Category Archives: Individual and Medicare

What Does the Dow’s Record High Really Mean?

Does it signal anything more than bullish sentiment?

Next stop, 15,000? As the Dow Jones Industrial Average
settled at a new all-time high of 14,253.77 on March 5, the psychological lift
on Wall Street was undeniable – the market was finally back to where it was in
2007. Or was it?1

For many Americans, the Dow equals the stock market, and the stock market is a direct
product of the economy. It doesn’t quite work that way, of course. Right now,
it is worth examining some of the factors that have driven the Dow to its
series of record closes. Does the Dow’s impressive winter rally signal anything
more than unbridled bullish enthusiasm?

The small picture. Investors should
remember that the Dow Jones Industrial Average includes just 30 stocks – 30 closely
watched stocks, to be sure, but still just 30 of roughly 2,800 companies listed
on the New York Stock Exchange. The S&P 500, with its 500 components, is considered
a better measure of the market. When you hear or read that “stocks advanced
today” or “stocks retreated this afternoon”, the reference is to the S&P. As
the Dow kept settling at all-time peaks in early March, the S&P was consistently
wrapping up trading days at 5-year highs but still remained about 2% off its 2007
record close.2,3
You could argue that the Dow is even less representative of the broad stock market than it once
was. In 2007, Kraft, Citigroup and General Motors were among the blue chips;
since then, they’ve been tossed out and the index has gotten a little more tech-heavy.1
If you add up all the share prices of the
30 stocks in the Dow, you will not get a number over $14,000. The value of the
Dow = 7.68 x the total share prices of all 30 Dow components. How did Dow Jones
arrive at the magic multiplier of 7.68? It is a direct reflection of the Dow
Divisor, which is a numerical value computed and periodically adjusted by Dow
Jones Indexes. For every $1 that shares of a DJIA component rise in price, the
value of the Dow rises 7.68 (the Dow Divisor, you see, is well beneath 1 – on
March 7 it was 0.130216081).4,5,6
The DJIA isn’t indexed to inflation, so hitting 14,167 in 2013 isn’t quite like hitting 14,167
in 2007. It is a price-weighted index as well (i.e., each Dow component represents
a fraction of the index proportional to its price), which also makes a
comparison between 2007 and 2013 a bit hazy.1
The big picture.
The Dow surpassed its old record thanks to many factors – the resurgent
housing market, the Institute for Supply Management’s February purchasing
managers indices showing stronger expansion in the manufacturing and service
sectors, an encouraging ADP employment report, and of course earnings. Perhaps the most
influential factor, however, is central bank policy. The Federal Reserve’s
ongoing bond-buying has stimulated the real estate industry, the market and the
overall economy, and fueled the DJIA’s ascent. The parallel, open-ended effort
of the European Central Bank has diminished some of the anxiety over the future
of the euro. In early March, the ECB and the Bank of England again refrained
from adjusting interest rates and ECB president Mario Draghi mentioned the need
for the bank to retain an “accommodative” policy mode until the eurozone economy sufficiently improves.3
In the big picture, two perceptions are moving the market higher. One is the conclusive belief that the recession
is over. The other is the assumption that the Fed will keep easing for a year
or more. Pair those thoughts together, and you have grounds for sustained bullish
sentiment.
How high could the Dow go? Any time the Dow
flirts with or reaches a new record high, bears caution that a pullback is
next. Though many analysts feel stocks are fairly valued at the moment, a
combination of headlines could inspire a retreat – but not necessarily a
correction, or a replay of the last bear market.
While the market has soared in the first quarter, the economy grew just 0.1% in the fourth
quarter by the federal government’s most recent estimate. That may have given
some investors pause: the Investment Company Institute said that $1.13 billion left
U.S. stock funds in the week of February 25-March 1, which either amounts to
bad timing, an aberration (as it was the first outflow ICI recorded this year),
profit-taking or skittishness.7

If the Dow hits 14,500 or 15,000, that won’t confirm that the economy has fully healed or that
the current bull market will last X number of years longer. It will be good for
Wall Street’s morale, however, and Main Street certainly takes note of that. Lazard
Capital Markets managing director Art Hogan seemed to speak for the status quo
in a recent CNBC.com article: “We’re certainly in an environment where good
news is great and bad news is just okay. The market has just found the path of
least resistance to the upside in the near term and it’s hard to find something
to knock it off there.”7
Reeve Conover can be reached at 877-423-9990 or Reeve@ReeveWillKnow.com

 

This material was prepared by MarketingLibrary.Net Inc., and does
not necessarily represent the views of the presenting party, nor their
affiliates. All information is believed to be from reliable sources; however we
make no representation as to its completeness or accuracy. Please note –
investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.

