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Economic News, Outlook & Notable Numbers - July 2012

2012-07-17T16:28:00.000-07:00

Key U.S. Economic News
■ Nonfarm payrolls increased only +80,000 in June. We’ve averaged only +75,000 payroll gains per month in the second quarter, the weakest job growth seen in two years. The unemployment rate held at 8.2% and there was no change in the participation rate. The broader U-6 measure of unemployment ticked up to 14.9%.
■ In June the manufacturing PMI fell into contraction territory for the first time since July 2009, falling -3.8 points to 49.7%. The new orders component fell an astonishing -12.3 points to 47.8%. Only seven industries reported growth, while nine reported contraction. The prices component also fell significantly, declining -10.5 points to 37.0%.
■ The non-manufacturing PMI declined -1.6 points to 52.1% in June, still indicating growth but at a slower rate. Twelve industries reported growth while five reported contraction. The business activity component fell but remained in expansionary territory and the employment component increased 1.5 points.
■ Real disposable personal income increased +0.3% in May, while real personal consumption expenditures increased +0.1%. The personal savings rate ticked up to 3.9%. Year-over-year real consumer spending has increased at a muted +1.9% rate.
■ Retail sales fell -0.2% in May, and April’s sales were revised downward to a -0.2% decline. However, retail sales remain +5.3% above May 2011 levels.
■ Inflationary pressures continued to recede on lower energy prices.
□ The Consumer Price Index fell -0.3% on lower gasoline prices, bringing the year-over-year change down to +1.7%. The core CPI, which excludes food and energy, rose +0.2% on higher shelter prices. The core CPI is up +2.3% over the last 12 months.
□ The Producer Price Index fell -1.0%. Over the last 12 months, the PPI has increased only +0.7%.
■ Industrial production edged down -0.1% in May on lower manufacturing production. Industrial production is 4.7% above its year-ago level and at 97.3% of its 2007 average. Capacity utilization fell -0.2% to 79.0%, still 1.3 percentage points below its long-run average.
■ The housing market remains weak, but appears to have bottomed.
□ Housing starts fell -4.8% to a SAAR of 708,000; however, the weakness was in the multi-family sector as single family housing starts increased +3.2% to 516,000. Housing starts remain well below peak levels.
□ Existing home sales fell -1.5% to a SAAR of 4.55 million. Distressed homes accounted for 25% of sales in May, down from 31% a year ago.
□ New home sales increased 7.6% to a SAAR of 369,000, boosted by strong sales in the Northeast.
□ The S&P/Case-Shiller 20-City Home Price Index increased +1.3% in April after seven consecutive months of falling prices. Year-over-year, home prices have fallen -1.9%.
■ The Confidence Board’s Leading Economic Index increased +0.3% in May, reversing April’s slight decline.

Key U.S. Policy News
■ At their June meeting, the FOMC decided to extend “Operation Twist” through the end of 2012, purchasing approximately $267 billion of longer dated U.S. Treasuries (6-30 year maturities) while selling the same amount of shorter dated securities (maturities of less than three years). The Fed downgraded its growth, inflation and employment projections for 2012 and 2013 and left the door open to further stimulus if the data warrants. Federal Reserve Bank of Richmond President Jeffrey Lacker, the lone dissenter, does not believe the extension would spur economic growth and could instead stoke inflation.
■ The Supreme Court upheld the Affordable Care Act in a 5-4 decision based on Congress’ taxing power, but struck down the Medicaid expansion portion of the bill.
Key Market Data and Events

Annualized for periods greater than one year. Past performance is no guarantee of future results. Source: FactSet, Red Rocks Capital, Hedge Fund Research. Total returns as of 6/30/12.

■ While most asset classes have posted positive returns through the first half of 2012, it has been a volatile ride. Risk assets were on a tear in the first quarter, but concerns regarding Europe’s sovereign debt crisis and tepid economic growth dominated in March and April, resulting in a flight to safety and a sell-off in global equity markets. Investors began to embrace risk again in June and markets rallied, but still ended with a second quarter loss.
■ In the second quarter, defensive sectors (telecom, utilities, staples, healthcare) outperformed, while financials and information technology were the worst performing sectors. Year-to-date energy is the only S&P sector with a negative return (-2.3%) while telecom has been the top performing sector (+16.5%).
■ Large cap stocks edged out small caps in the second quarter and for the year-to-date period. Mid cap stocks have underperformed so far this year.
■ From a style perspective value led growth in the second quarter, but growth still leads value year-to-date. Stocks with high dividend yield have been rewarded as investors continue to be starved for yield in this environment.
■ The U.S. dollar enjoyed safe haven status in the second quarter, gaining over 3% versus developed market currencies.
■ International equities continue to lag U.S. equities. Over the last three years the S&P 500 Index has outperformed the MSCI EAFE Index by 10 percentage points on an annualized basis. The events in the Eurozone weighed on their equity markets, with Germany, Portugal, Spain, Italy and Greece all experiencing double-digit declines in the second quarter.
■ At the EU summit at the end of June, European leaders came to some agreement on policy options going forward. They discussed moving toward common banking supervision, the direct recapitalization of banks, the abandonment of the seniority requirement for the loan to Spain, and the potential use of the ESM to purchasing peripheral sovereign bonds. The markets reacted favorably to the news; however, it is unclear to what extent the proposal will actually be implemented.
■ Emerging markets exhibited mixed performance. Despite the growth concerns, China was a relative outperformer in the second quarter. The remainder of the BRICs (Brazil, Russia, and India) lagged and were also hurt by depreciating currencies. Colombia, Thailand and Mexico have been the strongest performing markets so far this year.
■ Consistent with the risk-off mentality that dominated most of the second quarter, the bond market provided strong returns as rates hit historic lows. The yield on the 10-year U.S. Treasury fell to a record low 1.47% on June 1, while the 30-year bond yield fell to 2.53%.
■ The Barclays Aggregate gained for the sixth consecutive quarter and has risen in 14 of the last 15 quarters. All major sectors posted gains, led by Treasuries. Despite spread widening during the quarter, high yield was able to generate a positive return.
■ Hedge funds posted another disappointing quarter of returns. CTA funds continue to struggle in this type of volatile environment. Credit arbitrage funds have been the best performers so far this year.
■ REITs have been the beneficiary of investor demand for yield. U.S. and Asia REITs produced gains in the second quarter, while the asset class has delivered 15% returns year-to-date.
■ Commodity indexes were negative in the second quarter on concerns of slowing global growth. Crude oil declined more than -20% and copper declined -10% during the quarter. Gold reacted negatively to the lack of announcement of additional quantitative easing by the Federal Reserve. Natural gas moved higher, as did wheat and grains.

Outlook
After the “risk on” environment to start the year, global equity prices pushed sharply higher and forced credit spreads tighter, risk assets pulled back in the second quarter. The deepening crisis in the Eurozone and evidence of slower global growth weighed on the global financial markets and drove investors to the relative safety of the U.S. government bond markets.

Some positive factors remain, but the macro risks continue to dominate. We expect continued sluggish growth in the U.S. because of ongoing deleveraging, regulatory uncertainty and the looming fiscal cliff in 2013. The effect of the fiscal cliff is estimated to be north of 3% of GDP, which would push the economy into recession. While U.S. corporations are in good shape with strong earnings and high levels of cash on their balance sheets, they are hesitant to put it to work because of the uncertain environment. Employment growth has been weaker, and we still lack sustained growth in real personal incomes, both of which are key to greater levels of consumption and stronger economic growth going forward. While the Federal Reserve remains accommodative and stands ready to act further, the effectiveness of their monetary policy tools is diminishing.

The Eurozone has begun to take steps toward addressing their sovereign debt crisis, but more needs to be done. Policymakers must also contend with a deepening recession in the region, which will send debt/GDP ratios even higher. The need for a bailout of Spanish banks prompted leaders to announce somewhat more aggressive measures at their recent summit. It remains unclear whether these policy options will actually be put into place; however, it appears that Europe is beginning to lay out a path forward, which is a positive. Now actions need to follow.

While growth in developed markets is weak, growth in emerging markets has also slowed. Investors continue to watch China’s actions to see whether a hard landing can be averted. Brazil’s economy has slowed meaningfully as well. Unlike developed economies, emerging economies still have room to ease to promote growth. One positive corollary of a slowdown in global growth is receding inflationary pressures and lower commodity prices. Lower retail gas prices are a boost to the disposable incomes of consumers.

The unresolved macro risks will keep the markets susceptible to bouts of volatility as we enter the second half of the year. The U.S. Presidential election will likely add to that volatility. Because of massive government intervention in the global financial markets, we will continue to be susceptible to event risk. As a result, our portfolios will continue to be positioned with a modestly defensive bias. However, we seek to take advantage of high conviction opportunities and strategies within asset classes as increased volatility often leads to opportunities. We feel that a broadly diversified portfolio and actively managed approach can best navigate the current investing environment.

