketplace.

The Bottom Line

There are many other companies that could easily make this list. Coffee drinkers love their Starbucks, a company that started a coffeehouse revolution and made the beverage a branded fashion statement. The Nike swoosh seems to appear on sportswear everywhere, and you don't need to see the name of the company to know who made it. Then there are the Bimmer (or Beemer) devotees, who wouldn't own another car under any circumstances. Why should they settle for anything less than the performance and aggressive styling of the "ultimate driving machine?"

Addictive brands are more than just wildly popular; they turn industries and traditions on their heads. They innovate and reinvent the wheel. They don't react to cultural shifts; they cause them. Among their competitors, they stand out in a crowd and make us gasp at their creative spirit. Anyone care for a grande, extra-hot, triple nonfat, decaf, two-pump vanilla, no-foam latte, with cinnamon and chocolate sprinkles in a double cup?

Read more: http://financialedge.investopedia.com/financial-edge/1111/4-Addictive-Brands-Consumers-Crave.aspx#ixzz1eSlWowHC

How Europe’s debt crisis hits your wallet

By Jennifer Openshaw, Marketwatch

Everyday newspapers and news programs are headlining about the events in Greece, France, Italy, you name it.

Debt gone bad. Two prime ministers kicked out of office. Countries coming to the rescue. It’s the European crisis soap opera that makes “All My Children” look tame by comparison.

Mom sees all the scary headlines every day, and doesn’t understand what it means, nor do most people. All she knows is that she’s worried and wants her money safe.

So what does it mean to you and me as consumers? Well, there are actually three ways the European crisis can and will have a huge impact.

Volatility: If you’ve watched the news, you’ve seen how volatile the stock market has been since the Greek crisis began to unfold last year, and particularly since this past August when S&P downgraded our nation’s credit rating. Up 200 points one day, down 200 the next.

If you’ve got money in a college savings plan or are nearing retirement, more pronounced swings in prices of all assets means you need to think differently about your portfolio. Are you too heavily weighted toward stocks? Should you devote a greater portion to fixed-income alternatives? Perhaps you’d be better off following many affluent Americans and staying in cash or Treasuries.

Sovereign debt and your bank: Major U.S. banks, according to a report by the Congressional Research Services, are exposed to some $641 billion in debt from Greece, Ireland, Italy and other hard-hit European economies. Depending on the outcome of this euro zone crisis, that debt could be worth significantly less than expected. Significant write-offs will impact investors around the world.

Say, for example, your bank held $1 billion in Greek debt. Europe’s current proposal is to reduce the burden of debt to that nation by forcing a 50% “haircut” on all holders of that debt. Your bank would then have to write down the value of the debt by $500 million. The effect of that write-down means the bank would have to reserve against the 50% of value it has lost, which would hurt the bank’s future earnings, and certainly negatively impact its stock price.

Remember what happened during our own financial crisis? Banks had to write down their holdings in billions of dollars of subprime home mortgages, blowing huge holes in their balance sheets. That put a real damper on lending activity to consumers and small businesses. We could see a repeat of that scenario if the European debt crisis spreads beyond Greece (Italy could be the next casualty), further impairing our recovery and hurting job creation.

Think of it this way: Let’s say one of the stocks you own a big position in loses half its value. Your personal net worth (at least on paper) takes a real hit. You may now think twice before co-signing your cousin’s truck loan, regardless of what a great guy he is and how much you want to help him.

Sale of U.S products and jobs: Whether it’s cars, computers or corn, we manufacture and export products to Europe. According to the U.S. Census, six of our top export partners, including Britain, France and Germany, account for nearly 16% of total U.S. exports. The European Commission for Trade says “total U.S. investment in the European Union (EU) is three times higher than in all of Asia and EU investment in the U.S. is around eight times the amount of EU investment in India and China together.”

What does this mean? If, thanks to the spreading sovereign debt problem, our European partners face a growing economic slowdown, we’re likely to see fewer U.S. products purchased overseas. That will certainly hurt our jobs outlook next year.

