Warren Wealth Article Archive
Articles Posted During 07/2009
Cash For Clunkers
Monday 07/27/2009 - 10:09:29 am
Does your car qualify?
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Junk a clunker, get a credit. The Car Allowance Rebate System (cars.gov) is ready to roll. Friday, July 24 was the day that auto dealers could start registering for the Obama administration’s plan to get gas guzzlers off the highways through new car buyer incentives.1
Save $3,500, $4,500, or maybe even $9,000 if your car qualifies. That’s how much you may be able to chop off the sticker price of a new, more fuel-efficient car. Chrysler is offering you another $4,500 through August 31 (in cash or in 0% financing for 72 months through GMAC Financial Services) on top of the $3,500 or $4,500 credit from the government.1,2 Other automakers may chime in with supplemental incentives before the program ends.
Think old trucks and SUVs (but not too old). Your clunker has to be from 1984 or newer, and it has to get 18 MPG or less when you combine the highway/city numbers. (How do you find out the MPG of your make and model? You can use the New Combined EPA MPG ratings at either fueleconomy.gov or cars.gov.) So for example, a 1992 Honda Civic or a 1995 Saturn SL is not eligible by that MPG yardstick. However, the prospects sure look promising for a 1989 Chevy Suburban.3,4
Whatever car you buy has to meet federal fuel efficiency requirements and have an MSRP of $45,000 or less. (No Lamborghinis.) If you’re trading in a passenger car, you get the $3,500 credit if you buy a new vehicle that gets 4 MPG more than your old car. The $4,500 credit is yours if your new car gets 10 MPG or better than the old one.1
The standards are a little more lenient if you are bringing in a big clunker – a minivan, truck, or SUV. (Even large work trucks weighing 6,000+ lbs. may be traded in under the program.) In the case of these larger vehicles, you get a $3,500 rebate if you buy a new vehicle getting at least 2 MPG better than the trade-in. If the new vehicle will get 5 MPG or more than the trade-in, you can qualify for the $4,500 credit.1
Is this really so green? It is possible to use the credit to buy a new truck or SUV with gas mileage just slightly better than the old one. Yet you may not use the credit to buy a used hybrid – or for that matter, a used anything.
Trade-in value, too? No, you don’t get to apply trade-in value toward the purchase of the new car in addition to the government credit.6 Still, if you’ve got a $1,000 or $2,000 car chugging around, this program could give you the equivalent of real trade-in value.
Your old junker will be destroyed, not resold or parted out. In fact, the dealership will drain the oil out, pour in two quarts of sodium silicate solution, and then run the engine for up to seven minutes according to instructions from the National Highway Traffic Safety Administration. Scrap heap, here we come. The government wants to prevent fraud and flipping of old cars. Your clunker has to be running and drivable when you trade it in, and licensed and insured for at least a year. Dealers must gain the vehicle title, and direct a junkyard to crush the car within six months of submission.1,6
250,000 new car sales? That’s what the federal government would like the cash-for clunkers program to achieve.6 While the program could stimulate sales at U.S. auto dealers, it could seriously hinder the efforts of charities that routinely rely on vehicle donations.
What about leasing? Yes, you can use the credit to offset the lease price of a new car. However, it will have to be a pretty long lease – five years or longer. Americans typically lease cars for about three years.7
Deadline: November 1. Actually, you may not have that much time. If you see a parade of $1,000 cars headed for your local auto center, you might want to hurry. The program will last until November 1 or until the $1 billion of rebates dries up – so think about junking the clunker now rather than later.5
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Professional for further information.
Citations.