Notable Numbers
The Home Stretch – The S&P 500 closed at its calendar year high in the second half of the year 73% of the time since 1950. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market (source: BTN Research).

Costs A Lot - Just 1 in 9 retirees (11%) surveyed indicated that their post-retirement expenses were less than they had expected. 22,000 retirees participated in the poll (source: Consumer Reports).

Most Pay On Time – 8 out of every 9 mortgages in the USA (88.9%) are “current and performing” as of 3/31/12, i.e., the borrower is current with his/her monthly mortgage payment (source: OCC).

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This newsletter is intended to provide opinions and analysis of the general conditions of the market and economy, but is not intended to provide personalized investment advice. Statements referring to future actions or events, such as the future financial performance of certain asset classes or market segments, are based on the current expectations and projections about future events provided by various. sources, including Brinker Capital's Investment Management Group. These statements are not guarantees of future performance and actual events may differ materially from those discussed. This commentary includes statistical information obtained from various third-party sources. Brinker Capital believes those sources to be accurate and reliable; however, we are not responsible for errors by third-party sources on which we reasonably rely. Performance data represents general indexes representative of certain asset classes and are not indicative of actual past performance of any specific portfolio managed or sponsored by Brinker Capital.

Appendix

*Returns as of 6/30/12. Annualized for periods greater than one year. Past performance is no guarantee of future results.
*Price Return. Source: FactSet

Glossary
Barclays Capital Municipal Bond Index – A benchmark index that includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million.
Barclays Capital U.S. Aggregate Bond Index – An unmanaged market-value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year.
Barclays Capital U.S. TIPS Index (Treasury Inflation-Protected Securities) –The Barclays U.S. TIPS Index consists of inflation-protection securities issued by the U.S. Treasury.
Commercial Mortgage-Backed Securities (CMBS) – a type of mortgage-backed security that is secured by the loan on a commercial property. (Source: Investopedia.com)
Consumer Price Index (CPI) – The CPI or Consumer Price Index is a measure of the cost of goods purchased by average U.S. household. It is calculated by the U.S. government's Bureau of Labor Statistics. (Source: About.com)
Developed Markets (DM) – Markets that are associated with nations that are considered to be developed. In order for a developed market to exist, the nations involved with the market must be considered to be somewhat stable in terms of economy and governmental structure. (Source: Wisegeek.com)
Dow Jones/UBS Commodity Index – A rolling commodities index composed of futures contracts on 19 physical commodities traded on U.S. exchanges. The Index serves as a liquid and diversified benchmark for the commodities asset class.
DJIA (Dow Jones Industrial Average) – The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
Dow Jones U.S. Total Stock Market – The Dow Jones U.S. Total Stock Market Index represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The Index was created in 1974.
Emerging Markets (EM) – A foreign economy with a low to middle per capita income that is developing in response to the spread of capitalism and has created its own stock market. Analogous to small growth companies, emerging markets have high potential as well as high risk. Such countries constitute approximately 80% of the global population, and represent about 20% of the world's economies. (Sources: Answers.com, Investopedia.com)
FTSE EPRA/NAREIT Global Real Estate (Financial Times and London Stock Exchange European Public Real Estate Association/National Association of Real Estate Investment Trusts®) –The FTSE EPRA/NAREIT Global Real Estate Index is designed to represent general trends in eligible listed real estate stocks worldwide. Relevant real estate activities are defined as the ownership, trading and development of income-producing real estate. Only closed-end companies listed on an official stock exchange are included in the Index.
HFRX Global Hedge Fund Index (Hedge Fund Research Inc.) – The HFRX Global Hedge Fund Index is designed to be representative of the overall composition of the hedge fund universe. It comprises eight strategies: convertible arbitrage, distressed securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, and relative value arbitrage. The strategies are asset-weighted based on the distribution of assets in the hedge fund industry.
ISM Manufacturing Index – A monthly index released by the Institute of Supply Management which tracks the amount of manufacturing activity that occurred in the previous month. This data is considered a very important and trusted economic measure. If the Index has a value below 50, due to a decrease in activity, it tends to indicate an economic recession, especially if the trend continues over several months. A value substantially above 50 likely indicates a time of economic growth. The values for the Index can be between 0 and 100.
ISM Non-Manufacturing Index – ISM Non-Manufacturing Index is a gauge of business conditions in non-manufacturing industries, based on measures of employment trends, prices and new orders. Though non-manufacturing sectors make up the majority of the economy, the ISM Non-Manufacturing has less market impact because non-manufacturing data tends to be more cyclical and predictable. However, these sectors do account for a considerable portion of CPI. As a result, the figure gives insight into conditions which can impact output growth and inflationary pressures.
ISM Non-Manufacturing PMI - ISM Non-Manufacturing Purchasing Managers' Index (PMI) is an index based on the survey of around 400 purchasing managers excluding the manufacturing industry. It often asks to rate business conditions including employment, production, prices, and new orders. (source: http://www.forexyard.com/es/calendar/428)
LIBOR (London Interbank Offered Rate) – The interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity. LIBOR is used as a base index for setting rates of some adjustable rate financial instruments, including Adjustable Rate Mortgages (ARMs) and other loans.
Long Bond – bond that matures in more than 10 years (Source: Investopedia.com)
M2 Money Supply – measure of total money supply. Includes saving and other time deposits. It is a broader measure that reflects money’s function as a store of value. (Sources: Library of Economics and Liberty, www.econlib.org; www.About.com)
Merrill Lynch 3-7 Year Municipal Bond Index – The Merrill Lynch 3-7 year municipal bond index us a subset of The Merrill Lynch U.S. Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 3 years and less than 7 years.
Metropolitan Statistical Area (MSA) – a geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics. A metro area contains a core urban area of 50,000 or more population and consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured by commuting to work) with the urban core. (Source: U.S. Census Bureau)
Mortgage-Backed Security (MBS) – a type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must be grouped in one of the top two ratings as determined by a accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. (Source: Investopedia.com)
MSCI All Country World ex-U.S. (Morgan Stanley Capital International) –The MSCI All Country World Index ex-U.S. is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, except the U.S. The Index consists of 47 country indices comprising 22 developed and 25 emerging market country indices.
MSCI EAFE (Morgan Stanley Capital International Europe, Australasia and Far East) –The MSCI EAFE Index is recognized as the preeminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America: Europe, Australasia and the Far East.
MSCI Emerging Markets (Morgan Stanley Capital International) –The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2006, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
NASDAQ (National Association of Securities Dealers Automated Quotations) – The NASDAQ Composite Index is a market-capitalization-weighted, unmanaged index that is designed to represent the performance of the National Association of Securities Dealers Quotation System, which includes more than 5,000 stocks traded only over the counter and not on an exchange. The Index does not include the reinvestment of dividends.
Personal Consumption Expenditure (PCE) – A measure of price changes in consumer goods and services. Personal consumption expenditures consist of the actual and imputed expenditures of households; the measure includes data pertaining to durables, non-durables and services. It is essentially a measure of goods and services targeted toward individuals and consumed by individuals. (Source: Investopedia.com, 2010.)
Red Rocks Listed Private Equity Index – The Red Rocks Listed Private Equity Index is designed to track the performance of the largest and most liquid publicly traded private equity firms principally invested in the United States and publicly traded private equity portfolios with principal investments in the United States. The publicly traded stocks within the Index are traded on any nationally recognized exchange worldwide.
Russell 1000 – Measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. As of the latest reconstitution, the average market capitalization was approximately $13.9 billion; the median market capitalization was approximately $4.9 billion. The smallest company in the Index had an approximate market capitalization of $2.0 billion.
Russell 1000 Growth – Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000 Value – Measures the performance of Russell 1000 companies with lower price-to-book ratios and forecasted growth values.
Russell Mid Cap – Measures the performance of the 800 smallest companies in the Russell 1000 Index, which represents approximately 30% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $5.3 billion; the median market capitalization was approximately $3.9 billion. The largest company in the Index had an approximate market capitalization of $14.9 billion.
Russell Mid Cap Growth – Measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index.
Russell Mid Cap Value – Measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value Index.
Russell 2500 – Measures the performance of the 2,500 smallest companies in the Russell 3000 Index.
Russell 2500 Growth – Measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2500 Value – Measures the performance of Russell 2500 companies with lower price-to-book ratios and forecasted growth values.
Russell Small Cap – Measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the Index had an approximate market capitalization of $2.0 billion and a smallest of $218.4 million.
Russell Small Cap Growth – Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell Small Cap Value – Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
S&P 500 (Standard & Poor's 500 Index) – An index consisting of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large-cap universe. Companies included in the Index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor's. The S&P 500 is a market-value-weighted index -- each stock's weight in the Index is proportionate to its market value.
Seasonally Adjusted Annual Rate (SAAR) – rate adjustment used for economic or business data that attempts to remove the seasonal variation in data. Calculated by dividing the unadjusted annual rate for the month by its seasonality factor and crated an adjusted annual rate for the month. (Source: Investopedia.com)
Standard & Poor’s/Case-Shiller Home Price Index – The S&P/Case-Shiller Home Price Index measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. The Index uses the repeat sales pricing technique to measure housing markets. The Index is calculated monthly and published with a two-month lag.
TED Spread (acronym formed from T-Bill and ED, the ticker symbol for the Eurodollar futures contract) – the difference between the interest rates on interbank loans and short-term U.S. government debt. It is an indicator of perceived credit risk in the general economy.
Troubled Assets Relief Program (TARP) – A program in which the federal government can buy bad assets from financial institutions, with the government getting stock warrants in return.
VIX (Market Volatility Index) – An index designed to track market volatility as an independent entity. The Market Volatility Index is calculated based on option activity and is used as an indicator of investor sentiment, with high values implying pessimism and low values implying optimism.