 

Citations.

1 – business.time.com/2013/03/06/dow-jones-closes-at-record-high-so-what/
[3/6/13]

2 – www.nyse.com/content/faqs/1050241764950.html
[3/7/13]

3 – money.cnn.com/2013/03/07/investing/stocks-markets
[3/7/13]

4 – www.dailyfinance.com/2013/02/28/dow-14000-economy-meaning-djia-explainer/
[2/28/13]

5 – www.investopedia.com/terms/d/dowdivisor.asp#axzz2MtpUOJVi
[3/7/13]

6 – online.wsj.com/mdc/public/page/2_3022-djiahourly.html
[3/7/13]

7 – www.cnbc.com/id/100533269
[3/7/13]

 

Have Americans Given Up on Saving for Retirement?

In the wake of the Great Recession, retirement-minded Americans are feeling an unprecedented amount of futility. They are undersaved and — worse — see little reason to do anything about it.

That’s the alarming conclusion in a new report from the Deloitte Center for Financial Services, which found that 60% of preretirees believe health care costs will consume their savings no matter how much they save. Similarly, 39% believe investment returns won’t be high enough to provide decent retirement income regardless of how much they manage to put away.

Deloitte found exasperation at every turn: 58% don’t have a retirement plan; nearly 40% don’t know what an annuity or mutual fund is; and 20% expect to rely purely on Social Security for their retirement needs. More than half don’t trust anyone’s advice.

Collectively, we seem to be throwing the towel. It’s not difficult to understand why, to be sure. After a sharp pullback in 2008 and ’09, stocks are only now touching levels they first reached in the late 1990s. So the market has been dead money for nearly 15 years if you bought then and simply held on. A lot of folks who were on track with savings at, say 45, have fallen way behind and now they are 60. This helps explain why so many boomers now plan to work past their normal retirement age of 66 or 67.

Meanwhile, housing is finally making a comeback. But real estate values in most markets are nowhere near the levels seen in 2007. And historically low interest rates are behind the spreading feeling that decent retirement income is a pipe dream.

The high cost of health care, and slowly disappearing coverage for retirees, further fuel the growing sense of retirement futility. Extend Health found in a survey that adequate health insurance coverage was retirees’ top concern and that the share of those worried about “having enough money to pay out-of-pocket medical expenses” had doubled in the past five years.

One out of two workers says they will delay retirement solely to keep their health plan, reports the Employee Benefit Research Institute (EBRI); 1 in 4 says they would retire earlier than currently planned if they were guaranteed access to health insurance.

Only 18% of workers are employed at firms that offer health coverage to early retirees, down from 29% in 1997, EBRI reports. Between 1997 and 2010, the percentage of retirees over age 65 with retiree health benefits fell to 16% from 20%. With an economic recovery under way, and housing rebounding and stocks verging on new highs, perhaps the sense of futility will ease before we all slip into a coma. Let’s hope so, because giving up isn’t the answer.

Monthly Economic Update, March 2013

THE MONTH IN BRIEF As February ended, a central question seemed to preoccupy Wall Street: “When will the Dow hit a new record high?” Nothing seemed to shake the Street’s upbeat mood – not the $85 billion in federal budget cuts slated for March 1, not the real estate bubble in China or political uncertainty in Italy, not the still-anemic Q4 GDP reading or the abrupt decline in personal incomes. All told, the data stream offered much to keep Wall Street in a good mood: impressive numbers from the housing sector, rebounding consumer sentiment, continuing expansion in the manufacturing and service sectors. So the Dow ended the month at 14,054.49, with bulls holding an unyielding belief that it could reach a new all-time high in March – and the index did just that.1,2