1 google.com/hostednews/ap/article/ALeqM5iItdBAAv4UIPdwp2YwWjh_dlQUAQD99KVML81 [7/24/09]
2 media.chrysler.com/newsrelease.do;jsessionid=F3F32E743AE1376AD1409D768AEE34F3?id=8897&mid=1 [7/22/09]
3 fueleconomy.gov/feg/carsglossary.htm#CombinedMPG [7/24/09]
4 fueleconomy.gov/feg/findacar.htm [7/24/09]
5 miamiherald.com/457/story/1155154.html [7/23/09]
6 bloomberg.com/apps/news?pid=20601087&sid=atGyvjeWv3wg [7/24/09]
7 smartmoney.com/Spending/Autos/Cash-for-Clunkers-What-You-Need-to-Know/ [7/24/09]
[b][/b]
[Permalink]
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Junk a clunker, get a credit. The Car Allowance Rebate System (cars.gov) is ready to roll. Friday, July 24 was the day that auto dealers could start registering for the Obama administration’s plan to get gas guzzlers off the highways through new car buyer incentives.1
Save $3,500, $4,500, or maybe even $9,000 if your car qualifies. That’s how much you may be able to chop off the sticker price of a new, more fuel-efficient car. Chrysler is offering you another $4,500 through August 31 (in cash or in 0% financing for 72 months through GMAC Financial Services) on top of the $3,500 or $4,500 credit from the government.1,2 Other automakers may chime in with supplemental incentives before the program ends.
Think old trucks and SUVs (but not too old). Your clunker has to be from 1984 or newer, and it has to get 18 MPG or less when you combine the highway/city numbers. (How do you find out the MPG of your make and model? You can use the New Combined EPA MPG ratings at either fueleconomy.gov or cars.gov.) So for example, a 1992 Honda Civic or a 1995 Saturn SL is not eligible by that MPG yardstick. However, the prospects sure look promising for a 1989 Chevy Suburban.3,4
Whatever car you buy has to meet federal fuel efficiency requirements and have an MSRP of $45,000 or less. (No Lamborghinis.) If you’re trading in a passenger car, you get the $3,500 credit if you buy a new vehicle that gets 4 MPG more than your old car. The $4,500 credit is yours if your new car gets 10 MPG or better than the old one.1
The standards are a little more lenient if you are bringing in a big clunker – a minivan, truck, or SUV. (Even large work trucks weighing 6,000+ lbs. may be traded in under the program.) In the case of these larger vehicles, you get a $3,500 rebate if you buy a new vehicle getting at least 2 MPG better than the trade-in. If the new vehicle will get 5 MPG or more than the trade-in, you can qualify for the $4,500 credit.1
Is this really so green? It is possible to use the credit to buy a new truck or SUV with gas mileage just slightly better than the old one. Yet you may not use the credit to buy a used hybrid – or for that matter, a used anything.
Trade-in value, too? No, you don’t get to apply trade-in value toward the purchase of the new car in addition to the government credit.6 Still, if you’ve got a $1,000 or $2,000 car chugging around, this program could give you the equivalent of real trade-in value.
Your old junker will be destroyed, not resold or parted out. In fact, the dealership will drain the oil out, pour in two quarts of sodium silicate solution, and then run the engine for up to seven minutes according to instructions from the National Highway Traffic Safety Administration. Scrap heap, here we come. The government wants to prevent fraud and flipping of old cars. Your clunker has to be running and drivable when you trade it in, and licensed and insured for at least a year. Dealers must gain the vehicle title, and direct a junkyard to crush the car within six months of submission.1,6
250,000 new car sales? That’s what the federal government would like the cash-for clunkers program to achieve.6 While the program could stimulate sales at U.S. auto dealers, it could seriously hinder the efforts of charities that routinely rely on vehicle donations.
What about leasing? Yes, you can use the credit to offset the lease price of a new car. However, it will have to be a pretty long lease – five years or longer. Americans typically lease cars for about three years.7
Deadline: November 1. Actually, you may not have that much time. If you see a parade of $1,000 cars headed for your local auto center, you might want to hurry. The program will last until November 1 or until the $1 billion of rebates dries up – so think about junking the clunker now rather than later.5
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Professional for further information.
Citations.