What Is Your Business Worth?

2012-07-12T12:52:00.000-07:00

The market for selling small businesses improved slightly last year, but buyers typically still had the upper hand. The median selling price rose 3.3% to $155,000, while the median revenue for firms sold in 2011 rose by 6.7%.¹

Lenders generally require a professional valuation before extending credit to owners and buyers. But even if a loan or a sale is not in your immediate future, a precise valuation could be useful for effective business, tax, and retirement planning.

Preparing for potential changes. When a firm with several owners has negotiated a buy-sell agreement, the buyout value should be updated regularly to reflect market conditions and the company’s financial position.

You may also need to seek a business valuation if you plan to implement an employee stock ownership or profit-sharing plan, or for litigation support in the event of a divorce or other type of legal dispute. For tax purposes, it may be necessary to use one of the specific valuation approaches considered acceptable by the IRS.

Conserving your estate. One way to help reduce exposure to potential future estate taxes is to begin transferring ownership of a family business to the next generation during your lifetime. An accurate valuation may be needed to help ensure that gifts of partnership shares conform to the annual federal gift tax exclusion (currently $13,000 per year, per person).

Protecting your wealth and your retirement. It’s generally considered risky for investors to hold more than 20% to 30% of their net worth in a single asset, but many entrepreneurs don’t think twice about having a much larger proportion of their personal wealth in their own businesses.²Investing outside your firm could help insulate your total financial picture from risks associated with your business’s distinct market.

Understanding the true market value of your company may help you make more informed decisions about how much of your income you should save and invest for retirement. It might also lead you to adjust your portfolio in light of the performance of your enterprise and/or your retirement goals.

1) BizBuySell.com, January 4, 2012
2) The Wall Street Journal, December 17, 2011

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright © 2012 Emerald Connect, Inc.

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iMoney - A series of short videos on Financial Concepts

2012-07-06T12:47:00.000-07:00

One survey found that 45% of current retirees had to retire earlier than they expected.¹

Source: 1) Employee Benefit Research Institute, 2011

Some of the best financial concepts are learned in small, bite-size pieces.

Our library of iMoney ideas is built on the concept that short lessons can teach a lot about personal finance. Click on one of the items below and watch a quick movie that will show a financial concept.

Retirement Vision
Is your picture out of focus?

Inside an Annuity
Immediate or deferred: There's no right answer

The Latte Habit
How little things can add up over time

The $350,000 Baby
The price on your investment from cradle to college

Retirement Confidence
Does your confidence rise and fall with the stock market?

The Value of a Bond
How interest rate changes influence bond prices

You, Inc.
Would you invest in this company?

Which Bank Would You Go To?
Identifying potential risks in your financial strategy

The Retirement Income Factor
How much money will you bring to retirement?

Behavioral Finance
Reacting emotionally may hinder your investment results.

What Would Happen to Your Estate?
Estate planning documents can help you manage your estate.

American Tax Burden
Are you concerned about your tax situation?

What Does Your Tax Return Say About You?
Your return may reveal how you are managing your tax burden.

What Is Investment Risk?
How different types of risks can adversely affect your investments

Do You Know Who Your Beneficiaries Are?
Valuable assets will convey directly to them, regardless of instructions in a will.

Protecting Your Dependents with Life Insurance
Term or whole life? Just be sure you have adequate coverage.

Information Overload
Are you getting sound investment guidance?

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Following the Federal Reserve

2012-07-06T12:36:00.000-07:00

To spur borrowing and boost the economy, the Federal Reserve cut the federal funds target rate to near zero at the end of 2008. More recently, the Fed disclosed that it is unlikely to raise rates until late 2014. In January 2012, the central bank released detailed forecasts for the federal funds rate — and stated a specific goal for the rate of inflation (2%) — for the first time in its history.^1–2

The Federal Reserve and the Federal Open Market Committee (FOMC) operate under a dual mandate to conduct monetary policies that foster maximum employment and price stability. In response to the financial crisis, lingering economic weakness, and high unemployment, the Fed has taken a series of unconventional steps.

Meet the Committee

The FOMC meets eight times a year. Projections for economic growth, unemployment, and inflation are collected from all seven members of the Board of Governors of the Federal Reserve System (including Chairman Ben Bernanke) and 12 regional Reserve Bank presidents ahead of scheduled FOMC meetings.

Behind closed doors, participants discuss how economic conditions are likely to change and which policy responses might be appropriate given the economic outlook. The 12 committee members — including all seven governors, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents (on a rotating basis) — vote on specific policy actions proposed during the meeting. Quarterly projections are typically released after their two-day meetings.

Portfolio Moves

During the 2008 credit crisis, the Fed helped stabilize the banking system by making emergency loans to banks and businesses and buying up “toxic” securities whose values had plummeted. The central bank was criticized by some people for putting itself in a position to sustain losses, but so far Fed holdings have generated profits.³

The central bank now holds almost $2.9 trillion of Treasuries, agency debt, and other securities, much of which was acquired through bond-buying programs known as quantitative easing and QE2.⁴

In September 2011, the Fed announced a plan to help drive down long-term rates further. “Operation Twist” involved trading $400 billion of short-term Treasuries for new ones with longer maturities. If the economy falters in 2012, a third round of monetary stimulus remains a possibility.⁵

Communication Matters

One of the most powerful tools the Fed has at its disposal is communication. Traditionally, speeches made by FOMC participants, published economic projections, and the official statements released after each FOMC meeting have been used to inform the public.

Chairman Bernanke began holding press conferences after FOMC meetings in 2011, and detailed rate forecasts followed in January 2012.⁶ This marks quite a shift from the early 1990s, when the Fed didn’t even announce when (or by how much) rates had been adjusted.⁷

Bernanke believes that greater transparency and the clarity gained from forecasts could push down long-term rates and help shape the expectations and behavior of investors, businesses, and households — and managing the public’s expectations could make the Fed’s policy moves more effective.⁸

Investors should remember that future Fed actions will depend on economic conditions. If inflation rises more than expected, higher interest rates will likely follow, despite any previous forecasts.

All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest.

1) Federal Reserve, 2012
2, 6) CNNMoney, January 25, 2012
3) The Wall Street Journal, January 10, 2012
4) CNNMoney, January 10, 2012
5) The Wall Street Journal, September 21, 2011
7–8) The Wall Street Journal, January 4, 2012

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright © 2012 Emerald Connect, Inc.

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Investing When Rates Are Low

2012-07-05T12:29:00.000-07:00

Interest rates have been exceptionally low for three years now — and are expected to remain so through the end of 2014, according to the Federal Reserve.¹ Meanwhile, market volatility has been high. These are challenging times for risk-averse investors who want to improve their returns.

If you are retired or approaching retirement in Charleston SC, Atlanta GA, Miami FL or Charlotte NC, capital preservation is important, but you also want your portfolio to outpace inflation in order for it to last throughout retirement. So how do you factor the prospect of continued low interest rates into your investment strategy?

Cushioning with Cash

In a low-interest-rate environment, savings accounts, bank money market accounts, CDs, and other cash alternatives offer low earnings potential. However, these generally stable vehicles may still play a role in helping mitigate the impact of market volatility in your portfolio. It’s also important to keep reserves in liquid accounts to handle unexpected as well as routine large expenses and to take advantage of future investing opportunities.

Bracing with Bonds

Like cash alternatives, bonds may play a key role in your portfolio regardless of low interest rates, but you should choose your investments based on the same sound criteria you would utilize if interest rates were higher. Bonds with longer maturities generally offer higher yields than short- and medium-term bonds.² However, you may not want to commit to long-term bond investments in the current interest-rate environment because you might not be able to take advantage of more attractive yields when rates rise in the future.

Diving into Dividends

Equities may offer the potential to outperform cash and bond investments, but they carry higher risks. If you have trepidations about investing in a volatile stock market, one approach is to focus on well-established companies that pay dividends.

