The laws of supply and demand apply to stock and bond returns just as you learned in Econ 101. If new stock shares flood a market, there may be more sellers than buyers. Conversely, if the supply of stock declines, it may help to boost the returns of remaining stocks. 

Stock supply can be controlled by decisions made by companies. In order to raise money, companies may borrow from bond markets or banks. An alternative is to issue new stock and potentially dilute the ownership of existing shareholders. If companies happen to have stockpiles of cash, they may choose to pile up the cash, pay-off debt, establish or increase dividends, or buy back stock. 

Today, you have a borrowing environment with extraordinarily low interest rates. This makes the decision to issue debt easier to swallow for companies with good credit. You also see record corporate profitability and many large companies have built a war chest of cash irrespective of borrowing. There are other ways the outstanding shares can shrink, like mergers and acquisitions. 

For personal investors, fewer shares may mean the potential for stronger returns with investments. It's important to keep in mind, though, that valuation matters and a shrinking stock market may result in higher than appropriate prices. Today we especially note the potential for the shrinking supply of stocks to offset the lack of enthusiasm for stocks and bond favoritism, quietly keeping more balance in markets than headlines about bond flows would indicate.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

 

Research shows that individuals who experience isolation and inactivity are much more likely to be diagnosed with depression, memory and other health-related problems.  One such study conducted by Lisa F. Berkman, an epidemiologist at Yale University, found that people who were not connected to others were three times as likely to die over the course of 9 years as those who had strong social ties.  Even more interestingly, the same study found that those with strong social ties and poor health behaviors lived longer than those with poor social ties and positive health behaviors. 

An expanded version of retirement planning is needed to look beyond income distribution planning and investment policy statements.  Planning to maintain vital social connections, whether they are family members, friends, church members, dance partners, etc., seems to be just as important to success in retirement as the stability of your investment portfolio.   So as you or your loved ones plan for retirement, think about exploring activities and hobbies, groups and clubs, and consider living arrangements for all of retirement, including early and later retirement.

Contact your financial planner to develop a retirement plan that includes all aspects of your financial life, especially the all-important social connections.

Source:www.hsph.harvard.edu

 

Probate avoidance is a common estate planning goal for many people. And, rightfully so.  While the probate process has been simplified over the years, the fact remains that the probate process continues to be time intensive and potentially costly. In many cases, a revocable living trust is used as a financial tool to avoid probate.  Another less known vehicle is the Transfer on Death (“TOD”) designation that can be added to accounts such as bank accounts and taxable brokerage accounts.

A TOD account acts much like a beneficiary designation on an IRA, 401k or even life insurance policy.  At the owner’s death, the account bypasses probate and is paid directly to the person named on the TOD form.  Some firms may charge $50-$100 to establish a TOD, but many also provide such an account for free, making this a cost effective alternative to having a Living Trust drafted.

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

 

There are many theories as to why this could be true:           

• Investors tend to fund their IRA accounts either early or later in the year
• Lower summer productivity for business
• And the most obvious, people prefer to be outside rather than inside investing their money
  (especially in Michigan).

However, this year could be different. If you look at monthly returns in Election years (which like it or not we are in the middle of) the above picture is contradicted.

Beware of strategies involved in short-term timing of the markets.  Many investors end up hurting themselves by trying to time their investments in and out of the market.

Source:  The Big Picture  http://www.ritholtz.com/blog/

 

There are a handful of items that need to be handled immediately.  Most decisions can, and should, be left for a later date when grief has been handled and clearer heads can prevail.

