The Financial Cost Of Remarriage After losing a spouse, whether it is to death or divorce, the trauma of finding yourself suddenly alone can be very difficult, especially for someone who has been used to sharing their lives with someone for a great number of
To Marry Or Not? Why The Financial Ramifications Of Marriage May Be Discouraging Couples From “Tying The Knot”
Do Investors Need To Beware Of A Stock Market Bubble? For investors who have been standing by and watching the seemingly slow slump of the markets, it is disconcerting to wonder if the recent performance in the stock market is indicative of another bubble bursting,
Tax Day Is Upon US…Did You Take Advantage Of The Right Deductions? There are two certain things in life, death and taxes, and unfortunately, one of them rolls around annually and wreaks havoc on our time, and our finances. However, if you can learn
Are Annuities A Good Investment Product? Over the recent years annuities have been the source of a fair amount of criticism and have overall gotten a fairly bad rap, but is there ever a time when purchasing an annuity is a good investment decision? Depending
How Much Do I Need To Save For Retirement If My Goal Is To Retire In 30 Years? Saving for retirement can often be very tricky, especially with the demands of day-to-day finances, paying for college educations, and the more recent expense of boomerang children
To Marry Or Not? Why The Financial Ramifications Of Marriage May Be Discouraging Couples From “Tying The Knot”
After losing a spouse, whether it is to death or divorce, the trauma of finding yourself suddenly alone can be very difficult, especially for someone who has been used to sharing their lives with someone for a great number of years. It’s only natural after losing a spouse to think about finding someone else to share your life with, including the possibility of a second marriage sometime in the future. Unfortunately, the way the current tax and financial system is set up, it is often financially detrimental for couples considering saying “I do.”
Current Laws Financially Discourage Marriage
Let’s say for instance, that you lost your spouse in a work-related accident. In many cases, this would make you eligible for a monthly workman’s comp benefit that will be paid to you for the rest of your life. Unfortunately, if you were to remarry, this benefit would quickly come to an end. In a recent USA today article, there was an example given of a woman who lost her husband at the age of 50, and was receiving a workman’s comp benefit of $2,000/month. Invested at 3% for 35 years, that $2,000 becomes $520,000. If instead, she were to remarry, her marriage would come at the cost of the $520,000 of lost workman’s comp benefits. This puts a quantitative price tag on the cost of remarrying.
Current Tax Laws Discourage Married Couples
In addition to the loss of benefits, couples who choose to marry may also suffer on their taxes. For higher earners, it’s almost always detrimental financially to “tie the knot”. If both individuals make close to $400,000, right on the edge of the 39.6% tax bracket, their tax liability goes up significantly if they marry. The 35% tax bracket only extends to $450,000 for couples, whereas their combined income pushes them closer to $800,000 and in a much higher tax bracket. For those who actually make that much in income, the 4.6% loss in taxes may seem insignificant, but the point of the matter is, it is still a penalty for marrying.
Other Financial Deterrents For Getting Married
In addition to the tax laws, there are many other financial deterrents for choosing to remarry later on in life. For instance, if you’re planning on remarrying and it’s important to you that your children receive your inheritance when you pass away, remarrying may necessitate a prenuptial agreement with your spouse. This can get particularly tricky if you marry someone with unequal assets.
Dependent on your belief system, your finances and your desire to be married and share your life with someone, the decision to marry, especially later on in life when children are no longer a significant part of the picture, can be easily swayed by the financial implications. To learn more about how remarrying will impact your finances, and to discuss the financial pros and cons of remarrying vs. staying single, contact a Redhawk Wealth Advisor near you today.
Do Investors Need To Beware Of A Stock Market Bubble?
For investors who have been standing by and watching the seemingly slow slump of the markets, it is disconcerting to wonder if the recent performance in the stock market is indicative of another bubble bursting, especially in the bio-tech and technology industries. While it is unlikely that the markets have entered bubble territory as of yet, it is still important to closely examine the valuations of certain sectors of the stock market before choosing where to invest your hard earned assets.
Investors Need To Examine Stock Valuations Before Investing In The Markets
Although the broader market is probably a long ways away from “bubble territory” it’s still important to steer clear of the companies and stocks that are selling for significantly higher than they are valued. For instance, last year’s growth stocks, the Nasdaq Biotechnology index, and internet stocks are currently pretty overvalued however there are some sectors of the market that still have historically low valuations.