1 google.com/hostednews/ap/article/ALeqM5iItdBAAv4UIPdwp2YwWjh_dlQUAQD99KVML81 [7/24/09]
2 media.chrysler.com/newsrelease.do;jsessionid=F3F32E743AE1376AD1409D768AEE34F3?id=8897&mid=1 [7/22/09]
3 fueleconomy.gov/feg/carsglossary.htm#CombinedMPG [7/24/09]
4 fueleconomy.gov/feg/findacar.htm [7/24/09]
5 miamiherald.com/457/story/1155154.html [7/23/09]
6 bloomberg.com/apps/news?pid=20601087&sid=atGyvjeWv3wg [7/24/09]
7 smartmoney.com/Spending/Autos/Cash-for-Clunkers-What-You-Need-to-Know/ [7/24/09]
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From Wealth Accumulation To Wealth Preservation
Monday 07/20/2009 - 10:44:52 am
A retirement transition might call for a shift in your investment approach.
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Time passes … and priorities change. When you approach retirement, your investment mindset may have to be modified. If you are in your thirties or forties, the goal is accumulation – investing and saving to amass as much as possible for your retirement years. When you are older, the goal changes to wealth preservation – the objective of making assets last through a combination of conservative investing, sensible cash flow, risk management and tax reduction.
A subtle shift. Committed investors who work with a financial advisor often receive guidance to help them adjust their investment approach to new phases of life.
If you’re younger than 40, you will almost always be encouraged to invest for growth for two reasons. One, you probably have a very long time horizon until retirement (maybe as long as 40 years). Two, although past performance is no guarantee of future results, numerous studies have shown that the stock market has historically outperformed (in the long term) fixed-rate investments and savings accounts. Also, as your earnings increase, you can potentially defer greater and greater amounts of salary for retirement savings.
When people are in their forties, they usually begin to approach their maximum earnings potential. This is when many portfolios start to shift toward a mix of growth-oriented and preservation-oriented investments. For many people, this shift toward asset preservation gets more pronounced the older they get – though some growth investments usually remain in their portfolios, because their retirement capital may have to last for another 30 or 40 years.
In retirement, a financial advisor has to find an asset allocation that will encourage a regular income stream for you without discouraging your potential for growth. It must also be an allocation that you are comfortable with.
Still accumulating? Perhaps you started saving for retirement relatively late, or maybe you had a financial setback or two. This is not unusual: many people in their fifties or sixties are still in the accumulation phase out of necessity.
There are people in their forties or fifties who have no retirement savings. Many are predisposed to “make up for lost time” and adopt an aggressive investment strategy. This can be dangerous. People may be tempted to invest the bulk of their assets in a “hot” sector of the market, crossing their fingers and hoping for double-digit returns. But as we have seen with the real estate market, what seems “hot” may turn cold. Diversification is just as important for late savers.
The psychology of preservation. “Wealth preservation” is a broad term that can signify a number of financial steps. A good wealth preservation strategy addresses the things that have to be addressed for any mature couple or individual or maturing family.
It should outline how retirement plan savings will be reinvested and managed (asset allocation, investment objectives). It should establish a schedule of sensible income withdrawals. It should provide measures for tax efficiency (in investing) and tax reduction, to potentially increase the after-tax return. It should incorporate an estate plan, to permit the tax-efficient transfer of assets to heirs and/or favorite causes.
It should NOT expose an individual, couple, or family to dangerous levels of risk with the mission of obsessively pursuing the best possible stock market returns.
Is preserving wealth on your mind? If not, it may need to be – particularly if you are in your forties, fifties or older. Now might be the right time to confer with a qualified financial advisor and discuss a shift in emphasis from wealth accumulation to wealth preservation.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
[Permalink]
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Time passes … and priorities change. When you approach retirement, your investment mindset may have to be modified. If you are in your thirties or forties, the goal is accumulation – investing and saving to amass as much as possible for your retirement years. When you are older, the goal changes to wealth preservation – the objective of making assets last through a combination of conservative investing, sensible cash flow, risk management and tax reduction.
