Correlation Diversification Frustration

The importance of asset correlation

It is important to define te real difference between asset classes

Investors hear a lot about the benefits of asset allocation, that is, spreading your assets among different types of investments to help reduce risk (1). Somewhat less discussed is an equally important measurement: correlation, which is a way to measure how closely related two types of investments are. In theory, you could be invested in multiple securities of differing types and classes, but if they are all closely correlated, your portfolio may not be as diverse as you think — and could open you up to more risk than you intended.

Mathematically, correlation is expressed as a number between 1.00 and -1.00.
•    A “1.00” indicates an absolute positive correlation (that is, the assets under comparison always move together in the same direction).
•    A “0” correlation indicates there is no relationship between the assets.
•    A “-1.00” indicates an absolute negative correlation (the assets always move together in opposite directions of each other).

Very few assets have a pure 1.00 to 1.00 or -1.00 to -1.00 relationship. Generally, most experts consider a correlation value between 0 and 0.50 as a weak correlation, while a value of 0.50 and higher is progressively stronger. The farther from a 1.00 correlation two investments are, the more diversification you may realize.

If you’d like to determine the correlation of your portfolio, the easiest way may be to contact your financial professional. You can also search the Web for an investment correlation calculator — a number of brokerage firms and other financial sites have tools, but few are free to use.

The Markets March in Unison
One important consideration for investors to keep in mind is that the financial markets are increasingly marching in unison, making correlating your investments increasingly difficult. A variety of factors are causing this trend, including:

•    Globalized economies: The growth of global trade and the proliferation of worldwide investment firms mean that the fortunes of both large corporations and the investors who own their stock are tied together as never before.
•    Reliance on U.S. dollars: Many foreign governments and global financial institutions rely on U.S. dollars as a reserve currency to pay debts or to influence exchange rates. Given this situation, the health of the U.S. economy and the actions of the Federal Reserve reverberate globally, as do events in Europe and beyond.

What Investors Can Do

If climbing correlations concern you, consider the strategies that may help you balance risk and return, including:
•    Combining stocks with other types of assets. Adding exposure to bonds, real estate, and commodities may help you to balance returns over the long term.(2)
•    Considering investments that generate income. Dividend-paying stocks, bonds, and REITs are popular with investors searching for income. When stock returns are uncertain, dividends provide something in the way of a return. Dividends are not guaranteed and companies that issue dividend-paying stock can stop at any time.

Be sure to remember that alternative investments and commodities are risky, too.

Disclaimer:
1. Asset allocation does not ensure a profit or protect against a loss in a declining market.
2. Investing in stocks involves risk, including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price. Exposure to the commodities market may subject investors to greater volatility as commodity-linked investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity.

The Strain and Drain of Hidden 401k Fees

What to do about 401K feesConcerned about the drain hidden fees in your 401(k) plan are extracting from your hard-earned retirement savings? Maybe you should be. Millions of Americans–and a lot of professional advisors–are talking about the hard-hitting Frontline exposé on retirement plans.  The PBS special, entitled “Retirement Gamble,” tells you a lot of things you already know: that corporations have offloaded the decision-making for retirement portfolios on their (not always financially sophisticated) employees, but provided virtually no guidance.  The 2008 market crash wiped out investors who had naively put their entire retirement savings in stocks and then sold out at the bottom in a panic.  Just 14% of Americans are confident that they have saved enough to live comfortably in retirement.

The special report includes a few details that are likely to be shocking to many non-experts, including the fact that 401(k) plans are not provided for free, as many participants believe, and some plans were set up by the mutual fund and brokerage companies who (no surprise here) populate it with their own funds and triple-dip, charging fees for managing the account, and more fees for managing the funds, plus commissions for selling the funds to those naive plan participants.  We learn what many professionals already know: that some people pay ten times more in fees drained out of their retirement plan than others.  Vanguard founder Jack Bogle, who is charming, telegenic, and a big believer in index funds is interviewed extensively.

Interestingly, the PBS report doesn’t mention that help may be on the way.  The U.S. Department of Labor, which sets the regulations for corporate retirement plans, has mandated that all retirement plans disclose, in writing, the various costs and fees that are being charged to plan participants.  These disclosures are now starting to show up in performance statements, and some believe that these rays of sunlight will eventually eliminate the self-dealing and high fees that were exposed in prime time.

The DOL is working on proposals that would require those who give investment advice to plan participants to act in the best interests of the future retirees, and the proposal is expected to ban sales commissions.  The requirement–known as a fiduciary standard, or putting the client’s interest first–would extend to the IRA accounts that receive the rollover funds from 401(k) and other retirement plans.