Look For The Best Bang For Your Buck In The Markets
Rather than seeking out last-year’s most popular stocks, your best investment “bet” is to consider the stocks that were less popular last year. Last year’s “losers” or value stocks have been pushing ahead by 2.1% thus far this year, whereas U.S. growth equities have remained flat. Additionally, investors may also benefit by taking a look at mega cap stocks instead of focusing on small caps. Although large caps are certainly not considered cheap at this time, they have still been trading strongly this year, and in March they finished the month at 17.25x trailing earnings and are above their 60-year average. However, in spite of the fact that they aren’t cheap right now, they have seen 1.5% gains thus far this year, whereas small caps have taken a beating in 2014.
International markets, including the Emerging markets are another place where investors are experiencing some tremendous growth potential. Emerging markets have been volatile, but still offer the potential for great growth ahead. In addition, The European markets have far outperformed the U.S. stock market year-to-date. Because the European markets are still tremendously undervalued, there is a great potential for future growth in investments in these foreign markets.
To learn more about valuations and which sectors of the stock market may be overvalued at this given time, and to determine the best places to allocate your hard earned assets in order to maximize your profit potential given today’s investment environment, contact a Redhawk Wealth Advisor near you today.
Tax Day Is Upon US…Did You Take Advantage Of The Right Deductions?
There are two certain things in life, death and taxes, and unfortunately, one of them rolls around annually and wreaks havoc on our time, and our finances. However, if you can learn to navigate the world of taxes by maximizing the amount of deductions and credits you are able to take, you may be able to lesson your tax headache as the dreaded Taxes due day rolls around year after year.
What’s The Difference Between A Tax Credit And A Tax Deduction?
One of the most important ways you can minimize your tax liability is by taking full advantage of the available tax credits and tax deductions. A tax credit is a dollar-for-dollar reduction in taxes, and a deduction reduces your taxable income at whatever rate tax bracket you fall within. So for instance, if you take a $1,000 tax credit, you get $1,000 back on your taxes. Whereas, if you take a $1,000 tax deduction and you’re in the 25% tax bracket, you only get $250 back on your taxes. In other words, it’s never wise to spend money just to gain tax deductions, because you’re only going to get back in taxes whatever percentage tax bracket you fall within.
What Tax Credits Are Available?
Since tax credits give you the most back, it’s worth paying attention to the available credits out there to see if you might qualify. Some of the more common credit include:
-The Child Tax Credit: This credit can give you as much as $1,000/child under the age of 17, depending on whether or not your income falls within requirements and you are the custodial parent. For divorced parents only one parent is eligible to claim the credit.
-The Savers Credit: This credit is less known, but any couple filing jointly that makes less than $55,000/year who saves in qualified retirement plans, can claim a credit of up to $2,000. For singles, the credit is up to $1,000 for singles making less than $27,500.
-Dependent Care Tax Credit: If you have childcare costs for children who are under the age of 13, you can claim a dollar-for –dollar childcare credit up to $3,000.
-Education Tax Credits: If you’re going back to school, you can claim as much as $2,500 in college education costs for up to four years. This is eligible for those filing jointly who make less than $160,000/year or $80,000 for singles.
-Energy Tax Credits: For those who are interested in green energy you can still get credits up to 30% of your expenses if you invest in green energy techniques such as solar power and wind turbines.
Should You Itemize Or Take The Standard Tax Deduction?
The other way to get money back on your taxes, is to make sure that you are maximizing your tax deductions for the year. If it makes sense for you to itemize there are a number of factors you should look into to try to save money on taxes. These deductions reduce your gross income which can actually take you down tax bracket, or can qualify you for certain credits you wouldn’t otherwise qualify for.
Some of the more obvious tax deductions are:
-Retirement Plan Contributions- You can deduct qualifying IRA contributions
-Student Loan Interest: up to $2,500 in interest is tax deductible
-Health Savings Account: If you have a high-deductible plan you can deduct up to $6,500 for HAS contributions.
-Moving expenses related to your job.
