After some articles about small business taxes, there has been a demand for more small business and entrepreneur information. This guest post examines the necessary attributes for successfully starting your own business. – The Finance Gourmet.

Should You Start That Business?

With companies downsizing and mass layoffs occurring in even the biggest and most established corporations, many of us feel that the workplace is no longer as safe and secure as it should be. Faced with an uncertain future, we’re hoping to change the tide by setting up our own businesses.

Transitioning from an employed worker to a business owner is a big step, and one that should be taken with considerable thought and planning. The fact is that not everyone is cut out to become their own boss and only a handful can make it to the top.

Before even attempting to delve into this unfamiliar territory, it is important that you first take the time to decide whether you have the right attitude, skills, and mindset to start your own enterprise.

1. Personal Skills

One of the critical elements to a successful venture lies in who is running it. This is precisely why it is vital that you look deep into yourself and honestly evaluate if you truly have what it takes to fulfill this undertaking.

Successful entrepreneurs are driven, persistent, and powered by their vision. Instead of taking directions, you will be the one leading your team, and doing this takes control and a certain amount of tolerance with your subordinates. The process of setting up your business is bound to be riddled with risks and challenges, and it is your resilience that will determine if you can power through these obstacles.

2. Social Skills

The success of a business is also dependent on how you, as a team, work together towards a common goal. As the head of the group, it is your obligation to keep your team motivated and excited to work. This is where good interpersonal skills play a big role.

If you are hoping to become your own boss, then you better start honing your communication and listening skills. Always be ready to adapt to changing situations and be open to taking suggestions and even criticisms. Also keep in mind that your employees can only be as good as you allow them to be.

3. Creative Skills

Creativity and strategic thinking are two disciplines that are necessary in order to succeed in your own venture. You need to move out of your comfort zone and constantly try to innovate yourself and think of ways to improve your products or services. This involves learning to spot evolving trends and opportunities as well as potential threats that can destabilize your company.

4. Problem Solving Skills

As all businesses are bound to go through crisis situations that will put you to the test, it is vital that you sharpen your analytical skills in regards to getting through these challenges.

5. Organizational Skills

Having a business of your own is highly stressful, especially if you lack the planning and organization skills necessary to make sure that every little detail is in order. From setting up goals to implementing plans, it is your responsibility to stay on top of everything.

If you’ve really taken a moment to study yourself and decided that you have each of these skills, then you have what it takes to handle the daily business, as well as unforseen emergencies in the future. You are ready to make that leap to being your own boss.

Author:

Jimmy is the business and automotive writer for TruckertoTrucker.com, where you can find trucks for sale as well as specialty commercial equipment like tanker trailers.

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Are You Capable of Handling Your Own Business? originally published at Finance Gourmet

In reality, if you read the entire article, you’ll find that the odds of triggering an IRS audit are pretty much right in line with what I said in my article. What this other news article points out is that there are ways for the IRS to contact you that aren’t really audits. If you include these not-audits in the count of actual audits, then you get, not surprisingly, a much higher number of audits. In particular, the article focuses on ominous letters that IRS sends out to taxpayers, which are very much not audits. In fact, the letters cited in the article are about as far from an audit as you can get.

One of the letters informs taxpayers of a math error in their tax returns. This is not an audit. This is a notice that you messed up your math and therefore need to pay your taxes based upon the correct math. This scenario in no way results in anyone questioning your deductions or asking you to prove anything on your tax return with financial records. An audit is a re-examination of your tax return, not a request for you to fix a math error. Assuming you use tax software and take the 2011 standard deduction, there is a small chance of filing a return with a math error in it.

Another of the letters mentions the electronic system the IRS has to match reported data with the amounts listed on a tax return. I did allude in my post to the fact that the IRS matches information reported directly to it by your employer and other financial relationships with the amounts you actually report on your income tax forms. I even mentioned that this is an are where only a fool tries any funny business. Again, the result of this scenario is a letter in which the IRS in no way re-examines your return except to change the results of your calculations based upon the numbers that are reported to the Internal Revenue Service directly. This is not an audit either.