A subtle shift. Committed investors who work with a financial advisor often receive guidance to help them adjust their investment approach to new phases of life.
If you’re younger than 40, you will almost always be encouraged to invest for growth for two reasons. One, you probably have a very long time horizon until retirement (maybe as long as 40 years). Two, although past performance is no guarantee of future results, numerous studies have shown that the stock market has historically outperformed (in the long term) fixed-rate investments and savings accounts. Also, as your earnings increase, you can potentially defer greater and greater amounts of salary for retirement savings.
When people are in their forties, they usually begin to approach their maximum earnings potential. This is when many portfolios start to shift toward a mix of growth-oriented and preservation-oriented investments. For many people, this shift toward asset preservation gets more pronounced the older they get – though some growth investments usually remain in their portfolios, because their retirement capital may have to last for another 30 or 40 years.
In retirement, a financial advisor has to find an asset allocation that will encourage a regular income stream for you without discouraging your potential for growth. It must also be an allocation that you are comfortable with.
Still accumulating? Perhaps you started saving for retirement relatively late, or maybe you had a financial setback or two. This is not unusual: many people in their fifties or sixties are still in the accumulation phase out of necessity.
There are people in their forties or fifties who have no retirement savings. Many are predisposed to “make up for lost time” and adopt an aggressive investment strategy. This can be dangerous. People may be tempted to invest the bulk of their assets in a “hot” sector of the market, crossing their fingers and hoping for double-digit returns. But as we have seen with the real estate market, what seems “hot” may turn cold. Diversification is just as important for late savers.
The psychology of preservation. “Wealth preservation” is a broad term that can signify a number of financial steps. A good wealth preservation strategy addresses the things that have to be addressed for any mature couple or individual or maturing family.
It should outline how retirement plan savings will be reinvested and managed (asset allocation, investment objectives). It should establish a schedule of sensible income withdrawals. It should provide measures for tax efficiency (in investing) and tax reduction, to potentially increase the after-tax return. It should incorporate an estate plan, to permit the tax-efficient transfer of assets to heirs and/or favorite causes.
It should NOT expose an individual, couple, or family to dangerous levels of risk with the mission of obsessively pursuing the best possible stock market returns.
Is preserving wealth on your mind? If not, it may need to be – particularly if you are in your forties, fifties or older. Now might be the right time to confer with a qualified financial advisor and discuss a shift in emphasis from wealth accumulation to wealth preservation.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
[Permalink]
Common Financial Mistakes
Monday 07/20/2009 - 10:33:00 am
A few things you can’t afford to do.
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Are you making mistakes with your money? Many people do, because of inattention, a lack of knowledge or confidence, or relying of the advice of friends rather than professionals. Here are some all-too-common money errors to avoid …
Putting off financial planning. This may be the biggest mistake of all. Procrastination does not help you save for retirement, and it will not help you reduce your taxes or transfer money to your heirs. Delaying necessary financial planning can be perilous. Some avoid planning out of fear – they simply don’t know where to begin. Don’t let this stop you. Decide today to do something about your financial future.
Putting all your eggs in one basket. Too many people invest everything in just one place. Try spreading your assets across multiple investments, and you’ll help to insulate them against the effects of economic ups and downs.
Buying more home than you can afford. Interest-only loans, option adjustable-rate mortgages (option ARMs) and lease purchases still tantalize couples and families with small nest eggs, modest salaries and credit blemishes into taking on much more liability than they can bear. The result is often foreclosure. Speak to a professional to make sure the amount of home you purchase makes sense for you.
Making impulsive or emotional money decisions. A decision that feels good (or exciting) may not be appropriate for you financially. Avoid spur-of-the-moment financial choices, and the influences that may trigger them. The next time you’re about to make a snap decision, stop and think. Will you lose the opportunity if you take a while to consider your next move? Consider and compare whenever possible.