DOMESTIC ECONOMIC HEALTH February wrapped up with no agreement between Congress and the White House to postpone the sequestration – a 9% budget reduction for domestic programs, a 13% reduction for defense programs and a 2% cut in Medicare payments to physicians. March 27 presents a deadline for an appropriations bill to keep federal government operations sufficiently funded; the sequester cuts might be retroactively altered or undone as a result.3 Word came from the Commerce Department that consumer incomes fell 3.6% in January, a clear effect of higher payroll taxes. Yet consumer spending held up, rising 0.2% in that month. So did consumer sentiment: the University of Michigan’s monthly index was at 77.6 in February, and the Conference Board’s consumer confidence poll soared to 69.0 last month, even with the jobless rate at 7.9%.4,5 If a rising stock market and general perception of an improving economy influenced the above numbers, tame inflation may have as well. In January, the Consumer Price Index was flat again. Retail prices had only increased 1.6% in 12 months. The troubling asterisk: core CPI (with food and energy prices factored out) rose 0.3% in January, a gain unmatched since May 2011. Also, retail sales increased just 0.1% in January compared to 0.5% in December. Wholesale inflation (as measured by the federal government’s Producer Price Index) was up 0.2% for January, and had increased 1.4% in the past year.6,7,8 The world certainly pays attention to the Institute for Supply Management’s twin purchasing manager indices, and the latest readings on the economy from ISM have been quite positive. Its non-manufacturing index rose to 54.2 in February (the best mark since June 2011) while its service sector index read 56.0 last month, up from 55.2 in January for the highest reading in 12 months.9,10 When the Federal Reserve’s January policy meeting minutes came out, they raised eyebrows – the Federal Open Market Committee had agreed to review its easy money policies in March, perhaps signaling an earlier-than-expected end to QE3. The Bureau of Economic Analysis revised its estimate of Q4 GDP to +0.1%.5,11

GLOBAL ECONOMIC HEALTH By the end of the month, Wall Street had one eye on China and another on Italy. The PRC finally set some limits on its runaway real estate market, imposing a whopping 20% capital gains tax on real property sales, demanding higher mortgage rates and down payments and requiring cities to adopt yearly price easing targets for their housing markets. China’s manufacturing PMIs barely showed expansion in February: the official PRC PMI came in at 50.1, while the HSBC PMI read 50.4. The People’s Bank of China forecasts 3% inflation in 2013, compared to 2.6% in 2012; Bloomberg sees China’s economy growing 8.1% in 2013, up from the 13-year low of 7.8% recorded by its government last year. 12,13

Italy’s national election produced a deadlock,
raising fears that austerity measures stipulated by the European Central Bank
could be rejected. Incumbent Prime Minister Mario Monti had been effectively
challenged by Beppe Grillo, a populist fiercely opposed to the euro, and – of
all people – disgraced former Prime Minister Silvio Berlusconi. (Italy’s jobless
rate hit a 21-year peak of 11.7% in February.) On the upside, European
Commission president José Manuel Barroso announced a federal surplus in Ireland
and smaller payment imbalances for Italy, Portugal, Spain, and Greece. On the
downside, the smaller deficits for those last four nations could be traced
largely to a reduction in imports stemming from sinking demand.4,14

WORLD MARKETS

Foreign benchmarks experienced much more turbulence than ours last month. A list of some losses: Hang Seng, -3.29%; NIFTY 50, -6.55%;
MERVAL, -11.95%; Bovespa, -3.91%; Euro STOXX 50, -2.57%; CAC 40, -0.26%; DAX,
-0.44%; MSCI World Index, -0.02%; MSCI Emerging Markets Index, -1.35%. The
gains: S&P/ASX 200, +3.27%; KOSPI, +3.51%; TOPIX, +3.79%; FTSE 100, +1.34%;
TSX Composite, +1.08%; S&P Asia 50, +0.52%.1,15

COMMODITIES MARKETS

When was the last time gold racked up a five-month losing streak on the COMEX? You
have to go back to 1997 to find another example of that, yet that was its
dubious achievement in February. All key metals seemed to retreat last month:
gold went 5.0%, silver -9.3%, copper -4.9%, platinum
-5.5% and palladium -1.5%. Gold settled at just $1,572.30 on the COMEX on
February 28. The perception of an improving economy also hurt oil, which ended February at $92.05 a barrel, its lowest NYMEX settlement price of the
year. (It would head lower in early March). Natural gas futures, rose 4.4% in
February. The U.S. Dollar Index rose 3.46% last month.16,17,18
REAL ESTATE