Take General Motors Co., which 17 percent of sales from Europe. Chief Executive Dan Akerson is now looking for ways to reduce its exposure to the euro zone, saying that slower sales “is a manifestation of Europe’s economic morass.”

Teen retailer Abercrombie & Fitch Co. is also feeling the squeeze on sales; maybe the chances of your own teen getting hired there would dwindle.

Even McDonald’s Corp.’s Europe division, which is the Golden Arches’ second largest region (by revenue), employing more than 400,000 people in Europe with more than 700 restaurants, could see fewer Big Macs gobbled down despite the attraction of cheap eats in a recession.

Don’t forget that many Americans are employed here and abroad by European companies. BNP Paribas, France’s largest bank, has thousands of US workers and just announced cuts of 10,000 employees worldwide.

There’s no question that the steady drumbeat of negative economic news coming from Europe has had an unnerving effect on business and political leaders around the world. The failure of those leaders to provide effective solutions, despite years of warning signs, has severely limited the options nations in that region now have.

Crooks find new ways to prey on home woes

By Amy Hoak, MarketWatch

Fraudsters find a way to scam lenders and homeowners out of money no matter how the housing market is faring, but in recent years they’ve shifted their tactics to profit from the market’s downturn.

Today, there’s less identity fraud and misrepresentation of income or employment to obtain a mortgage, mainly because stricter validation criteria when a borrower applies for a loan makes that strategy much less successful.

But other types of fraud are replacing those scams. Some schemes target distressed homeowners who are looking for a way to save their home from foreclosure. Another tactic: Profiting off of short sales at the expense of the lender.

Foreclosure rescue

Schemes that prey on struggling homeowners heading toward foreclosure are still prevalent, even years into the foreclosure crisis.

It’s a crime of opportunity. There is an enormous pool of distressed homeowners.

Scammers use various pitches. Some say they can prepare your documents for you as you try for a loan modification; others claim to be an attorney or say they are working with an attorney. Often, these offers sound legitimate, echoing some of the same language used by big government programs and lenders to gain a homeowner’s trust.

They offer a service, take the homeowner’s money, then disappear.

But the Mortgage Assistance Relief Services Rule, in effect since January, prohibits firms offering mortgage-modification or mortgage-relief assistance to accept up-front fees, so homeowners should never pay before services are rendered. There’s an exception for attorneys, causing some scammers to pose as representatives of law offices, she said.

Other fraudsters get homeowners to sign a quit-claim deed, which transfers ownership of the home to the scammer, who promises the homeowner a situation where he or she will be able to remain in the house. In a newer scam, those who have already lost their homes are being approached to pay money to get the home back, she said.

Don’t give anyone money to help you with this. Instead, seek out a U.S. Department of Housing and Urban Development-approved housing counselor and your servicer.

Short-sale fraud

A short sale can be a lifeline for a distressed homeowner heading for foreclosure. That’s because in a short sale the lender accepts a lower mortgage payoff when the homeowner owes more than the home is currently worth.

But fraudsters have found ways to make a profit off these deals.

One of the most common forms of short-sale fraud happens when a seller or someone representing a seller doesn’t submit the best offer to the lender. A middleman purchases the short-sale property at the lower price, then turns around and resells the property to a legitimate buyer at a higher price — often on the same day, according to a recent Federal Bureau of Investigation report on mortgage fraud.

The middleman pockets the difference, sometimes sharing it with an accomplice.

It does require a pretty sound knowledge of how a conventional loan is closed and how a short sale is negotiated and approved. Some fraudsters are real-estate agents marketing themselves as “short-sale specialists.” Title companies and settlement agents may be in on the scam too, he said.

Sometimes fraudsters try to manipulate the price lower by encouraging the owner to make the house look worse than it is, referred to in the industry as “reverse staging.”

That means you don’t weed the yard, don’t shovel the sidewalks, don’t do any continued maintenance of the property, don’t worry about putting a fresh coat of paint on it, or even keep it neat and clean. That reduces the value of the property when the appraiser or broker comes to evaluate it.

