Common Market Misconceptions

1. Cash is the safest place to be. When conditions are uncertain, investors tend to migrate from riskier assets to cash and cash equivalents. While there is some safety in holding cash, it should only be part of a well-diversified portfolio, as cash provides zero interest and produces a negative return on an after-tax, after-inflation basis.
2. Stocks are too risky. Yes, the first 10 years of this century have been dubbed the "lost decade" for stocks, having provided investors with negligible returns. But investors must understand that "checking out" of equities could mean missed opportunities, and also that not all stocks are created equal.  It is not just about the highest yields, but also the focus on high-quality companies that can ride out volatility and ideally have growing dividends.
3. Income is only important for retirees. There's no doubt that income is critical in retirement, once investors have foregone a regular paycheck, but it is also a powerful wealth builder once they are still working. Investors may be surprised to learn that income historically has accounted for a large percentage of investment returns: over the past 85 years, dividends made up 43% of stock returns and coupons accounted for nearly 90% of bond returns.
4. Better wait for markets to settle down before making changes. Investors probably feel like they have been on a roller coaster since the 2008 financial crisis, and at this point are waiting for things to settle down. However, it's important to know they are missing out on opportunities with that mindset. S&P 500 equity valuations, although they've increased double-digits so far in 2012 and over 100% since their crisis low in March 2009, are still quite reasonable, particularly compared to bonds. And interestingly, equity market volatility, while it may feel bad, is close to historic norms.
5. Inflation is not a concern today. While inflation has been moderate in recent years, it would be a mistake to underestimate its erosive powers, especially with bond yields as low as they are. While inflation may be tough to notice on a one-, two- or three-year basis, BlackRock research has shown that annual inflation of just 3% can reduce the purchasing power of a portfolio by 50% over a 25-year timeframe.
6. Diversified? Yes, I hold an assortment of stocks and bonds. In the new world of investing, exposure to just stocks, bonds and cash is no longer enough. Diversification requires an allocation to non-traditional or alternative investments which tend to have lower correlations to traditional assets. While such diversification cannot ensure a profit or prevent a loss, it has been shown to smooth the ride over time. 

Source:  BlackRock

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

 

Ten Worst Financial Habits: Did Yours Make the List?

Have you set retirement planning goals for 2013?

If your answer is "no," then join the club. Some 84 percent of Americans surveyed by Allianz Life Insurance Co. said they had not included any financial resolutions among their goals for the new year.

Allianz also asked people 55 and older to identify their worst financial habits. More than one-third -- 37 percent -- replied that they had no bad financial habits. I have my doubts they were telling the truth. The list that the other two-thirds confessed sounds too familiar.

Here are the top 10. Do you recognize yourself?

1. I spend too much money on things I don't need: 20 percent.
2. I'm not saving any money: 23 percent.
3. I'm saving some money, but not as much as I could: 20 percent.
4. I don't have a household budget: 15 percent.
5. I spend more money than I make: 13 percent.
6. I'm not educating myself about retirement finances: 12 percent.
7. I only make the minimum payment on credit cards: 8 percent.
8. I can't resist gambling -- or at least playing the lottery: 10 percent.
9. I haven't pursued professional financial help planning retirement: 8 percent.
10. I'm not contributing to my employer-sponsored retirement plan (401(k) or 403(b)/457): 4 percent.

Source:  Jennie Phipps, CNBC

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

 

How a Financial Advisor Adds Value (Asset Allocation)

Asset allocation is a critical factor in determining the long term returns of your portfolio.  asset allocation also helps you and your financial advisor determine the trade-off between risk and return for your particular needs.

Your investment goals.  Your financial advisor will need to understand your short- and long-term objectives - for example, a home purchase, college education, retirement, or business financing - to create an allocation that helps you meet your goals.

Your risk tolerance.  Do you lose sleep when the markets slide?  Or do you shrug off a market slide as the normal course of business on Wall Street?  Your financial advisor can help you understand your emotional reactions to the risks of investing and can help you create a plan that suits your investment temperament.