Could a seller’s market be emerging? That possibility
doesn’t seem so absurd given the latest round of indicators. Existing home
sales had improved 0.4% in January even as the inventory of homes reached its
lowest level April 2005, the National Association of Realtors noted;
year-over-year, home prices were up 12.9%. NAR also found pending home sales rising
4.5% in January, and December’s S&P/Case-Shiller Home Price Index recorded
a 6.8% 12-month increase. January also saw a 15.6% jump in new home sales,
which had increased 28.9% in a year.19,20,21,22

Between January 31 and February 28, home loan rates generally decreased. In that
interval (according to Freddie Mac), the average interest rate on the 30-year
FRM went from 3.53% to 3.51%. Average rates for the 15-year FRM went from
2.81% to 2.76%; the 5/1-year ARM, 2.70% to 2.61%; the 1-year ARM, 2.59% to
2.64%.23

 

This material was prepared by
MarketingLibrary.Net Inc., and does not necessarily represent the views of the
presenting party, nor their affiliates. Marketing
Library.Net Inc. is not affiliated with any broker or brokerage firm that may
be providing this information to you. This information should not be construed
as investment, tax or legal advice and may not be relied on for the purpose of
avoiding any Federal tax penalty. This is not a solicitation or recommendation
to purchase or sell any investment or insurance product or service, and should
not be relied upon as such. The Dow Jones Industrial Average is a
price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ
Composite Index is an unmanaged, market-weighted index of all over-the-counter
common stocks traded on the National Association of Securities Dealers
Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an
unmanaged group of securities considered to be representative of the stock
market in general. It is not possible to invest directly in an index. NYSE
Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock
Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago
Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading
provider of securities listing, trading and market data products and services.
The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical
commodity futures exchange and the preeminent trading forum for energy and
precious metals, with trading conducted through two divisions – the NYMEX
Division, home to the energy, platinum, and palladium markets, and the COMEX
Division, on which all other metals trade. The Hang Seng Index is a
freefloat-adjusted market capitalization-weighted stock market index that is
the main indicator of the overall market performance in Hong Kong. The CNX
Nifty, also called the Nifty 50 or simply the Nifty, is a stock market index
and benchmark index for Indian equity market. The price-weighted MERVAL Index
(MERcado de VALores, literally Stock Exchange) is the most important index of
the Buenos Aires Stock Exchange. The Bovespa Index is a gross total return
index weighted by traded volume & is comprised of the most liquid stocks
traded on the Sao Paulo Stock Exchange. The EURO STOXX 50 Index, Europe’s
leading Blue-chip index for the eurozone, provides a blue-chip representation
of supersector leaders in the eurozone. The CAC-40 Index is a narrow-based,
modified capitalization-weighted index of 40 companies listed on the Paris
Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major
German companies trading on the Frankfurt Stock Exchange. The MSCI World Index
is a free-float weighted equity index that includes developed world markets,
and does not include emerging markets. The MSCI Emerging Markets Index is a
float-adjusted market capitalization index consisting of indices in more than
25 emerging economies. The S&P/ASX 200 is recognized as the primary
investable benchmark in Australia. The KOSPI Index is a capitalization-weighted
index of all common shares on the Korean Stock Exchanges. The TOPIX Index is
the most broadly based Japanese stock index, covering all companies within the
First Section of the TSE (around 1,600 stocks). The FTSE 100 Index is a share
index of the 100 companies listed on the London Stock Exchange with the highest
market capitalization. The S&P/TSX Composite Index is an index of the stock
(equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as
measured by market capitalization. The S&P Asia 50 is an equity index drawn
from four major Asian markets – Hong Kong, Singapore, South Korea, and Taiwan. The
US Dollar Index measures the performance of the U.S. dollar against a basket of
six currencies. Additional
risks are associated with international investing, such as currency
fluctuations, political and economic instability and differences in accounting standards.
All information is believed to be from reliable sources; however we make no
representation as to its completeness or accuracy. All economic and performance
data is historical and not indicative of future results. Market indices
discussed are unmanaged. Investors cannot invest in unmanaged indices. The
publisher is not engaged in rendering legal, accounting or other professional
services. If assistance is needed, the reader is advised to engage the services
of a competent professional.