Often, short-sale fraud and flips are between real-estate agents. But homeowners can get entangled in the mess as well. If you get wind of a fishy scheme — or if an agent offers a way for you to profit from the deal — run the other way.

Other schemes

Another scam is when the title or closing agent doesn’t remit payoffs as he should. An example: You refi your mortgage, the refi closes, you go on your way and make payments to the mortgage company, but your title company hasn’t remitted payoffs to the old company. Fraudsters take funds for their own use, and it can be a month or two before evidence of the scam is found in the public record.

There surely will be more scams emerging as fraudsters find other system weaknesses to exploit.

Investing in Social Media

The first exchange-traded fund aiming to replicate the performance of social-media stocks is set to launch Tuesday, and it offers significant exposure to Chinese Internet firms.

Tracking 25 stocks—including some launched in this year's most closely watched initial public offerings, such as Linked-In Corp.—the Global X Social Media ETF is structured as a pretty simple way to make sure you're exposed to the full sector. ETFs are baskets of shares that trade like a single stock.

Investor interest in social-media stocks has surged this year, but the twin heavyweights of U.S. social media, Facebook Inc. and Twitter Inc., aren't publicly listed.

That helps explain why 37% of the fund's initial weighting will be in Chinese firms, such as Tencent Holdings Ltd. and Sina Corp., compared with 26% in U.S. stocks.

The U.S. group includes Google Inc. at 4.75%. That is the same weighting given to Pandora Media Inc. and to Groupon Inc. LinkedIn is at 3.5%. Three Japanese stocks get more than 19% collectively, while Russian, German, Indian, Taiwanese, Italian and U.K. social-media stocks are also represented.

The focus will almost certainly shift in favor of the U.S. as the fund adds new holdings.

It may take a while, though. There have been conflicting reports about when Facebook might plan an Initial Public Offering (IPO).

However, the surge of interest ahead of these Facebook and Twitter IPOs and in social-media companies generally has conjured memories of the Internet bubble of the late 1990s.

Note: This is for information only and is not intended as specific investment advice. Investing in social media can be considered a speculative investment.

How to Spot an Investment Fraud

Excerpted from John F. Wasik, Morningstar

There's rarely a siren going off when you're about to write the check for a fraudulent investment. The scammer may be someone you know, even a clergyman. Like mystery novel characters, they often are the people you least expect.

Yet there are ways to vet an investment before you sign on the dotted line. Some investors are intuitive enough to have a decent "smell test" that they use while others just stay away from things that seem too good to be true.

As people, though, we're hard-wired to trust our advisors (medical, financial, and otherwise), because we can't know everything. But if you don't have the expertise, you can at least arm yourself with a rigorous checklist before you hand over a check.

The first calling card of a scammer is unrealistically high returns. If insured certificates of deposit are only yielding 1.5%, you can be pretty sure that a promised return of 20% is either highly risky, bogus, or front-end loaded with high expenses. Most swindlers make their money upfront, then move on to other investors.

If the investment program offers low-risk, double-digit yields, well above historical averages, then you need to be wary. Remember, traditional stocks and bonds have returned around 8% and 4%, respectively, over the past 80 years. Those are pretty reliable benchmarks.

The pitches for frauds are almost always laced with secrecy and the necessity to act quickly. Documentation such as prospectuses and offering sheets with meaningful details are rare when a scammer is peddling something illegitimate. They thrive because investors don't demand transparency. Their marks don't know what they're buying because they aren't skeptical enough to ask the pertinent questions. Con artists thrive on opaque transactions.

You can usually stop scam promoters in their tracks by finding out whether they are licensed to sell securities. Many aren't. They must be registered with state or federal agencies. You can easily check their status by locating your state securities regulator at the North American Securities Administrators Association. A phone call would take only a few minutes. There's also a broker background check that will show you any disciplinary actions or lawsuits against them. This information can be found on Finra's BrokerCheck. Look to see if they have bounced around from state to state or firm to firm. Have there been any complaints lodged against them?

