Vacations Over: Stock Market Takes a Nose Dive

The lifestyle of the military family can prove both challenging and rewarding, especially in terms of family finance. Saving, investing and budgeting on a military income – while coping with frequent moves, career changes for the spouse and new schools for the kids – requires special skills and planning. That’s why we’ve created the GI Money online portal and family of educational products.

Vacations Over: Stock Market Takes a Nose Dive

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Stocks and bonds tumbled worldwide this week, as investors reacted to stretched valuations and the ongoing fear of the U.S. Federal Reserve’s “tapering.” As early as September, the Fed may reduce its $85 billion monthly rate of bond purchases. The S&P 500 index closed the week at 1,655.84, down 2.04%.

By Dan Denbow, Asst. VP, USAA Investments

The 10-year Treasury yield finished the week at 2.83%, up .25%. Gold enjoyed a strong rally, closing the week at $1,376.87 an ounce, up 4.75%.

This week was heavy on economic news. Through our lens, we see a slow-growing economy, with a rebound in housing but new building activity still at depressed levels, a gradually healing labor market, a relatively weak consumer and low inflation.

VIDEO: Monthly Market Commentary: Vacation’s Over

Housing numbers exhibited some softness, with mortgage applications being affected by the recent backup in interest rates and falling 4.7% for the week ended Aug. 9, the lowest level in more than two years. Housing starts rose at an 896,000 annual rate in July, slightly less than expected but higher than June.

Consumer spending is growing, but at subpar levels. July retail sales were up 0.2%, less than expected, although June’s numbers were revised upward. Consumer sentiment fell in August, as measured by the five-point drop in the University of Michigan survey to 80.0.

The labor market is gradually improving. Weekly initial jobless claims hit a six-year low of 320,000 this week, an encouraging sign.

Inflation remains contained, but we note that it is a lagging indicator, and we wonder whether it can continue to remain low given the Fed’s massive money printing. The consumer price index for July was up 0.2% month over month and up 2.0% year over year. The market’s forecast of inflation for the next 10 years has crept up over the past two months to 2.18%, as measured by the difference between the yield on U.S. Treasury bonds and U.S. Treasury Inflation-Protected bonds.

As we approach September, we expect market volatility to increase, as there are several significant events coming up. The Sept. 17-18 Federal Open Market Committee meeting will be closely watched for signs of tapering, with a majority of market strategists currently forecasting a tapering announcement following that meeting.

The U.S. debt ceiling is approaching, and we expect a heated debate regarding potential spending cuts when Congress reconvenes next month. And depending upon the results of the Sept. 22 German elections, investors may have some renewed clarity regarding the European Union’s policy toward future bailouts for troubled eurozone countries.

It appears that German voters are getting “bailout fatigue” associated with large payments going to countries that are capital-starved, and bailout countries are getting “austerity fatigue” from the spending cuts that are tied to their receipt of receiving financial aid.

 

August 19, 2013 |

Is The Irish Lotto Still Popular?

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Did you know that the Irish Lottery currently contributes 32 cents for every Euro that is earned? Another interesting fact about the national lottery of the Irish people is that it is has contributed hundreds of millions of Euros to various charitable and other non-profit organizations, and it has shown and proved its support in a wide array of areas, including hockey or the Irish Social Environment project, arts and the promotion of children’s health.

 

Rich History To Follow

The Irish Lotto saw the light of day in the year 1988 when the government adopted the National Lottery Act supporting sports, welfare, health, and national history. With the first historical draw occurring on the 16th of April during the same year, and ever since, the lottery has received close to 40 billion Euros – money it has donated to the Irish society. Statistics are quite impressive when it comes to the actual number of people playing the game; namely, two thirds of the adult population has at least once played the since its inception. Going through various changes in the style of the game, the game kept its players coming. At the moment, a player needs to select 6 numbers 1-45 and a bonus number used only for the six secondary prizes. This site here http://www.thetoplotto.com/the-lotter online lottery players to buy their tickets from the comfort of their own homes and while keeping them updated with the latest results, bonuses, size of jackpots and many more. Because of the small range of numbers used, the game of Irish Lottery possesses the highest odds of winning as compared to other games, thus an additional reason to buy your tickets on a weekly basis and cross your fingers for the best of luck to strike you. With a jackpot starting at €2 million and reaching much higher amounts when no one is winning the big jackpot, playing the Irish Lotto game on thetoplotto site is a great idea.   

 

 

 

July 18, 2013 |

5 Must-Haves for Your Retirement Toolkit

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Are you building a nice garden home, a castle, or heading for life in a cardboard box? Earlier this year, the Employer Benefit Research Institute issued its annual Retirement Confidence Survey. If the findings are any indication, we should all examine our retirement toolkit and get to building. Only 21% of those surveyed felt very confident in their ability to live comfortably throughout retirement.

As you review where you stand, here’s a checklist of handy tools you should consider adding, oiling or updating on a regular basis:

1) Eyeglasses or Crystal Ball. In my mind, retirement planning starts with a vision. If you’re in your 20’s, it may be no clearer than the idea that you need to take some steps to create options (no, not stock options) for your future. Obviously, the closer you are, the more concise your vision should be. And don’t forget the non-financial stuff; retirement is not just a stack of dough. What will you do? Where will you live? Sure, it could mean golf and travel, but it also might just mean working in a different type of environment or for fewer hours. Shine up your crystal ball.