The point of my article about the low chances of being audited was not to encourage people to cheat on their taxes, nor to suggest that anyone cheat because the risk of audit is so low. Rather, I hoped to make filing income taxes a little less tense. People get so worked up about getting audited that they don’t take tax deductions or credits that they qualify for, for risk of being audited. That isn’t smart personal finance strategy, but neither is cheating.

Go into doing your taxes realizing that they can be a bit complicated, although there are tax prep software packages that help, but there is no need to walk around in fear of a potential audit. It might happen, but chances are it won’t. Just don’t freak out about it for no reason.

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Higher Tax Audit Chances? originally published at Finance Gourmet

Odds of Being Audited

According to IRS statistics, the chances of being audited by the IRS is about one in 100, or one percent. A deeper look, however, reveals the the IRS audits certain tax returns much more often than other returns. IRS audit statistics suggest that high-income taxpayers and those who own small businesses are more likely to be audited that middle and low income taxpayers who earn the majority of their income from wages and salary or brokerage-style investments.

The reasons certain groups get audited more than others are two-fold. First, and foremost, there is more money to be gained by auditing higher income taxpayers. For example, consider a middle income wage earner, who is married filing jointly, bringing down a salary of $70,000 with no other income. Taking the standard deduction for 2011, of $11,600 for married couples filing joint, that leaves $58,400 of taxable income.

Do the math and that taxpayer isn’t going to pay any more than around $7,500 and likely much less if there are any kids. Assuming that our fearless taxpayer files his income taxes and fudges a child care credit or student loan interest deduction, he might shave a few hundred bucks off his total. If he is caught and audited, then the IRS can recover that and penalties and interest (particularly if it is proven to be fraudulent). Either way, the sum total of collection by that IRS audit won’t be more than a $1,000. That’s hardly worth the time and effort.

Don’t get me wrong, the IRS can and does audit returns like this all the time, primarily to avoid the appearance of “never” auditing certain kinds of tax returns. All it takes is one person getting audited to scare-straight dozens of their friends and acquaintances. However, at the end of the day, this taxpayer isn’t really “worth” the cost of an audit.

Who Gets Audited By the IRS?

A high-income taxpayer on the other hand can generate a significant tax recovery. When someone’s total tax liability is $5,000, even a big cheater won’t owe too much extra if audited. However, when someone’s total tax liability is $25,000, $50,000 or more, a successful audit might recover $10,000 or more, especially if there are penalties and interest involved.

The other reason higher earning taxpayers get audited more often is that they have more ways to cheat. Someone who earns a salary and takes the standard deduction has very little room to be sneaky. After all, their salary is reported to the IRS as well as the taxpayer. Trying to cheat on that number is flat-out stupid, considering a computer will crosscheck each and every one of those.

On the other hand, higher salaried taxpayers tend to itemize their deductions. Many of those tax deductions, such as mortgage interest are also reported to the IRS and thus not likely to be underreported. However, there are plenty of deductions that can be exaggerated very easily. Catching these things is the bread and butter of audits.

For the same reason, small business owners are frequent audit targets. There are many deductions for small business owners and other than the requirement to keep receipts and records, many are completely undocumented directly to the IRS. The 2011 Section 179 tax deduction alone is worth up to $250,000 this year. That’s some real money worth collecting.

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IRS Audit Odds originally published at Finance Gourmet

Good Time to File Bankruptcy

One of the things that trips many bankruptcy filers up, even after speaking with a bankruptcy attorney, is that the bankruptcy court will take 40 percent of your unpaid earnings. If you get paid once per month, this can be a very big deal. For example, if you get paid on the 30th of each month and you file your bankruptcy petition with the court on the 28th, you will have to pay almost half the amount of your pay check to the bankruptcy trustee. In a case like this, you would be much better off waiting the following month to file for bankruptcy.