But even if you get past the smell test and the registration check, and everything looks fine on the front end, investors should remain vigilant. For example, pay attention to the performance reporting on your investments. Do you receive regular statements? Do the statements come at odd intervals (other than monthly, quarterly or annually)? One troubling sign is if the proof of ownership and account activity is provided on a low-quality client statement that arrives irregularly, is incomplete, or fails to match your understanding of the investment.

Ultimately, though, the unwillingness of a broker to answer basic questions might be the biggest giveaway. If they are evasive, won't redeem your money, or simply stop returning your calls, that's the time to call your state securities regulator.

What if you get stuck and can't get your money back? Call your state attorney general and file for arbitration, which every broker offers to resolve disputes. It's often brutally difficult to get any money back once it's gotten tangled in the web of a scam, so your best defense is to avoid them altogether.

Samples of Recent Scams
Here's a summary of some recent scams, many of which play upon headlines and market activity:

• Real-Estate Turnarounds. Scammers have pitched "distressed real estate" as a way to buy undervalued properties. Con artists have seized upon this theme as a way to swindle investors. In February 2011, for example, a Florida man pleaded guilty to fraud after he took $2.3 million from investors in a scheme to buy and refurbish homes. Instead of being given ownership in the properties, the man sold worthless promissory notes at 12% interest. It was a Ponzi scam.
• Energy and Metals Schemes. When the price of any commodity goes up, there are always schemes tied into them. Oil, gas, gold, silver, and other resources are offered through fake "stakes" in mines or wells. One scheme solicited nearly $30 million through a Florida Gold Bullion Exchange. The operator used telemarketing to find his 1,400 victims.
• Life Settlement Contracts. Although there are legitimate ways of investing in the death benefits of other people's life insurance policies, some schemes sell securities in these vehicles. They usually involve bogus promissory notes. Earlier this year, two executives of National Life Settlements, LLC, of Houston were indicted for fraud for selling $30 million in unlicensed notes.

The 3 Deadly Perils of D-I-Y Financial Planning

By Princess Clark-Wendel, Fox Business

Financial planning doesn’t have to be a scary process, but doing it yourself without a little research and preparation can lead your budget to a pretty scary place.

Book store shelves are filled with how-to books offering instructions on a wide variety of activities, from gardening, roof repairs to cutting our own hair. While these plights to master these things on our own can work out sometimes, often our plans go awry and we are left with a permanent bad hair day.

There are several tools available to consumers looking to get some insight on financial planning both in stores and online. But how do you know which are best for you and your budget? Here are three mistakes to avoid when practicing do-it-your-self financial planning and investing.

Relying on the Out-of-Date Information

Especially in our current economic landscape, it’s hard for books on DIY books on financial planning and economics to stay up to date.

As our government tries to restore the economy, Congress has enacted a number of tax laws and legislation that impact the pocketbooks of many Americans, particularly the middle class.

These laws change rapidly.

In 2010, Congress passed laws that enable employees to maximize their workplace savings contributions to higher levels, reduced payroll taxes by 2% and the Bush-era tax cuts were extended through 2012. These legislative changes greatly impact year-end and long term planning, however, no financial planning books published prior to 2010 contains this information.

If you find a book that you like make sure to double check the information to make sure it is still current or applicable.

Getting Tangled in the World Wide Web

While the internet has provided us with such conveniences like online banking and tools to easily manage our everyday living expenses, it should not be considered the best or only way to manage our investments.

Not only does a savvy investor need information, he or she also needs skills and knowledge of complex investment concepts like diversification, dollar cost averaging, efficient market hypothesis and capital asset pricing models, which are not for the faint of heart.

For example, if an investor does not fully understand cash flow in evaluating a particular business, he or she may invest in a company that has a problem with liquidity. A clear concept on cash flow management is needed for the do it yourself investor especially if he or she expects to cash out relatively soon.

It’s important to have a solid knowledge base of financial planning to make sure you are making sound investment decisions.

Exposing Yourself to Catastrophes

To give consumers a broad sense of certain investment or financial tools, expert sources tend to provide general guidelines or rules of thumbs.

