No Need to Panic Over Healthcare Ruling Tax Hike

The Supreme Court upheld President Obama’s healthcare reform legislation Thursday morning, but there’s no need to overreact.

By Diana Britton   

The U.S. Supreme Court upheld the constitutionality of President Obama’s healthcare reform legislation Thursday morning. That means a proposed tax increase on investment income is set to kick in, barring further Congressional changes to the tax code. But nothing takes effect until next year and investors shouldn’t make any rash decisions about their portfolios, according to tax experts.

“There’s no need to overreact right away today,” said Tim Steffen, director of financial planning at Robert W. Baird & Co. “Take a deep breath, and figure out what this really means for you before you start making long-term decisions.”

The new law imposes a Medicare tax of 3.8 percent on investment income for married couples with over $250,000 in combined income, or individuals with over $200,000 in income. That includes capital gains, interest, dividends, annuities, rental income and royalties. It also includes a 0.9 percent tax increase on wages for people in the same income levels. 

“I am surprised that people are now saying, ‘Oh my gosh, taxes are going up.’”

In addition, Steffen believes two other pending tax changes could be more impactful, including the Bush tax cuts and the estate tax cuts, set to expire at the beginning of next year. The Bush tax cuts, for example, will impact everybody.

“As big a decision as this is and as impactful as this will be for investors, this is only one of three tax increases we’ve been keeping an eye on for next year,” Steffen said.

The 0.9 percent tax on wages is small compared to the tax boost on wages for the wealthy if the Bush tax cuts expire, which would increase from 35 percent to 40 percent, Friedman said.

Also, when making an investment portfolio decision, tax rates should definitely be a factor, but Steffen warns against making it the driving factor behind a decision. Advisors should base buys and sells on the merits of the underlying investments.

That said, the healthcare reform does mean a tax increase, like it or not, and there are some steps advisors can take to prepare for it. For one, if clients were planning to recognize capital gains or do stock options next year, they might want to consider doing those before the end of the year because it will be less expensive, Steffen said. 

Andy Friedman, principal of The Washington Update, also saw this coming. 

Investors should also be wary of dividend-paying stocks until we see how high dividend taxes will be, Friedman said. If lower dividend taxes expire as part of the Bush tax cuts, dividend taxes could go back up into the 40-percent range.

Friedman says investors shouldn’t have a knee-jerk reaction, however, to the news about the healthcare law, Friedman said.

“You should never make a fast decision on anything, except may a horse race,” Friedman said.  “You don’t just sit down and fire off a sell order on everything you own. You sit down with your advisor and figure out what the best way to respond is.”

There’s always a possibility that the Obama healthcare reform could get repealed, but it would involve Congress going back and changing the law. That’s very unlikely, Steffen said.

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Expanded Oil Drilling Helps U.S.Wean Itself From Mideast

By Angel Gonzales, Wall Street Journal

HOUSTON—America will halve its reliance on Middle East oil by the end of this decade and could end it completely by 2035 due to declining demand and the rapid growth of new petroleum sources in the Western Hemisphere, energy analysts now anticipate.

The shift, a result of technological advances that are unlocking new sources of oil in shale-rock formations, oil sands and deep beneath the ocean floor, carries profound consequences for the U.S. economy and energy security. A good portion of this surprising bounty comes from the widespread use of hydraulic fracturing, or fracking, a technique perfected during the last decade in U.S. fields previously deemed not worth tempering with.

By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side if the Atlantic, according to the U.S. Energy Information Administration.  By 2035, oil shipments from the Middle East to North America "could almost be non-existent," the Organization of Petroleum Exporting Countries predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.

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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.

What’s This ‘Fiscal Cliff’ Anyway? Do I Need to Worry?

By Jeff Cox, CNBC.com Senior Writer

"Fiscal cliff" is a term you'll be hearing much more often between now and the end of the year. That's when a half-trillion dollars worth of tax cuts and spending boosts go by the wayside, possibly dragging the U.S. economy into the abyss of another recession.

That, however, is the worst-case scenario.

A more likely outcome, according to those who have studied the issue closely, is that Washington officials come up with a way to extend many of the items in question before automatic tax increases and spending cuts kick in that could choke the life out of the already-stumbling recovery.

Global policy makers have done it during the financial crisis of 2008, the U.S. budget imbroglio in 2011, and throughout the European sovereign debt disaster.

For the fiscal cliff, there are four main items at issue: Expiration of the Bush tax cuts; the end of the 2 percent payroll tax holiday; extended unemployment compensation coming to a close; and the automatic spending and budget cuts mandated by the Budget Control Act if Congress fails to reach its Supercommittee's deficit reduction goals.

All told, the damage would amount to $500 billion, or some 3.8 percent of gross domestic product, at a time when GDP is struggling to grow by 2 percent.

While it all sounds pretty scary on the surface, in practice it's unlikely that anyone in Washington will be content to sit by and allow another deep recession to hit.

"We do not see the doomsday scenario playing out: policymakers are unlikely to drive the US economy off the fiscal cliff," JPMorgan Chase economist Michael Feroli said in an analysis. "Nonetheless, fiscal policy will continue to be a drag on the economy next year."

The conclusion: While the markets may rattle and roll over the doomsday scenarios, the end result will be a buying opportunity.

"We anticipate the market will show a smaller-amplitude reaction to the political drama developing around the US fiscal cliff," said Thomas J. Lee, JPMorgan's chief market strategist. "The fiscal cliff is enormous...but there is sufficient common ground to expect much of this to be delayed."

In other words, policymakers soon will embark on another round of their favorite sport: Can-kicking problems as far down the road as possible (if you'll pardon the overused market cliche).

"In 2012, the fiscal cliff carries major economic consequences...but (is) unlikely to trigger a financial crisis," Lee said. "Of course, we ultimately expect some form of 'can kicking' but even if this comes down to the final week of December before action, we expect markets to become more comfortable with the notion this is not a financial crisis ala 2011.

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Half of Americans Still Lack 3-Month Emergency Fund

By Ann Carrns, New York Times

How is your emergency savings fund doing?

Nearly half of Americans say they lack enough emergency savings to cover three months of expenses, according to new survey from Bankrate.com.

Still, Bankrate noted that a similar poll done in 2006 found that 61 percent of Americans lacked a three-month cushion. So the recent findings suggest that the financial crisis convinced more Americans of the importance of savings. “People got the message,” said Sheyna Steiner, who writes about investments for the site.

There’s room for progress, though. The general rule of thumb is that you need a cushion of at least six months. But only a quarter have saved that much, about the same as a year ago.

Meanwhile, nearly a third the people responding to the survey said they had no emergency savings, up from a quarter last year. That’s risky because savings are crucial to avoiding high-cost credit card debt when unexpected expenses arise.

In general, Bankrate’s June financial security index showed Americans are feeling a bit better than they did a year ago. Just 32 percent said they were “less comfortable” with their savings, a new low.

The telephone survey was conducted June 7 to 10 by Princeton Survey Research Associates International. The survey included 1,000 adults, with a margin of sampling error of 4 percentage points.

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The case for buy and hold investing

By John Prestbo

NEW YORK (MarketWatch) — One of the most frequent questions about indexed investing is: Why should I hold on when the market tanks? Why not bail out and get back in when things settle?

