For seniors, financial pitfalls come in many forms: Ponzi schemes, Internet scams, a relative who takes advantage of them. But many also see their life savings slip away — and into casino coffers — because of their own actions.
Archive for April, 2013
If your clients had invested in the latest installment of the James Bond series, the $1 billion-plus grossing “Skyfall,” they would have a much better return on their investment than what they’ll get in the U.S. bond market this year.
That’s the word from investment analysts (without the James Bond reference), so if your clients are poised to bet on a strengthening American economy, they’ll get out of bonds and into stocks, according to a story in The New York Times. (http://tinyurl.com/aq37k7a)
When the U.S. economy turned sour in 2006 and went into recession in 2008, Investors jumped into the relative safety of the bond market with both feet. Indeed, The Times reports, the percentage of personal investments in bonds increased to 26 percent last year from 14 five years ago.
When the move to bonds began in earnest in 2008, however, the S&P 500 stock index ended the year up more than 13 percent. Clearly, the run on the bond market was driven by fear about the overall economy and not just one segment of it.
LPL market strategist Anthony Valeri, who isn’t betting on swift economic growth this year, gives AdvisorOne other reasons to get out of bonds in 2013: European debt concerns and a market-friendly Federal Reserve, which leads to bond price increases and lower yields. (http://tinyurl.com/atzkc4m)
Stock the cupboard
The editors at Kiplinger are bullish on the stock market, saying it has as good chance of gaining 7 percent during 2013 — with dividends adding another 2 percentage points. (http://tinyurl.com/bytlavc) If correct, that means clients could see the S&P 500 gain some 200 points this year. In addition, the Dow would rise about 1,000 points.
The Times reports that surveys of hedge funds by Bank of America found that professional investors already are prepared for a shift into the stock market, allocating more of their portfolios into stocks than at any time since 2006. And 12 out of 13 bank strategists the Birinyi Associates spoke to expect the stock market to rise in 2013.
Bound to bonds
Gary Shilling, for one, isn’t giving up on bonds. President of economic consulting company A. Gary Shilling & Co., Shilling has advocated bonds for three decades. He told
CNBC (http://www.cnbc.com/id/100339419) he doesn’t believe the stock market can keep up its four-year rally and that another recession is a possibility. He advocates your clients spend some money buying Treasury securities as a hedge against a stock market downturn.
Schilling thinks stocks could be hurt by a global recession, which hurts revenue and thus earnings; companies have cut to the bone, making their profit margins as good as they’re going to get; and a strong U.S. dollar will hurt companies’ foreign profits and overseas operating expenses. Finally, he believes the housing market has excess inventory — as much as 1.9 million unoccupied houses — that will continue to depress prices in large swaths of the country.
The bottom line with any investment strategy is that a sound, diversified portfolio will give your clients the best of both worlds — security and growth. And they won’t need James Bond to come to their rescue.
We hope this information was useful to you, your clients and their families. To get more information regarding this or any related topic, please visit our website www.TEPLG.com or call us at 630-871-8778.
The Internal Revenue Code (“IRC”) provides substantial income and estate tax benefits to the married residents of the nine “community property” states. A tenth state – Alaska – allows married couples to opt in to the community property regime and reap these benefits. In addition, Alaska offers the married residents of the other 40 states a way to reap these benefits by using its community property law.
Many clients have large IRAs and retirement plan accounts and need special estate planning for these assets. A 2009 study by the Investment Company Institute found that retirement plans account for 34% of all household financial assets, up from 14% in 1978; IRAs alone account for more than 10% of all household financial assets; and 47 million U.S. households have IRAs.
One of the greatest concerns for the elderly we serve and their families is that of long term care. Two-thirds of seniors will need care at some point in their life and many have not planned for this likelihood. It is an emotional and unpleasant topic to broach, but helping those we serve to plan ahead empowers them. This issue of the ElderCounselor™ newsletter will focus on information necessary to assist elderly in making decisions that will likely eventually affect them and their loved ones.