However, there is a catch. You don’t want to file too soon after being paid because the other thing that the bankruptcy court is entitled to is almost all of the cash in your bank accounts on the day you file. For example, if you got paid $3,000 on the 30th and then you filed your bankruptcy petition on the 1st and there was $2,900 left in your bank account, you’ll have to pay that $2,900 to the trustee, even if you have long since spent it since you filed. Don’t forget, the numbers that matter are the ones that exist on the day you file.

Which brings us to the next issue in bankruptcy filing timing. Spend your money before you file. Be careful HOW you spend your money. Buying “things” like jewelry or other items is a very bad idea. The court can ask you to forfeit those items, especially if you bought them close to the filing date or if those items exceed the amount of allowable bankruptcy exemptions in your state. However, buying groceries, filling prescriptions and making sure your gas tank is full are very good ways to spend your money down before filing bankruptcy. No one can complain that you want to eat and stay healthy. More to the point, there is really no way to ask you to forfeit food, gas, and medicines.

Be very sure you understand that the amount in your account on the day you file is what matters, not when you spent the money. For example, if you write a check for $200 worth of groceries on the 8th, file bankruptcy on the 9th and the check clears on the 10th, the amount of money that counts against you for the purposes of asset counting in your bankruptcy is the amount in your checking account on the 9th, which includes the $250 you already spent. For this reason, it can be useful to withdraw cash. However, large cash withdrawals right before filing can be suspicious. Keep all your receipts to prove that you spent that money on necessities. You can also use your checking account debit card instead. Debit card transactions often clear in 24 hours, so you just have to wait one day. However, be careful of weekends and bank holidays when transactions may be delayed in reporting. You can also simply time your filing for a time after your checks and debit card transactions have cleared.

If you file anytime between December and April, don’t be surprised if your bankruptcy trustee keeps your case open long enough to take any tax refund you are getting. Don’t try spending your refund right before filing either, that usually won’t fly. Either adjust your withholding to avoid a refund (late in the year). If you still owe taxes from the previous year, this doesn’t apply to you. The IRS will intercept any refund before it ever goes to you and apply it to your outstanding taxes, before the court can lay any claim to it. This works in your favor since most federal income taxes cannot be discharged in bankruptcy.

Pay Bills Before Bankruptcy

It doesn’t make sense to pay bills due on credit cards before filing. Those debts, including any late fees, will be wiped out in the discharge. As far as your credit score goes, bankruptcy is bankruptcy. Your credit report won’t look any better if you have slightly lower balances on your credit cards before you file. You might want to take a look at your credit score before you file. To avoid having to pay, get a free credit score from CreditKarma.com. (See my Credit Karma scam article and my CreditKarma.com review article for more details.) You may, however, want to wait to sign up for Credit Karma free credit monitoring. You’ll just get a lot of depressing emails as everyone reports your bankruptcy and charge offs.

While it is not smart to pay bills like credit card bills, it is very smart to pay utilities and other bills. Paying those bills takes money out of your accounts in a way that cannot be reclaimed by the bankruptcy courts. So, in our example above, the best time to file for bankruptcy is soon after you get paid, but not until you have paid your electric bill, cable bill, cell phone bills, kid’s tuition or day care fees, and so on. Each of those things will reduce the amount of cash you have to report without raising any white flags. In order to keep the amount of unpaid earnings you have to pay to the court low, pay those bills in advance so that you can file soon after you get your paycheck before more unpaid earnings build up.

Grab the FinanceGourmet Feed to keep up to date on our series of bankruptcy filing help articles as well as our other personal finance tips.

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Best Time to File Bankruptcy originally published at Finance Gourmet

Credit Monitoring Scam

This year, Credit Karma is offering it’s registered users something new. They are expanding beyond their flagship service of offering to show users a free credit score and moving into to offering free credit report monitoring.

One of the biggest financial scams in America comes courtesy of the credit reporting industry and the three major credit reporting bureaus. In class Mafia-style extortion, a tough looking guy visits a local business. He says that bad things might happen to his business. In order to be safe, he should pay for “protection.” Of course, the only protection the business needs is from the crooks offering the protection. Credit reports and credit report monitoring work the same way.