-Deductions of certain taxes on primary residence
The point of the matter is, taxes come due annually, whether we like it or not. The key is to make certain that you are taking a look at your tax exposure and tax liability throughout the year to ensure you are able to take advantage of as many tax deductions and tax credits as possible. To learn more about the tax advantages of certain investments, and to discuss with a financial advisor about how to decrease your tax liability for the upcoming year, contact a Redhawk Wealth Advisor near you today.
Are Annuities A Good Investment Product?
Over the recent years annuities have been the source of a fair amount of criticism and have overall gotten a fairly bad rap, but is there ever a time when purchasing an annuity is a good investment decision? Depending on the individual, the age and needs of the person purchasing the products, and the individual product being sold, annuities may or may not be a bad choice for an investment option. The key to making a wise decision when considering an annuity is to understand the product, evaluate the fees, and then determine if the product is a good fit for your portfolio.
What Types Of Annuities Are Available?
When looking at annuities it’s also important to recognize that not all annuity products are the same. Generally speaking, an annuity is an investment product sold by an insurance company. There are four types of annuities, immediate annuities, fixed annuities, variable annuities, and equity indexed annuities.
An Immediate annuity: This type of annuity provides an immediate income stream in exchange for a lump sum of money up front.
Fixed annuity: The word guarantee rings true with a fixed annuity. This type of annuity is similar to a CD, with typically a longer term. The rate of return is fairly low because there is no fluctuation along with the markets with this type of annuity.
Variable Annuitiy: Generally has a slightly higher risk and higher rate of return because it tracks similarly to a mutual fund.
Equity Indexed Annuity: This type of annuity tracks with the upside of the markets, without exposing your principle to the downside. So in many ways is “safer” than other equity based investments.
Why Consider An Annuity? Who Benefits?
In spite of criticism about low interest rates and high fees, there are many individuals who would benefit greatly by including an annuity as part of their investment portfolio. For instance, if you’re goal is to create a stream of income that is guaranteed for the duration of your life, an annuity might be an excellent investment option. Other positives include: Tax deferral-any gains made are waited to be taxed until the payments are disbursed; and a guarantee of principle for those who need to ensure that their risk is minimal.
Why You Wouldn’t Want To Invest In An Annuity
One of the biggest cons to an annuity at this point is the interest rates. The environment we currently live in is experiencing such low interest rates, that often annuities and other low-risk investments can’t even keep up with inflation. So while principle protection is a plus, how safe is your principle if the rate of return can’t keep pace with the inflation rate? There ends up being a slow and silent erosion of principle simply through loss of purchasing power. Additionally, depending on who you purchase the product from there is often very high fees associated with annuities. It’s important to shop the company, and know the fees that are involved before committing your hard earned assets to a low-yield, investment with high fees attached. Annuities can also be characterized by having extremely high surrender charges, if you were to withdraw from the account prior to its term date. If you need liquidity in your investment, annuities are certainly not the way to go.
Essentially, if you’re in need of a guaranteed stream of income that will help prevent you from outliving your retirement savings, then an annuity may just be the way for you to go. If however you have different investment goals, then it’s important to consider all of your options and talk to a Redhawk Wealth Advisor near you to determine which investment vehicles may be better suited for your investment needs. For more information on annuities and other retirement investment options, contact a Redhawk Advisor today.
How Much Do I Need To Save For Retirement If My Goal Is To Retire In 30 Years?
Saving for retirement can often be very tricky, especially with the demands of day-to-day finances, paying for college educations, and the more recent expense of boomerang children wreaking havoc on your finances. In addition to difficulty with saving, there are many unknowns that shadow retirement saving, making it seem lofty and unattainable for the average American. In many cases, it’s easier to meet a goal if you are aware of what you need and in what time frame you need it. According to many financial advisors, if you’re goal is to retire in the next 30 years, you will need to come up with $82.28/day every day, for the next 30 years to meet that goal.
How Much Is Enough For Retirement?
If $82.28/day seems like a rather large amount, it’s actually based on the assumption that you will want to live on roughly $50,000/year. In order to make that, your $82.28/day needs to be invested in a fairly aggressive portfolio with a 7% return, for 30 years. This figure also takes into account cost of living adjustments for inflation, which is figured to be on average about 3%/year. For the average person out there, this amount will be enough for you to survive on for the duration of your retirement.
How Will I Ever Save Enough For Retirement?