Your comfort with risk versus return.  The concept of risk/return suggests that low levels of investment risk will result in low returns, while high levels of risk will generate higher returns.  Of course, there are no guarantees.  While increased risk offers the possibility of higher returns, it can also lead to bigger losses.  Balancing the risk you are willing to accept with the investment returns you need or want is something your financial advisor will discuss with you.

Determining the amount of investment risk you can tolerate is essential to establishing an asset allocation.  Your financial advisor will examine your income, investable assets, investment goals - even your attitude about risk - to determine the risk/return trade-off that is right for you.

Your time horizon.  In order for your financial advisor to tailor your portfolio to your goals, it is important to define your financial time frame.  A portfolio invested to finance retirement in 20 years would include a different selection of securities than a portfolio intended to finance an imminent retirement.  For example, a growth-oriented investor seeking to maximize hie or her long term return potential may be willing to tolerate the large short term fluctuations that can occur with a concentration of stocks.  On the other hand, an investor with short term goals might be more likely to choose a bond-oriented allocation that is more suitable for generating income.  Your financial advisor will work closely with you to establish an allocation to meet your particular needs.

Diversification.   Your financial advisor will generally build your portfolio using a variety of asset classes to achieve a high level of diversification and long term stability.

But there is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.  Diversification does not ensure a profit or protect against a loss in a declining market.

Periodic re-balancing is essential.  Your needs, goals, and time horizon change over time.  So too, does the market.  One of the ways your financial advisor adds value to your investment plan is by monitoring the periodically re-balancing the asset allocation of your portfolio.

Source:  The Vanguard Group

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

How a Financial Advisor Adds Value (Strategy)

A carefully planned investment strategy is a practical way that you and your financial advisor can make sure that you maintain the direction and discipline you need to reach your investment goals.

The first step in creating an investment strategy is to work with your financial advisor to understand your current situation and decide what you want to accomplish with your portfolio.  Together with your financial advisor, you will need to determine your investment goals, risk tolerance, and time horizon.

Your financial advisor will also ask you questions about your current investments, the amount you plan to invest and your investment time frame, the level of risk you are comfortable with, and the return you expect from your portfolio.

Periodically your financial advisor will revisit your investment strategy to ensure that your portfolio is on track and to make any necessary adjustments.

Source:  The Vanguard Group

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

How a Financial Advisor Adds Value (Knowledge)

A skilled financial advisor has the training and insight to:

• Understand your goals, your dreams, and your reasons for investing.
• Help create an investment strategy that can meet your short- and long-term needs.
• Make sense of an array of investments from traditional stocks and bonds to ETFs, retirement accounts, and other investment opportunities and determine how they fit into your overall financial plan.
• Act as an effective behavioral coach to keep you focused on your objectives.

You can trust an experienced financial advisor who offers the discipline, strategic planning, and continuous monitoring that will help ensure that your portfolio is positioned for success whether the market is booming or fraught with uncertainty.

Source:  Vanguard Group
  
The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Paying for Advice

People who have no problem paying for the services of an accountant or lawyer often balk at the prospect of cutting a check to pay for investment advice. Instead, they rely on "free" help from retirement advisers they meet at banks, brokerage firms and retirement seminars.

But there is no free lunch. You might not be paying an hourly fee for financial advice, but you still are compensating the adviser. The fees are built into the investment, so people don't realize how much they are paying and how these fees drag down investment returns.

This doesn't mean that commission-based advisers are incompetent or unethical, but they do have a conflict of interest, and their inventory could be limited largely to products managed by their firm.

Fee-only advisers, by contrast, don't earn commissions, are more likely to suggest low-cost investments from a larger variety of providers and will generally take a more holistic look at your finances.

Source:  Ellen Schultz, Wall Street Journal

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

FICA Payroll Increases January 1

Over and above the potential lapsing of the "Bush Tax Cuts", unless Congress legislates otherwise, the Social Security Tax (FICA) will go up 2%. It was cut in 2010 by 2% as a stimulus measure for the economy.  Some people will get paid next Friday, and those who get paid then will probably see the increased rate of the Social Security tax.

For the past two tax years, employee contributions to the Social Security program was 4.2 percent, down from the usual rate of 6.2 percent (this comes on the FICA line item of a paystub) on earnings of up to $110,100 in 2012 and up to $113,700 in 2013. That 2 percent rise in payroll taxes would result in 160 million American wage earners seeing their tax bills increase by an average of $1,000.