Nobody should be surprised that the brokerage industry is lobbying furiously against these proposals, which has caused several delays and at least one incident where the Department of Labor shelved a proposal for “further study” to explore the economic impact on brokerage firms and consumers.

Will the new rules ever be enacted?

Sales agents failed to stop the disclosure rules from passage, so their lobbying power is not unlimited.  And few unbiased parties would argue with the idea that people receiving advice should be given unconflicted advice, and that sales people should openly disclose the fact that they’re selling rather than advising.  The Frontline special, showing millions of people how much money has been siphoned out of their retirement accounts into the pockets of larger financial services firms, should help the Department of Labor resist the big moneyed opposition to its efforts to do the right thing for retirees.

Sources:

The Big Gold Sell Off Puzzle

Gold rush

Keep your gold close; maybe not this close!

Extra, extra!!! Big meltdown in the gold market! Some Wall Street pundits are saying the bear is here to stay, and it’s time to sell everything gold-related and look for greener pastures elsewhere, preferably the stock market obviously. Others are claiming this is the buying opportunity of the decade, and it’s time to go “all in.”

Both groups are forgetting to abstract and analyze all aspects and personally I think a third reason is at play. Just like in 2008 here in the States, lots of Europeans are now facing the reality that they have to sell their gold to meet their other financial obligations.

It really goes beyond me that there are still so many conventionalists in the new world economy that listen to a guidance published by Goldman Sachs. Why anybody would listen to those guys after all they’ve been wrong about, at taxpayers’ expense, is beyond me.

Now, I do admit that the European sell off may only be part of the puzzle, but human nature dictates that once a selloff starts pushing investors into panic mode, that negative momentum can seem to take on a life of its own and move asset classes down way beyond reality.

I have always been a proponent of treating gold for what it is, a very long term fundamental safety net asset, a retirement account if you wish, not a speculative instrument. Gold preserves wealth. If you need proof, history is loaded with more or less valid comparisons.

For all the years that I have been encouraging people to buy precious metals, my advice now is to stick with your plan. Buy consistently and try to lower your dollar cost average. The reason why we haven’t collapsed here in the US yet is, because the US dollar, with all its currency debasement is still the most leveraged buy in a world of financial misery, because governments around the world, like ours, are still printing up trillions of dollars’ worth of new currency units in order to try to avoid an inevitable currency crisis. Until now, much of that new paper money is basically just sitting in the financial system. But at some point it will enter into the economy and cause the higher prices for consumer goods I have been pointing at. Consequently we are going to see an enormous amount of asset bubbles, one of them being precious metals and especially gold and silver.

Ad when that happens you’d better have diversified yourself politically and financially, because Executive Order 6102 will see a repeat.

Granted, all investments are dangerously risky these days. There are very few bargains anywhere, in any market, in any country. Governments around the globe are completely out of control and using all their assumed power to rid you of your nest eggs, even your pension funds. For the last decade or so Social Security has been pointed at in terms of unfunded government liabilities, without ever taking real action to work on solutions. Now the US government is eying US Pensionfunds drowning in $2.5 trillion of unfunded liabilities.

On January 17, Bloomberg reported that the US Consumer Financial Protection Bureau is exploring “helping” Americans manage the $19.4 trillion they have in retirement savings. The reason brought forward is to more “fairly” redistribute pensions and privately held retirement funds. If the government goes through with this plan, and I don’t see any reason why they wouldn’t (other Western Governments have already done this so precedence is created), you’ll lose control of any money that’s invested in a US-based retirement fund.

Yes gold still remains high on my asset list, just make sure you are protecting yourself from an increasingly greedy government.

Chicken Little Doomsday Prophecy a Real Turkey

Chicken Little Predicting Gloom and Doom

Chicken Little Predicting Gloom and Doom is not very convincing

When a former White House Budget director (who famously never balanced the federal budget) suddenly claims to have special powers to forecast a major economic crisis, it’s hard to understand why anybody pays attention. But recently David Stockman, who served as Ronald Reagan’s budget chief back in the 1980s, has gotten a lot of publicity for his fiery Easter Sunday article in The New York Times, telling us that America’s future is bleak and everybody should get out of the investment markets as quickly as possible.

His advice (the first paragraph contains the words “we should be very afraid”) is getting a lot of attention among triumphant doomsayers who have been predicting America’s downfall for decades, and from economists, who wonder where Mr. Stockman learned how to add and subtract.

The article was written to support Stockman’s newly-released book, called The Great Deformation, and it shows that the author knows how to generate a lot of attention. It calls the Federal Reserve Board “a rogue central bank,” and declares that the U.S. is fiscally, morally and intellectually broke. It predicts a global currency war that America is destined to lose. Stockton’s advice: “hide out in cash.”