The usual answer is that nobody can time the market, except by dumb luck. By the time you throw in the towel you are likely to already have substantial paper losses. Then,you probably will be gun shy about getting back in when the market turns. Plus, if you are using exchange-traded funds, you will shell out more commission fees with every transaction.

An indexed investor manages the degree of risk he is taking by means of asset allocation rather than market timing. The mix of assets determines the risk of the overall portfolio, which typically is less than it would be with any single asset other than bonds. Asset diversification does not always work as desired. But a thin cushion is better than none.

Let’s go to the stats, as the sports announcers say. The Dow Jones U.S. Index — which underlies the iShares Dow Jones U.S. Index Fund IYY -1.81%  — plunged 55% from its high point on Oct. 9, 2007, to its nadir on March 9, 2009, on a total return (dividends included) basis. This was a devastating drop that terrorized investors; many of them still avoid the stock market, and if they were only in stocks this is understandable.

Suppose, however, that our indexed investor was 60% in stocks and 40% in bonds, represented here by the Barclay’s U.S. Aggregate Bond Index. In this case, the 17-month nightmare would have been somewhat less horrendous. This portfolio sank 31.4% between those dates, again on a total return basis. That is bad enough but considerably better than the all-stock holding.

Actually, bonds were a true diversifier because their prices rose 7% during the period as interest rates continued to drop. Other asset classes, such as non-U.S. stocks, commodities and commercial real estate, were not so fortunate.

For our indexed investors we conjured a portfolio comprised of 27% U.S. stocks, 33% Dow Jones Global ex.-U.S. Index, 30% U.S. bonds and 5% each in the Dow Jones-UBS Commodity Index and the Dow Jones U.S. Real Estate Index. This portfolio is much more diversified, but four of its five components were gored by the bear market. 

This portfolio dropped 40% from top to bottom — nine percentage points more than the 60-40 portfolio but 15 percentage points less than the all-stock version. As an aside, this portfolio peaked 16 days later than the others, though it bottomed at the same time.

Time in the market

So diversification mitigates pain. But how much does that matter if a third or more of your portfolio is vaporizing? That judgment is up to each investor, of course, but an indexed investor who stays put does not have to worry about when to climb back in.

That is important because some of the strongest market moves occur early in a recovery when shell-shocked sideliners are still wondering if it is real. One month after bottoming, the Dow Jones U.S. Index was 27.5% higher on a total return basis. Six months later it was 56.5% higher; a year later, 75.5%. Missing out on some or all of that rebound prolongs your recuperation period.

The Dow Jones U.S. Index recovered its 2007 total return peak on March 13 of this year. Of course, Europe’s travails sent the index back down again, but that’s the start of a new cycle.

Diversified portfolios did much better. The 60-40 portfolio reclaimed its total return summit on Nov. 4, 2010, and as of June 7 was up an additional 9.5%. The five-asset portfolio fully recovered on April 20, 2011, but had slipped back by 3.9% on June 7. The recoveries were as much a function of the depth of the bear-market declines as they were of subsequent asset-class performance.

It pays to hold on, even when the floor seems to fall out underneath the market, for three main reasons:

1. With a diversified portfolio, you will mitigate your losses. As a result, you will be in better position to recover more quickly.

2. The burden of market-timing decisions — both moving out and then back in — is lifted from your shoulders.

3. You will not miss out on the strong initial moves of a market’s early recovery.

The indexed investor hangs on because doing so is in his best interests. And the “I should have stayed in/gotten back in/stayed out” remorse is eliminated.

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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.

5 Ways To Invest $5,000

In this economy, $5,000 may feel like a lot more money than it did just a few years ago. There are numerous ways that you may find yourself with an extra $5,000: a bonus at work, inheritance, an extra contract job that you weren't expecting or a tax refund. Maybe you have it now or you're expecting it soon, but regardless of the time frame, what are you expecting to do with the money?

Here are a few ideas that may help.

Pay off Credit Cards

If your household has credit card debt, you have, on average, $15,956 worth. Almost one third of that debt could be wiped out with that $5,000. If your credit card interest rate is average, you are paying 13% ,or $650 each year, to hold that balance. That $5,000 could reduce the interest you're building up by $54 a month. How long was it going to take you to save $5,000 for the sole purpose of paying your credit card debt? If it was two years, you just saved $1,300 making the return on your $5,000 - 26% over two years or 13% per year. Any investor would be very happy with that figure. Although it's not necessarily fun, the best return you'll get on your money is to service your debt.

High Quality Stocks

Investing in high quality, dividend paying stocks for a long period of time has shown to be a very safe investment. Because it's nearly impossible to pick the few correct stocks that will perform better than the overall market, look at an index mutual fund or exchange traded fund (ETF) that tracks the total stock market.

Historic returns for the stock market over the past 50 years have averaged around 10%, making this a good investment, but not nearly as good as paying down debt.

Education

The cost of a college education has risen 130% in the last 20 years, according to USA Today. If you have a two-year old child now, the cost to send your child to college in 16 years will be $95,000, if he or she chooses a college in the state where you are a resident. If your child chooses a private university, the cost rises to as high $340,000, if college inflation rates stay as they are for another 16 years.

The best way to save for college is to use a 529 plan. These tax advantaged college savings accounts are similar to 401(k) plans where you contribute a certain amount into the plan, the money is invested into funds of your choice and you withdraw those funds when the child reaches college age.
Some 529 plans allow you to purchase years of college at today's rates for use when the child reaches college age, but most plans now invest the money without guaranteeing future results. That same $5,000 is a great start to put in a plan like this, and although the returns will average less than the overall stock market, the plan is one of the best ways to save for future college expenses.

Bond ETFs

An ETF is a basket of investment products packaged into one fund. They often come with low fees, yet offer the safety of a diverse portfolio. Some of these ETFs hold bonds, which are historically safer than stocks. Some bond ETFs have dividends of 7% or more and, barring any large investment market event, those dividends are quite safe, because of the hundreds or even thousands of bonds held in these funds. If you choose to invest in Bond ETFs, you may need to ask for help from a trust financial adviser.

Start a Small Business

If your debts are paid, you don't have children or you're well on your way to having your kids' college education paid for, consider starting a small business. To get your business off of the ground, $5,000 may not go very far, but some service-type businesses have very little startup costs. Before committing the money to a small business, make sure to carefully weigh the time and financial commitment that will come with this type of endeavor.

Forecasting the annual return is nearly impossible due to the many variables that come with starting a business, but even more important, this might jump-start your dream of becoming an entrepreneur.

The Bottom Line

Even if it isn't $5,000, before deciding how to utilize a larger sum of money that found its way into your bank account, think more long term. Sure, you could purchase the big TV that you've wanted for a long time but is that the best decision to make for years to come?

Read more: http://www.investopedia.com/financial-edge/0612/5-Ways-To-Invest-5000.aspx#ixzz1ypTG3nkn

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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.

Retirement Tips For Single-Income Homes

Saving for retirement as a married couple is not an easy task. Add to that saving for college, while also paying for a mortgage, and you have a recipe for disaster if you don't have a well thought out financial plan. Often, many couples decide to have one partner stay at home once they have children. This means that the couple will have to handle saving for all life goals on a single income. To effectively prepare for retirement, you'll have to be very strategic and extra careful with your budget in order to increase your savings.