Source:  Multiple Sources

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Average cost of raising a child

Family net worth is dropping, but college tuition is rising, and so is...the cost of raising children? Yes, the U.S. Department of Agriculture's annual report found that a middle-income family with a child born in 2011 can expect to spend about $234,900 ($295,560 with projected inflation rates) to raise that child over the next 17 years. This is a 3.5% increase from the cost of raising a child born in 2010. The USDA report, issued since 1960, considers everything from housing and food (some of the larger expenses) to clothing and child care.

Source:  BlackRock 

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Do not freak out about the "fiscal cliff."

We're not talking about the failure of the banking system …we're not talking about fraud or a housing crisis.

The dynamics of today's financial environment are nowhere near as dire as the 2008 financial crisis.

The fiscal cliff crisis is more like the rollercoaster of August 2011, when the United States lost its AAA rating. That was very short-term. And we've gone on and had a relatively strong equity performance this year.

But make no mistake, the fiscal cliff -- the package of tax hikes and deep spending cuts set to kick in automatically on Jan. 1 if Congress can't reach a deal -- will almost definitely impact you.The question is how much.

Will my taxes go up?  - Probably. And they may go up a lot.

We're looking at higher tax rates for a number of years. People don't realize that rates were once much higher than they are today.

From the 1950s to the 1960s, the rate on the highest earners was 90 percent. From the late 1960s the early 1980s, the highest rate was 70 percent.The rate didn't lower to 50 percent until the late 1980s. Starting in the early 1990s, the rate dropped to 39.6 percent.

Today, the top tax rate is 35 percent – but it's probably going up to 39.6 percent next year for the highest earners. And if you are married and filing jointly ($200,000 for single filers) and your income is over $250,000, you may be looking at additional taxes.

First, 0.9 percent of your wages above $250,000 will go toward an extra Medicare tax. Second, to the extent your income is above $250,000, you may also pay an additional 3.8 percent for unearned income such as interest, dividends and capital gains.

Which means that if you earn more than $250,000, and you have interest and dividend income, you will be paying 43.4 percent. (The rate is derived this way: If you are in the 39.6 percent tax bracket and your income is above $250,000, you'll also pay the 3.8 percent tax on interest, dividends, and capital gains.)

You should pay attention to capital gains because those are going to be taxed quite a bit higher. This year, if you sell a stock, your capital gains tax rate is 15 percent. Next year you'll probably pay 20 percent – and if you are subject to the 3.8 percent tax, you could be paying as high as 23.8 percent.

How can I shelter income to keep my tax bracket lower?  - So if you expect a bonus, take it in 2012, not 2013. In the old days, advisers always told clients to defer income. But now, the tax rate on a bonus is probably discounted from what it will be next year.

You also may want to wait until Jan. 1 to make charitable contributions, since those deductions will reduce your taxable income in 2013. If you have deductible expenses such as your real estate taxes or the cost of buying a business computer, wait until 2013. But be careful: there is some discussion about capping certain deductions.

You should also increase your savings through your retirement plans to reduce your pretax income.

Also consider shifting investments to tax-free bonds if you have a portfolio of dividend-paying bonds. Municipal bonds are becoming more attractive because of the tax threat.

So what can I do to prepare?  - First of all, don't freak out and move your investments around just because you're worried about higher taxes.

That said, there are moves you can make in the next couple weeks to get ready.

Know that tax rates across the board could be higher. Be aware that certain dividend income could be taxed at a higher rate, from 15 percent to as high as 39.6 plus 3.8 percent.

Consider buying municipal bonds as an investment if you expect your tax rate is increasing to around 40 percent because the after-tax return for municipal bonds may be more favorable.

With the prospect of higher tax rates, Roth IRAs can provide an excellent shelter from taxes in the future.

With Roth IRAs all the potential future growth is sheltered from taxation; in addition, a Roth can be inherited and the future growth can go to heirs without income taxation. It's also a form of tax diversification at retirement, because a retiree can take a chunk of money out of a Roth (which is untaxed) and a chunk of money out of a traditional IRA (which is taxed) to take advantage of his or her tax position in a particular year.