Is this good advice?

Interestingly, the article says that the problems began in 1933, when the American dollar went off the gold standard, and have simply accelerated ever since. But anybody who avoided the U.S. stock market since 1933, and hid out in cash, would have missed the greatest period of stock market returns in world history–not to mention the enormous strides in standards of living and, most notably, no more economic catastrophes like the Great Depression.

Even the Great Recession meltdown in 2008 has been followed by a long, steady recovery that has produced new market highs. And despite 80 years of disconnect from the gold standard, the dollar remains the strongest currency in the world, the reserve currency against which all others are measured.

Predicting doom is a great business to be in, because our minds are wired to spook at the first sign of danger, and our eyes are instantly attracted to warning signs. People buy because they’re afraid not to. The only problem with the doomsayers who have made these predictions is that they have never actually been right. Betting on the end of the world, or the end of the U.S. economy, or the death of the stock market, has never been a winning choice.

In addition, you have to wonder how credible Stockman is to be telling us our economic future. Never balancing the federal budget puts him in pretty good company, but Stockton has had an undistinguished Wall Street career at Salomon Brothers and the Blackstone Group, and his job as CEO at auto supplies manufacturer Collins & Aikman Corp. led, less than two years later, to the company filing for Chapter 11 Bankruptcy protection.

If Warren Buffett tells us to get out of stocks, we’re going to listen carefully to his arguments. When David Stockman peddles gloom to an ever-ready market, because he seems to be the only Wall Street executive who has to supplement his income by book revenues, we simply put our hands over our ears and continue with our investment policies.

If his fiery case for gloom and doom make you nervous, our best advice is to consider what would have happened if you had retreated to cash in 1933 when the S&P 500 was trading at 6.25 and stayed out while it rose to(recently) over 1,550. Missing out on 24,700% overall growth (and all the associated dividends) might be too scary even for David Stockman to contemplate.

Sources:

Federal Reserve Surprisingly Profitable

One Hundred Dollar Bills, fresh from the presses

One Hundred Dollar Bills, fresh from the Fed's presses

In 2008, the Federal Reserve famously purchased a lot of subprime bank loans that have been described, in the banking industry, as “toxic waste”–in an effort to clean up the balance sheets of large lending institutions.

Since then, the Fed has been an active buyer of Treasury securities and, in its latest (and ongoing) QE3 program, become the single largest buyer of mortgage securities issued by Fannie Mae and Freddie Mac, working hard to drive down their coupon rates.

These dramatic gestures are supposed to help revive the American economy, but what are they costing our nation’s reserve bank? The Reuters news service looked at last year’s audited results and reports a surprise: the Fed’s increasingly complex balance sheet generated $88.9 billion in profits last year. That’s far more than the most profitable U.S. companies, like number one Exxon Mobil ($41 billion); number two Chevron ($27 billion), #3 Apple ($26 billion) or Microsoft ($23billion).

Under Chairman Ben Bernanke, the Fed has gotten in the habit of earning a profit on its operations. In 2011, 2010 and 2009, it took in $77.4 billion, $81.74 billion and $53.42 billion in profits, respectively. The Fed earns money in the same manner as most banks do, profiting from the spread between return on assets and the interest paid on liabilities. The Fed’s liabilities consist mostly of currency in circulation, which pays no interest, and reserves, the cash that commercial banks are required to keep on deposit at the Fed. Since 2008 these reserves have ballooned to $1.6 trillion, on which the central bank pays only 0.25% interest. This difference between 0.25% and the average return of about 3.5% on its bond holdings accounts for the substantial profit the Fed earns from printing money.

Where does this money go?

Does the Fed pay out this largesse to its executives in the form of bonuses, like Goldman Sachs? Fortunately not. The Fed sent $88.4 billion to the U.S. Treasury last year, and gave taxpayers back a comparable percentage of its profits in previous years. The interesting observation is that the most profitable entity in the American economy is run like a nonprofit on behalf of our government.

However, there may be reason to fret about what could happen next. In the past, rising rates meant little for profits, since reserves were smaller and earned no interest. Since 2008, the Fed has paid interest on reserves in order to exercise control over interest rates. In the future, when the Fed must eventually switch to a tighter monetary policy, it will be forced to pay out more interest. To absorb reserves, it may have to sell some bonds for less than purchase price, resulting in capital losses. In theory, the Fed could begin losing money, which is a risk that grows with every Fed bond purchase.