Living above your means. In the acclaimed book The Millionaire Next Door, authors Thomas Stanley and William Danko found that most millionaires drive used American cars and shun a champagne-and-caviar lifestyle. It is the middle class that is generally seduced by big-debt, big-ticket luxury items … sometimes all the way into bankruptcy. Make wise decisions about money, take the time to consider big purchases, and be mindful of what effect they’ll have on finances down the road.
Avoiding all risk. Caution is good, but being extremely risk-averse (for example, refraining from investment and just putting your money in an FDIC-insured bank account) may cost you in terms of the growth of your retirement savings and assets. If you’re holding back because you’re unsure, speak with a financial professional.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
[Permalink]
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
Are you making mistakes with your money? Many people do, because of inattention, a lack of knowledge or confidence, or relying of the advice of friends rather than professionals. Here are some all-too-common money errors to avoid …
Putting off financial planning. This may be the biggest mistake of all. Procrastination does not help you save for retirement, and it will not help you reduce your taxes or transfer money to your heirs. Delaying necessary financial planning can be perilous. Some avoid planning out of fear – they simply don’t know where to begin. Don’t let this stop you. Decide today to do something about your financial future.
Putting all your eggs in one basket. Too many people invest everything in just one place. Try spreading your assets across multiple investments, and you’ll help to insulate them against the effects of economic ups and downs.
Buying more home than you can afford. Interest-only loans, option adjustable-rate mortgages (option ARMs) and lease purchases still tantalize couples and families with small nest eggs, modest salaries and credit blemishes into taking on much more liability than they can bear. The result is often foreclosure. Speak to a professional to make sure the amount of home you purchase makes sense for you.
Making impulsive or emotional money decisions. A decision that feels good (or exciting) may not be appropriate for you financially. Avoid spur-of-the-moment financial choices, and the influences that may trigger them. The next time you’re about to make a snap decision, stop and think. Will you lose the opportunity if you take a while to consider your next move? Consider and compare whenever possible.
Living above your means. In the acclaimed book The Millionaire Next Door, authors Thomas Stanley and William Danko found that most millionaires drive used American cars and shun a champagne-and-caviar lifestyle. It is the middle class that is generally seduced by big-debt, big-ticket luxury items … sometimes all the way into bankruptcy. Make wise decisions about money, take the time to consider big purchases, and be mindful of what effect they’ll have on finances down the road.
Avoiding all risk. Caution is good, but being extremely risk-averse (for example, refraining from investment and just putting your money in an FDIC-insured bank account) may cost you in terms of the growth of your retirement savings and assets. If you’re holding back because you’re unsure, speak with a financial professional.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
[Permalink]
China, Japan And Our Debt
Tuesday 07/14/2009 - 11:02:18 am
Will other countries keep buying our Treasuries?
provided by Jacob Warren
Content provided by Peter Montoya, Inc.
If China and Japan change their minds, could the United States have a problem? Since 1980, the U.S. has imported more than it has exported.1 It makes up for this trade deficit by issuing Treasury bonds and other debt instruments. Foreign governments have long lined up to buy them.
China holds almost $800 billion of U.S. Treasuries. That’s the April 2009 figure from the U.S. Treasury (at this moment, the most recent data). In addition, Japan has $686 billion in Treasuries. Hong Kong has $81 billion, Taiwan $78 billion, Singapore $40 billion, India $39 billion, and South Korea $35 billion. Away from Asia, Great Britain holds $153 billion, Russia holds $137 billion, and Brazil holds $126 billion. 2 U.S. Treasury bonds offer these institutional investors some stability in uncertain times.
Are China and Japan wary of buying more? Earlier in the decade, China, Japan and other nations readily bought Treasuries. From 2004-2008, China spent as much as 14% of its GDP on the purchase of foreign debt - mostly American debt.3
What happened as a result? China, Japan and other creditor countries got a nice return on their investment and a strong export market. We got to buy inexpensive imports. This kept the dollar strong and interest rates low.