Cash reserves held by U.S. corporations are currently near a 50-year high.³ And some companies with excess cash are paying higher dividends. In 2011, companies included in the S&P 500 offered 388 dividend increases, compared with only 261 in 2010.⁴ The amount of a company’s dividend can fluctuate with its earnings, which are influenced by economic, market, and political events. There is no guarantee that a corporation will continue paying dividends in the future.

Although companies that pay dividends may not offer the growth potential of some newer companies that reinvest their profits, dividend-paying stocks may be less volatile. And if you have a longer-term time horizon, reinvesting any dividends can increase the potential for total return — share price appreciation or depreciation plus all investment earnings, including dividends and interest. Of course, as demand for dividend-paying stocks increases, their prices can become more expensive.

The return and principal value of stocks, bonds, and cash alternatives fluctuate with market conditions. Shares, when sold, and bonds redeemed prior to maturity may be worth more or less than their original cost. The FDIC insures bank CDs, savings accounts, and money market deposit accounts, which generally provide a fixed rate of return, up to $250,000 per depositor, per federally insured institution. Investments seeking the potential for higher yields also involve a higher degree of risk.

Even though a low-interest-rate environment can be challenging, there may still be opportunities for careful investors. Just be aware that if you’re searching for higher yields, you could take on more risk than may be appropriate for your situation.

1) Federal Reserve, 2012
2) Yahoo! Finance, 2012
3) Time.com, January 18, 2012
4) The Fiscal Times, February 10, 2012

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To Roll or Not to Roll: It’s Your Choice

2012-07-02T14:41:00.000-07:00

It used to be common for employers to encourage (or require) departing employees to withdraw their money from the company’s retirement plan.¹ Like most employee benefits, an employer-sponsored retirement plan is typically an expense for the employer.

Now that the baby-boomer generation has started reaching retirement age (at the rate of about 10,000 per day), some employers are encouraging departing employees to leave their retirement savings in the company plan.^2–3 These employers are finding that the loss of large employee accounts can diminish their leverage when negotiating with plan administrators, possibly making their retirement plans less attractive to current and prospective workers.⁴

If and when you leave your current job, either to retire or to take a new position in Charleston, Miami, Charlotte or Atlanta, understanding the options for your retirement savings may help you make decisions that serve your interests and not those of a former employer.

Stay Versus Roll

Employees are under no obligation to leave money invested in a former employer’s retirement plan but are free to roll it over to a traditional IRA. A properly executed IRA rollover can help preserve the tax-deferred status of retirement assets and avoid unwanted tax consequences and penalties. However, there are some subtle differences between IRAs and employer plans to be aware of before you decide how to proceed.

Investment options. The investment options in an employer plan tend to be limited by the plan administrator. The investment options available in IRAs are nearly unlimited.

Early withdrawals. If you think you might tap your retirement assets early, you may want to leave them in the employer plan. Normally, a 10% federal income tax penalty applies to distributions from traditional IRAs and employer retirement plans before age 59½. However, you may be able to avoid this penalty with an employer plan if you sever employment during or after the year in which you turn 55. [The age 55 exception does not apply to IRAs, annuity contracts, or modified endowment contracts (MECs), nor does an exception for death apply to MECs.]

You may also be able to withdraw money from a former employer’s plan or an IRA and avoid the early-withdrawal penalty by taking a series of substantially equal periodic payments (based on life expectancy) that continue for at least five years or until age 59½,whichever occurs later.

Early withdrawals may be penalty-free in the event of death or disability. IRA exceptions to the penalty also include a first-time home purchase ($10,000 lifetime maximum), unreimbursed medical expenses that exceed 7.5% of adjusted gross income, and qualifying higher-education expenses. Withdrawals from traditional IRAs and employer-sponsored retirement plans are subject to ordinary income tax.

Keeping track of multiple accounts. Over the course of your career, you could accumulate several retirement accounts. Rolling them all into a single IRA may give you a better perspective of your retirement portfolio and help reduce the potential for losing track of your money.

Creditor protections. Employer plans have strong creditor protections enshrined in federal law. Money rolled into an IRA from an employer plan typically enjoys the same protections.

There is no one-size-fits-all solution. A careful evaluation of your circumstances could help you decide what to do with your retirement assets when you change jobs or retire.

1, 3–4) The Wall Street Journal, May 8, 2011
2) Pew Research Center, 2010

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Insurance for Two Could Benefit Your Heirs

2012-06-27T10:52:00.001-07:00

Since the federal estate tax was established in 1916, the amount exempted from the tax has been raised substantially over time. The $5 million exemption for 2011 and 2012 is the highest in history, and the 35% top estate tax rate is the lowest in 70 years.¹

However, these generous provisions may not last. After 2012, the federal estate tax is currently scheduled to revert to a $1 million exemption and a 55% top tax rate. Many families with a home and large retirement accounts in Charleston SC, Miami FL, Charlotte NC and Atlanta GA could easily have estates worth $1 million or more. A survivorship life insurance policy is one way to help heirs pay estate taxes, probate costs, and other final expenses.

Preserving a Legacy

Also called second-to-die insurance, a survivorship life insurance policy insures two people and pays a benefit after the death of the second person. The premiums are usually less expensive than premiums for a single life insurance policy, because they are based on the life expectancies of both insured individuals.

The unlimited marital deduction allows assets to pass to a surviving spouse free of federal estate taxes, so estate taxes typically do not become an issue until estate assets pass to nonspouse heirs. Thus, a survivorship life insurance policy could pay a benefit at the time it may be needed most.

Moreover, by purchasing the survivorship policy in an irrevocable life insurance trust, the proceeds may not be considered part of your taxable estate. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisors before implementing such strategies.

Even if you are not concerned about the estate tax, a survivorship life policy could be a relatively inexpensive way to leave a legacy, especially considering that an individual life insurance policy may be more expensive or difficult to obtain later in life. Survivorship life might also be used to insure business partners.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

With the uncertain future of the estate tax, now may be a good time to consider a survivorship life insurance policy. Even if the estate tax doesn’t apply to your estate, the insurance proceeds could benefit your heirs or a favorite charity.

1) Internal Revenue Service

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Asset Protection!

2012-06-26T11:01:00.000-07:00

Lawsuits have become increasingly common in our society in Charleston, Miami, Charlotte and Atlanta. From 1951 through 2009, the cost of torts (civil suits) rose at more than double the annual rate of general inflation and even surpassed the annual increase in medical expenses (see chart).

In this litigious environment, it is especially important to protect your assets and your future income. If you entertain often, have a dog or a swimming pool, or employ workers in your home, you may have additional exposure to a potential civil suit.

Standard homeowners and automobile insurance policies generally offer coverage in the event of a personal liability lawsuit. However, the policy limits may not be high enough to pay a substantial jury award. If you would like extra coverage at a relatively low cost, you might consider an umbrella insurance policy in SC, FL, GA or NC.

Typically, you can obtain $1 million in coverage for a few hundred dollars a year. However, you must usually purchase the maximum liability coverage on your homeowners and automobile policies; they serve as a deductible for the umbrella policy, which can provide additional coverage (up to the policy limits). Umbrella policies may also cover situations that are not included in standard policies, such as libel, slander, invasion of privacy, defamation of character, and other personal injuries.

Although umbrella policies have long been a staple for wealthy households, many middle-income households have substantial home equity, retirement savings, and current and future income that could be used to satisfy a large judgment. Qualified retirement plan assets may have some protection from creditors under federal and/or state law (depending on the type of plan and jurisdiction), but even if your retirement savings may be protected, you would still be liable for any judgments.

You’ve worked hard to establish a solid financial base. In a world where it sometimes seems to be raining lawsuits, it might be wise to carry an umbrella.

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The ROTH IRA Question!

2012-06-18T11:44:00.000-07:00

To Convert or Not to Convert? That’s the Roth Question

Nearly 20 million U.S. households have a Roth IRA — a significant number considering that it has been around only since 1998. However, Roth IRA participation still lags behind that of traditional IRAs in Charleston, Miami, Charlotte and Atlanta, which were first introduced in 1974 in the USA.¹

The good news is that you can invest in more than one type of IRA (the combined contribution limit in 2012 is $5,000, or $6,000 for those aged 50 and older). And regardless of your income, you can convert all or part of your traditional IRA investments to a Roth IRA and benefit from tax-free withdrawals in retirement.

Paying Taxes Now or Later

Contributions to a Roth IRA are made with after-tax dollars (subject to income limits), whereas contributions to a traditional IRA are generally tax deductible. When you withdraw money, however, qualified distributions from a Roth IRA are free of federal income tax if you’ve satisfied the requirements (distributions may be subject to state income taxes). By contrast, traditional IRA withdrawals are taxed as ordinary income.