On the other hand, a significant perk of central banking is that it can simply print the money it needs to pay interest. If this results in a loss, the Fed then creates an offsetting “deferred asset” on its balance-sheet, representing future profits it will not need to send to the Treasury. The profit that is lost would be much less than total interest saved, along with higher tax revenue from stronger economic growth and roughly $500 billion of profit that earlier quantitative easing (QE) had generated. Most important of all, these losses would happen only after the economy recovered sufficiently to demand higher interest rates. This situation, after all, would be the proof that QE had worked in the first place.

Sources:

http://www.huffingtonpost.com/2012/03/21/federal-reserve-profit-2011_n_1369354.html

http://www.huffingtonpost.com/2013/03/15/federal-reserve-record-profit_n_2884366.html?utm_hp_ref=business

Cyprus, Island of Debt

Financial trouble in CyprusThe Republic of Cyprus, with a population of just over 1 million people (about the same as the city of Jacksonville, FL) would seem an unlikely place to trigger a global financial crisis. The island nation in the eastern Mediterranean Sea is divided by a U.N.-monitored buffer zone rather less hostile than the one in Korea, and the only news you generally hear is how Greece and Turkey both claim the island once used by Richard the Lionhearted as a staging ground for Crusader attacks on Jerusalem.

Now, suddenly, news outlets are declaring that a failed bailout of this tiny nation could shatter the European Union’s finances, sending financial shock waves around the world. Shares on European stock exchanges plunged in panic selling, and it remains to be seen whether U.S.-based investors will join this fearful exodus. Meanwhile, the biggest potential losers in this crisis could be Russian mobsters.

What do we need to know about this latest Eurozone crisis? First, that it represents a spectacular display of poor timing. The southern part of the small nation gave up its currency (the Cyprus pound) for the Euro in January 2008, just before the global economic crisis hit. The meltdown was followed by a severe financial crisis in Greece–and, since most of the people living south of the U.N. buffer zone are ethnic Greek, it is not surprising that the country’s banks would have had substantial holdings of Greek public and private debt.

cyprus-a political and financial mess

Besides the political mess, now also a financial drama

The restructuring fell like a hammer on the Cyprus banking system. The Washington Post recently estimated that the nation’s two largest lending institutions–Cyprus Popular Bank and the Bank of Cyprus–ended up losing $4.4 billion and $3.1 billion respectively on their Greek debt investments–roughly 76 percent of their value.

The reason you didn’t read about any of this last year or the year before, during the bondholder-negotiated haircuts, is because the Cyprus government reached into its pocket and provided the necessary liquidity to its banking system–or, in the case of Popular Bank, simply took over the lending institution as a government subsidiary.

Unlike its insolvent neighbor to the north (or, for that matter, the U.S.), the Cypriot government takes in more tax revenues than it spends. But when the nation’s 10-year government borrowing rates rose from 4.5% to 7%, it became clear that a broader bailout would be necessary. How much are we talking about? An estimated $12 billion would restore solvency.

In negotiations with the European Central Bank and the International Monetary Fund, the Cypriot government agreed to a solution that is (so far) unique in the Eurozone: the government would assess a one-time tax on its country’s bank depositors–taking 6.75% of all deposits of 100,000 euros or less, and 9.9% on deposits greater than that amount. This would have raised $7 billion, more than half the needed total, and the IMF and ECB agreed to provide the rest of the cash in the form of loans.

Why the different tax rates?

That’s a story in itself. The Washington Post reports that Russian companies have been setting up subsidiaries in Cyprus as a way to evade Russia’s heavy taxes on money they earn abroad. There are also reports that Russian tycoons have been using the Cypriot banking system to launder dirty money, and using Cyprus to evade U.N. restrictions on sending weapons to the Syrian government. German intelligence reports suggest that at least 20 billion euros of the 70 billion euros deposited in Cyprus’s banking system were put there by Russian oligarchs.

Most of those Russian deposits, of course, exceed the 100,000 euro threshold by a few orders of magnitude, and therefore would have been taxed at the highest rate. This explains what might otherwise be a puzzling part of the Cyprus default story: the fact that Cyprus’s finance minister Michael Sarris flew to Russia instead of Brussels when the crisis became public, or that Russian President Vladimir Putin took time out of his workday to publicly pronounce the tax levy, in a very small country far from Russian shores, as “unprofessional and dangerous.”

You’ve probably seen, in blaring headlines, reports that the Cyprus parliament ultimately rejected this plan to confiscate billions from the country’s savers and foreign oligarchs, causing the rescue package to collapse and triggering yet another global hand-wringing over the fate of the euro. But there are also reports that Russia has offered Cyprus a loan of $3 billion at favorable 4.5% interest rates, and indicated a willingness to sweeten the deal if necessary.

Should you be worried about all this?