As a younger individual with the demand of family expenses, trying to come up with an additional $82/day may seem like a daunting task. However, the younger you are when you begin saving, the more of a chance you have of meeting your retirement goals. For instance, if you began saving at the age of 20, and were able to save for 45 years instead of 30 years, you’re savings rate will have to be much lower. Additionally, the $82.28 is not adjusted for inflation. Meaning, even though that seems like a large chunk of change right now, in 20 years it will actually be much easier to save $82/day because of the inflation rate.
The Bottom Line Is: Before you allow yourself to become discouraged and throw in the towel entirely for retirement, it’s mostly important to recognize that retirement savings requires a diligence and preparedness on the part of the investor. Your retirement nest egg is not going to form itself, and in order to prevent yourself from becoming a burden on your loved ones in the future, getting on the right track for retirement today is going to be of the utmost importance. To learn more about how to get prepared for retirement, and where to invest your hard earned assets to generate the return you will need to retire comfortably, contact a Redhawk Wealth Advisor near you today.
Conservative Is The New Trend For The Stock Market
Living on the edge is an investment mentality of the past. Days of blowing up tech bubbles and turning Wall Street into a trip to Vegas have since been replaced by a more conservative mentality where investors are favoring dividend paying investments and utilities. To be defensive in your investment strategy is to fit in nicely with the status quo.
Utilities Are The New Trend Of The Stock Market
2013 was a fantastic year for the stock market as record highs characterized the market, and investors were unafraid to branch out into “hot” stock items such as Netflix, Amazon and Tesla. As 2014 started off sluggishly, these hotter stock items have taken quite a beating, whereas more conservative utility stocks with decent dividends have become the trending investment choices. For instance, the SPDR utility fund is up by 9% so far this year, which is pretty significant given the performance of the rest of the market. According to Jim Russel, the Senior Equities Strategist for U.S. Bank Wealth Management, “Investors are flocking to what is known as opposed to what is promised.”
What Does The Conservative Investment Trend Mean For The Stock Market?
Overall, the fact that investors are turning towards more conservative stock investments, is a sign that we could be looking towards greater volatility in the upcoming months. Investors who are afraid to put themselves out there because of the paltry first quarter returns will be more likely to invest conservatively or leave their money on the sidelines than they would be in a more promising market. Most investors are concerned that stock prices not only were impacted by a harsh winter here in the U.S., but also that stock valuations are becoming unrealistically high in comparison to earnings. One example is Amazon, which has performed very poorly thus far in 2014 and is currently down 20%. Even so, Amazon stocks trade at 170 times the 2014 earnings. It’s not realistic to assume that Amazon stock could continue to skyrocket with profit to earning rations being so off kilter.
How Should A Savvy Investor Play The Current Market?
It’s difficult to say for sure how the market will continue to perform given the current investor sentiment. If history were to repeat itself we could see some volatility as investors pull back in search for safer investment options. However, other economists anticipate the slowdown in the stock market is short-lived, and that is only a matter of time before investments start performing well again.
Keep in mind that in any type of economy or investment environment, there is money to be made and assets that are worth looking into as investments. To learn more about the current investment climate and how to position your portfolio to maximize your earning potential given the current market trends, speak to a Redhawk Wealth Advisor near you today.
Concerns In The Ukraine Could Lead To Global Economic Problems
Although 2014 started out looking very positive for global economic growth and expansion, as threats around the world, including the escalating issue in the Ukraine, economists have become more and more concerned about potential risk for the global economy. Sinai, the chief executive officer with Decision Economics in New York feels that we have about a 10 percent chance for a global recession occurring as a result of the problems we have been seeing brewing between Russia and the West over the Ukraine issue. Other unknowns that are contributing to the uncertainty around the globe include elections in emerging markets, the ever brewing turmoil in Syria, and ongoing concerns with Iran’s nuclear program, which are all impacted by the rising tensions with Russia.
Uncertainty Around The Globe Keeping Investors On Their Toes
Due to the uncertain political nature of many of the major issues going on around the globe, investors are staying on their toes watching for any major signs that the markets will be adversely affected. Stocks fell towards the end of March, and the portion of cash in portfolios is currently the highest it has been since 2012 according to a Merrill Lynch survey. Global businesses are also concerned that the escalating tensions between Russia and the west will throw the U.S. right in the middle of a major “intervention” or war, which could have a direct impact on their business’ profitability.