The credit bureau’s extortion scheme works exactly the same way. You see, bad things might happen to your credit report. Someone might put false, damaging information in your file. The “smart” thing to do is to check your credit report often. To do that, you have to pay your protection money for a credit monitoring service so that you can be informed when negative information goes on your credit report. Of course, the only thing you need “protection” from is the credit bureaus and their lackadaisical efforts to ensure that only accurate information is on your credit report. Not surprisingly, Transunion, Experian and Equifax all gladly offer high-priced credit monitoring protection.

Unfortunately, just like the Mafia, the credit bureaus aren’t satisfied with just extorting a one-time fee. Instead, they use every trick in the book to get suckers customers to sign up for automatically renewing subscriptions that will charge your credit card or debit your bank account for life, all to “protect” you.

Free Credit Monitoring from CreditKarma.com

Credit Karma is offering it’s users a new option. Once signed up for Credit Karma, users can opt-in to a free credit report monitoring service. Every time negative information shows up on your credit report, Credit Karma will send an email alert. Unfortunately, at that point, the only thing you can do is order a copy of your credit report from the credit bureaus. If you are lucky, then you can get your government mandated free annual credit report.

If you already looked at in the past year, however, you will have to pay money in order to get your report, get bombarded with offers for free-trials that are actually auto-renewing subscriptions to expensive services, and then find the negative credit info in your report. Credit Karma has nothing to do with that part of the industry and it certainly isn’t their fault. Hopefully, the trend toward more accessible free credit information will continue. In the meantime, the credit industries high-paid lobbyists will ensure that other than that one free report each year, that you pay through the nose to keep financial companies from lying about you.

Fortunately, Credit Karma allows you the piece of mind of not having to pay every month, or every year, for a credit report monitoring subscription. By checking your free credit score number regularly and signing up for the CreditKarma.com free credit report alerts, you should be able to detect when something is going wrong. You’ll have to pay to find out exactly what and then to fix it, but at least you won’t be wasting money buying credit reports or paying fees when there are no issues with your credit.

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Credit Karma Review Free Credit Monitoring originally published at Finance Gourmet

2011 Capital Loss Deduction

When it comes to taxes, the more tax deductions the better. And, when you lose money on an investment, a tax deduction can take out a little of the sting. However, deducting capital losses can be tricky. Get the rules straight to save on taxes and avoid making mistakes.

Just like with capital gains, there are two kinds of capital losses, short-term capital loss and long-term capital loss. Generally, a long-term capital loss occurs when you have a loss on an investment that you have held for at least one year. Conversely, a short-term capital loss occurs when there is a loss on an investment held for less than a full year.

The tax deduction for capital losses is limited to $3,000 per year against regular income. That means that you can get a full deduction of up to $3,000 each year, regardless of whether you have any other capital gains. Capital losses are a itemized deduction, so they won’t help if you are taking the standard deduction.

Offset Capital Gains with Capital Losses

However, you can offset an unlimited amount of capital gains with corresponding capital losses. For example, if you had an investment that gave you a $10,000 capital gain, and you have another investment that generated a $10,000 capital loss, you can offset the entire $10,000 gain. That means that you do not pay any capital gains taxes on the $10,000.

There is a catch, however.

In order to offset gains with losses, the type of loss must match the type of gain. In other words, in order to offset long-term capital gains, you must have long-term capital losses. You cannot use a short-term capital loss to offset a long-term capital gain, or vice versa.

It does not matter if your capital loss is short-term or long-term when it comes to deducting the $3,000 above and beyond any investment gains that you have for the year.

Capital Loss Carryover

If you have more losses than gains to be offset, only the first $3,000 of the losses can be deducted from ordinary income. However, the remaining amount is not lost. Rather, losses can be carried forward to be used on future year’s taxes.

Revisiting our example, assume that you have a $10,000 capital gain for the year, but you have $20,000 in capital losses. You can completely offset the $10,000 gain, meaning you owe no capital gains taxes this year. However, you can only deduct $3,000 of the remaining $10,000 of losses against your regular income. That leaves $7,000 of loss that can be carried forward to next year’s taxes.