When you convert tax-deferred IRA assets to a Roth IRA, the conversion amount is taxed as ordinary income in the tax year of the conversion. This can be a significant expense, but there’s a trade-off: Under current tax law (and if all conditions are met), the Roth account will incur no further income tax liability for the rest of your lifetime or for the lifetimes of your account beneficiaries, regardless of how much growth the account experiences.

Here are some considerations to help determine whether a Roth IRA conversion might be appropriate for you.

Changing tax brackets. The logic behind deferring taxes on retirement savings is that investors may be in a lower tax bracket in retirement than they were during their working years. This is not always the case, of course, so you need to consider your own situation. Also keep in mind that tax rates are scheduled to increase after 2012 (unless Congress takes further action), so you may pay higher tax rates in the future.

Mandatory distributions. Unlike the case with traditional IRAs, there are no required minimum distributions (RMDs) at age 70½ for original Roth IRA owners, so you can keep money in your account until you need it, or bequeath it to your heirs if you wish (IRA beneficiaries must take RMDs). The longer your investments can pursue growth, the more advantageous it might be for you and your beneficiaries to have tax-free withdrawals.

Current value versus growth potential.If your tax-deferred assets have fallen in value over the last few years, one silver lining is that taxes on a conversion may be lower. Again, your choice on converting may depend on how much time your portfolio will have to pursue growth.

Keep in mind that you can convert as much or as little of your traditional IRA assets as you wish, and you can even spread the conversion process over a number of years to help manage the tax liability.

Traditional and Roth IRA withdrawals prior to age 59½ may be subject to a 10% federal income tax penalty. To qualify for a tax-free and penalty-free withdrawal of earnings, a Roth IRA must meet the five-year holding requirement and the distribution must take place after age 59½ or result from the owner’s death, disability, or a first-time home purchase ($10,000 lifetime maximum).

A Roth IRA conversion may not be an appropriate strategy for everyone, but it’s worth considering depending on your personal situation, time frame, and current and future tax brackets.

1) Investment Company Institute, 2011

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April 2012 Quarterly Newsletter

2012-04-23T07:15:00.001-07:00

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January 2012 Quarterly Newsletter & 2012 Economic Forecast

2012-01-26T14:47:00.000-08:00

NEW! January Quarterly 2012 Newsletter and 2012 Economic Forecast

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Using an Annuity for Guaranteed Income

2011-08-03T09:08:00.000-07:00

One of the recommendations from the White House Task Force on Middle Class Working Families was for retirees to purchase annuities to help reduce the risks of outliving their savings or experiencing lower living standards because of inflation and investment losses.1

The White House is not a common source of retirement information, but its recommendation addressed a common concern: running out of money in retirement. Although the task force wasn’t talking about variable annuities in Miami, Charleston, Atlanta and Charlotte in particular, one of the benefits offered by variable annuities is the potential for a guaranteed lifetime income.

If you have wondered whether your retirement portfolio will be able to go the distance, you might want to learn more about variable annuities.

An Investment in Insurance
A variable annuity is an insurance contract that is typically funded with either a lump sum or a series of premium payments. The term variable derives from the variable return potential. During the accumulation period, the contract holder can direct his or her premiums to be invested among a variety of subaccounts, which pursue returns in the financial markets. The subaccounts offer varying degrees of risk, allowing contract holders to pursue investment returns according to their risk tolerance, long-term goals, and time horizon.

When the contract holder is ready to begin receiving a retirement income, the amount of income available depends on the contract value, which is determined in part by how the investment subaccounts performed during the accumulation period.

A lifetime income is one of several payout options. Contract holders may also select an income that lasts for a specific number of years or for the lifetimes of two people. For an additional cost, contract holders may be able to purchase guarantees, such as a guarantee of minimum fixed income payments or a guarantee to withdraw a specific amount over a lifetime, regardless of the account value.

There are contract limitations, fees, and charges associated with variable annuities, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Withdrawals reduce annuity contract benefits and values. Variable annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. Withdrawals of annuity earnings are taxed as ordinary income and may be subject to a 10% federal income tax penalty if made prior to age 59½. Surrender charges may also apply if the annuity is surrendered in the early years of the contract. Any guarantees are contingent on the claims-paying ability of the issuing company. The investment return and principal value of an investment option are not guaranteed. Because variable annuity subaccounts fluctuate with changes in market conditions, the principal may be worth more or less than the original amount invested when the annuity is surrendered.

Variable annuities are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

1) Kiplinger’s Personal Finance, May 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

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June 2011 Quarterly Newsletter & 7% Structured CDs

2011-06-29T07:03:00.000-07:00

7% Structured CDs & June 2011 Quarterly Update

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Consider Your Retirement Needs, but Don’t Forget Your Retirement Wants

2011-04-05T18:32:00.000-07:00

You might have read or heard that you need to replace about 80% of your pre-retirement income to maintain your standard of living in retirement in Miami, Charleston, Charlotte and Atlanta. Although some research validates this guideline, consider that half of today’s retirees say their spending is higher or about the same as it was when they were working.1–2
The idea that you may need less income in retirement considers that your income tax burden may be lower when you quit working and that you probably are not contributing a large chunk of your salary to retirement plans. Variables that can influence the replacement ratio — positively or negatively — include your living expenses, overall debt level, health-care costs, and whether you will receive an employer-provided pension.

Rather than focusing on how much money you’ll need to get by in retirement, take some time to envision a retirement lifestyle that you can really get excited about. Unless you plan to spend retirement being frugal, there’s a good chance that you could need more than 80% of your pre-retirement income to fund the lifestyle you seek.

More Time, More Money?
Retirement may be the first time in your life when you are free to travel, play golf, go back to school, focus on hobbies, and pursue other interests that you simply didn’t have time for during your working years.

What a disappointment it would be to retire and finally have the time, but not the money, to do as you please. If you would find it difficult to afford your ideal retirement lifestyle on your current income, it could be an indication that you are underestimating how much income you’ll need in retirement.

Changing Needs
As we grow older, what once may have been considered a luxury can become a necessity. In their list of “basic needs,” more than half of baby boomers include an Internet connection, special occasion gifts, and pet care. Many baby boomers would add family vacations, dining out, professional haircuts/coloring, movies, and their children’s or grandchildren’s education to the list of basic needs.3 And for 98% of baby boomers, health-care coverage is not a luxury but a basic need, one that they are extremely concerned about being able to afford.4

Underestimating Costs and Spending
The danger of underestimating how much you expect to spend in retirement is that it could lead you to save too little or invest too conservatively during your working years. Among the 46% of workers who have attempted to calculate how much money they will need for retirement, 44% made changes to their retirement savings strategies as a result, with the majority of changes involving saving or investing more.5

To prepare for a retirement that you can truly look forward to, consider the luxuries that your retirement-needs calculation may not account for. It could mean the difference between living well and just getting by.

1) CNNMoney, October 8, 2009
2, 5) Employee Benefit Research Institute, 2010
3) MarketWatch, August 6, 2010
4) Society for Human Resource Management, 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

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Leaving Your Job? Put an IRA to Work

2011-03-22T11:52:00.000-07:00

After leaving a job in Miami, Charleston, Charlotte or Atlanta, workers generally have three options when it comes to the money they have saved in their former employer’s retirement plans. They can keep the money in the plan, roll the money directly to an individual retirement account, or cash out and take a lump-sum distribution.
The way in which you handle your retirement plan assets when leaving a company is an important decision that could affect your retirement savings considerably. One of these choices may result in current taxes and penalties. One may end up limiting flexibility and your investment options. Rolling your money directly to an IRA may enable you to avoid the hassle and cost of the other two options while you continue saving for retirement.

Cashing Out
Taking a lump-sum distribution not only subjects the withdrawal to income taxes plus a 10% federal income tax penalty for someone younger than 59½ (with certain exceptions), but companies will withhold 20% for taxes. Despite these disincentives, 46% of workers who left their jobs in 2008 decided to cash out and pay the taxes and penalties.1

Staying Put
Although leaving money in your former employer’s plan may avoid current taxes and penalties, it may not be the ideal saving situation for you. Not all plans allow former employees to remain, so you might get the boot. If your plan allows your funds to stay, you may be subject to certain restrictions and will continue to be limited by the investment options offered by that plan.

Rolling Over
By transferring funds directly to a traditional IRA by the way of a Roll Over , you can preserve tax deferral and avoid penalties. Beyond that, IRAs offer benefits that aren’t available with many employer-sponsored plans.

IRAs tend to have more flexible rules than workplace plans. This can affect everything from customizing your investment selections to naming your beneficiaries. IRAs generally have fewer restrictions when it comes to inherited plans, which could make it easier for your heirs to stretch the account into possibly decades of tax-deferred growth potential. Finally, the range of investment options with an IRA vastly outnumbers that of most employer-sponsored plans.

Distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income. Distributions taken prior to age 59½ may be subject to a 10% federal income tax penalty, except in cases of the owner’s death, disability, or a qualified first-time home purchase ($10,000 lifetime maximum).