For example, a rule of thumb that many people use to determine how much life insurance they need is to multiply their annual salary by six or 10. This magic number should be the amount of life insurance that would be needed to replace your income if you die. Therefore, if your annual salary were $50,000, you would need approximately $300,000 to $500,000 worth of life insurance coverage. But here’s the problem: this equation doesn’t take into account individual goals and life situations. For example, you may not have kids today, but what happens when you get married and have a family? Would $300,000 to $500,000 worth of life insurance be enough to sustain them?

Some people are skeptical about carrying too much insurance, whether it is life or liability insurance because they do not see the immediate benefit. In most cases, the insured of a life insurance policy will never benefit from the policy; but other loved ones will. Regarding liability insurance, keep in mind that whenever someone suffers a loss, regardless of the causes, the tendency now is to file a suit – and courts are awarding record judgments.

Not having enough insurance could be costly- and terrifying. Awards in civil cases now exceed $25 billion, with a total of one million cases in the system according to the Rand Institute for Civil Justice Report.

Don’t fall for the perils associated with do-it-yourself planning by avoiding these costly mistakes. A good advisor will help you develop good spending and investing habits, while they help you do a better job of insuring and planning for contingencies.

As recent headlines prove, the financial market is always exposed to various risks, and an expert advisor can help you minimize those risks, including the dark side of information, the tangled web of information, and exposure to the catastrophic.

By planning together, you will reduce stress, save money and increase your financial security- fearlessly!

5 insurance mistakes and how to avoid them

By Sarah Max, Fidelity Interactive Content Services

If life insurance has been low on your list of financial priorities, you’re not alone. Some 30% of U.S. households have no life insurance whatsoever, and half admit to not having enough, according to research and consulting firm LIMRA.

While budget constraints account for some of this gap, the morbid nature of the product might also be to blame. Unlike, say, saving for retirement or college, thinking through the financial implications of death doesn’t exactly evoke warm and fuzzy feelings.

But better to confront your own mortality than leave your family a legacy of financial hardship. And, look at the bright side: “Prices are near all-time lows,” says Robert Bland, CEO of Life Quotes, a national life insurance brokerage. “You’ve got intense price competition, and the industry is realizing that people are living longer.” In fact, a healthy 40-year-old man could lock in a $1 million, 20-year term policy for about $640 a year, according to Life Quotes.

Taking stock of your insurance needs and shopping for a policy isn’t rocket science. Still, it’s easy to get tripped up by the dollars and details. Here are five common blunders to avoid.

Mistake No. 1: Counting on rules of thumb

A better way: Do an inventory of what you need and what you have.

A common rule of thumb is to buy insurance equal to 10 times your annual salary, but that guesstimate can result in not having enough or, conversely, buying too much. It can also lead you to overlook hidden costs, such as replacing employer-provided health insurance, as well as big-ticket items, such as college for your kids or retirement for your non-working spouse.

For most families, a term life policy is usually the go-to type of policy, and for good reason. It’s the cheapest insurance to fit the bill. As the name suggests, it offers a fixed premium for anywhere from 10 to 30 years depending on the term you choose. If you have kids, you’ll want a policy that doesn’t expire until they finish college. If your spouse relies on you for some or all of the household income, the term may be tied to when your mortgage is paid off or when you plan to retire.

Mistake No. 2: Buying permanent insurance at all costs

A better way: Cover your bases with term.

If your insurance needs go beyond your working years – for example, you want to cover estate taxes – a permanent policy may be appropriate. These policies, which come in the form of whole life, variable life and universal life, don’t expire and typically include a cash value component. When matched properly with a family's needs, such a policy can be an important addition to an overall financial plan.

But because these plans come in many different varieties – and are substantially more expensive than term insurance – you should consult a fee-only financial planner (who doesn’t make commissions on life insurance products) before going this route. First and foremost you need to make sure you have enough insurance to cover your needs.

Mistake No. 3: Relying on employer-provided insurance

A better way: Lock in a policy you can take with you.

Group life insurance is a common offering in company benefit packages. These policies, which typically cover from one to five years of salary, offer some financial cushion, but it’s best not to include them in the equation. If you lose your job you likely won’t have that insurance.