Global Growth Projections Being Downgraded Due To Rising Uncertainties
As a result of many of the concerns hovering around the globe, economists have downgraded many of their global growth projections for what was otherwise predicted to be a strong year for the global economy. Due to elections in emerging countries, Morgan Stanley downgraded their predictions from 5% growth to 4.7% growth. The bigger concern is the Ukraine, and the implications of tighter sanctions on Russia if Russia refuses to back off from the region. Even after a directive to have his military stand down on the borders of Ukraine, Putin continues to maintain control over Crimea, making the west increasingly concerned over the potential of a more serious conflict. If things progress in Russia it is likely that Europe will feel the fallout the most acutely, as the Eurozone is fairly interconnected and reliant upon Russia for around 20-30% of their energy and trade. If things remain tense in the region, the Eurozone, which is still recovering from the recession of recent years, could see their growth falter.
Emerging Markets And Global Uncertainty
Amid the concerns surrounding Russia and the Ukraine, the emerging markets that had been garnering a fair amount of Investor attention, could also be hit by the global fall out. These countries include Brazil, India, Indonesia, Turkey and South Africa. Their markets have proven to be fairly sensitive to changes in the global economy, and contracted significantly when the Federal Reserve began to cut back on the U.S. bond-buying program. Uncertainty in the Eurozone, could further complicate things for these more fragile countries, especially as many of them are facing an election year.
How Should Investors Respond To Global Uncertainty?
Uncertainty is just that…uncertain. It’s difficult to predict the outcomes of uncertainties within the Ukraine, and even more difficult to know how the current political tensions will impact the global economy and markets in the months ahead. To learn more about how the conflict with Russia could spill over into the Iranian nuclear talks, the emerging markets and the western markets, contact a Redhawk Wealth Advisor near you today. A Redhawk advisor can help you navigate these tides of uncertainty to ensure your portfolio is properly positioned to protect you from the current volatile environment.
You don’t have to be an economist to take your cart of groceries up to the register and recognize that grocery prices have started to skyrocket. That small bag of groceries that you ran to the store for in order to fix dinner for the family, is now running you $100 or more. In spite of the fact that the official inflation rate remains relatively low, food prices have been excluded from the way inflation is computed, and Americans are starting to feel the financial pressure of rising food costs.
Food Prices Will Continue To Soar In 2014
Unfortunately for the average individual, food prices are continued to keep on rising throughout the duration of 2014. According to the recent data released by the Labor Department, the CPI which measures inflation here in the U.S. only rose 0.1% making the official inflation rate 1.1%. That’s the smallest gain we have seen in months. As a consumer, you may feel like arguing with that inflation rate, because it certainly hasn’t appeared to be so innocuous with the purchases you make the most at the store. This is because the government actually excludes food prices, gas prices, and other major consumer expenditures when they calculate inflation. The rationale is, that if the cost of one food item goes up, Americans compensate by purchasing a different item. Unfortunately, that only works if inflation hasn’t hit the majority of foods in the grocery store.
Drought And Other Factors Will Impact Food Prices
Already since February, we have seen a 4% jump in the price of beef alone, which is the biggest increase in beef prices in over 10 years. The reason for the rising costs in corn, beef and other commodity crops can be credited at least in part, to the droughts being felt in California, and the cooler weather we have experienced around the country this winter. Overall food prices have climbed by 1.4% since the beginning of January.
According to the Ag Department, 2014 could see food prices rising by at least 3.5%, and that’s without calculating the far-reaching impact of drought on food prices. Since California is largely responsible for the growth of many of our foods, it’s likely that inflation of food prices will be much more significant than 3.5% moving forward.
How Do I Use Higher Food Prices To My Advantage?
Before you rush to the grocery store and start purchasing beef and other groceries in bulk for the deep freezer, (although that’s not entirely a bad idea), it’s also a good idea to think about how to utilize higher food prices and inflation to make your investment portfolio grow. Within the Nasdaq are several Ag Funds that are likely to take off this year, along with the food prices. For instance, there are certain ETFs that track the prices of corn, wheat and cattle, and other commodities and allow you to make educated investment decisions on higher food prices. So before you wring your hands about the higher food prices, take the time to learn how you can use changes in the economy and in consumer spending to benefit your individualized portfolio. For more information on investing in commodities via ETFs, contact a Redhawk Wealth Advisor near you today.