1) Hewitt Associates, 2009

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.

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Socially Responsible Investing: Handle with Care

2011-03-14T13:47:00.000-07:00

Socially Responsible Investing in Miami, Charleston, Charlotte and Atlanta: Handle with Care

Weigh Personal Fundamentals Against Socially Conscious Aims
It seems as though everywhere you look, things are turning green. Terms like sustainable, environmentally friendly, and socially responsible have entered the national consciousness and are forming the basis for a growing number of personal investment decisions. For example, more than $1 out of every $10 under professional management in the United States is invested according to socially screened criteria.1

To be sure, many investment opportunities may appeal to your desire to do something socially responsible with your portfolio. And if you’re interested in steering your money toward a particular cause or away from organizations or practices that you disapprove of, that’s great. However, it’s also important not to allow this desire to outweigh the other factors that must be considered when making investment decisions.

Is It a Good Fit?
Investments that meet socially responsible criteria can be a positive addition to your portfolio as long as they are appropriate for your situation. For example, alternative energy is still a fairly young industry; many of the key players are start-ups that may not have a solid earnings record — or any significant earnings at all. These types of investments are generally more appropriate for investors with a high risk tolerance.

Like all investments, socially responsible investments entail risk, could lose money, and may underperform similar investments not constrained by socially conscious criteria. It’s important to consider your time horizon, net worth, and whether the potential return is worth the extra risk.

What Is It?
Billionaire Warren Buffett famously said that he invests only in companies that he understands. The universe of socially responsible investment opportunities is diverse, so it’s important to understand what companies are available and what their objectives are. Most socially responsible investments fall into one of these popular categories.

Green investments are associated with companies that develop products and services to help protect or improve the environment.

Faith-based investments tend to avoid companies with products, services, or practices that violate certain core beliefs or religious principles. Rather, they seek out companies that are more closely aligned with certain moral or ethical standards.

Community investing is focused on making loans and capital available to underprivileged communities for affordable housing, child and health care, and business start-ups.

If you are interested in socially conscious investing, we can help make sure that your decisions are based not only on your beliefs but on sound investment principles as well.

1) Social Investment Forum Foundation, 2009

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.

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Tax Changes for 2012

2011-02-14T07:21:00.000-08:00

Mandatory annual inflation adjustments generally affect federal income tax brackets, retirement plan contribution limits, and exemption levels from year to year.

The 3.8% inflation rate (measured by the Consumer Price Index) used to index 2012 tax rates is higher than it was in the previous two years; the adjustments could lower your tax bill on your 2012 return (due in April 2013). Here are some changes that may affect you and your family in Charleston SC, Miami FL, Charlotte NC and Atlanta GA.

Personal and dependent deduction: $3,800 (up $100).
Standard deduction: $5,950 for single filers and married couples filing separately (up $150); $11,900 for married couples filing jointly (up $300). According to the IRS, almost two out of three taxpayers take the standard deduction rather than itemizing.
Higher-education credit income thresholds [modified adjusted gross income (AGI)]: Phaseouts start at $52,000 (single filers) and $104,000 (joint filers) for the Lifetime Learning Credit; $80,000 (single filers) and $160,000 (joint filers) for the American Opportunity Tax Credit (formerly the Hope Scholarship Credit).
Federal estate tax exemption: $5,120,000 (up $120,000). The annual gift tax exclusion ($13,000) did not change.*

Retirement Contribution Limits

The annual employee contribution limit for employer-sponsored retirement plans (401k, 403b, 457 plans) increased from $16,500 to $17,000 — the first increase since 2009. However, the catch-up contribution for those aged 50 and older remains unchanged at $5,500.

The income phaseout limit for deducting contributions to traditional IRAs (for active participants in employer-sponsored retirement plans) rose to $58,000 AGI ($92,000 for joint filers), an increase of $2,000 over 2011. Roth IRA eligibility phaseout limits rose to $110,000 AGI ($173,000 for joint filers), up slightly from 2011.

For additional information on 2012 changes, visit www.irs.gov. Of course, before you take any specific action, be sure to consult with your tax professional.

*The federal estate tax exemption is scheduled to fall to $1 million in 2013, unless Congress changes the current tax law.

Sources: Internal Revenue Service, 2011; CCH, 2011

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Retirement Plans for Small Businesses

2011-01-31T14:52:00.000-08:00

Safe Harbor 401(k) Plans May Help Owners and Employees Save More

With standard 401(k) plans, the amount that a company’s owners or highly compensated employees can contribute is often restricted by how much other employees contribute to the plan, making such plans a less effective savings vehicle for many small businesses. However, with the more flexible safe harbor option, owners may be able to make larger contributions for themselves (as employee and employer) in exchange for making tax-deductible contributions or “matches” for employees.

In addition, the annual IRS non-dis-crimination testing that normally applies to standard 401(k) plans is eliminated from safe harbor plans, which typically makes them easier and less expensive for small businesses to maintain.

To help shelter more of your income from taxes in Charleston SC, Miami FL, Charlotte NC and Atlanta GA, and possibly help your employees do the same, compare the benefits and limitations of safe harbor 401(k) plans to other retirement plans to determine which one could best meet your company’s needs.

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Do You Have Enough Disability Coverage?

2011-01-24T05:27:00.000-08:00

A disabling illness or injury can occur without notice, and statistics show that nearly one in five people will be sidelined for at least a year during their careers.¹ States often require employers to provide short-term disability coverage, but many don’t extend coverage beyond a few weeks or months. In fact, less than half of U.S. companies paid for long-term disability insurance coverage in 2009.²

Even when businesses include disability income insurance in their benefits packages in Charleston SC, Charlotte NC, Miami FL and Atlanta GA, typical limitations can make group policies inadequate. A well-paid professional in the midst of a productive career generally has much to lose if he or she experiences a disability and is unable to work.

Disability benefits paid from an employer’s group plan, workers’ compensation, or Social Security probably won’t come close to replacing a six-figure income. Individuals with higher incomes may want to expand their disability coverage to help ensure that their incomes, assets, and lifestyles are not left vulnerable.

Potential Problems with Group Coverage

Workers may want to purchase an individual disability income policy if they are self-employed or their employers do not offer coverage — or if they would like to supplement an insufficient group plan. Companies that pay for long-term coverage tend to provide policies that replace only 50% to 60% of income.

There are other reasons why it might not be wise to rely on group benefits alone. If the employer contributes to the premium, the benefits are taxable to the beneficiary, and bonuses are typically not considered when the worker’s base earnings are calculated.

Options for Broader Protection

Unlike the case with group policies, benefits from an individual policy are generally tax-free as long as the policy holder pays the premiums. Other features that may apply only to individual policies could make them especially beneficial to professionals with special skills and to those who work in high-paying fields.

Group plans may end payments when the disabled worker’s condition improves enough for him or her to work at any job, even if the salary is significantly less than what was earned before the disability. With an individual disability policy, you might prefer one that pays benefits if you cannot perform your “own occupation.” Residual coverage may help you as lost income if you can only work part-time or at a lower-paying job after you return to work.

Other riders may allow you to add coverage without additional under-writing as your income increases, or to convert your policy to a long-term-care policy after you reach a certain age.

Unfortunately, entire families must often suffer the consequences of a breadwinner’s disability. Owning an individual disability income insurance policy built to suit your personal situation may help you avoid life-altering coverage gaps.

1–2) Money, June 2011

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Managing Cash When Interest Rates Are Low

2011-01-17T09:44:00.000-08:00

The economy may be improving, but high unemployment and low inflation indicate that the Federal Reserve may keep interest rates low at least until 2012.¹

It’s generally a good idea to keep three to six months of income in an emergency fund to help cover unexpected expenses or a sudden loss of income. But when interest rates are low, where should you keep your cash?

Savings Accounts

Perhaps the most appealing aspect of savings accounts is that they are insured and highly liquid. The Federal Deposit Insurance Corporation insures deposits up to $250,000 per depositor, per institution, in principal and interest. You can generally withdraw your money at any time, although you could be subject to a fee if you exceed the financial institution’s monthly limit on withdrawals or transfers.

One disadvantage is that savings accounts may offer lower interest rates compared with other cash alternatives. Although you are unlikely to lose money deposited in a savings account, you could lose purchasing power over the long run if the interest rate does not keep pace with inflation.

Certificates of Deposit

CDs may offer slightly higher interest rates than savings accounts, but you generally must commit your principal for a period of months or years. Early-withdrawal penalties vary by institution and may range from several days’ worth of interest to the loss of some principal.

Typically, the interest rate paid by a CD depends on the maturity date. The longer you are willing to commit your money, the higher the interest rate you may be able to earn. Some CDs also offer higher rates for larger deposits. However, if your principal is locked into a CD when interest rates increase, you may not be able to take advantage of the higher rates until your CD matures, and the early-withdrawal penalty may offset any gains from reinvesting at a higher rate. The FDIC also insures CDs (up to $250,000 per depositor, per institution), which generally provide a fixed rate of return.