Run Your Household As a Successful Business

The first way to get a hold on your finances in preparation for retirement is to trim your expenses. Write down all the items you buy on a regular basis and analyze this list with your partner. Be completely honest about your spending habits and thoroughly look at everything. Set emotions aside and look at your household as a business. You and your partner are the CEOs, and to effectively run this business you will have to turn a profit. So, limit your expenses and eliminate items you do not need. You know that you'll save in lunches and gas because the partner not working outside the home will need to spend less on these items, but look at items you can eliminate or minimize.

Boost Contributions

In order to meet retirement goals, it's essential to boost the amount that you contribute in order to make up for the missing income. If you were planning to retire at 60, expect to work a few more years. Also, increase the amount you contribute to your retirement plan. If you were contributing 10%, find ways to increase this percentage to 15% or higher. Remember, you'll need to put a lot more away so you'll need to be aggressive. Try to max out your retirement plan. If you file a joint tax return, the working spouse can open a Roth or Traditional IRA and contribute the max amount of US$5,000, $6,000 if over 50. Once your joint AGI reaches $166,000, contributions will be limited. When it reaches $176,000, it is phased out completely.

Minimize and Strategize

The key to saving for retirement effectively on only one income is to stay focused on your long-term goal and rein in expenses. Begin saving early and minimize eating out as this expense can really add up. Get creative on clothing combinations so you don't have to buy new clothes frequently. Minimize going out to the movies and consider working out from home. Buy clothes at thrift stores. Many times, people donate brand new clothes with tags still attached. Also, don't add to your expenses by using credit cards. Make sure you have the discipline to save for items and pay in cash or at least be sure you can pay the credit card bill in full. It's important to be strategic about your budget and figure out the best way to get the extra funds you'll need for retirement. It might be necessary for the person still working to try and get a higher-paying job.

The Bottom Line

Saving for retirement on just one income will be difficult, but it is doable. The best way is for the partner who is at home to stretch the dollar and get extra income from different sources. This will create a healthy financial life in the home and help you both reach retirement age with a hefty and comfortable nest egg.

Read more: http://www.investopedia.com/financial-edge/0612/Retirement-Tips-For-Single-Income-Homes.aspx#ixzz1ypVD4Hba

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Millionaire Parents Say Their Kids Are Unfit to Inherit

By Robert Frank

Remember Gina Rinehart, the Australian billionaire who was recently called the richest woman in the world? Before that, she was mostly in the news for disparaging her children.

In a battle over the family trust, Ms. Rinehart said the kids “lacked the requisite capacity or skill, knowledge, experience, judgment or responsible work ethic” to manage the business and inheritance.

It turns out, it’s not just mining billionaires who doubt their kids’ money skills. A new study from U.S. Trust says that only half of millionaire baby boomers think it’s important to leave money to their kids. A third of them said they would rather leave the money to charity rather than their kids.

There are two explanations for their stinginess.

The kind explanation is that today’s boomers want their kids to grow up with the same middle-class values they had. They want their offspring to learn struggle and hard work and failure and the joys of earned success and all the other lessons that helped the boomers become successful .

Aligned with this benevolent explanation is their commitment to charity and the broader world.

The second and perhaps more realistic explanation is that boomers don’t think their kids can handle all that money. Only 32 percent of baby boomers are confident their children will be prepared emotionally and financially to receive a financial legacy.

Granted, not all generations feel this way. Gen-Xers and Gen-Yers, along with the generation older than the baby boomers, are more disposed to leave money to their kids. More than two thirds of those aged 18 to 46 and those over 67 say it’s important to leave a financial inheritance to their children.

And there may be a third explanation: the baby boomers plan to spend most of their money. Given the low investment returns in today’s markets, their long lifespan and their famously non-apologetic lifestyles, the boomers are probably burning through their fortunes at a rate that won’t leave much for the next generation.

In the end, however, the phenomenon outlined in the survey boils down to a simple problem: The baby boomers have raised kids who are unequipped to inherit large amounts unearned wealth. The kids have been given most of what they want since childhood and have followed their parents model of generous spending. And the job market isn’t exactly conducive to college grads making it on their own.

In the same survey last year, U.S. Trust found that half of multi-millionaire respondents said their children wouldn’t reach a level of financial maturity to handle the family money until they are at least 35 years old.

Whose fault is all this? The parents, in part. Only half of the respondents had told their children about their family wealth. When asked why, they said the children would become lazy, make poor decisions, squander money or fall prey to golddiggers.

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Why Oil Prices Are Lowest They've Been in Months

By Patti Domm

The free-fall in crude prices is unlikely to reverse course without significant signs that the world economy is improving.

Oil, like stocks, fell sharply Thursday as fears of slowing global growth gripped markets, which were also beset by speculation about pending bank downgrades and Europe’s sovereign crisis.

But the price of oil has a separate significance in that it is an important lever on the world economy, and its decline could help consumers.

Crude prices have fallen 30 percent from their March highs as oil production globally rose to a record level in May, according to the International Energy Agency.

The world is now pumping 91.1 million barrels per day, the most ever. OPEC production, at more than 31.5 million barrels in May, is also higher than normal.

West Texas intermediate plunged 3.5 percent Thursday, following government reports of ample supply and domestic production at a 13-year high. WTI finished $3.05 lower at $78.20 per barrel, the first close below $80 since October.

Brent, the international benchmark, fell to $89.23 per barrel, the lowest level in 18 months.

Traders say the months-long decline in oil may have been signaling a slowdown in the economy.

While OPEC affirmed last week that it would hold production at 30 million barrels a day, production of oil elsewhere has increased.

“We’re (the U.S.) probably close to 6.4 million barrels a day, the highest in 13 years,” said Andrew Lipow, president of Lipow Oil Associates. “My unofficial estimate compared to last June, is we’re probably up 800,000 barrels, and that is about a 14 percent increase year over year. It’s huge and it’s being led by North Dakota and Texas.”

He added: “What we don’t talk about very much is the decline in demand in Europe and that is a good 3 percent year on year, which is a significant amount.”

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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.

Market Outlook for the Rest of 2012: Positive

Here's a look at what chief investment officers are putting in their midyear reports.

By Robert Powell

It's that time of year when chief investment officers from firms big and small start churning out their midyear reports, reflecting on the half year that was and predicting what might happen in the half year that's about to begin. What can we glean from these reports? What course adjustments might we make to our investment ship?

Well, here's a look at what's crossing the transom.

Investors, pundits say, will face more challenges in the second half of the year than they have in the first half. The markets are likely to remain "on edge" throughout the remainder of 2012, Russ Koesterich, the global chief Investment strategist for BlackRock's iShares business.

Others share that sentiment. Stuart Freeman, the chief equity strategist at Wells Fargo Advisors, said in his midyear report that the markets will be "choppy" for the rest of 2012

But even with "rocky," and "choppy" markets, advisers also think that the outlook for U.S. stocks is positive through the end of the year.

James Swanson, chief investment strategist at MFS Investment Management, for instance, said in a recent conference call that there are reasons to be optimistic. One, the drivers of the current business cycle are positive. Corporate profit margins, consumer spending, the housing market, and car sales are all rising, from his perspective.

Freeman also said the market has the potential to move higher -- it's the second leg of this cyclical bull market. He predicted in Wells Fargo's 2012 Midyear Economic and Market Outlook report that the operating earnings of the Standard & Poor's 500 index will rise 6% to 7% and he's looking for the S&P 500 to close the year between 1,400 and 1,450. His rationale for that forecast: Job growth, consumer confidence, a resilient U.S. economy, and increased liquidity world-wide all bode well for stocks.