Some firms offer supplemental policies at the employees’ expense, typically subject to a health exam. Before you go this route, make sure the policy is portable, meaning you can take it with you when you leave the job, and see how the plans price out. As a rule, these policies are often more expensive than what you’d find on the open market. One exception: If you have a pre-existing condition that makes it tough to qualify for an individual policy consider stocking up on insurance when you start a new job. Some companies have a no-questions-asked period where new employees can buy supplemental insurance that isn’t tied to a health assessment.

Mistake No. 4: Not insuring a non-working spouse

A better way: Put a dollar value on his or her contributions.

At its core, life insurance is designed to replace income. That said, the death of a non-working spouse can still be a financial hardship. It can result in substantially higher child care costs and home maintenance costs. It can alsohave an impact on the wage earner’s ability to earn money.

To find the right number, calculate what it would cost to pay someone to help care for the children, manage the household and deal with all the other tasks that fall on the shoulders of a stay-at-home spouse.

Mistake No. 5: Fibbing on the insurance application

A better way: Be honest from the get-go.

It probably goes without saying, but your individual health – as determined by everything from your weight and blood pressure to medical history and prescription drugs – will greatly influence premiums. A 40-year-old male smoker, for example, can expect to pay about $3,900 a year for a 20-year, $1 million term life policy, according to Life Quotes. That’s about six times what his healthy non-smoking counterpart would pay.

If your health is less than stellar it’s particularly important to shop around, because different carriers are willing to take on different types of risk. Initially, you’ll be quoted based on the information you provide on the application, but because all of this information is verified via a medical clearinghouse and health exam, fudging the numbers will get you nowhere.

In fact, during the underwriting process you may be better off providing more information than necessary. If you have something in your health history, explain it. You’ll likely have a better outcome if you give this information up front.

Once you’ve done your homework and secured the coverage you need, don’t just set it and forget it. Experts recommend reassessing your coverage when you change jobs, buy a new home, have another child, get divorced or get remarried. Even if the dollar amount of coverage you need doesn’t change, some of the fine print could be affected.

The most obvious example is divorce. If you don’t update your policy to remove your ex-spouse, he or she will remain the beneficiary.

Thanks but No Thanks on 401(k) Advice

Excerpted from: Karen Blumenthal, Wall Street Journal

Amid volatile markets and concerns about how workers are investing their retirement savings, more 401(k) plans are offering participants specific investment advice and even automatic account management to make investing decisions easier.

That should be a good thing: Survey after survey shows that formal advice leads investors to increase their savings, diversify their holdings and continue holding stocks even when the market takes a plunge.

But here's the catch: Only about a quarter of the people who have access to advice through their retirement plans actually take advantage of it, according to retirement-plan providers and firms that provide advice services. And most of those who do use advisory services neglect to provide the personal details that would make the advice more valuable.

For many years, 401(k) and similar plans offered mostly education and "guidance," such as brochures, seminars and worksheets that gave employees generic suggestions about how to manage their accounts. Providing advice goes much further, offering specific recommendations about how much to invest in specific funds in your plan.

It also carries a fiduciary responsibility, or a requirement to put investors' interests first. Because of that, most advice services are offered by a company other than the investment firm that provides the 401(k) plan's fund offerings.

A recent survey of 820 profit-sharing and 401(k) plans by the nonprofit Plan Sponsor Council of America found that 58% offered investment advice in 2010, most commonly online services, one-on-one counseling and telephone hot lines. That was up from 47% of firms surveyed in 2005. Just over a third of the plans offered professional account management, up from 24% in 2005.

Among large companies, 74% now offer advice or managed accounts to plan participants, up from 50% in 2009, says benefits consultant Aon Hewitt.

In addition, as companies continue to shift to 401(k) plans from pension plans, it has become more apparent that many employees are ill-equipped to manage their own money. They may make costly decisions, such as moving out of stocks only after the market has tanked. Many older investors are too heavily invested in stocks or worse, their own company's stock, while some young workers avoid stocks altogether.