Money Market Funds

Money market funds are mutual funds that invest in short-term debt. These funds typically pay dividends, which may be greater than the interest paid by a savings account or CD. Generally, there are no limits or penalties for redeeming shares from a money market fund.

Money market funds are neither insured nor guaranteed by the FDIC or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in such a fund.

Mutual funds are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

1) MoneyRates.com, 2011

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Why Global Investors Are Worried About European Debt

2010-11-08T10:41:00.001-08:00

European Union officials recently announced an agreement to rescue debt-laden Greece for a second time. In addition to providing Greece with 109 billion euros in new loans and some relief from its existing debt, the plan includes measures to help prevent the crisis from infecting the other economies in the monetary union.¹

The deal reached by the 17 EU nations may help stem contagion fears, at least temporarily. It was well received — the euro rallied on the news, and stocks rose. Italian, Spanish, Portuguese, Irish, and Greek bond yields also dropped.² However, some debt restructuring is expected to prompt rating agencies to place Greece on “selective default status,” and it is unclear how markets will react if or when that occurs.³

Here’s what the latest rescue could mean for investors and financial markets in the eurozone and in the United States.

What Happened Over There

Europe’s sovereign-debt crisis began early in 2010 when the Greek government revealed that its debt levels and deficits far exceeded limits set by the EU.⁴ In May 2010, Greece received 110 billion euros in aid from the EU and the International Monetary Fund (IMF) under the condition that it implement austerity measures to help reduce budget deficits.⁵ Ireland and Portugal received similar aid after struggling under economic stress and high debts levels.⁶

In recent weeks, the crisis threatened to spread to much larger European economies such as Spain and Italy, causing investors to flee the European bond market. Yields on Spanish and Italian 10-year bonds were driven to record highs, resulting in higher borrowing costs.⁷

The health of European financial institutions also became a matter of concern. Many banks hold sovereign debt, so their balance sheets would most likely deteriorate if eurozone bonds were to continue losing value. Some banks could become more vulnerable to failure.⁸

Key Features of the Rescue

Interest rates on new and existing loans from the eurozone’s bailout fund and the IMF will be reduced from 5.5% to 3.5%, and the repayment period will be increased from 7.5 years to between 15 and 30 years. These more favorable terms were also extended to Ireland’s and Portugal’s bailout loans.⁹
Private-sector creditors will contribute billions in debt savings by “voluntarily” accepting a bond exchange with lower interest rates and longer repayment periods.¹⁰
Europe’s bailout fund gained the authority to issue credit to countries before they lose private funding, and to purchase eurozone bonds on secondary markets. It will also have the ability to lend money to help finance bank recapitalizations, if necessary.¹¹

Fallout of a Greek Default

The terms of exchanged Greek bonds will be different from what was initially promised, therefore private investors are likely to incur some losses. As a result, rating agencies will most likely downgrade Greek debt to reflect the temporary default.¹² The European Central Bank (ECB) had previously said it would not take Greek bonds as collateral if the nation defaulted, which could have affected the liquidity of some eurozone banks. The ECB will continue to accept the bonds, but the EU has agreed to provide substantial bond guarantees.¹³

American institutions hold billions in European bank debt, but many companies have already decreased their exposure to Europe.¹⁴Furthermore, a voluntary exchange will reportedly not trigger bond insurance payouts, which may help alleviate worries that American banks and insurance companies could assume major losses due to a Greek sovereign debt default.¹⁵

The situation in Europe was not sudden or unforeseen, so it’s possible that U.S. financial institutions and investors may not be greatly affected by recent events.¹⁶ However, it could be many months before the world knows whether a broader European financial crisis was tactfully averted or other serious problems were merely delayed.

Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to a specific country. This may result in greater investment price volatility. All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. Investments seeking to achieve higher yields also involve a higher degree of risk.

1, 10–11) The Wall Street Journal, July 22, 2011
2–3, 9, 13) The Wall Street Journal, July 21, 2011
4) CNNMoney, July 21, 2011
5) CNNMoney, November 23, 2010
6) The Wall Street Journal, May 5, 2011
7) CNNMoney, July 21, 2011
8) The New York Times, July 17, 2011
12, 15) Associated Press, July 22, 2011
14, 16) The New York Times, July 21, 2011

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Settling on a Salary

2010-10-18T10:23:00.001-07:00

It’s somewhat disheartening that 40% of working Americans in Charleston, Miami, Charlotte and Atlanta believe they will never save enough money to retire.¹

There may be nothing you love more than running your business today. However, you may not be willing and able to stay involved forever, and there could come a time when your interests or passions lead you elsewhere.

When your company’s bottom line improves, it may be tempting to give yourself a raise and use the extra money to enhance your current lifestyle. But if you want to be in a position to finance your retirement dreams, you may want to think about how you can use some of your business proceeds to benefit your financial future.

Good Time to Grow

Owners may work the longest hours, but for better or worse their paychecks come from whatever is left after other business expenses are paid. One rule of thumb is that no more than 50% of the profits should be taken as salary, but more may be required to meet personal needs during lean times.

As revenues grow, consider whether it might be beneficial to forego a certain amount of salary and reinvest back in the business. Modernizing equipment or facilities, hiring new employees, or ramping up marketing efforts could help boost your company’s productivity, market share, and future profits.

Budgeting for Benefits

Depending on how your business is organized, you may be able to take advantage of personal tax benefits by deferring some salary and contributing to a qualified retirement plan. It may also be worthwhile to devote some resources to funding other types of workplace benefits such as life, health, and disability insurance for both you and your employees.

Of course, you own a business so you will have the income you need to live well today. But it might be possible to choose a salary and benefits that could also help you to lighten your tax burden, grow your business, and save for a comfortable retirement.

1) CNNMoney, April 13, 2011

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What Kind of Investor Are You?

2010-09-06T07:28:00.000-07:00

Most Americans seem to understand that to pursue financial gains through investing, they typically must assume some level of risk. For example, one survey of investors with household incomes above $150,000 found that 98% were willing to assume at least some risk in pursuit of investment gains (see chart below).

When you assume investment risk, it means you should be willing to lose money in pursuit of investment gains. Although losing money is exactly the opposite outcome you hope to achieve through investing, risk is an inherent aspect of investing. Broadly speaking, the more risk you are willing to assume, the greater your potential for investment returns.

Understanding your risk tolerance is an important part of determining what kind of investor you are. At one end of the risk spectrum is the conservative investor, who is usually interested in preserving principal and earning a steady income. At the other end is the aggressive investor, who is typically more concerned with growing principal, even if it means sustaining some investment losses along the way. Not sure where you fit? These factors may help you decide.

Comfort Level

Everyone has a different comfort level when it comes to the potential for losing money on an investment. Although feelings are important and should be taken into consideration, making major decisions based on emotion could cause you to miss opportunities or take on too much risk. Remember that even the most conservative investments can lose value over time if they don’t keep pace with inflation.

Time Horizon

Your proximity to your financial goals can have a significant influence on your risk tolerance. In general, the more time you have to reach your goal, the more risk you may be able to assume. An individual who is 15 to 20 years from a major goal, such as retirement or sending a child to college, is typically in a better position to recover from investment losses than someone who is five years from a major goal. As you approach the date when you will need the money in your portfolio, it may be a good idea to begin shifting assets to more conservative vehicles to help avoid losses from which you may not have time to recover.

Net Worth

The size of your portfolio could also affect your risk tolerance. Consider two hypothetical investors: One has a $5 million portfolio and the other has $100,000 in a retirement account. Each makes a $50,000 investment in the same security. The millionaire is assuming far less risk because $50,000 represents only 1% of his portfolio. The other investor is facing a much larger risk by exposing half of his portfolio to the fate of a single security.

All investments are subject to market fluctuations, risk, and loss of principal. When sold, investments may be worth more or less than their original cost.

Determining how much risk may be appropriate for your portfolio typically requires you to consider more than just your feelings. Examining your overall situation may help you determine how much risk you want to assume to meet your long-term financial goals.

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What Do Price/Earnings Ratios Really Have to Offer?

2010-08-09T14:14:00.001-07:00

With an abundance of market information literally at investors’ fingertips, the price/earnings ratios of publicly traded companies are easier than ever to find but often more difficult to interpret. In fact, knowing the P/E ratio of a single company, a basket of stocks, or the overall market may not be particularly helpful unless you are in a position to make meaningful comparisons.

Put simply, the P/E ratio is calculated by dividing a stock’s current price per share by the company’s earnings per share over a 12-month period. It quantifies what investors may be willing to pay for one dollar of earnings. Thus, a P/E ratio of 10 means that investors would pay $10 for every $1 the company earns.