 

Citations.

1 – www.bloomberg.com/markets/stocks/
[2/28/13]

2 – www.reuters.com/article/2013/03/01/us-usa-fiscal-idUSBRE91P0W220130301 [3/1/13]

3 – www.medscape.com/viewarticle/779980
[2/27/13]

4 – www.cnbc.com/id/100511717 [3/1/13]

5 – briefing.com/investor/calendars/economic/2013/02/25-01 [3/1/13]

6 – www.foxbusiness.com/economy/2013/02/21/consumer-prices-flat-in-january/
[2/22/13]

7 – www.reuters.com/article/2013/02/13/usa-economy-retail-idUSL1N0BCCZM20130213
[2/13/13]

8 – articles.marketwatch.com/2013-02-20/economy/37188507_1_wholesale-prices-vegetable-prices-higher-food-prices
[2/22/13]

9 – www.ism.ws/ISMReport/NonMfgROB.cfm [3/5/13]

10 – briefing.com/investor/calendars/economic/2013/03/04-08
[3/4/13]

11 – www.usatoday.com/story/money/business/2013/02/20/january-fed-minutes/1933047/

12 – dealbook.nytimes.com/2013/03/04/chinas-push-to-cool-down-housing-raises-questions/
[3/4/13]

13 – www.bloomberg.com/news/2013-03-03/china-monetary-tightening-pressure-eases-as-growth-rebound-slows.html
[3/3/13]

14 – www.nytimes.com/2013/03/05/business/global/jolt-from-italys-elections-may-not-be-enough.html
[3/5/13]

15 –
mscibarra.com/products/indices/international_equity_indices/gimi/stdindex/performance.html
[2/28/13]

16 –
bullionpricestoday.com/bullion-prices-plunge-in-february-us-gold-silver-coins-steady/
[3/1/13]

17 –
www.bloomberg.com/news/2013-02-28/gold-falls-on-signs-of-economic-recovery-commodities-at-close.html
[2/28/13]

18 –
online.wsj.com/mdc/public/npage/2_3050.html?mod=mdc_curr_dtabnk&symb=DXY
[3/1/13]

19 – www.marketwatch.com/story/home-sales-inch-up-in-january-as-inventory-shrinks-2013-02-21
[2/21/13]

20 – blogs.wsj.com/developments/2013/02/20/housing-starts-fall-but-economists-stay-positive/
[2/22/13]

21 – www.mercurynews.com/real-estate/ci_22670982/new-home-sales-hit-highest-level-more-than
[2/26/13]

22 – www.census.gov/construction/nrs/pdf/newressales.pdf
[2/26/13]

23 – www.freddiemac.com/pmms/ [3/4/13]

24 – money.cnn.com/quote/quote.html?symb=RUT
[2/28/13]

25 – online.wsj.com/mdc/public/page/2_3024-m_globalstockindexes.html
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F31%2F12&x=0&y=0
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F31%2F12&x=0&y=0
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F29%2F12&x=0&y=0
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F28%2F03&x=0&y=0
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F28%2F03&x=0&y=0
[2/28/13]

26 –
bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F28%2F03&x=0&y=0
[2/28/13]

27 –
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll
[3/4/13]

28 – www.cnbc.com/id/100508355
[2/28/13]

FTC: Cramming Fraud Targets Consumer’s Credit Cards

There is a new consumer alert from the FTC about a kind of fraud
called cramming. Small charges $10, $20, $30 secretly inserted onto your
credit card bill. Small charges that add up to millions of dollars. It
hits consumers straight in the wallet–a $30 charge here, $40 there,
buried so deep in your credit card bills, you might never even notice
it. Tens of thousands of Americans were hit with what the FTC calls fake
fees, charged by vague financial services, like Debt 2 Wealth, draining
more than $24 million in all. They steal little amounts at a time
hoping consumers just don’t notice. Many of the consumers had recently
applied for a payday loan or cash advance when they spotted the charge
on the bill and called the toll free number next to it to complain. They
entered an infuriating maze of call centers around the globe. The FTC
says 20 million people a year fall victim to it. And until now, most of
the charges were buried in phone bills. [ABC News]

Putting your tax refund to work!