In the following year, you can use the entire $7,000 to offset any capital gains. If you have no gains, you can still deduct the $3,000 allowance against ordinary income for the year.

So, if the following year you have $5,000 in capital gains, you can offset all $5,000 and still use the remaining $2,000 in losses as a deduction against ordinary income.

How To Claim a Capital Loss

Capital gains and losses are calculated and reported using Schedule D of Form 1040 and entered on Line 13 of Form 1040.

What is most important about capital losses is that you remember to carry them forward. Users of tax software like Turbo Tax or Tax Cut have this data automatically carried forward by the program if you import last year’s tax returns when you start filing your taxes with the software. However, taxpayers who do their taxes by hand or that switch accountants or tax software need to ensure that their previous year losses are carried forward. Large losses can take years to use up if there are no corresponding large gains to use them against.

Many people have big capital losses to use thanks to recent market volatility. Even if you have tens of thousands of dollars of losses or more, be sure to continue to carry the amount forward. Some day, you’ll make money on an investment and those losses will keep you from having to pay taxes on your gains.

Capital losses can be carried forward forever with no limit on how long they may be used.

Be sure to also understand short sales for capital gains.

Related posts:

1. 2011 Section 179 Deduction Limits for Small Businesses Taxes
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Capital Loss Tax Deduction 2011 originally published at Finance Gourmet

Right about now, she’s probably hoping you forgot. Whitney is the analyst who said,

“There’s not a doubt in my mind that you will see a spate of municipal bond defaults…”

She went on to say that there could be 50 to 100 sizable defaults or more and that those defaults would amount to hundreds billions of dollars worth of defaults.

Municipal bond markets reacted by bidding up the yield for muni bonds.

Most experts didn’t buy Whitney’s prediction. Even I wrote a 2011 article about how safe are muni bonds when people kept asking me about it. Of course, none of those stories was a big, inflammatory prediction of doom from a “name-brand” financial analyst.

Analyst Predicts Muni Bond Defaults

Wall Street and the financial markets are a very weird place. Preeminent analysts are created by making market calls or predictions that come to pass, especially when they make calls that no one else saw coming. Ironically, those same analysts aren’t necessarily held accountable when they make bad calls.

Goldman Sachs’ Abbey Joseph Cohen made a name for herself by making ever higher market calls during the technology fueled stock market bubble of the late nineties. When other analysts concluded that there was no rational basis for the stock market to go any higher and predicted a downturn, Cohen was always there with an even higher market prediction, and she was right (for a while).

Unfortunately for the people that listened to Cohen, she was most decidedly not right about when the market would finally turn. Indeed, when the market first began heading down, Cohen predicted a rebound. Listening to her would have cost you much more money that it would have made. In fact, Cohen predicted an UP year for the stock market in EVERY SINGLE YEAR during and after the internet bubble popped, which means she has NEVER thought the stock market would go down.

It’s a sad fact that there is little or no real accountability in the investing world. The bond rating agencies Moody’s, Standard and Poors and Fitch have suffered no negative effects from rating toxic mortgage securities as AAA until long after it was obvious to EVERYONE that there were problems. Many securities went straight from AAA to Junk status, an admission that the AAA rating was either gross incompetence or outright fraud. Either way, all three companies continue to prosper.

Meredith Whitney’s Muni Bond Default Prediction Defaults

Financial analyst Meredith Whitney rose to fame by making a call warning about bank stocks in 2007, before everyone else realized the ship was sinking. Later, she predicted the dividend cut by Citigroup, further cementing her reputation as someone who saw things others could not see.

In mid-December of 2010, Whitney made another call no one was making, that muni bonds were headed for big waves of failures. The reality is that despite a very tough 2011, the end of stimulus dollars flowing from Washington and state and local tax collections below predictions, there have actually been FEWER muni bond defaults in 2011 than in previous years.