Before the gift and estate tax exclusion decreases in 2013, you can gift up to $5 million this year. You can also set up a trust – though that takes time and legal assistance. But if you have $25 million or more, the time and trouble is worth it from a tax perspective. But you should talk to a competent estate planner before you take any action.

Will the fiscal cliff impact my retirement?  -  People are reacting like they should move their whole retirement account into cash.  It's war fatigue, especially for those nearing retirement because 2008 took the stuffing out of people. They ran and didn't come back and didn't recover.

Every financial planner said that the best thing you can do – for the near and longer-term future – is contribute more to your retirement funds.

The extra money socked away in savings reduces taxable income when tax rates likely go up next year, and has the added bonus of increasing the amount you have available for retirement.

How will the economy react?  - If the cliff isn't quickly resolved, the country may slip into recession.  If the economy goes into a recession, stocks may take a beating.

But there is so much of a potential for a huge rally in stocks if some of this gets sorted out because corporations have huge amounts of cash, and individuals have more cash than is appropriate for their financial planning. So if there is some resolution, we have just as big a possible upside in stocks if people unlock some of the stuff they've buried under the mattress.

Source:  Deborah Caldwell, CNBC

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Economy Poised to Nudge Ahead in 2013

As 2012 comes to a close, the U.S. economy is also turning a page: The recovery is over. It looks like 2013 will be the start of a more normal, though hardly robust, period of growth.

For Americans struggling in the still-slow economy, that is both good news and bad. The risk of another recession is diminishing, at least if leaders in Washington can steer clear of the "fiscal cliff." But so are the prospects for a period of rapid growth that brings down the unemployment rate and helps the economy make up the ground lost in the recession.

Technically, the recovery ended in late 2011 when economic output, adjusted for inflation, returned to its prerecession peak. But on a per-capita basis, gross domestic product still hasn't rebounded to its 2007 high, and by most other measures the economy has remained mired in its postrecession doldrums. For more than three years after the recession ended in June, 2009, unemployment remained high, the housing market remained depressed, and every economic speed bump brought renewed fears of a drop back into recession.

That is poised to change in 2013. Home prices are finally rising again in much of the country, and construction activity is slowly picking up. Job growth has stabilized at about 150,000 jobs per month and unemployment, though still elevated, dropped below 8% in September and has continued to fall. If current trends continue, per capita output will surpass its prior peak sometime next year.

The economy is far from fully healed. The combined net worth of American households remains 12% below its pre-recession peak, after adjusting for inflation.

Incomes, too, have yet to fully recover. And most significantly, U.S. businesses still employ 3.3 million fewer workers than before the financial crisis, a gap the economy won't fill next year under even the rosiest of plausible job-growth scenarios.

In the immediate aftermath of the financial crisis, the economy was supported by just one or two sectors—first government during the recession, then manufacturing in the early phase of recovery. Lately, as households and businesses have begun to dig out of debt and rebuild their battered finances, more sectors of the economy are contributing. The last to show real gains, housing, has emerged as a driver of growth this year.

That kind of broad-based revival gives the economy a cushion it lacked earlier in the cycle. When exports slowed last spring, consumers picked up the slack. Now consumers are growing more cautious, but housing remains strong. That means the economy is in less danger of tumbling back into recession.

The wild card is the fiscal cliff, the billions in dollars in tax increases and government spending cuts set to take effect starting early next year. Experts including Federal Reserve Chairman Ben Bernanke and the nonpartisan Congressional Budget Office have said that if there's no deal to avoid the cliff, the U.S. will fall into a recession in the new year.

But even with that looming threat, economists surveyed by The Wall Street Journal put the odds of a recession next year at just 24%. Not coincidentally, those odds are closely aligned with the odds—26%—that the economists put on a standoff that allows the tax and spending policies to take effect. Get past the cliff, and most economists expect reasonably solid growth.

"The economy is waiting to grow," said Ram Bhagavatula of Combinatorics Capital. "Just give us some normalcy. I don't see any piece of the economy that should be subtracting next year."