Now we have two problems that could potentially sour this relationship. The economies of China, Japan and other countries have suffered along with ours in the global recession. Moreover, the U.S. has run up a huge budget deficit to accompany its trade deficit. Our President is on record as saying that we may have trillion-dollar deficits for “years to come.”
Under these conditions, China and Japan are naturally getting leery of holding so much American debt (especially when the Federal Reserve is printing money to buy it). China needs to pay for its own $600 billion stimulus package, and Japan announced a $154 billion stimulus in April. Tax revenues in both economies have declined with the recession. Government regulators in China have ordered banks to direct money this year to local governments and small- and medium-sized businesses. All this means China and Japan aren’t as eager for dollars and Treasuries as they were a few years ago.3,4
What if other nations stop buying our debt? There are three potential side effects. One, interest rates would likely increase as there would be fewer buyers for Treasuries. Two, the dollar could weaken. Three, long-term bond prices could fall.
Voices on the fringe worry about a scenario in which the central banks of China, Japan and other nations jettison dollars en masse or abruptly quit buying U.S. debt. Realistically, the odds of something like this happening are slim. These countries would have nothing to gain by stifling America’s chances for economic recovery, and these decisions would greatly harm the world economy.
Now for some good news. In May, our trade deficit fell to its lowest level since November 1999. It shrank 9.8% in May from April levels, defying analysts’ expectations – and offering a hint of economic recovery. Our deficit with China increased by $4.4 billion for May, but the 2009 increase is 12.6% under last year’s pace. The U.S. deficit with Japan reduced to its lowest level in more than 20 years last month.5
More good news. Domestic and foreign demand for Treasuries is still strong – in its auction in the first full week of July, the Treasury quickly sold $19 billion of 10-year notes, with Treasury yields hitting 6½-week lows.6 At least in the short term, it appears the government doesn’t have to struggle for buyers to fund its reforms and rescue efforts.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
Citations.
1 moneycentral.msn.com/content/invest/extra/P140049.asp [1/5/06]
2 treas.gov/tic/mfh.txt [6/15/09]
3 nytimes.com/2009/01/08/business/worldbusiness/08yuan.html [1/8/09]
4 nytimes.com/2009/04/09/business/global/09yen.html [4/9/09]
5 finance.yahoo.com/news/May-trade-deficit-apf-2840686452.html?x=0&sec=topStories&pos=6&asset=&ccode= [7/10/09]
6 forbes.com/feeds/reuters/2009/07/08/2009-07-08T205823Z_01_N08405527_RTRIDST_0_MARKETS-GLOBAL-WRAPUP-6.html [7/8/09]
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Coping With A Layoff
Tuesday 07/07/2009 - 2:22:53 pm
What can you do to help yourself?
Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
You go to work and get the word … you’re being laid off. Maybe it’s no surprise. Maybe it comes as a shock. The question becomes: what now?
Basically, you have three quick to-dos: leaving work with as much money as possible, securing health insurance for the interim, and arranging unemployment benefits. Beyond these items, stay calm and stay in the hunt – or alternatively, work for yourself.
Negotiate your exit. While no law requires your employer to give you a severance package, some employers do provide them.1 Severance package or not, you may very well receive two weeks pay and perhaps compensation for unused vacation or sick days.
Don’t be meek here. If you’ve been a key employee or simply a good employee, make the case for your company to extend your health coverage a little longer or give you a true severance package. They may see the merit if you have proven yours.
In tax terms, it may be better to receive your severance pay in the form of recurring checks rather than a lump sum. If you get a lump sum, it’s quite possible you could have too much withheld.
If you know you are getting laid off in the next few months, you can request to reduce the amount of withholding taxes on your last few paychecks to give yourself more take-home pay. And if it looks like you are going to receive a lump sum severance before December 31, think about deferring that payment until 2010 so you don’t have to include it on your 2009 tax return.