GDP at 2%

As for the economy, Swanson noted that economic expansions since World War II have lasted on average 59 months -- nearly five years. The current economic expansion is at 35 months, which means there could be another two years of expansion. "We're roughly halfway or in midcycle here, not at the end of a cycle," said Swanson.

To be sure, Swanson said, this cycle of economic growth may not be up to politicians' standards of 4% growth, which was seen in the '80s and '90s, recoveries and expansions. It's just 2%. "But this 2% is organic and sustainable in that it's not being fueled by debt spending at corporate or consumer levels," he said. "Government level, yes, but the government's actually not growing in terms of payroll. So the sustainability of the cycle, to me, is intact because ... we are not witnessing a credit cycle."

Koesterich also seems to think that growth in the U.S. is unlikely to be better than 2%. But he also said potential year-end tax hikes and spending cuts in the U.S. could create more than $600 billion in "fiscal drag," or the equivalent of roughly 4% of GDP. And if the fiscal drag were to occur, Koesterich believes a double-dip recession becomes much more likely and that's not something investors are anticipating.

Europe emerges from its recession in three quarters

Europe has problems for sure. But, according to Swanson, its recession will be shallow, not nearly as deep as in 2008. Plus, the leaders of the European Central Bank have been able to keep the euro zone together in the short term with band aids and temporary solutions.

According Swanson, Europe biggest issue at the moment is not necessarily too much debt in the peripheral countries. Rather the bigger and more fundamental problem to be addressed is high-unit labor costs and labor inefficiency, he said.

"The number one problem, and it's important to understand the root cause of the problem in Europe, is a unit labor cost problem," Swanson said. "Europe has been losing its share of the world export markets for years."


China's slowing, but not crashing

According to Swanson, the Official China manufacturing employment subindex, though volatile, is as good a guide as there is to figuring out the state of the Chinese economy. And at the moment "it's holding up," Swanson said.

There are two reasons why China is holding up: First, the current slowdown is related in part to recession in Europe, but more due tight monetary policies of the People's Bank of China of a year ago. With China lowering interest rates and providing liquidity, Swanson predicts, we'll see the fruits of this in five to six months, 10 months, tops.

Second, he said, the "big threats to emerging market economies, the inflation scare, particularly in agriculture, has subsided with record crops and a return to a more normal weather patterns."  So, he predicts growth in emerging market to resume closer to trend by year-end in the major emerging market countries, such as Brazil and India.

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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.

How to Take Control of Your 401(k)

Chances are good the funds in your 401(k) yield only about 2 percent.

By Glenn Ruffenach

This may surprise you, but there's a good chance you can take direct control of your nest egg at work, choosing investments beyond the two dozen or so mutual funds that most employers offer in their savings plans. Doing so can be risky, but here's why you should consider taking a shot at it.

About one in five employers, according to Plan Sponsor Council of America (PSCA), offers a self-directed brokerage option, in which workers with 401(k)s and related accounts can buy stocks, bonds and other assets. Also, three-quarters of employers -- and 86 percent of those with 5,000 or more plan participants -- permit "in-service withdrawals" (typically starting at age 59 1/2), where holdings can be pulled from accounts and rolled into IRAs.

Yes, this is a scary idea: people taking the wheel of their savings plans and, possibly, crashing into crazy investments. Most workers with these options, in fact, take a pass; less than 1 percent of plan assets are invested through self-directed accounts. Indeed, according to David Wray, president of PSCA, "401(k) participants are not retail investors -- picking individual stocks is way out of their thinking."

But I'm betting that, if you pursue either option, you're smart enough to do so gingerly. In which case, the potential payoff is that you get a jump on building income for retirement.

More people are recognizing the importance of having investments that generate cash in later life. This way, you aren't dependent on capital gains to meet expenses. What's less appreciated, though, is the value in identifying and assembling these investments early -- say, five or 10 years before retirement. If you can get a head start on building income at age 55 or 60, says Charles Farrell, chief executive at Northstar Investment Advisors in Denver, the compounding effects can move you closer to the point where you're living off the returns of your portfolio in retirement, rather than eating into the portfolio itself.

Dividend-paying stocks -- and an important concept called "yield on cost" -- are a good example of how this can work. Yield on cost is calculated by dividing a stock's current dividend by the amount originally paid for each share. Let's say you buy a stock for $12, and it pays a 3 percent annual dividend, or 36 cents. And let's say that after a year, the share price hits $16, and the company increases the dividend to 48 cents.

At this point, the payout is still 3 percent (48 cents is 3 percent of $16). But not for you. You paid $12 for your stock; thus, you're getting a dividend of 48 cents on $12 -- or 4 percent. So, your yield on cost is 4 percent. In other words, you're now earning a higher yield on your original investment, which puts more money in your pocket. If you're able to invest in companies with a long history of paying dividends -- where those dividends increase annually and the increases outpace inflation -- your yield on cost eventually should outshine the return on other investments.

Now, let's return to your 401(k), which likely holds the bulk of your retirement savings. Chances are good that the mutual funds in your account are yielding about 2 percent (or less) -- hardly the stuff of retirement dreams. (Inflation alone is running about 2.9 percent.) But if you could gain access to a wide range of investments, you could assemble -- today -- a group of dividend-paying stocks (again, with a steady history of payouts and dividend increases) that yields about 3.5 percent. Ideally, over time your yield on cost on these shares would rise significantly.

To see how this might work, I asked Charles Carnevale, founder of FAST Graphs, a website with a nifty set of stock-research tools, to calculate how yield on cost for several investments could change over time, based on analysts' current growth estimates. I picked Coca-Cola, Johnson & Johnson and Procter & Gamble, each of which meets our criteria: an attractive current yield and a history of increasing payouts.

At the moment, the three stocks yield roughly 3.0 percent, 3.6 percent and 3.2 percent, respectively. In five years, the yield on cost for these stocks -- again, based on the companies' projected growth -- is expected to reach 4.6 percent, 4.7 percent and 4.8 percent. In five more years (should the current growth rate hold), the yield on cost for each would exceed 6 percent.

How could this help you? Remember: A 4 percent rate of withdrawal from a nest egg is traditionally considered a safe starting point. If you're thinking about drawing down your savings at that rate, "the growing yield on cost alone may meet your distribution needs in retirement," says Farrell.

If all this sounds too easy, you're right to be cautious. Dividends, of course, can be reduced or eliminated. (In 2008, Bank of America's quarterly payout was 64 cents; today it's a penny.) Companies don't always meet growth estimates. And some people simply aren't meant to manage their money: They buy and sell too frequently; they pick less-than-stellar investments (read: Enron); and they get hammered with trading fees.

That said, the need for dependable and growing income in later life is clear -- and if you can start the process early, so much the better. My advice: See what options you have with your 401(k). If you're able to take the reins, sit down with a financial adviser and discuss investments that fit your comfort level and future needs. The ride could be safer than you think.

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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.

10 Things You Must Know About Social Security

By Jessica Naziri

1. How Benefits Are Calculated - Benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.

Social Security recipients below their full retirement age (66 for those born between 1943 and 1954) can earn up to $14,640 in 2012 (not including tax withholdings).