The Young and the Riskless

Excerpted from Joe Light, Mary Pilon and Jessica Silver-Greenberg, Wall Street Journal

Risk-taking is for the young—except, it seems, when it comes to investing.

The 2008 market panic, last year's "flash crash" and the latest burst of volatility are proving to be more than many young investors can stomach. As a group, people in their 20s and early 30s are less comfortable taking risk than they were before the financial crisis, according to recent surveys—leading them to hunker down with safe assets at a time when many financial planners say they should be rebalancing into risky ones.

Investors who eschew risk at such a young age might be setting themselves up for disappointment. Without the compounding effects that come with investing in equities for a long time, stock-less investors might find it nearly impossible to accumulate a big enough nest egg to retire at all, let alone in their 60s.

"It's hard to build a lot of wealth without taking at least some risks in the markets," says Colorado Springs, Colo., financial planner Allan Roth.

The good news is that even the most traumatized young investors can take steps to ease back into the stock market and improve their long-term chances for success—while limiting the risks that made them so nervous about equities in the first place. The key is to take measured risks based on job security and other factors.

If young investors' fear persists, financial advisers say, the result could be leaner retirement funds later in life.

Advisers often urge young investors to put most of their retirement portfolios in stocks. Young people who take less risk will likely have to make up for it in other ways or suffer the consequences of a late or nonexistent retirement.

Although investors haven't seen much of a payoff from stocks over the last 10 years, over longer periods, equities have a much better track record. Over the last 20 years, large-capitalization stocks have returned more than 9% annually, and over the last 30 years, they have returned almost 11%.

Of course, no two investors are alike. There are a number of other important factors besides age to consider when choosing an allocation, from the person's career choices to their psychological resilience to losses.

To Get Ahead, Stick Your Neck Out

Excerpted from Peter Coy, Nikolaj Gammeltoft & Karen Weise, Business Week

Nobody’s forcing you to take risks as an investor. You’re free to stash your savings in three-month Treasury bills at a current yield of 0.02 percent a year. Just bear in mind that if that rate persisted, it would take you 3,500 years to double your money. Actually, it’s worse: If inflation averaged 1 percent annually, the buying power of your ultrasafe T-bills would be reduced over that period to one-quadrillionth of its current value.

Hunkering down may be a prudent short-term strategy, but eventually you need to poke your head out of the foxhole and look for ways to make some real money. The good news is that stocks, high-yield bonds, and real estate are cheap by historical standards and stand a good chance of appreciating strongly over the next decade or so. In fact, after five monthly declines in a row, stocks jumped 9 percent from Oct. 1-Oct. 25.

“Stock values today are the most attractive relative to bonds in more than one-half century,” Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School. “It is the fear of short-term fluctuations that keeps stock prices so low, and this generates the superior returns that stockholders have always achieved when buying at favorable valuations, such as we see today.”

You can think of today’s ultralow interest rates as a hard shove from Federal Reserve Chairman Ben Bernanke to get you out of your defensive posture. One way low rates juice economic growth is by inducing investors to reach for yield by putting their money to work in riskier investments.

Persuading people to buy when prices have gone down is a challenge. In focusing on the weak returns in stocks over the past decade, “investors are all looking in the rearview mirror,” says Daniel J. Genter, chief executive officer and chief investment officer of RNC Genter Capital Management. Skittish investors withdrew an estimated net $341 billion from U.S. equity mutual funds from the start of 2008 through September 2011, including $61 billion so far this year. The share of mutual-fund-owning households that want below-average or no risk rose to 23 percent in May of this year, from 14 percent in May 2008, while the share seeking above-average risk shrank.

Investors in 401(k)s have the right attitude. They put their investing on autopilot. During the market’s swings of 2007 through 2010, Vanguard Group found that the share of contributions going into equities in its defined-contribution plans stayed within a narrow range of 68 percent to 74 percent.

Deductible Investment-Related Expenses

Do you invest in stocks, bonds or mutual funds? If you do, you may be able to deduct certain expenses related to your investments. To be deductible, the expenses must be ordinary and necessary and related to the production of taxable income, or for the management of property held for the production of income.