It depends on whether a big part of your investment portfolio is allocated to the Cyprus stock exchange, which suspended trading on Tuesday and Wednesday while the mess gets sorted out.

If not, consider that Cyprus can always go back to its original currency as a last resort, without endangering the Euro banking system the way, say, a Greek or Spanish exit might. And also remember that Cyprus is in the habit of running a government surplus, which means that the country will eventually get back on its financial feet again–probably after the Russian oligarchs and their government have quietly refinanced their private tax haven.

Sources:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/18/everything-you-need-to-know-about-the-cyprus-bailout-in-one-faq-2/

Financial Tips for Women at Fifi’s Girl’s Night Out

Financial Tips for Women at Fifi's Girl's Night OutAmelia Island, FL – Ladies are invited to join Ronnie Stoots, owner of Amelia Wealth Management on Thursday, April 4, 2013 at 6:00 pm at Fifi’s (1853 S. 8thStreet) for financial tips that every woman needs to know. In the Fifi’s friendly environment, treats will be served. The event is free, but an RSVP is requested no later than Tuesday, April 2, 2013 by calling 904-277-4430.

Ronnie Stoots, a Nassau County resident, has been self-employed for over 25 years. He knows firsthand the challenges as well as the rewards of being a business owner. Ronnie has been an ordained minister for over 20 years. During this time he has worked with churches, families and individuals as a Life Coach. His passion has always been to enlighten, equip and empower those around him. Ronnie is the owner and President of Amelia Wealth Management. As a Financial Advisor, he helps his clients achieve and maintain their financial goals. Estate Planning, 401k Planning and Retirement Income are the main focus of his practice. Ronnie currently lives in Yulee with his wife, Juli and two of his three children. He is President of Amelia Wealth Management, is a member of the Financial Services Institute and has a ministry called ConnectPoint. In his spare time he enjoys playing keyboards for two local bands, The Beech Street Blues Band and Island Vibe.

Fifi’s Fine Resale Apparel is a nationally recognized resale store that offers quality merchandise at great prices with exceptional service. Fifi’s Fine Resale is celebrating being a part of this community for 20 years, and supports several non-profit organizations including: Gerri’s Corner, Hope House/Salvation Army, Women of Power’s Cedar Haven Transitional Home for Homeless Women, Micah’s Place/Purple Dove, and Barnabas’ New to You. In addition, we are members of the Amelia Island Chamber of Commerce, Women in Nassau helping Women in Need (WIN WIN), and the National Association of Resale Professionals(NARTS). Follow us on twitter at: www.twitter.com/ResaleRocks. For information about resale shopping or guidelines on consignment, please contact Jessica Miller, Owner, at (904) 277-4430 or fifis.amelia@gmail.com.

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What is the Total Economic Impact of FSCJ?

What is the Total Economic Impact of FSCJ?Press Release What’s the total economic impact of Florida State College at Jacksonville, if you consider all of its activities and those of its former students in its service area, Duval and Nassau counties? A cool $1.6 billion annually, according to a study produced by Economic Modeling Specialists, Inc. (EMSI) for the Florida College System Council of Presidents. The comprehensive study addressed the economic impact of all 28 state colleges and community colleges.

On its own, Florida State College at Jacksonville contributes a total of $136 million just in income to Duval and Nassau counties each year.

The EMSI study includes two major analyses:

    -An investment analysis, which treats education funding as an investment and calculates the returns from the perspectives of students, taxpayers and society.
    -An economic growth analysis, which measures added income in the region due to college operations, student spending and skills of past and present students still in the workforce.

Specific to FSCJ and the return on investment, the EMSI report determined that students benefit from a 17.6 percent rate of return on their investment in FSCJ. On average, an FSCJ student’s income increases by $6.60 for every dollar invested in FSCJ. Society benefits from the higher earnings-and the expanded tax base-an educated workforce brings, which in FSCJ’s case amounts to about $231.8 million each year.

The EMSI analysis of the region’s economic growth attributable to FSCJ was determined to be $123.5 million annually, based on income due to College operations. Additionally, spending by FSCJ’s non-local students (about 14 percent of its student body) amounts to about $12.5 million.

Academic credits earned by FSCJ students translate into higher earnings for students and increased output of businesses. The added income that can be attributed to these academic credits is estimated to be around $1.5 billion a year.

Fact Sheets and Executive Summaries of the economic contributions of the Florida College System and Florida State College at Jacksonville are listed below. For detailed information on the EMST study, visit Florida College System Economic Impact.

Florida State College at Jacksonville is a member of the Florida College System and is not affiliated with any other public or private university or college in Florida or elsewhere.

Florida State College at Jacksonville is accredited by the Southern Association of Colleges and Schools Commission on Colleges to award the baccalaureate and associate degree.