Keep yourself insured. If you can sign up as a spouse for the plan offered by your spouse’s employer, it makes sense to do it as soon as you can. If that doesn’t describe your situation, then the options are extending coverage through COBRA or keeping up the payments on private life or disability insurance that your company provided.
If you sign up for COBRA at the moment, the federal government will subsidize 65% of the cost for nine months as a result of the federal stimulus. In COBRA, you will have to pay the entire premium on your health insurance plus a 2% administrative fee.1
Sign up for unemployment benefits. As few of us have bank accounts equal to six months or a year of salary, it is wise (not demeaning) to sign up for these benefits. You will want to do so ASAP, because it may take a few weeks for that first check to arrive. In some states, you can receive unemployment checks even if you have been given a severance package – although you may have to wait until the entirety of the severance is issued to you before jobless benefits can follow.1
Remember that the federal government is pulling out all the stops right now. Take advantage of the federal economic stimulus effort, which is directing $500 million toward helping the jobless find jobs. New search assistance, education, and retraining programs are available. The government is also boosting unemployment payments a bit and elongating parameters of eligibility. Currently, the average weekly unemployment check in America is about $300. Jobseekers can receive unemployment benefits for up to 46 weeks – up to 59 weeks in states where the unemployment rate tops 6% for more than three months in a row, which would be just about everywhere right now. Under the stimulus, weekly unemployment checks will increase by $20 – and the first $2,400 of unemployment payments will be tax-exempt.1
Press flesh, not just keys. Despite the buzz surrounding job boards like Monster.com, Dice.com and CareerBuilder.com, an article this winter in the San Francisco Chronicle noted that only about 2-3% of new hires find their jobs through such resources. About 15% of new hires find work directly by applying at a company’s web site, and about 65% find new jobs through that old standby – networking.2
Older employees may actually cope with layoffs better. That’s what a collaborative study coming from the Federal Reserve Bank of Chicago and Columbia University has just concluded. It found that laid-off workers younger than 55 experience a much greater increase in “mortality hazards” than their older counterparts – stress and health risks, addictions, and negative personal behaviors. Perhaps this is because workers over 55 are somewhat less likely to deal with making ends meet and the pressures of raising a family; they may have already thought about (and planned for) a retirement transition and they have the options of Medicare and Social Security now or in the near future.3
Have you been given a gift? That’s one way to look at it: one door closes, another opens. If you have an entrepreneurial ambition, or just suspect that like many Americans you will one day have to be your own boss, then maybe now is the time to talk over your options with a potential mentor – a friend who owns a business or makes a living as an independent professional in your industry. If you are mature and want or need to keep working, you might even think about a life or career coach – someone who can help you see the full range of possibilities, including those that you may not have considered five or ten years ago.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
Citations.
1 smartmoney.com/personal-finance/employment/4-ways-to-survive-a-layoff/ [7/2/09]
2 sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/20/BU2914Q1JE.DTL [12/20/08]
3 usnews.com/blogs/the-inside-job/2009/07/01/the-correlation-between-health-employment-and-layoff-fears.html [7/1/09]
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Presented by Jacob Warren
Content provided by Peter Montoya, Inc.
You go to work and get the word … you’re being laid off. Maybe it’s no surprise. Maybe it comes as a shock. The question becomes: what now?
Basically, you have three quick to-dos: leaving work with as much money as possible, securing health insurance for the interim, and arranging unemployment benefits. Beyond these items, stay calm and stay in the hunt – or alternatively, work for yourself.
Negotiate your exit. While no law requires your employer to give you a severance package, some employers do provide them.1 Severance package or not, you may very well receive two weeks pay and perhaps compensation for unused vacation or sick days.
Don’t be meek here. If you’ve been a key employee or simply a good employee, make the case for your company to extend your health coverage a little longer or give you a true severance package. They may see the merit if you have proven yours.