Investment expenses are deductible as miscellaneous itemized deductions on Schedule A of your tax return. When your investment portfolio includes both taxable and tax-exempt securities, you can deduct only those expenses that are related to the taxable securities.

The investment-related expenses " along with your other miscellaneous itemized deductions " must exceed two percent of your adjusted gross income (AGI) to be deductible.

COMMON DEDUCTIBLE INVESTMENT EXPENSES

Legal and professional fees. If you paid for legal advice regarding your investments, the cost is deductible. The same holds true for fees paid to an accountant for tax advice about your investment activities and transactions.

Investment advice. You can deduct payment to a broker or an investment manager for portfolio management.

Investment-related publications. Also deductible is the cost of financial newspapers, such as the Wall Street Journal or the Financial Times, as well as financial magazines, journals and newsletters. To qualify for the deduction, the IRS says that there must be a credible relation between the information, the advice gained and the taxpayer's investment activity.

Safe deposit box rental. These fees are deductible if the box is used exclusively to store securities and documents related to your investments.

Travel and transportation costs. You may claim a deduction for travel costs incurred to look after your investments, or to seek investment advice from an attorney, accountant, investment advisor, or stockbroker.

IRA and Keogh investment fees. These fees are deductible only if they are billed and paid separately. If the fees are subtracted from your IRA or Keogh account, they are not tax deductible.

Fees to collect income. You can deduct fees you pay to a bank, broker, trustee or agent to collect investment income, such as your taxable bond interest or stock dividends.

NON-DEDUCTIBLE INVESTMENT-RELATED EXPENSES

Not all investment-related expenses are deductible. For example, you cannot deduct commissions or brokers' fees on the purchase or sale of securities. Instead, these expenses are added to the investment's cost basis, which reduces your taxable gain when the asset is sold. The same rule applies to mutual fund expenses.

You may not deduct travel costs associated with attending seminars, conventions, or similar meetings for investment purposes, nor can you deduct the cost of attending a stockholders meeting, even if you own stock in the company.

As always, consult with your professional tax preparer regarding your specific situation.

Volatile Markets Can Damage Your Health

By Andrew Jack in Financial Times

Sharp moves in stock markets are closely correlated with a sharp jump in heart attacks, according to a new analysis of studies in the US and China.

Two recent academic articles have found a link between equity trends and coronary heart disease, suggesting the stock market volatility acts as a signal of health risks and may threaten investors who closely monitor their portfolios.

Bernstein Research, which highlighted the findings in a note issued on Monday, said they showed share performance had a greater statistical effect on heart attacks than cardiovascular drugs released in recent years.

Writing in the European Heart Journal, Wenjuan Ma at the school of public health at Fudan University and a team of co-authors, identified a strong link between stock market volatility and coronary heart disease deaths in Shanghai’s nine urban districts.

During the period 2006-08, which was associated with rapid share price fluctuations on the Shanghai stock exchange composite index, they tracked a 1.9 per cent average increase in deaths for each 1 per cent change in the index.

While stressing they could not prove a causal link, they stressed that many Chinese investors were “elderly retirees who spent much of their day sitting at the Stock Exchange hall to monitor the real-time performance of the stock ... “

“Both rising and falling of the stock markets may represent substantial emotional, psychological, and physical stress that may adversely affect cardiovascular health.”

Jack Scannell, a senior analyst with Bernstein, said: “The message for retail investors may be to not check your portfolio too often. If you do so every day, half the time you will be disappointed, if you do so only every decade, you’ll be let down less often.”

A separate study released last year in the Journal of the American College of Cardiology by Mona Fiuzat and colleagues at Duke University Medical Center found a rise in heart attacks linked to falls in the Nasdaq index during 2008-09.

“The three-month moving average of [heart attacks] events had an inverse relationship to the stock market trends. As stock market values decreased, the incidence of AMI increased, and decreased when stock trends improved. These data suggest the stock market trends may have an association with increased local [cardio-vascular] event rates,” they concluded.

They add to broader research suggesting a rise in health-related problems caused by the economic downturn and reduced access to medical systems in countries including Greece.