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New Stock Market Heights No Big Deal

Stock Market Gains

The story behind the Hype...

Eventually, sooner rather than later, newspaper headlines will trumpet another new record high for the Dow Jones Industrial Average and the S&P 500 index.

The Dow recently passed its previous record closing high of 14,164.53 set on October 9, 2007, and the S&P large cap index is not far from its record of 1,565 set on the same day.

But these records are really meaningless to investment professionals and people who make a living giving investment advice. Why? Because the record really isn’t the record in real terms.

The Devil, you say! Index milestones don’t take into account several factors. Like dividends, for instance. Barron’s has reported that the past year’s dividends on the Dow have added the equivalent of almost 350 points to the average, and the previous year, that figure was 320 points. On a total return basis, investors in the Dow or the S&P 500 have already seen their asset levels reach record highs. However, this picture is also complicated by inflation. Even if the levels of the index are the same on two different dates, the actual purchasing power of the money invested in the index will be lower on the second date.

Okay, but by how much? Since October of 2007, the Consumer Price Index has risen by about 10%. That would suggest that the Dow would need to reach 15,500 to set a new real record level, after adjusting for inflation. The S&P 500 would have to reach 1,700 before it was in record territory on a real, after-inflation basis.

What does this mean? It means that the daily market movements, and especially market milestones, should generally be regarded as entertainment rather than real news. In the short term, market movements are a reflection of the mood of the moment–do investors feel good or bad about the future, and about stocks? In the long term, the underlying trend is usually positive, as companies gradually, through the daily efforts of their workers and the decisions of their managers, become more profitable and more valuable to their stock investors.

Get Involved with America Saves

Get Involved with America SavesHere are 5 Easy Ways to Get Involved in America Saves and save successfully! This article is by America Saves Communications Manager Katie Bryan Week.

America Saves Week, February 25 – March 2, 2013, is chance for individuals to assess their own saving status and take financial action. Studies reveal that having a savings plan with specific goals can have beneficial financial effects, even for lower-income families.

Here are 5 easy ways to get involved in America Saves Week:

    1. Take the America Saves Pledge: Those with a savings plan are twice as likely to save for emergencies and retirement than those without a plan. Join over 310,000 people who have already committed to save. Pledge or re-pledge today!
    2. Share Your Savings Goal: People save more successfully when they have a goal in mind. That’s why we’ve created posters so you can put your savings goal into perspective and, share it.
    3. Assess Your Savings: Find out if you are saving in all the right places with this 12 step savings assessment.
    4. Test Your Savings Knowledge: Take this savings quiz to reveal how much you understand about the realities of savings in America.
    5. Share Savings Tips and Advice with Family and Friends: On Twitter and Facebook? Share these social media posts with your friends and followers to encourage them to save.

America Saves Week is coordinated by America Saves and the American Savings Education Council. Started in 2007, the Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

Visit the website, America Saves, for more information.

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Advance Directives are for Everyone

Medical Care if incapacitated

Five Wishes Hospice Care

Advance Directives are a way to “have your say” about the type of care you receive (or don’t receive) in the event you suffer a catastrophic medical event, such as a stroke or an accident that leaves you unable to communicate your wishes. Every adult should plan ahead by completing an Advance Directive that specifies his or her personal preferences in regard to acceptable and unacceptable medical treatments. There are two types of Advance Directives:

A Living Will states your preferences regarding the type of medical care you want to receive (or don’t want to receive) if you are incapacitated and cannot communicate. You specify the treatment you want to receive or not receive in a variety of scenarios.

Also known as a durable power of attorney for health care or a health care proxy, a Medical Power of Attorney names another person, such as your spouse, daughter or son, to make medical decisions for you if you are no longer able to make medical decisions for yourself, or you are unable to communicate your preferences.

Note that a Medical Power of Attorney is not the same as a Power of Attorney, which gives another person the authority to act on your behalf on matters you specify, such as handling your financial affairs. Each state regulates Advance Directives differently. As a result, you may wish to involve an attorney in the preparation of your Advance Directive. You can modify, update or cancel an Advance Directive at any time, in accordance with state law. If you spend a good deal of time in several states, you may want to have an Advance Directive for each state.

Make sure that the person you name to act for you – your health care proxy – has current copies of your Advance Directive. Give a copy of your Advance Directive to your physician and, if appropriate, your long-term care facility.