2. Paying Income Tax on Benefits - Some states tax Social Security benefits, while others don't. Check the laws in the state where you reside.

No matter where you live, you will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

3. If You Wait to Claim, Benefits Increase - Monthly Social Security payments will be bigger if you wait until your full retirement age to sign up for benefits instead of claiming at age 62. Even if you delay your claiming decision by a year, you will get a boost in your benefit.

4. Claiming Benefits After Your Full Retirement Age (Older than 65) - If you wait as long as possible to collect, your payments could increase by 8 percent annually after your full retirement age. Additionally, you get two-thirds of 1 percent more for each month you delay.

5. Maximum Social Security Retirement Benefit - The maximum possible Social Security check grew to $2,513 per month in 2012. That is up from $2,366 in 2011. In order to get this amount, a worker would need to earn the maximum taxable amount ($110,100 in 2012) every year after age 21.

6. Receiving Social Security and Unemployment at the Same Time - Unemployment insurance benefits are not counted under the Social Security annual earnings test and therefore do not affect your receipt of Social Security benefits.

However, the unemployment benefit amount of an individual may be reduced by the receipt of a pension or other retirement income, including Social Security  benefits.

7. Receiving Social Security Benefits When Living Overseas - As long as you are a U.S. citizen, you may receive your Social Security benefits outside the United States. So you can retire abroad.

8. Receiving Credit for Military Service - Earnings for active duty military service or active duty training have been covered under Social Security since 1957. Under certain circumstances, special earnings can be credited to your military pay record for Social Security purposes.

The extra earnings are for periods of active duty or active duty for training. These extra earnings may help you qualify for Social Security or increase the amount of your Social Security benefit.

9. Couples Have Extra Options - Spouses are entitled to Social Security benefits of up to 50 percent of the higher earner's check if that amount is higher than the payments based on his or her own working record.

Additionally, dual-earner couples who have reached their full retirement age can even claim twice by first signing up for a spousal payment, then claiming again later based on their own work record (which will then be higher due to delayed claiming).

10. Social Security Numbers Have Significance - The first three digits of your Social Security number are assigned based on geographical region, with the lowest numbers being assigned in the Northeast and increasingly higher numbers assigned to residents in the West.

The middle two digits, called the group number, are allocated in a precise but nonconsecutive order between 01 and 99. The last four digits are issued in a sequential order. Over 420 million unique numbers have been issued and they are not reused after a person's death.

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Lots of Turnover in Millionaires Club

By John D. McKinnon

A new study shows that the ranks of people earning $1 million or more are highly variable from year to year. That implies that millionaires aren’t quite the monolithic class that some political rhetoric might suggest.
In fact, from 1999 to 2007, about 50% of people who earned $1 million or more in any given year only managed to achieve the feat once, according to the research by the nonpartisan Tax Foundation. Another 15% did it twice.

Just 6% filed in all nine years with incomes more than $1 million. Millionaires often generate their income through one-time sales of small businesses, or other appreciated assets.

The Tax Foundation, which receives funding from foundations as well as businesses and individuals, says its job is to “educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government.”

Overall, about 675,000 households earned over $1 million in any year during the period of the study.

The data broadly mirror previous findings concerning the top 400 earners in the U.S.

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It’s Not Easy Making Do With a Measly Million

By Charles Delafuente

Occupy Wall Street has its 1 percent answer, of course. A consulting firm that studies the wealthy has a broader definition, based on millionaire status. Many financial planners have a cautionary third answer — that appearances, and account balances, can be deceiving, and you may not be as rich as you think you are.

The Occupy Wall Street forces focus more on income than on wealth. But if its 1 percent label were applied to assets, the dividing line between the 1 percent and everyone else would be $8.4 million.

Based on its research, the consulting firm, Spectrem Group, said about 8.6 million American households had a net worth of at least $1 million last year, not including their equity in a home — just over 7 percent of the 117 million American households.

George H. Walper Jr., the president of Spectrem, in Lake Forest, Ill., estimated that most of those in the low end of the millionaire class did not have most of their assets in formal retirement funds. “A lot of it is in other places,” he said, even if it is intended for retirement. Many people in that group are already retired, and their average age is 62.

People planning decades of retirement based on $1 million need to recognize that that amount is not anywhere near what it was a century ago, and that they will never live like millionaires, said Larry Luxenberg, a fee-only financial planner at Lexington Avenue Capital Management in New City, N.Y.

So how do you make $1 million last?

Take, for example, a hypothetical couple about to retire who have assets of just over $1 million. To help them, assume they have no children who are financially dependent on them. Also assume that they will be entitled to maximum Social Security benefits, which are just over $30,000 a year each (this year) for people who start collecting at age 66. (Delaying the start of benefits for up to four years increases the amount to be received but might, for some, require earlier withdrawals of retirement funds that would be subject to income tax.)

On the minus side, assume that this couple has no other pension plans that will provide retirement income — although many people who entered the workplace 40 years ago have significant defined-benefit pension plans from corporate or government employers. Mr. Luxenberg said there was a one-in-four chance that one member of a couple who had reached 65 would live into his or her 90s. So that person will have to plan for 30 years of income, he said. A rule of thumb, he said, was to draw 4 to 6 percent of retirement assets, adjusted for inflation, each year. For a hypothetical millionaire, that would be $40,000 to $60,000 a year, plus Social Security benefits.

“Folks with $1 million in a well-balanced portfolio can be comfortable,” he said, but “it’s not a lavish lifestyle.” He added: “The idea of a millionaire being someone who is really rich, that goes back to the Roaring ’20s and the Great Depression.”

Inflation has eroded the value of $1 million considerably, and as Mr. Luxenberg noted, “Three percent inflation over 30 years means you need 2.4 dollars for every dollar that you’d need now.” Withdrawing 4 percent of a nest egg each year used to be a standard formula but is no longer considered a hard-and-fast rule, said Greg Daugherty, executive editor of Consumer Reports and a retirement columnist for the Consumer Reports Money Adviser newsletter.

Four percent might be too much for someone who retired early, or whose money was largely in fixed-income assets.

For those who will keep their assets and figure out how much to withdraw annually, Mr. Daugherty said, “Try to figure out what your expenses are going to be in retirement” before retiring. “Make a budget, even if you never have before,” he added. “One advantage of doing that is that it might show the need to work a few more years, if that is feasible, to allow the desired annual withdrawals in retirement.”

“The value of the 4 percent rule these days, for one thing, is it keeps people from doing anything too crazy, like 8 or 10 percent,” Mr. Daugherty said.

For some people who have been diligent savers, the 4 percent benchmark might encourage them to dip into assets, rather than trying to live only on the income their assets yield. “Some people are terrified of any spending,” Mr. Daugherty said, but they should not deny themselves “the legitimate pleasures of retirement, enjoying things like travel.”

But for those millionaires on paper, while such legitimate pleasures will be theirs, the bottom line, as Mr. Walper of Spectrem put it, “They’re not buying a Duesenberg.”

 9951 Atlantic Blvd, Suite 323, Jacksonville FL 32225

Lunch With Warren Buffett: One Giant Tax Deduction

By Laura Saunders

An anonymous donor on June 8 paid $3.46 million to Glide, an antipoverty group in San Francisco, for the privilege of having lunch with Warren Buffett.

Is the donation tax-deductible? Experts say most of it probably is, meaning taxpayers in effect will pick up about $1.2 million of the tab.