Here are the top 5 things you can’t put off:

1. Look for instructions that the deceased may have left regarding preferences for funeral and burial arrangements.  This may be part of a larger document called a Personal Financial Record Keeping System and Letter of Last Instruction, a document that provides important information about professional advisors, documents and accounts.
2. Locate important legal documents, including the will and trust, if one exists.  This will give guidance regarding who has been named to handle the financial affairs of your loved one and how funds can be accessed to pay for funeral and other costs.  Other important documents may include prepaid funeral plans, safety deposit box information, and marriage, birth and other identification like driver’s licenses.
3. Contact the Deceased’s financial advisor.  The financial advisor will likely have copies of any/all legal documents, as well as a complete list of all financial assets and insurances.  The financial advisor will be instrumental in helping to settle the estate and will be invaluable in helping to make important financial decisions later.
4. Get Multiple Copies of the Certified Death Certificate.  These documents will be important in settling all of the financial affairs of your loved one, and can be more difficult to obtain later.
5. Notify Income Providers.  This includes Social Security, employers paying pensions, etc.  Stopping income payments immediately prevents the need to repay them later.

It is most important to deal with your grief and to give yourself and your family time to honor your loved one.  Many of the rest of the financial decisions and affairs can be handled when the time is right. 

Contact your financial advisor for additional guidance.

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

 

Times and things change, however, writing letters to share wisdom, preserve tradition, record family history, explain and inspire is not a new concept.  In fact, letters like the one from my father are most commonly known today as ethical wills or legacy letters.  Until I received a legacy letter, I could only imagine the impact and value a gift like this carries. 

Estate planning documents like wills, trusts, and beneficiary designations are legal documents which typically are used to control the distribution, management and availability of assets from one generation to the next.  Legacy letters are not legal documents.  They pass on personal values and the nuances of your story.

There are no hard and fast “rules” for writing legacy letters. The contents and form of your letter are entirely up to you. You can tell your kids what you hope they’ll accomplish, tell stories about your grandfather, or relive the time you made a key tackle on the one-yard line to preserve a win for your high school football team.  Embellishment is allowed!

Here are some ideas to help you get started:

• Decide who you are writing to . . . .
• Speak from your heart in your unique voice  . . . .
• Life has taught me . . . .
• Some of my special memories are . . . .
• I believe . . . .
• Defining moments  . . . .

The beauty of the written word is that it can be handed down for generations to come.  Don’t hesitate – get started today.  Legacy letters are the perfect gift for any occasion!

 

1. Early Retirement Gap: (between retirement and age 65 when you are eligible for Medicare) – If you want to retire any time before you qualify for Medicare, you may be responsible for footing your health insurance bill during this gap, assuming you do not have access to retiree health care benefits from your employer.   According to Alicia Munnell, director of the Center for Retirement Research at Boston College, “In your early 60’s you can expect at a minimum for premiums of at least $500 per month with a $2,000 to $5,000 annual deductible (in today’s dollars)”.



2. Planning for out-of-pocket expenses not covered by Medicare: Many retirees think that once Medicare kicks in this may cover all of their medical expenses and this is not the case.  On average, a couple can expect to pay $7,600 each year for out-of-pocket medical expenses, assuming no chronic conditions exist.  The following is a chart breaking down the expenses for Part A and B for Medicare.  It is important to note that Part D (prescription drug coverage) and a Medigap plan would have additional expenses. 



3. Long Term Care Event: In addition to the health care costs discussed above, long term care expenses need to be considered as well.  According to the 2007 data from the Department of Health and Human Services, 70% of Americans over 65 will need some form of long-term care during their lifetime.   Nursing home care is not cheap.  Nursing home care can cost on average $75,000 per year, assuming a stay of 3 years that is $225,000!  Protecting yourself with long term care insurance, whether it is traditional long term care or a hybrid-type policy, can make all the difference.  My grandfather left behind excellent health coverage for my now 92 year old grandmother from his service with the Wayne County Organized Crime Task Force, but now my grandmother needs daily 12 hour care. Those costs, which she now pays out-of-pocket, really do add up.

Most of us do not want to have to plan for when we get sick, but it is imperative that we do.  If specific health care planning is addressed within your retirement plan, you can take a lot of the guesswork out of it and make sure you are really ready for health care costs in retirement.

*Part B Medicare premiums are linked to income – the more you make the more you pay.

Sources: Medicare.gov, Investment News, March 26, 2012 (Andrew Osterland)

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  Links are provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and or members.