P/E ratios may serve as a better indicator of a stock’s underlying value than the market price alone, but it’s essential for investors to understand what they represent.

Two Ways to Express Earnings

The trailing P/E, which is the ratio most commonly referenced, relies on the officially reported earnings per share for the previous four quarters. The forward P/E is calculated using the expected earnings over the next four quarters, which can end up differing substantially from the actual figure because it relies on analysts’ projections.

Weighing Price vs. Value

A relatively high P/E ratio may signal greater optimism in the stock’s growth potential. Investors expect the company’s earnings to grow more quickly and are prepared to pay more for the stock. But if future earnings disappoint, the price could fall rapidly.

A lower P/E ratio may suggest that a company’s earnings are more stable and predictable, but investors may not be willing to pay as much for the stock. There is usually less chance that the company will surprise the market with a strong jump in earnings that could cause the stock price to rise dramatically, or a drop in earnings that could cause the stock price to fall significantly.

By this standard, a stock that costs $10 per share with a P/E of 50 would typically be considered more “expensive” than a stock with a $50 share price and a P/E of 10. But it’s not as simple as comparing the P/E ratios of two different companies to determine which one may be a better value.

The Benefit of Perspective

Although it would rarely make sense to compare the P/E ratio of a tech stock to one of a utility stock, weighing the P/E ratios of two companies in the same industry may provide some insight. Furthermore, viewing one company’s P/E in light of the industry average or its own historical norms may also offer clues about the potential of a stock investment.

The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Looking closely at P/E ratios is just one of many ways to evaluate stock investments, but there are many reasons why a company’s P/E ratio may seem relatively high or low. Buy and sell decisions should typically be made with more than one factor in mind.

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Tax-Efficient Investments for the Tax-Averse

2010-08-01T03:50:00.000-07:00

Raising taxes is one of many ideas that have been proposed to help reduce mounting federal budget deficits. Yet some taxpayers are already facing the prospect of higher taxes as a result of health-reform legislation passed in 2009.

In 2013, single filers with modified adjusted gross incomes exceeding $200,000 ($250,000 for joint filers) will be subject to a 3.8% Medicare unearned income tax on net investment income. The Medicare payroll tax will increase by 0.9% on wages exceeding these thresholds.

If you are concerned about higher taxes in the future, it may be a good time to consider the tax advantages associated with municipal bonds and tax-exempt mutual funds.

Investing in Infrastructure

State and local governments sell bonds to finance public-works projects such as roads, sewers, schools, and stadiums. Because government entities have the power to raise taxes and fees to pay the interest, municipal bonds are generally considered higher-quality assets. However, they typically pay less interest than taxable debt.

On the plus side, municipal bond income is generally exempt from federal taxes and may not trigger the Medicare tax mentioned earlier. The interest on a bond issued outside the state in which you reside could be subject to state and local taxes, and some municipal bond interest could be subject to the federal alternative minimum tax.

Tax-Free Fund Options

Tax-exempt mutual funds earn interest from their underlying state and local bonds, so they share the same federal income tax exemption. However, if you sell a municipal bond or tax-exempt fund at a profit, you could incur capital gains taxes.

The tax benefits associated with these lower-yielding mutual funds may also make them more suitable for taxable accounts, as opposed to qualified retirement plans and IRAs that allow for tax-deferred growth until the assets are withdrawn. Withdrawals from tax-deferred plans prior to age 59½ may be subject to a 10% federal income tax penalty.

The return and principal value of bonds and mutual fund shares fluctuate with changes in market conditions. When redeemed, they may be worth more or less than their original cost. Bond funds are subject to the same inflation, interest-rate, and credit risks associated with their underlying bonds. As interest rates rise, bond prices typically fall, which can adversely affect a bond fund’s performance.

High Earners May Net More

Investors in the top tax brackets may find that the lower tax-free yields from muni bonds and tax-exempt funds are worth more to them than the after-tax yield from taxable bond investments. For example, a 3% tax-free yield is equivalent to a 4.62% taxable yield for an investor in the 35% federal income tax bracket.

Municipal bonds and tax-exempt funds can be a key component of the portfolios of investors with high incomes and/or a relatively low tolerance for risk. If you fall into these categories, you may want to learn more about tax-efficient investment opportunities that could be appropriate for your personal situation.

Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

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Economic News, Outlook & Notable Numbers - July 2012

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What Is Your Business Worth?

The market for selling small businesses improved slightly last year, but buyers typically still had the upper hand. The median selling price rose 3.3% to $155,000, while the median revenue for firms sold in 2011 rose by 6.7%.1

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iMoney - A series of short videos on Financial Concepts

One survey found that 45% of current retirees had to retire earlier than they expected.1

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Following the Federal Reserve

Meet the Committee

Portfolio Moves

Communication Matters

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Investing When Rates Are Low

Interest rates have been exceptionally low for three years now — and are expected to remain so through the end of 2014, according to the Federal Reserve.1 Meanwhile, market volatility has been high. These are challenging times for risk-averse investors who want to improve their returns.

Cushioning with Cash

Bracing with Bonds

Diving into Dividends

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To Roll or Not to Roll: It’s Your Choice

It used to be common for employers to encourage (or require) departing employees to withdraw their money from the company’s retirement plan.1 Like most employee benefits, an employer-sponsored retirement plan is typically an expense for the employer.

Stay Versus Roll

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Insurance for Two Could Benefit Your Heirs

Since the federal estate tax was established in 1916, the amount exempted from the tax has been raised substantially over time. The $5 million exemption for 2011 and 2012 is the highest in history, and the 35% top estate tax rate is the lowest in 70 years.1

Preserving a Legacy

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Asset Protection!

Lawsuits have become increasingly common in our society in Charleston, Miami, Charlotte and Atlanta. From 1951 through 2009, the cost of torts (civil suits) rose at more than double the annual rate of general inflation and even surpassed the annual increase in medical expenses (see chart).

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The ROTH IRA Question!

To Convert or Not to Convert? That’s the Roth Question

Nearly 20 million U.S. households have a Roth IRA — a significant number considering that it has been around only since 1998. However, Roth IRA participation still lags behind that of traditional IRAs in Charleston, Miami, Charlotte and Atlanta, which were first introduced in 1974 in the USA.1

Paying Taxes Now or Later

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April 2012 Quarterly Newsletter

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January 2012 Quarterly Newsletter & 2012 Economic Forecast

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Using an Annuity for Guaranteed Income

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June 2011 Quarterly Newsletter & 7% Structured CDs

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Consider Your Retirement Needs, but Don’t Forget Your Retirement Wants

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Leaving Your Job? Put an IRA to Work

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Socially Responsible Investing: Handle with Care

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Tax Changes for 2012

Mandatory annual inflation adjustments generally affect federal income tax brackets, retirement plan contribution limits, and exemption levels from year to year.

Retirement Contribution Limits

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Retirement Plans for Small Businesses

Safe Harbor 401(k) Plans May Help Owners and Employees Save More

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Do You Have Enough Disability Coverage?

Potential Problems with Group Coverage

Options for Broader Protection

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Managing Cash When Interest Rates Are Low

The economy may be improving, but high unemployment and low inflation indicate that the Federal Reserve may keep interest rates low at least until 2012.1

Savings Accounts

Certificates of Deposit

Money Market Funds

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Why Global Investors Are Worried About European Debt

What Happened Over There

Key Features of the Rescue

Fallout of a Greek Default

Contact Us

Settling on a Salary

Good Time to Grow

Budgeting for Benefits

Contact Us

What Kind of Investor Are You?

Comfort Level

Time Horizon

Net Worth

The market for selling small businesses improved slightly last year, but buyers typically still had the upper hand. The median selling price rose 3.3% to $155,000, while the median revenue for firms sold in 2011 rose by 6.7%.¹

One survey found that 45% of current retirees had to retire earlier than they expected.¹

Interest rates have been exceptionally low for three years now — and are expected to remain so through the end of 2014, according to the Federal Reserve.¹ Meanwhile, market volatility has been high. These are challenging times for risk-averse investors who want to improve their returns.

It used to be common for employers to encourage (or require) departing employees to withdraw their money from the company’s retirement plan.¹ Like most employee benefits, an employer-sponsored retirement plan is typically an expense for the employer.

Since the federal estate tax was established in 1916, the amount exempted from the tax has been raised substantially over time. The $5 million exemption for 2011 and 2012 is the highest in history, and the 35% top estate tax rate is the lowest in 70 years.¹

Nearly 20 million U.S. households have a Roth IRA — a significant number considering that it has been around only since 1998. However, Roth IRA participation still lags behind that of traditional IRAs in Charleston, Miami, Charlotte and Atlanta, which were first introduced in 1974 in the USA.¹

The economy may be improving, but high unemployment and low inflation indicate that the Federal Reserve may keep interest rates low at least until 2012.¹