2) Savings Discipline. I still remember a series of commercials from a few years back where the main characters secure their retirement by stumbling upon a miraculous find. In one version, it was a priceless original of the Declaration of Independence stuck behind a painting bought at a garage sale. Nice thought, but not likely in the real world. Instead, focus on building your own independence by saving and investing on a regular basis. If you’re just starting your career, setting aside 10% specifically for retirement is a nice goal. Late to the game and you’ll need to up your percentage.

3) Guaranteed Income. Create a situation which allows your recurring fixed expenses to be covered by guaranteed income. Guaranteed income could come in the form of military retirement, Social Security, pensions, or you could purchase your own guaranteed income in the form of an income annuity.

4) Retirement Portfolio. What’s yours look like after the turmoil we’ve seen over the past few years? Have you built and maintained a diversified mix of equities (U.S., small/medium/large, foreign developed and emerging market stocks) and fixed income (all types of bonds, fixed annuities, cash and cash equivalents). If not, add “evaluate my portfolio” to your to-do list and ensure what you’ve got matches up with your goals and targets.

5) Tax Strategy. The ever-changing tax landscape makes it difficult, but critically important, to keep this tool razor sharp. And for retirement, tax diversification should be top of mind. That means saving and investing in a manner that allows you to benefit today and tomorrow through building taxable, tax-free (Roth) and pre-tax investments.

Whether you’re eyeing a modest place or a mansion, you’ll need the right tools to get the work done. There’s no better time than right now to evaluate your array of retirement gear.

This content is provided courtesy of USAA.

 

July 15, 2013 |

Financial Papers: What to Keep or Toss

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During tax season, you probably found yourself surrounded by piles of papers — and wondering how long to keep all that stuff. For tax documents — and all your other financial paperwork — here’s your answer.

What How Long to Keep Why
Tax returns (including receipts and supporting documents) Up to six full years The IRS can audit a return up to three years after you’ve filed. The agency can challenge your return for up to six years if it suspects you under-reported your income by 25% or more.
IRA contribution records Permanently Keeping these forms — like IRS Form 5498 and 8606 — may prevent you from paying too much tax when you tap your retirement stash.
Investment and real estate records Seven years after you sell They help track your cost basis — and the taxes you owe when you sell; shred your monthly statements and save the annual summaries.
Bank statements and checks One month to seven years, depending on whether your bank has them available online You could need them if you’re audited by the IRS. If you haven’t already, switch to receiving your bank documents online. Your bank may have past statements available online.
Credit card statements and bills for non-deductible items Shred immediately after the next statement arrives. You don’t need them once you confirm the charges and have proof of payments.
Form W-2 Wage and Tax Statement Until you start receiving Social Security benefits Usually your best proof of earnings for Social Security
Pay stubs Until the end of the year Not needed once you get your W-2
Insurance policies Until they expire — except for liability policies with “occurrence” coverage Occurrence-based policies cover you for damages that occur while the policy was in effect — even if the claim happens after coverage expires.
Receipts
  • Day-to-day debit/credit: Toss after confirming the amount charged is correct.
  • Big-ticket item: Keep with other purchase documentation for proof of value in case of loss or damage.
  • Charitable donations: Store and keep for tax-filing purposes.
Depending on the type, amount and reason for the purchase, they may be necessary for insurance- and tax-filing.

Where to Keep Them

Once you’ve figured out which papers to keep, you’ll need to decide where to keep them. Here’s a look at your options, which offer some trade-offs between security and accessibility. Be sure to tell a relative or family friend where you keep this paperwork.

Safe-deposit boxes. Generally, it’s one of the safest places to keep your most important original documents, especially the ones that aren’t easily reproduced and the ones you’ll keep for years.

The downside: Rental fees and access only during bank hours. Your state law may require a safe deposit box sealed at your death, which could make it a questionable choice for some important documents, such as your will.

 

Fireproof home safes. A safe in your home gives a measure of security along with 24/7 access. Over time, it may be less expensive than a safe deposit box; but it isn’t as secure, either. They may be a good choice for things you want to keep both secure and accessible, such as passports and Social Security cards.

The downside: Levels of fireproofing vary. The safe could be lost in a flood, tornado or hurricane — and aggressive thieves can cart off the entire safe.

 

Home filing cabinet. This is a reasonable choice for things you need to access regularly or don’t need to keep very long, such as pay stubs, payment receipts, bank and credit card statements.

The downside: Not very safe or secure. If it doesn’t lock, your files are wide open to both thieves and nosey visitors.

 

The web. By creating images of key documents and uploading them to an online storage site, you give yourself access from any computer. That could be a lifesaver if you’re away from home or your entire community is devastated by a disaster. Be sure to use a common file format so that you can easily recover the documents. Also use online storage as a backup to a local copy, perhaps on a portable drive. Keep in mind that sometimes only the original document will do.

The downside: You could face monthly fees and potentially put your sensitive information at risk. Encrypting your files and folders helps prevent unwanted access to your information.

Automate and Go Green

Reduce future clutter — and save some trees — by going electronic.

  • Arrange for utility and other bills to be sent by email.
  • Pay your bills electronically.
  • Use a scanner to replace key paper documents with electronic versions. Be sure to create a backup file that’s stored in a separate location.

 

July 9, 2013 |
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