The closest thing to Whitney’s prediction were two defaults late in the year when Harrisburg, Pennsylvania and Jefferson County, Alabama defaulted. That $3 billion is a far cry from the hundreds of billions Whitney predicted. A closer looks shows a flawed project and not a tidal wave of financial problems sweeping up an entire county’s finances. Remember, the giant (and very real) financial issues of California led to not one single dollar of California muni bond defaults.

In the real world, Whitney’s credibility should be destroyed. In the world of finance, however, Whitney will lie low for a while before putting a better spin on her remarks. There will be caveats, and things that she said elsewhere in much lower profile that seem to make her bold prediction less of a failure.

The terminally stupid will by into this spin, and use it to defend her. But, the fact remains that when the press was swirling around and her name was in big BOLD headlines, she did not make one remark, give one interview, or say one single thing that suggested she was in any way uncomfortable with how her prediction was being represented. Only now, after she has been proven wrong and it looks bad for her will she suddenly point out the subtle nuances that meant it was all just a big misunderstanding.

For 2012, make your investing resolution to be, “To stop listening to analysts who make their living by making a lot of noise with big predictions.” After all, sooner or later you’ll be listening to Abbey Joseph Cohen call an up year for the markets in 2008, or Meredith Whitney telling you to get out of bonds before all those non-existent defaults in 2011.

Related posts:

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Meredith Whitney Muni Bond Defaults Fails to Materialize originally published at Finance Gourmet

2011 Dow Jones Up

The Dow finished up for 2011 thanks in part to the makeup of the index. The stocks in the Down Jones Industrial Average contain only large U.S. companies. While financial companies make up a significant number of the stocks, their impact is limited because the Dow Jones Average is a price-weighted index. That means that higher priced stocks have more influence on the average than lower priced stocks.

Most financial stocks have very low share prices these days, and as a result, their performance doesn’t drag as heavily on the average. Bank of America was the worst performer in the Dow having lost 58.3 percent for the year.

The Dow Industrials finished up 5.5 percent for the year. That is three consecutive positive years for the Dow, although nobody is dancing in the streets over this year’s performance, where many components had flat or down years.

The top 5 Dow stocks for 2011 were McDonald’s (up 30.7%), IBM (up 25.3%), Pfizer (up 23.6%), Home Depot (up 19.9%) and Kraft Foods (up 18.6%).

2011 S&P 500 Down

For 2011, the S&P 500 Index finished down for the year, although it’s performance was essentially flat, down less than 0.1 percent for 2011.  Unlike the Dow average,t he SP500 index is weighted based upon each stock’s market capitalization. The dismal performance of the financial stocks included in the index have large market caps and weighed heavier, pulling the index down.

For example, IBM’s high share price (around $185 per share) means that it’s positive returns for the year count a lot toward the up side for the Dow versus Bank of America’s terrible performance being only a small impact thanks to its $5 a share price. On the S&P 500 Index, however, Bank of America’s $56 billion market cap gives it much more pull.

NASDAQ 2011 Performance Down

The Nasdaq Composite Index was also down for 2011. It finished the year down about 1.8 percent.

Other Stock Markets in 2011

International markets didn’t do as well as the U.S. In Europe, the growing Euro crisis has engulfed not only Greece and Ireland, but Italy and Spain as well. Britain’s main index, the FTSE dropped 5.6 percent for the year and the main German index, the DAX, was down approximately 15. That is its first down year since 2008.

Elsewhere, the Asian index, the Nikkei was down 17 percent.

For 2011 Gold was up 10.2 percent for the year (down from this summer’s +33 percent peak). Oil was up 8.2 percent for the year.

2011 Market Recap

So, what does the market performance for 2011 mean for investors?

Almost nothing.

The small gains and losses for the year hide the extreme volatility that took place during the year through bone-headed gridlock in Washington, particularly over raising the debt-ceiling, and the building financial crisis in Europe.

Overall, regular investors would be wise to take very little stock of how the markets overall performed during 2011. Instead, investors should focus on finding good companies with strong management since those are the only ones poised to benefit from what looks to be weak economic growth during 2012.