Where could that money go besides a bank account?
Should your refund be saved? According to a TD Ameritrade poll, 47% of U.S. taxpayers expect a refund this year. What do they plan to do with the money?1

The answers may surprise you. While 15% of the survey respondents indicated they would spend
their refunds on discretionary purchases, 47% said they would save the money
and 44% indicated they would use some or all of it to whittle away some debt. Just
15% said they would invest it, and only 6% said they would direct it to a
charity.1

Besides deposit accounts, consider other destinations.
Putting your refund into your savings or checking account is sensible enough –
but with the interest rates most bank accounts earn today, you may be wondering
about alternatives. Here are some other options.

Your refund could let you put more money into your workplace
retirement plan.
Does your employer offer to match your
retirement plan contributions? If so, you might want to think about contacting
your plan administrator or human resources officer and increasing your elective
salary deferrals into the retirement plan this year by the same amount as the
refund. If you deposit those refund dollars in a checking or savings account,
you can offset the increase in the amount of salary you defer by distributing
the refund dollars from the bank account to yourself. Hopefully, that checking
or savings account generates at least some interest on those deposited funds as
well.2

It could help you increase your 2012 (or 2013) IRA contribution. If you didn’t make the maximum
allowable IRA contribution for 2012 – $5,000 across all of your traditional and
Roth IRAs, $6,000 for those 50 or older – you could boost that contribution as
a byproduct of your refund.2
Assuming you haven’t sent your 2012 federal return to the IRS yet, you can redo your taxes
to show your 2012 IRA contribution(s) raised by the amount of the refund you
will be getting. As the deadline for 2012 contributions is April 15, 2013, you
could either make your additional 2012 IRA contribution using your refund (if
you file early and get your refund back nice and early) or with equivalent cash
from your savings or checking account, knowing that you will then use the
refund to reimburse yourself. Whatever way you choose, please make sure that
you earmark your additional contribution for the year 2012; otherwise, the IRA
custodian will interpret it as a contribution for this year. (If you’ve already
sent your 2012 taxes to the IRS, you could still pull this off with the help of
a 1040X form to amend your return).2
Another option: use the refund you get from your 2012 taxes to increase your 2013 IRA
contribution.
You could tell the IRS to put the money in bonds. Starting in 2011, the IRS gave taxpayers who
received refunds a third option: in addition to a direct deposit or a check in
the mail, their refunds could be redirected into U.S. Series I Savings Bonds.
Up to $5,000 of refund dollars can be invested this way (in multiples of $50).3
You could use the dollars for home improvement. If
you want to go green (or even greener) and you have the time, initiative and
patience to tackle an energy-efficient home improvement project, here is
another option.
You could get as much as a $500 tax credit for your effort.2
You could make an additional mortgage payment or pay property tax. Assuming your home isn’t
underwater, you may want to use the refund dollars to reduce mortgage
principal. Also, mortgage companies often keep a few thousand bucks in escrow
to pay various tax and insurance expenses linked to your home, and some of them
will actually let a borrower’s savings account stand in for their escrow
account. If they permit, you could make such payments out of an account of your
own while it earns a (tiny) bit of interest.2

Lastly, think about avoiding a refund in 2013. In figurative terms, your federal tax refund amounts
to an interest-free loan to Uncle Sam. If you don’t particularly want to make
that “loan” again, see if your W-4 can be tweaked to decrease that possibility
this year.

Reeve Conover can be reached at 877-423-9990, or at reeve@reevewillknow.com

This material was prepared by MarketingLibrary.Net Inc., and does
not necessarily represent the views of the presenting party, nor their
affiliates. All information is believed to be from reliable sources; however we
make no representation as to its completeness or accuracy. Please note – investing
involves risk, and past performance is no guarantee of future results. The
publisher is not engaged in rendering legal, accounting or other professional
services. If assistance is needed, the reader is advised to engage the services
of a competent professional. This information should not be construed as
investment, tax or legal advice and may not be relied on for the purpose of
avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.

 

Citations.

1 –
files.shareholder.com/downloads/AMTD/2319508826x0x633008/9024d25b-97d6-410e-bc67-f7e1bcf7f17c/Tax_Refund_Release_Final_2013.pdf
[2/6/13]

2 – www.cnbc.com/id/100457342
[2/13/13]

3 – www.irs.gov/uac/Ten-Things-to-Know-About-Tax-Refunds
[4/11/13]

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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