"Celebrities of all sorts use their fame to support charities, both big and small, and the same rules apply," says David Lifson, a partner at Crowe Horwath, an accounting firm in New York.

The lunch is Glide's 13th annual auction of a meal with Mr. Buffett. This year's winning bid was almost $850,000 more than last year's; the lunches have raised nearly $15 million for the group, which was a favorite of Mr. Buffett's deceased first wife, Susan.

Like any other charity, Glide will have to send the donor a letter saying how much of the gift is tax-deductible, and the assessment must be able to withstand a challenge by the Internal Revenue Service. Last month, the U.S. Tax Court, in a case known as Mohamed v. Commissioner, denied an $18.5 million charitable deduction by a California couple who didn't have correct paperwork before they filed their return.

Experts expect Glide's letter to exclude the fair-market value of the lunch from the donation total. The law mandates a disallowance for any goods or services received in connection with the donation, such as the lunch, which includes Mr. Buffett, the donor and up to six invited guests. The fair-market value is the cost of the prepared food to regular diners, not the purchase price of the groceries at a market.

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How much does it cost to raise a kid?

--Bloomberg News--

 A middle-income family may spend $234,900 to raise a child born in 2011 to the age of 18, a 3.5 percent increase in a year, according to a government report.

Expenses for child care and education, transportation and food represented the biggest jumps, the U.S. Department of Agriculture said today in a report. Adjusted for anticipated inflation, a child in a middle-class family would cost $295,560 to raise, the department said.

“It's not just the cost, it's the pressure,” said Ellen Galinsky, president of the Families and Work Institute based in New York. Competitive educational environments and an awareness of what it takes for children to succeed are prompting more spending, she said in a telephone interview.

The typical two-parent middle-income family spent $12,290 to $14,320 in 2011 on each child, the study found. Households that make less spend less, USDA researchers said. A family earning less than $59,410 a year will probably spend $169,080 in 2011 dollars to rear a child, while parents earning more than $102,870 may pay $389,670, according to the study.

“Families receive little support as they navigate” the child-rearing process, Galinsky said. The USDA report includes an online calculator to help figure out costs.

Expenses were highest for children raised in the urban Northeast, followed by cities in the West and Midwest, the USDA said. The urban South and rural areas were the least expensive. Housing accounts for the biggest portion of expenses, averaging 30 percent over 17 years, the USDA said. Child care and education costs at 18 percent and food, at 16 percent, are the next biggest costs. The estimates don't include college expenses.

The study, published each year since 1960, helps courts and government agencies estimate child-support costs, the USDA said. In the first study, housing accounted for 31 percent of the cost to raise a child, then estimated at $25,230 -- the equivalent of $191,720 in 2011 dollars. Food was the second-biggest component, at 24 percent, with transportation at 16 percent, compared with 14 percent in 2011.

Health care was 4 percent of the cost of raising a child in 1960, half the 2011 level. Education and child care accounted for 2 percent of costs. Two-income families have raised the cost of day care and other forms of child care, while changes in agriculture have lowered food expenses, the USDA said.
“In 1960, child-care costs were negligible, mainly consisting of in-the-home babysitting,” the USDA researchers said in the report. “Since then, the labor force participation of women has greatly increased, leading to the need for more child care.”

Such demands are only increasing as families look at quality education and child care as essential for success, Galinsky said. “People want to equip their children with what they need.”

 9951 Atlantic Blvd, Suite 323, Jacksonville FL 32225

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.

Why You Should Be Weary Of Target-Date Funds

It's the "in thing" now; everybody's doing it, so why wouldn't you? Here's how the story repeatedly plays out, especially for those who recently opened a new 401(k) or 403(b) account. The benefits manager of your company sent you a big stack of documents and told you to complete the application. You thumbed through everything, skimming the microscopic print in these pamphlets called prospectuses, and found yourself completely overwhelmed.

Luckily, as you were completing the application, you noticed that you could either pick your own investment options or choose the ready-made option that placed all of your retirement funds into a target-date fund. You didn't know what it was, but you didn't know how to pick your investment options anyway, so into this target-date fund is where your money has gone.

What Is a Target-Date Fund?

The concept is very simple. A target-date fund adjusts the assets in the fund to line up with your retirement timeline. If you're planning to retire in 15 years, you might pick a target-date fund of 2025 or 2030. The fund manager will adjust the holdings and when you near retirement age, that fund will hold a lot of bonds, instead of the more risky stocks.

You don't have to worry about adjusting your investment portfolio because the fund does it for you. If you don't have the time or desire to learn how to manage your retirement portfolio, these target-date funds might be a great idea.

As your grandparents might have said, if it's too good to be true, it probably is and that might be the case with target-date funds.

The Whole You

First, you are more than a date. Knowing that you plan to retire in 2025 or 2030 isn't enough information to assemble your retirement portfolio; imagine a doctor asking nothing more than your age. Your investment portfolio should be crafted around your tolerance for risk, the other assets you own, your family situation, social security and more. A target-date fund doesn't take any of that into account, because it's designed for a large amount instead of you, personally.

They're Hard to Understand

Target-date funds are like a brand new car. They look good on the outside but they're hard to figure out when you open the hood. A recent SEC study found that many people believed that a target-date fund guarantees an income stream at retirement much like an annuity or a pension.

Others believed that once the fund reached the target-date, no more allocation changes in the fund were made. Both of these facts are untrue but this, along with the fact that a 2025 fund may vary greatly between companies, makes these funds dangerous for investors to take at face value.

The Bottom Line

Regardless of what you read today or in the future, there is no one investment product that will address all of your investing needs. A combination of products that may include a target-date fund is the best way to insure your retirement needs are met. Diversification will likely always be the best way to protect and grow your portfolio.

Read more: http://www.investopedia.com/financial-edge/0612/Why-You-Should-Be-Weary-Of-Target-Date-Funds.aspx#ixzz1xmcn6FcN

9951 Atlantic Blvd, Suite 323, Jacksonville FL 32225

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.

Choppy Summer for Markets, So 'Buckle Your Seatbelts'

By: JeeYeon Park, CNBC.com Writer

Investors who have been frustrated by the market’s unpredictable zigzag trading pattern should brace for further disappointment as strategists expect continued choppiness in the months ahead.

“Investors can expect persistent volatility for the foreseeable future—buckle your seatbelts,” said Mark Martiak, senior wealth strategist at Premier/First Allied Securities. “It’s going to be continued ro-ro (risk-on, risk-off) trading.”

Equities have hit a number of milestones in the last month. All three major indexes logged their biggest gains last week for 2012, less than a month after logging their biggest weekly losses.
And the S&P 500 and the Nasdaq have alternated between gains and losses just in the last six trading sessions, another sign of the ongoing market volatility.

Probably the most annoying fact for investors is that the large fluctuations have only translated to a month-to-date gain of just under 1 percent.

“We’ve been gyrating around the 1,320-level on the S&P 500,” noted Todd Salamone, director of research at Schaeffer’s Investment Research. “We’re trading on the headlines, of course, and what that means is that we’ve been in a choppy environment which is frustrating for both bulls and bears.”
In addition, the anemic trading volume has intensified the market swings, which have largely been dictated by headlines from the euro zone.

“At these levels, people who have been burned in the past don’t want to commit,” said Salamone. “But more clarity could move investors off the sidelines.”