But while a recession may be unlikely, so is a period of breakout growth. Economists estimate the chances of greater than 3% growth next year are exactly the same 24% as the chances of another recession. On average they expect growth of 2.3% in 2013, a bit better than the 1.9% growth they think the U.S. achieved this year, but not enough to be of much help for the nation's 12 million job seekers. The economists surveyed expect the unemployment rate to tick down only to 7.5% by the end of 2013, from 7.7% today. Even by the end of 2014, economists still expect unemployment of 7%.

The slow pace of growth is unusual after a recession. After past downturns, the economy went through a period of rapid growth until it returned to its prior path. That hasn't happened this time: While the economy is nearing or has surpassed its prior peak by many measures, it hasn't come close to catching up to where it would have been if the recession had never happened. Economists are increasingly skeptical that the U.S. will soon experience such a growth spurt.

"It's very disappointing to say that 2% growth is where we are, but it's going to be hard to generate anything stronger," said John Silvia of Wells Fargo Securities. "Too many people are waiting for a solution to the European situation and the fiscal cliff, and thinking that's enough. You've got a long workout for the U.S. economy."

A period of stability would be welcome news for executives weary of economic projections that seesaw between imminent recession and breakout growth. But for all the complaints about uncertainty, the new normal that looks set to emerge post-crisis—modest growth amid still-high unemployment—may not make 2013 much to celebrate.

Source:   Ben Casselman and Phil Izzo, Wall Street Journal
  
The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

How to Boost Income Without Too Much Risk

The Federal Reserve last week pledged to keep interest rates low until the jobs picture improves massively.

Sounds great, right? But not for investors searching for significant income. The Fed's decision to stay on its low-interest course means safe investments like government bonds, money-market funds and certificates of deposit will continue paying peanuts.

So, how do you do better? Look into some lesser known, but sophisticated, investment vehicles. We found four types of investments, most of which have nice 4%-plus payouts—without a lot of risk.

One big caveat: If in a year or two the Fed starts raising interest rates, you can expect the value of these to go down.

1 Master Limited Partnerships - Think energy. The U.S. is in the midst of a giant home-grown energy boom. The land of big cars and central air conditioning is even on track to becoming a net energy exporter.

MLPs—which tend to focus on pipelines, other means of oil and gas distribution or other parts of the energy industry's infrastructure—are a way for ordinary investors to grab a piece of the boom, along with some very attractive dividends.

The partnerships are traded on Nasdaq and the New York Stock Exchange. You can buy and sell them like stocks.

"There are many MLPs where it doesn't matter what the price of oil or gas is because they [are] simply paid a toll to transport the energy," says David Dewitt of Dewitt Capital Management in Wayne, Pa. Many MLPs yield as much as 5% (payouts are called "distributions").

Because MLPs are partnerships, the company doesn't pay corporate taxes. But you do as part of your ordinary income. Overall it means Uncle Sam gets less money, but the record keeping can be burdensome. Average investors may find the best way to hold an MLP is in a tax-deferred IRA or 401(k) account.

2 REITs - Another business with the wind at its back is real estate, and depending on how you invest it can be tax-advantageous. The apartment market is starting to heat up and builders are taking notice.
Construction of multi-unit homes, or apartment blocks, surged 35% from June through October, according to the latest data from the Census Bureau.

"There are a lot of young adults living with their parents and the parents are getting tired," says Jeff Saut, chief investment strategist at Raymond James in Tampa.

Helping that situation is an improving jobs market with unemployment now less than 8%. As those young adults move into their own places, rents should start to rise.

If you don't want to be a landlord yourself, the best way to invest in the apartment boom is through real-estate investment trusts. They usually invest in hundreds of properties. Like MLPs, REITs themselves don't pay taxes on their earnings as long as they distribute at least 90% of the profits to investors. Instead you pay the taxes.

3 Leveraged Loans - Jack Ablin, investment officer at financial services firm BMO in Chicago, thinks buying portfolios of bank loans makes sense. Bank loans made to businesses and consumers are bundled up and sold to investors who then receive the interest and principal payments from the borrowers.

Mr. Ablin says such arrangements used to be mainstays of hedge-fund managers. Hedge funds found them a convenient and stable place to park cash between deals. Funds would often borrow to buy the loans—increasing risk while enhancing yields.