Although you may find the mythical genie in a lamp and be granted three wishes, Northeast Florida Community Hospice makes it even easier to be sure you are granted at least five wishes. Their Five Wishes® guidebook makes it very easy to specify up to five important advance directives for your health care decisions and communicating them to your loved ones while you still can. Presented in an easy reading fill-in-the-blank format, the guide is free of charge. You can get one (or several) by contacting Northeast Florida Community Hospice at 904-407-6500 or visit their website at communityhospice.com. Fill it out and give a copy to the important people in your life who may have to make medical decisions for you someday.

Although the Five Wishes® guide is a good start, an even better approach may be to have a chat with your financial planner and your attorney. Make sure all the important decisions regarding your personal care and the management of your estate are properly addressed, in addition to your five wishes.

20K in Scholarships at College Goal Sunday

20K in Scholarships at College Goal SundayThere is over $20,000.00 to be given out in scholarships at College Goal Sunday at FSCJ Betty P. Cook Nassau Center!

As a parent of a high school senior, I should not even be sharing this information with anyone because we NEED to win one of these scholarships being offered in a drawing.

The FSCJ Betty P. Cook Nassau Center will host College Goal Sunday on February 24, from 1:00 to 4:00 PM. The one-day event is designed to help high school seniors and families pay for college by providing free expert assistance with completing the Free Application for Federal Student Aid (FAFSA).

A completed FAFSA application is required by the U.S. Department of Education and higher education institutions nationwide to determine student eligibility for federal student aid such as the Pell grant, work-study aid, and loans. The FAFSA is also used to determine student eligibility for state, private, and institutional aid. College Goal Sunday Florida is coordinated by the Florida Association of Student Financial Aid Administrators in partnership with the Florida Department of Education, USA Funds, and the Florida College Access Network.

Participants will be able to enter scholarship drawings totaling over $20,000.

The scholarships will range from $500 to $5000.

Participating schools include:

    University of North Florida
    Jacksonville University
    Edward Waters College
    Florida State College at Jacksonville

There is also a $500 College Goal Sunday scholarship that may be used at any Florida college. (That is the one that I hope my daughter wins!)

High school seniors who have completed the FAFSA are eligible to enter the drawing.

Students and parents are encouraged to attend even if they have not completed their 2012 tax return.

Parents and students should bring the following documents:

    Social Security number
    driver’s license or alien registration card
    2012 IRS 1040 or latest tax return and W-2 statements
    untaxed yearly income statement for 2012, such as Social Security benefits
    Temporary Assistance to Needy Students
    welfare
    non-educational veterans’ benefits

For more information on what students and parents should bring to College Goal Sunday, visit www.fasfaa.org/cgs.

The event is being held statewide. The local site is a collaboration of Florida State College at Jacksonville, the University of North Florida, Jacksonville University, Edward Waters College, and the Nassau County School District.

Light refreshments will be served. Completing the FAFSA takes approximately one and a half hours. Please arrive by 2:30PM at the latest. More information on College Goal Sunday can be found at www.collegegoalsunday.fl.org.

The Nassau Center is located at 76346 William Burgess Boulevard in Yulee, Florida. Please call 548-4432 for directions to the Nassau Center or for additional information.

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Free Tax Help for Those Who Qualify

Free Tax Help for Those Who QualifyThe IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify.

VITA
The VITA Program generally offers free tax help to people who make $51,000 or less and need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals in local communities. They can inform taxpayers about special tax credits for which they may qualify such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly or the Disabled. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations.

TCE
The TCE Program offers free tax help for all with priority assistance to people who are 60 years of age and older, specializing in questions about pensions and retirement issues unique to seniors. IRS-certified volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS.

Self-Help Tax Preparation
In addition to traditional face-to-face tax preparation, the IRS is offering a self-assistance service at many VITA and TCE locations. If individuals have a simple tax return and need a little help or do not have access to a computer, they can visit one of the participating tax preparation sites and an IRS-certified volunteer will guide them through the process.

Find a VITA Site Near Youhttp://www.irs.gov/Individuals/Find-a-Location-for-Free-Tax-Prep

There are thousands of VITA sites located across the country. You may find a site near you between January and April using the VITA Locator Tool or call 1-800-906-9887.

Find a TCE or AARP Tax-Aide Site Near You
A majority of the TCE sites are operated by the AARP Foundation’s Tax Aide Program. To locate the nearest TCE site or AARP Tax-Aide site between January and April use the AARP Site Locator Tool or call 888-227-7669.

Note: Majority of the VITA and TCE sites are open annually from late January/early February to April 15. During this time, you can locate a site near you using the above locator tools.