The three events that investors are watching in the next few weeks for further market clarity will be Greece’s election this Sunday in addition to the Federal Reserve’s FOMC meeting and G20 summit next week.

But some market pros warned that the events will only add to further confusion and raise more questions for already-nervous investors.

“[Market volatility] will certainly continue through at least the Presidential election,” said Keith Bliss, senior vice president at Cuttone & Co. “There’s going to be a lot of choppiness leading up to [November] and I definitely don’t think we’ll reach any type of viable resolution in Europe for a long time.”

9951 Atlantic Blvd, Suite 323, Jacksonville FL 32225

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.

Gold: Not A Hedge For Stocks

By Brendan Conway

There are strong arguments for allocating some assets to the SPDR Gold Trust (GLD) or the iShares Gold Trust (IAU). Hedging stock-market exposure isn’t one of them.

As the Leuthold Group’s Eric Weigel notes in the firm’s research this month, the correlation between stocks and gold is “statistically indistinguishable from zero.” If that is the case, then “the hedging argument for owning gold to protect against stock market declines is, on average, not supported by the data.” Indeed, gold’s daily returns “seem almost completely independent of stock market returns,” he concludes.

On the other hand, gold’s negative correlation with the dollar is robust, as is the positive correlation with changes in inflation expectations.

So, use gold to hedge against currencies and inflation, but not stocks.

 9951 Atlantic Blvd, Jacksonville FL 32225

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.

Why Active Traders Make Bad Traders

By Jonathan Hoenig

In the markets, just as in life, we usually end up finding what we go looking for. And the problem with most traders is that they're seeking the rush of speculation. They like to buy and sell investments more than they like to make money.

The investment newsletter business and most financial TV shows are built around this undisputable fact. Stock tips are the market's glucose: there's an inherent thrill, even with small dollars at stake, in buying a stock and watching it rise or fall. Like the alcoholic who can't have just one drink, we seek out that pleasure over and over and over again.

But making money in the markets doesn't come from trading. There's no correlation between the number of transactions and how much money one makes. In fact, it's the holding, not the trading, where the money is actually made.

Yet holding a winner isn't very exciting at all, which is why so many of us loathe to sell when we should. We buy a stock and it rises, and the moment the profit exceeds the cost of a McDonald's value meal or even our own commissions, we grab the gains, content to snatch a "win" -- any win -- and move on to another exciting score.

And while every trade could be an opportunity, it's most certainly a risk: each new idea is one that has the potential to blow up in our face. This is why an existing, winning and open position (the kind we tend to mistakenly trade away) is incalculably more valuable than a new pick. Profitable trades tend to stay profitable, while untried speculations are always more of a crapshoot.

For the undeniable thrill of buying and selling, there's eBay (EBAY), Craigslist, online poker or small-stakes foreign exchange. But if profit, not excitement, is your goal, experience suggests its permitting winning ideas to play out, as opposed to trading them away, where the actual money is made.

 9951 Atlantic Blvd, Suite 323, Jacksonville FL 32225

Investors Trust Financial Advisors More Than Doctors, Accountants

By Kylie Hennagin

Investors trust their financial advisor more than any other institutional professional, including their primary doctor or their accountant, according to the John Hancock Trust Survey.

The 2012 survey found that of the 1,005 investors surveyed, 84% reported they “trust strongly” their financial advisor, while primary doctors were only “strongly trusted” by 79% of those surveyed and accountants by 74%.

Contractors had a 52% “trust strongly” ranking, with bosses coming in at 49% and real estate agents at 43%.

The two most important factors in advisor trust were clear investment recommendations and being knowledgeable and timely about trends and products. Letting the investor know how much the advisor would be compensated was also an important factor in building trust, according to the survey.

“Clearly, investors value excellent communication skills and product knowledge, and depend on these factors in assessing their level of trust in their advisors,” Chief Marketing Officer David Longfritz said.
The survey also showed that 12% of investors factor in if the advisor is involved in the local community and how informative their website is into determining their trust.

At 25%, being hard to contact or unresponsive was the most common reason for lack of trust in a financial advisor while bad investment advice (13%) and a lack of personalized approach (12%) followed.

9951 Atlantic Blvd, Suite 323, Jacksonville FL

The Gasoline Business Is All About Location

Along with barbecues, parades and a day off of work, one of the Memorial Day traditions in the United States is to talk about the price of gas at what is still called the "start of the summer driving season." Readers who don't travel much may be surprised at the extent to which gasoline prices can vary from state to state - a byproduct of not only the number of refineries in a given region, but pipeline access, quality/formulation regulations and taxes. What's true in the United States is also true around the world. Gasoline prices vary remarkably around the globe, with some countries offering subsidized rock-bottom prices and others layering sizable taxes on every liter or gallon.

The Home Front

Across the United States, there are some sizable discrepancies in gasoline prices. While drivers in some Southern states pay as little as $3 a gallon, prices all along the West Coast exceed $4 a gallon. Not surprisingly, taxes make up a significant part of the difference. While only about 10% of the price of gasoline in Oklahoma goes to local, state and federal taxes, that rate almost doubles in New York. With relatively few exceptions, overlaying a map of the states with the highest taxes on gasoline correlates very closely with those states that have the most expensive gas.

Still, taxes don't explain all of it. Gasoline requires refineries to make it, and pipelines, barges and trucks to transport it. Nearly 40% of the country's refining capacity stands in the Gulf region, and that's where a lot of the country's cheapest gasoline can be found. While areas like North Dakota are currently producing a lot of crude oil, there isn't nearly as much refining capacity in the region. Consequently, fuel costs about the same in Fargo, N.D. as it does in Atlanta, Ga. Then there are cases like California. Not only does California have high taxes (69 cents per gallon of the $4.10 to $4.15 per gallon retail price), but there is very limited capacity in the state. What's more, California is very demanding when it comes to quality standards and that imposes still more costs at the pump.

A Similar Story Overseas

At an average pump price of $3.61 for the week ending June 4, U.S. gasoline prices are actually quite low on a global basis. Of the countries in the world with cheaper gasoline, all of them except Bolivia and Ghana are meaningful oil producers. In some cases, as in Indonesia ($3.44) or Mexico, a lack of the right kind of oil and/or adequate refining infrastructure has kept prices near the U.S. average. In other cases, like Iran (42 cents), Saudi Arabia (72 cents) and Kuwait (98 cents), gasoline prices are subsidized as a way of keeping the citizenry relatively content. Government control on refining and retail pricing is relatively common around the world. While most of the OPEC countries have national oil companies that also refine and market gasoline, countries like Brazil and China force corporations like Petrobras and Petrochina to abide by price controls.

On the other side of the spectrum, countries like Turkey ($9.35), Israel ($7.68) and virtually all of Western Europe pay twice as much or more than Americans on a like-for-like basis. Some of this can be tied to the availability of oil. Neither Israel nor Turkey are oil-rich, and relative few European countries have access to meaningful oil reserves that are both nearby and cheap to exploit. It's not all about access to oil. Norway has robust oil reserves, but the country still has some of the most expensive gasoline in the world ($9.31/gallon). The difference is taxation. Taxes routinely make up 50% or more of the at-the-pump gasoline price, and it is perhaps ironic that Norway is both the leading producer of oil in Europe and has the highest taxes as well.