4 Preferred Stock - For many retirees, the stock-bond hybrid known as preferred stock can provide steady and safe income.

Similar to bonds, preferred stocks have regular fixed payouts—they're dividends, as with common stocks. But because preferred stocks are technically equity, they are considered riskier than bonds. For you that means higher yields.

"We're always looking to maximize income for our clients so we love preferreds," says Margaret McDowell, principal at Arbor Wealth Management in Miramar Beach, Fla.

Source:  Simon Constable, Wall Street Journal

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

3 Banking Moves You Should Make Before Traveling

Are you planning on taking a vacation this winter or traveling for the Holidays? While booking a flight, setting up an itinerary and packing up Christmas presents are tasks many soon-to-be travelers are eager to jump on, setting up your finances prior to shuttling off to the airport requires some work. A thin cash supply and a frozen credit card during your trip can put a damper on anyone's holiday, whether it's a one-week trip to visit relatives or a three-month adventure across Europe. Here are three important things you should remember to do before departing.

Tell Your Credit Card Company - Along with your friends, family and employers, your credit card company should be on the list of those you should notify when you are leaving, where you are going and when you plan on arriving home. Take some extra precautions before leaving and call your credit card company to request a note be put on your file that you will be using your card out of town for a specific number of days. A brief phone call to customer service in the comfort of your home beats having a freeze placed on your card while trying to pay for Christmas gifts or souvenirs in the checkout line.

Notify Your Bank - Banks can also freeze your checking account if there are frequent suspicious withdrawals outside of your home area. Though one argument for switching to a credit union is that they boast lower fees and better customer service, one of the benefits of managing your finances with a large bank is that many of them, including Bank of America, maintain ATM partnerships overseas. This generally grants customers the ability to avoid bank fees when withdrawing cash and reduces the likelihood of your bank flagging your account for shenanigans. As with your credit card, if you're with with a big bank stay on the safe side and notify them of your trip.

Cash Is King - Whether you are staying within the 50 states or sojourning to remote locales, you should maintain a healthy supply of cash to get you by in your day-to-day outings. While it may be unreasonable to try and pay for everything - such as your hotel stay - with only cash, by and large, you should make sure you take out a more-than-appropriate amount of money and use it more often than your cards. Notwithstanding whether your bank or credit card offers fee waivers for travel, carrying cash with you is predominately safer than paying with cards - both in terms of staying within budget and reducing the risk of identity theft if you end up visiting a less-than-legitimate business. Splitting your cash across multiple days gives you better control of your spending, and if worse comes to worst and you end up losing your money, it's marginally better than losing your information and having your entire bank account's fund being purloined.

The Bottom Line - Holidays are a time to focus on desires outside of work and home, whether it's visiting family, sightseeing or simply taking a break from the 9-to-5 grind. The last thing you want to worry about when you are away is dealing with money stress. While these three steps aren't as fun as planning out your itinerary, spending a few minutes out of your schedule tying up these loose ends will certainly make the actual trip itself infinitely more enjoyable.

Source: Investopedia  


The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Divorce and Life Insurance: Be Aware of the Law

Life insurance plays a major role in effective financial planning to assure that a surviving spouse and the families maintain acceptable standards of living after the premature death of the “breadwinner.” For most marriage relationships, the husband will be viewed as the breadwinner, though increasingly wives are fulfilling that role.

Unfortunately, United States divorce rates are estimated at about 49 percent of all marriages. Consequently, about 50 percent of insurance policies intended to protect the surviving spouse and family are affected by divorce.

Life insurance is a contract between the insurer and the owner. As part of the contractual relationship, the owner has the right to designate a beneficiary who will receive the benefits of the policy upon death of the insured party.  But the issue of rightful claim to the proceeds of the life insurance policy after a divorce has arisen on numerous occasions. There is no uniform law among the states that resolves this matter. In addition, the preemption rights of federal law over state law may further complicate the issue.

The naming of a beneficiary on a life insurance policy or other contractual benefit, such as an IRA, cannot be taken lightly by either party to a divorce. Under state law, the content of the property settlement/separation agreement embodied in the divorce decree can determine who the beneficiary may be.