Should You Consider Alternative Investments In Addition To The Typical Stock/Bond Mix?
In spite of the fact that 2013 was a fabulous year for the U.S. stock market, investors have become increasingly more adventurous in terms of their investment portfolios. In a recent survey put on by MainStay investments, it was surprising to discover that many investors are choosing to avoid stocks bonds and other “normal” investments, and instead are buying into commodities, hedge funds and other investments that are considered to be more alternative. According to the survey, 22% of the average portfolio is now allocated to alternative investments, and the majority of those investing in commodities etc, have actually increased their holdings over the last year.
Why The Sudden Interest In Alternative Investments?
Many investors have found the typical stock/bond mix to be sub-par in light of the current low interest rate environment. Search for higher yields and diversification have sent many looking outside the boundaries of the normal portfolio. Bonds and savings accounts are concerning considering they can barely keep up with inflation, and since the stock market rally appears to be slowly phasing out, alternative investments seem to be the only “safe” place to invest.
What Are Alternative Investments?
Alternative investments are used primarily for diversification and for principle protection, with the most common alternative investment being commodities. Commodities include oil, foods, and metals via physical holdings or ETFs. Traditionally, commodities have been used as part of an investment portfolio in an effort to protect a portfolio against inflation and serve as a “hedge”. In addition to investing in commodities, the relatively new world of ETFs has made it possible to employ long and short market strategies, which has become increasingly popular in recent years. Shorting the market can actually be an excellent investment strategy when a market is expected to decline.
Should I Consider A Venture Into Alternative Investments?
Since the evolution of ETFs small-time investors now have the ability to tap into investments that otherwise would have been unavailable to them. Even those with just a few thousand dollars to play in alternative investments, now have access to that sector of the investment world. If you are one who is concerned about potentially falling stock prices, rising interest rates, and whether or not your investment portfolio is properly hedged in to protect you from changes in the markets, than considering a venture in alternative investments might be the right choice for you. For more information about commodities, ETFs and other alternative investment options, speak to a Redhawk Wealth Advisor near you today.
China’s Economy Experiencing A Slowdown
Over the past several years, it hasn’t been totally uncommon for China to experience periods of slower growth during the winter months. However, thanks to the Chinese Government’s liberal monetary policies in the past, the Chinese economy has always rebounded and managed to hit their high growth expectations the remainder of the year. 2014 started out no different from recent years. The Factor sector, real estate market, industrial production, retail sales and investment growth are all underperforming year to date. In fact, economists are already lowering their growth projections for China this year in anticipation that China won’t be able to meet its7.5% target goal.
Contraction In The Manufacturing Sector
One of the more serious concerns facing the Chinese economy is the fact that the manufacturing sector got a recent PMI score of 49.6. The PMI score is assigned to a sector to determine if it is contracting or expanding. Any score over 50 is relatively “safe” but if a score drops below 50 it is a sign of contraction. This is an issue, because if China’s manufacturing sector is in fact headed into contraction, rather than just being a weather related slow-down, it doesn’t bode well for the broader economy.
Chinese Government Tightening Monetary Policies
In the past, the Chinese government would always be very quick to intervene when things were looking a little paltry for the Chinese economy. They utilized easy credit, and government spending to keep the economy roaring onwards. However, in recent months the Chinese government has implemented some reforms that put limits on the easy credit and government debt that has become very prevalent. Chinese Premier Li Keqiang made the comment: “We are not preoccupied with GDP growth, a bit higher or a bit lower; we have a level of tolerance here.”
Chinese Economic Woes Could Cause Problems Globally
Unfortunately, a slow-down in China’s economy could have a ripple effect that would negatively impact markets and investors around the globe. Already we have seen a drop in the price of copper and iron ore because those commodities are in higher demand when China’s manufacturing sector is in overdrive. Additionally, the Chinese government is refusing to step in to bailout Chinese businesses that get themselves into trouble financially. Without that guarantee it could cause problems for corporate bonds and the broader market. For more information on how the Chinese economy has a bearing on your investments and on economies around the world, contact a Redhawk Wealth Advisor near you today.