The Bottom Line

Clearly, different countries have different philosophies about taxation and the ideal transportation infrastructure. It is possible to argue that the extensive public transportation systems in Western Europe offer some compensation for the heavy gasoline taxation, while the subsidized prices of oil-producing countries gives those citizens at least some of the benefit of their nation's reserves. It's also clear, though, that gasoline prices come down to more than just taxes. Countries or states also have to have adequate supplies of the right kinds of gasoline, adequate refinery capacity and the ability to get the gasoline to market at a reasonable cost.

Read more: http://www.investopedia.com/financial-edge/0612/The-Gasoline-Business-Is-All-About-Location.aspx#ixzz1xW6G6ppr

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2013: Bad Year to Die If You're Rich

By: Robert Frank, CNBC Reporter & Editor

Financially speaking, 2010 was a pretty good year to enter the next life if you were wealthy.

There was no estate tax, so heirs inherited their dad or mom’s fortune without paying the usual 35 percent or more in estate taxes. (That lead some to call it the “throw mamma from the train” year).

Next year, however, could be different.

According to an analysis by Tim McCausland of Orange County Trust Co., “2013 is shaping up to be a very bad year to die” for the wealthy and even affluent.

The reason is largely the estate tax. Currently, estates valued at $5.12 million are exempt (or $10.24 million for couples.) Next year, unless Congress acts, the exemption will drop to $1 million for individuals and couples.

What’s more, the estate-tax rate jumps to 55 percent from 35 percent.

“At these levels, many more families will be affected by the federal estate tax. Compromise legislation is floating about, but movement is always ponderous in election years,” McCausland writes.

There is another reason 2013 is a bad year to die: a new surtax from Obamacare goes into effect, levying 3.8 percent on certain trusts and estates income.

All of this creates an added incentive for the wealthy stay healthy in 2013. Their heirs also have an interest in seeing their wealthy parents hang on through the next year or two.

If 2010 was the year of “Throw Momma from the train," in 2013 it may be “Keep Mom and Dad alive.”

 9951 Atlantic Blvd, Suite 323, Jacksonville FL

Roth Thrift Savings Plan or Roth IRA?

 
Now that a ROTH Thrift Savings Plan (TSP) is being rolled out for military members, how does it differ from regular ROTH IRAs?  Let's review the details.






ROTH TSP:

• Contributions are post-tax
• No income limitations for ROTH TSP contributions
• Contribution limits are $17,000 for taxpayers younger than 50 years (plus $5,500 catch up if older than 50)
• Earnings are tax free if account is held open 5 or more year and the taxpayer is over age 59 1/2 at the time of the distributions
• You can take out TSP loans up to 50% of your balance, up to a limit of $50,000

ROTH IRA:

• Contributions are post-tax
• Income limitation to contribute to a ROTH IRA: Single $110,000, (with decreasing eligible contributions up to $125,000; Married $173,000 (with decreasing eligible contributions up to $183,000.)
• Contribution limit is $5,000/$6,000 for those 50+
• Earnings are tax free if account is held open 5 or more year and the taxpayer is over age 59 1/2 at the time of the distribution
• Contributions can be withdrawn at anytime without penalty
• You cannot borrow against your ROTH IRA

So, while the ROTH TSP option allows all of us to contribute up to the limit regardless of income, the ROTH IRA gives you some added flexibility, particularly the ability to make withdrawals of contributions.

So, now to the decision, should you contribute to one or the other or neither. For those who are in the 15% tax bracket (single taxpayers earning 8,700 – $35,350 or married filing jointly (MFJ) earning $17,400 – $70,700) you're best bet is likely to fully fund the ROTH IRA, then begin contributing to the ROTH TSP. For those in the 25% bracket (single $35,350 – $85,650 or MFJ $70,700 – $142,700) you can fully fund your deductible conventional TSP and have tax savings of enough to almost fully fund a ROTH IRA ($17,000 * 25% = $4250 tax savings). It's also likely that you'll be in a lower bracket at retirement.

In the end, the ROTH IRA remains our top choice for flexibility and tax free growth. The ROTH TSP is a great option for lower income military members, and for those who have large amounts of tax free earnings from deployments. For higher income military members we recommend a combination of deductible TSP and ROTH IRA for tax savings and flexibility.

9951 Atlantic Blvd, Jacksonville FL 32225

Ways The Internet Has Destroyed Your Finances

In today's modern age, there are very few things that you cannot do on the Internet. From handling your finances to ordering a pizza, the Internet is a convenient means to taking care of business and socializing with friends. There is, however, a down side to all of this convenience. The Internet makes it very easy to go off track with even a well-structured budget. Here is a look at how the Internet has destroyed my finances in the past and how I've learned from my mistakes.

Temptation

The Internet has made it abundantly easy to spend money online. The temptation to spend is significant, with advertisements just about everywhere you look. If you are not extra-vigilant, you can fall prey to temptation and find yourself spending your hard-earned money at a store online. There are many tips you can use to help avoid the temptation to overspend online. Only buy things online that are necessities, and if you feel the need to impulse buy simply stop for a moment and think about how buying unwanted items will affect your long-term financial goals.
 
Scams

Another way the Internet has destroyed my finances in the past is through a phishing scam. While handling a transaction on Paypal, I was logged out of my account and prompted to log back in. Roughly an hour later multiple charges appeared on my Paypal account that I did not make. Because my Paypal account is linked to my debit card, the charges were paid immediately and I had a problem on my hands. My bank and Paypal both initiated their own investigations and a week later my money was refunded. One way to lower the likelihood of falling prey to a scam like this is to attach your credit card to your paypal account rather than your debit card. This way, if you end up being the prey to a scam the scammer will not have access to the funds in your bank account. You will be able to dispute the fraudulent charges with your credit card company much easier than with your bank. Take your time online. Many people fail to realize a scam because the offer or scam seems like a good opportunity or an urgent matter. By taking a few moments to think things through, you can decide if the scam is too good to be true or map the proper steps to research and report the issue.

Online Billing

Online billing can also add financial strain to your budget. Typically, you set up online billing to have funds automatically taken out each month to pay a bill, without much effort on your behalf. It can be a convenient way to take care of your bills. An issue arises when the withdraw date varies from month to month. You always need to make sure you have the total of the bill in your account for when the automatic withdrawal hits, or else your account will be overdrawn and you will be responsible for any fees or interest incurred.
 
Impulse Buying

Impulse buying is made even easier with advertisements for products just about everywhere. Also, thanks to social networking sites, just hearing your friends talk about a sale they have encountered or a great piece at a fashion boutique may tempt you to go online and shop.

No Need to Leave Home

When you shop online there is no need to leave home. Simply place your order online, pay for shipping and you can expect your package within a week's time. Some company's offer reasonable shipping, however; others charge astronomical shipping charges. It is easy to bust your budget online when your favorite store is only a few mouse clicks away.

The Bottom Line

While the Internet is a convenient venue for shopping, it may be a little too convenient. Be mindful of your monthly budget when shopping online, and keep track of all automatic billing arrangements you set up. Shopping from the comfort of your home is a great convenience as long as you use it with caution.

Read more: http://www.investopedia.com/financial-edge/0512/Ways-The-Internet-Has-Destroyed-Your-Finances.aspx#ixzz1x25sDiZ8

9951 Atlantic Blvd, Suite 323, Jacksonville FL