In tax terms, it may be better to receive your severance pay in the form of recurring checks rather than a lump sum. If you get a lump sum, it’s quite possible you could have too much withheld.
If you know you are getting laid off in the next few months, you can request to reduce the amount of withholding taxes on your last few paychecks to give yourself more take-home pay. And if it looks like you are going to receive a lump sum severance before December 31, think about deferring that payment until 2010 so you don’t have to include it on your 2009 tax return.
Keep yourself insured. If you can sign up as a spouse for the plan offered by your spouse’s employer, it makes sense to do it as soon as you can. If that doesn’t describe your situation, then the options are extending coverage through COBRA or keeping up the payments on private life or disability insurance that your company provided.
If you sign up for COBRA at the moment, the federal government will subsidize 65% of the cost for nine months as a result of the federal stimulus. In COBRA, you will have to pay the entire premium on your health insurance plus a 2% administrative fee.1
Sign up for unemployment benefits. As few of us have bank accounts equal to six months or a year of salary, it is wise (not demeaning) to sign up for these benefits. You will want to do so ASAP, because it may take a few weeks for that first check to arrive. In some states, you can receive unemployment checks even if you have been given a severance package – although you may have to wait until the entirety of the severance is issued to you before jobless benefits can follow.1
Remember that the federal government is pulling out all the stops right now. Take advantage of the federal economic stimulus effort, which is directing $500 million toward helping the jobless find jobs. New search assistance, education, and retraining programs are available. The government is also boosting unemployment payments a bit and elongating parameters of eligibility. Currently, the average weekly unemployment check in America is about $300. Jobseekers can receive unemployment benefits for up to 46 weeks – up to 59 weeks in states where the unemployment rate tops 6% for more than three months in a row, which would be just about everywhere right now. Under the stimulus, weekly unemployment checks will increase by $20 – and the first $2,400 of unemployment payments will be tax-exempt.1
Press flesh, not just keys. Despite the buzz surrounding job boards like Monster.com, Dice.com and CareerBuilder.com, an article this winter in the San Francisco Chronicle noted that only about 2-3% of new hires find their jobs through such resources. About 15% of new hires find work directly by applying at a company’s web site, and about 65% find new jobs through that old standby – networking.2
Older employees may actually cope with layoffs better. That’s what a collaborative study coming from the Federal Reserve Bank of Chicago and Columbia University has just concluded. It found that laid-off workers younger than 55 experience a much greater increase in “mortality hazards” than their older counterparts – stress and health risks, addictions, and negative personal behaviors. Perhaps this is because workers over 55 are somewhat less likely to deal with making ends meet and the pressures of raising a family; they may have already thought about (and planned for) a retirement transition and they have the options of Medicare and Social Security now or in the near future.3
Have you been given a gift? That’s one way to look at it: one door closes, another opens. If you have an entrepreneurial ambition, or just suspect that like many Americans you will one day have to be your own boss, then maybe now is the time to talk over your options with a potential mentor – a friend who owns a business or makes a living as an independent professional in your industry. If you are mature and want or need to keep working, you might even think about a life or career coach – someone who can help you see the full range of possibilities, including those that you may not have considered five or ten years ago.
Jacob Warren
Warren Wealth Management
111 West Port Plaza Drive, Ste 300, Saint Louis, MO 63146
(866) 463- 0752 ext. 52337 toll free, (314) 819-0464
---------------------------------------------------------------------------------
Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., Member FINRA, SIPC, and Registered Investment Advisor. Warren Wealth Management and Woodbury Financial Services, Inc. are unaffiliated entities
These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.
Citations.
1 smartmoney.com/personal-finance/employment/4-ways-to-survive-a-layoff/ [7/2/09]
2 sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/20/BU2914Q1JE.DTL [12/20/08]
3 usnews.com/blogs/the-inside-job/2009/07/01/the-correlation-between-health-employment-and-layoff-fears.html [7/1/09]
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