If the beneficiary can be changed and is not changed prior to death, some states protect the owner of the policy by creating a statutory presumption that the beneficiary would have been revoked by virtue of the divorce. Other states place the burden on the owner of the policy to change the beneficiary or suffer the consequences of proceeds being paid to an unintended beneficiary. In any event, all provisions and intentions of state law might well be preempted should the policy or other benefit be part of a federally-protected employee benefit plan. But unless specifically prohibited by court order, both state and federal law permit the owner of the policy to voluntarily change the beneficiary of the policy plan.

Source: Suzanne M. Gradisher, J.D., David R. Kennedy, Esq., and David Redle, Financial Planning Magazine

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

North America as an Energy Exporter

North America will become a net energy exporter by 2025, thanks to a surge in oil and gas production and rapid improvements in energy efficiency, Exxon Mobil Corp. predicts in its latest long-term energy outlook.

The closely watched annual forecast of energy trends concludes the growth of U.S. and Canadian oil and gas production has staying power and could lead to more international shipments of oil and gas.

Exxon's forecast follows similar estimates by the U.S. Energy Information Administration and the International Energy Agency, which have recently predicted North America will produce more energy than it uses in just a few decades, a shift with geopolitical as well as economic ramifications.

Exxon predicts that an anticipated decline in coal usage by power plants will accelerate as more efficient natural-gas-fired plants are built. It also forecasts coal use will drop 33% from 2010 to 2025,substantially more than its previous 23% estimate.

The economics of natural gas in the power-generating sector continue to look even better over time.

The U.S. is in the midst of a renaissance of oil and gas production thanks to a combination of technologies, including hydraulic fracturing and horizontal drilling, which are unlocking deposits trapped in shale formations throughout the country.

Daily U.S. oil production reached a 15-year high in September, and is expected to keep climbing. U.S. natural-gas production will outpace the nation's demand by 2020.

Growing production from Canada's oil-sands region, much of it exported to the U.S., and the continued growth of deep-water Gulf of Mexico production is also bolstering forecasts.

The net energy exports forecast for North America by Exxon don't mean the U.S. would be energy independent, however, as it will still rely heavily on Canadian crude production.

Global energy demand will increase 35% from 2010 to 2040, with most of the increased demand coming from developing nations like India and China.

Developed regions like the U.S., Canada and Europe will see their demand flat or declining as they become more efficient, the company said. By 2040 developed nations are expected to generate 80% more economic output than in 2010 but use the same amount of energy.

Source: Tom Fowler, Wall Street Journal

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association

Top 10 Strategic Technology Trends For 2013

Forbes magazine recently reported on the Gartner Research Corporation's Top 10 Strategic Technology Trends For 2013, which also includes ideas that have started to rumble already in 2012.

Smartphones - Today the flip phone just no longer cuts it. In 2013, mobile devices will pass PCs to be the most common web access tools, and by 2015 over 80% of all handsets in developed markets will be smartphones.

Cloud Computing - Clouds have become the center of our digital lives, storing photos, documents and other things too important to save in just one place. The automatic synchronization between devices has required data storage centers to increase and become more efficient. Companies at the forefront of the cloud computing industry, are Amazon, SAP and Google.

Internet - The world would not be where it is today without the Internet and its instant communication. The online giants include eBay, Facebook, LinkedIn, Google and Amazon.

Multimedia Networking - While cloud computing is fine for photos and documents, when it comes to running businesses and countries, physical servers in secure locations are the best way to maintain a safe haven for data. Here, well-known tech giants are Cisco Systems, Motorola Solutions and Qualcomm. 

Next Generation Internet - The Internet has proven to be an absolutely critical element to the advancement of technology as ideas, money and connections are shared now faster then ever before. Businesses can even exist almost entirely online, as reaching millions of interested investors and consumers has never been so accessible. 

Source:  Eric Savitz, Forbes Magazine 

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

The Jacksonville Business Journal has ranked D2 Capital Management in 

the top 25 of Certified Financial Planners in Jacksonville

D2 Capital Management is a Member of the Southside Businessmen's Club and the Beaches Business Association