For American’s regular lives, the markets offer no real solution or problem to the ongoing economic issues. Recent economic data suggests that the economy might FINALLY be turning a corner, assuming the current my-party-is-more-important-than-the-country mentality in Washington can either be overcome, or sidelined by a nation that has grown largely disgusted with everything the comes out of the nation’s capital.

If jobs continue to get created and Congress doesn’t break the fragile economy, 2012 might see better investment performance, and more importantly, set the stage for real economic growth and investment performance in 2013.

Happy New Year, Everybody!

Related posts:

1. 2011 Stock Market Update Q3
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Stock Market 2011 Results originally published at Finance Gourmet

Ironically, most investors are used to getting a so-called “Santa Claus” rally at the end of the year as money managers position their balance sheets and investments ahead of end of year reporting. However, this year, the problems in Europe, their affect on the Euro, and the potential collateral damage in the U.S. markets has kept investors from being in a merry mood.

As the year winds down, trading volume typically declines in the markets. Mutual funds, hedge fund managers and other money managers that are up for the year, sell everything and hold cash through the end of the year to lock in their gains.

Smaller investors, aware of the holidays, also position themselves to have only those investments they wish to hold for the long-term. That not only frees them up from having to watch the markets while at Great Aunt Margret’s house, it also prevents any surprise capital-losses or capital-gains that might upset carefully planned tax strategies.

The final two weeks of the year may produce enough of a rally to push the S&P 500 into positive territory, but it won’t be enough to make anything more than single digits show up in the 2011 column for all of those investor marketing materials and mutual fund prospectuses.

As anyone who lived through it (all of us) can tell you, 2011 doesn’t deserve to go down as a “good year” and it most certainly won’t look that way on paper when the math is all said and done.

Mutual Fund Returns 2011

I thought it would be interesting to see how some of the big mutual funds were doing in light of the single-digit change (positive or negative) likely coming for the S&P 500 index. Keep in mind that many of these funds do not use the S&P500 for their benchmark. However, investors are free to compare their investment returns to whatever they wish, and I always remember that I can have a low-expense S&P500 Index based ETF for much less than any mutual fund, so if they better at least make me feel good about it.

Unless otherwise specified, all funds listed are the “main” share class. Check the ticker symbol listed if you are really interested.

Year to Date Returns as of Market Close Friday, December 16, 2011 according to Morningstar.com.

• PIMCO Total Return Fund (PTTRX)  +3.68%
• Fidelity Contrafund (FCNTX)   -2.47%
• American Funds Growth Fund of America (AGTHX)  -7.19%
• American Funds Capital Income Builder (CAIBX)  +0.28%
• American Funds Income Fund of America (AMECX)  +2.94%
• Vanguard 500 Index Fund (VFIAX)  -1.07%
• Dodge & Cox International Stock Fund (DODFX)  -18.62%
• Dodge & Cox Stock Fund (DODGX)  -6.87%

As you can see, some funds are right there and some are getting hammered. International funds, particularly those with heavy investments in Europe, are understandably volatile. Bond funds are less volatile, although many are not in positive territory either. It’s hard to make much money in bonds when prices are held hostage by a zero percent interest Fed policy.

This year wasn’t necessarily pretty, but considering the state of the economy for much of the year and the slow improvements in the U.S. job market, there really isn’t much reason to think the stock market would react any differently.

Related posts:

1. Standard Deduction 2011 and 2011 Tax Brackets
2. 2011 Stock Market Update Q3

S&P 500 Down for Year 2011 originally published at Finance Gourmet

The stock markets ticked up today on a little bit more good economic news. Following recent good labor market news and the Fed holding interest rates at zero, comes statistics showing last weeks jobless claims were at a 3 1/2 year low.

Also, several large companies reported good results.

Furthermore, two regional business surveys from the Federal Reserve showed better than expected growth for December.

Finally, the general business conditions index for New York was higher again showing an increase in both new orders and hiring. That’s yet more good news for the job market.

We’ll have new articles about end of year tax strategies, financial planning for those in extreme circumstances, and more in the coming days.

No related posts.

Market Up on Good Economic News originally published at Finance Gourmet