Items you need to bring
To have your tax return(s) prepared at a VITA or TCE site you need to bring the following information with you:

    -Proof of identification – Picture ID
    -Social Security Cards for you, your spouse and dependents or a Social Security Number verification letter issued by the Social Security Administration or Individual Taxpayer Identification Number (ITIN) assignment letter for you, your spouse and dependents
    -Proof of foreign status, if applying for an ITIN
    -Birth dates for you, your spouse and dependents on the tax return
    -Wage and earning statement(s) Form W-2, W-2G, 1099-R, 1099-Misc from all employers
    -Interest and dividend statements from banks (Forms 1099)
    -A copy of last year’s federal and state returns if available
    -Proof of bank account routing numbers and account numbers for Direct Deposit, such as a blank check
    -Total paid for daycare provider and the daycare provider’s tax identifying number (the provider’s Social Security Number or the provider’s business Employer Identification Number) if appropriate

    To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms.

    It is extremely important that each person use the correct Social Security Number. The most accurate information is usually located on your original Social Security card. If you do not have an SSN for you or a dependent, you should complete Form SS-5, Social Security Number Application. This form should be submitted to the nearest Social Security Administration Office.

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Federal Benefits Checks are Going Electronic

Federal Benefits Checks are Going ElectronicWashington DC – If you receive your federal benefits by paper check, you’ll need to switch to electronic payments by March 1, 2013.

The federal benefits affected are:

    Social Security
    Supplemental Security Income
    Veterans Affairs
    Railroad Retirement Board
    Office of Personnel Management
    Department of Labor (Black Lung)

You have two options for receiving benefits electronically:
1. Direct Deposit: The U.S. Treasury deposits your benefits directly into your bank account. You can sign up for direct deposit in one of these ways:

    Enroll online.
    Visit your bank or credit union.
    Call (800) 333-1795 (Mon-Fri, 8am-8pm ET).
    Contact the local office of the agency providing your federal benefits.
    Enroll by mail.

2. Prepaid Debit Card: The U.S. Treasury deposits your benefits directly to a debit card. This is an option if you don’t have a bank account and do not want to open one. You can request a debit card by calling (800) 333-1795 (Mon-Fri, 8am-8pm ET).

If you have questions, call the Go Direct Helpline at (800) 333-1795.

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How to Painlessly Pay Off Your Mortgage

Paying off your mortgage early requires financial discipline

Paying off your mortgage early requires financial discipline

There’s an eternal debate about whether you should use an unexpected amount of free cash (bonus?  inheritance?) to pay down your mortgage or put the money into a retirement investment account.  The numbers on a spreadsheet tend to favor investing the money if the investment returns are higher than the mortgage interest rate (currently in the 3.5% range).  But of course there is absolutely no guarantee that this will happen.  And some people sleep better when they’re debt-free.  Can you put the value of THAT on a spreadsheet?

A more interesting discussion is whether you can use some of your lifestyle expenses to pay down your mortgage–and what the value of even small budget cuts would be over time.  You can explore this surprisingly fascinating subject on a new website: www.mortgagenudge.com, which lets you look at relatively modest shifts from the expense side of your ledger to your mortgage, and see the long-term results.

As an example, suppose you have a $250,000 mortgage at a 4.5% interest rate.  You enter this information into the website, along with your monthly principal and interest payment.

Then you move a little slider that determines how much extra you might be willing to put down on your mortgage each month.  For instance, suppose you discover that you’re spending $60 a month at Starbucks, when you could be brewing moderately decent coffee at home before your commute to work.  Let’s say you want to kick the habit gradually, so you start out putting $20.29 extra on your monthly mortgage payment.  You agree to find an additional $20.29 a month the following year, which means a little over $40.50 will be paid monthly the next year.  Your Starbucks habit will be gone in the third year, when you find those same additional savings to pay down your mortgage.  If you get a raise the following year, some of that is added to this payment, and so forth.

When the slider moves, you discover that this modest diversion of lifestyle dollars, over time, pays off your mortgage 7 years and 9 months early, saving you $48,531 in total interest.  If you want to be more aggressive, and start off with $26.29 a month–with graduated increases thereafter–your mortgage is paid off nine years and a month early, at an interest savings of $57,131.  The slider takes you all the way up to an aggressive $64.29 additional monthly payment in the first year, with increasing payments thereafter.  That cuts the 30 year mortgage almost in half, saving more than $92,000 in interest.

The key to making this interesting exercise work in the real world, of course, is discipline; making those additional payments each year like clockwork.  You can take some money out of eating out, or the cost of an unnecessary cable TV premium channel that you never watch, or some other service you no longer use–or, instead, when you receive an increase in salary, you can put some of that on the monthly mortgage check.  The point here is how substantial some of these smaller incremental adjustments can become over time; a few pennies saved can become big dollars later on.  Big dollars that can help you enjoy a nicer lifestyle in retirement, for instance.

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