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Saturday, December 26, 2009

Tax Tips: Year-End Donations

Retirement Advisor Tax Tip: Year-End Donations

Many people make deductions during the holiday season before the year ends. Remember the following:

1. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.

2. Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. The searchable online version can be found at IRS.gov under Search for Charities. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78.

3. For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.

4. The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C , or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.

5. If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return. For additional information on charitable giving go this url:

Publication 526 (pdf)

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December 2009 Retirement Advisor Newsletter

Thursday, December 24, 2009

Tax Tips: Charitable Contributions for IRA Owners

Retirement Advisor Tax Tip: Special Charitable Contributions for Certain IRA Owners

This provision, currently scheduled to expire at the end of 2009, offers older owners of individual retirement accounts (IRAs) a different way to give to charity. An IRA owner, age 70½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option, created in 2006, is available for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. Amounts so transferred are not taxable and no deduction is available for the transfer. Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

Amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. See the following url for more information:
Publication 590 Are Distributions Taxable?

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December 2009 Retirement Advisor Newsletter

Monday, December 21, 2009

Tax Tips: New Car Tax Break for 2009

Retirement Advisor Tax Tip: New Car Tax Break for 2009

If you are considering buying a new car, you have until Dec. 31 to take advantage of a tax break that may not be around in 2010.

Taxpayers who buy a qualifying new motor vehicle this year can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price.

Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.

Individuals who itemize and those who take the standard deduction can benefit from this tax break. In states without a sales tax, other taxes or fees can qualify if they are assessed on the purchase of the vehicle and are based on the vehicle’s sales price or as a per unit fee. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.

To learn more, consult this IRS publication:
Sales Tax Deduction for Vehicle Purchases

FREE ISSUE:
December 2009 Retirement Advisor Newsletter



Saturday, November 14, 2009

High Interest Checking Account

At the Retirement Advisor, we include a section in each of our newsletters that covers various ways our subscribers can earn more money on their cash. Whether it is certificates of deposits, Treasuries, or savings accounts, we research offerings available nationwide to enable our subscribers to earn more money but always with preserving principle in mind.

For people earning very little yield on their checking account, we recommend considering a move to one of the new offerings available. High yield checking accounts are a new development in the financial markets and are gaining popularity as people start to feel more comfortable banking online.

EARN 4%

If you have some cash laying around, there is an opportunity to earn 4% on your cash through a high yield checking account being offered by South Division Credit Union called Freedom Green Checking. Membership to this credit union is open to Children (Kid’s Club), Student’s (Student’s First Checking and Savings), and Adults (Full line of products and services). This credit union is a nationwide family community that accepts members from any U.S. neighborhood of family and friends with a household United States Postal Service Zip code from 01000 – 99999.

This checking account will pay you 4.01% on balances up to $25,000 which covers most people’s checking accounts except if you are the DON. The checking account refunds ATM fees nationwide up to $25 per cycle. It does carry certain requirements such as:

1. You must make 12 VISA debit signature purchases.
2. At least one direct deposit or ACH into your account each month of $250 minimum.
3. One Matrix21 bill pay (online banking)
4. You must Receive electronic statements
5. There is a $50 minimum to open and $300 required after 6 mo or you are charged a small fee of $6.

This credit union’s rating for safety and soundness are very good with 4 starts (an “excellent” rating) from BauerFinancial and 4 stars (a “sound” rating) at Bankrate.com. These ratings are based on financial data as of the end of the second quarter. The credit union is privately insured by the ESI and federal insured by the National Credit Union Association (Charter #65550). You can review the NCUA rating at this url:

http://tinyurl.com/yawym8a

In today’s rate environment, getting 4.01% is rare. If you are interested, you can learn more about the Freedom Green Checking account at this url:

http://tinyurl.com/yew7qpb


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Friday, November 06, 2009

US Treasury Auction Schedule - Upcoming Offerings

Auction Schedule for US Treasury Securities: One way the US government finances its debt is by the sale of marketable Treasury Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS - more info) to the public. Individual investors, through the US Treasury (www.treasurydirect.gov) or their bank and brokerage accounts, have the opportunity to participate in U.S. Treasury note, bill, bond and TIPS auctions without commissions for new issues.

In every issue of The Retirement Advisor Newsletter we cover upcoming US Treasury Auctions with a more complete auction calendar. We also give our estimate for rates for 3 month bills to 30-year bonds plus 5-, 10- and 20-year TIPS.

Upcoming Auctions

Security
Term / Type
CUSIP
Number
Auction
Date
Issue
Date
Maturity
Date
3-YEAR NOTE912828LX611-09-200911-16-200911-15-2012
10-YEAR NOTE912828LY411-10-200911-16-200911-15-2019
30-YEAR BOND912810QD311-12-200911-16-200911-15-2039
91-DAY BILL912795T2711-09-200911-12-200902-11-2010
182-DAY BILL912795UQ211-09-200911-12-200905-13-2010

note 1: tentative subject to official announcement
  • Marketable securities can be bought, sold or transferred after they are originally issued.
  • Treasury uses an auction process to sell marketable securities and determine their rate or yield.
  • The value of Treasury marketable securities fluctuates with changes in interest rates and market demand.
  • Marketable securities held in your account can be sold at current market prices through brokers and many financial institutions.
Current Rates
TERM
COUPONMATURITY
DATE
CURRENT
PRICE/YIELD
3-Month0.00002/04/20100.04 / .04
6-Month0.00005/06/20100.15 / .15
12-Month0.00010/21/20100.3 / .30
2-Year1.00010/31/2011100-09+ / .85
3-Year1.37510/15/2012100-01½ / 1.36
5-Year2.37510/31/2014100-12½ / 2.29
7-Year3.12510/31/2016100-24½ / 3.00
10-Year3.62508/15/2019101-03+ / 3.49
30-Year4.50008/15/2039101-23+ / 4.39


13-WEEK TREASURY BILL
(Historical Quotes for: ^IRX)
5-YEAR TREASURY NOTE
(
Historical Quotes for: ^FVX)
Click for 1-Day Graph Click for 1-Day Graph
Click for 5-day graph Click for 5-day graph
Click for Yahoo! 1-Yr Quotes Click for Yahoo! 1-Yr Quotes
10-YEAR TREASURY NOTE
(
Historical Quotes for: ^TNX)
Click for 1-Day Graph
Click for 5-day graph
Click for Yahoo! 1-Yr Quotes

Broker Links:
For more details, see:

Friday, October 23, 2009

US Treasury Auction Schedule

Auction Schedule for US Treasury Securities: One way the US government finances its debt is by the sale of marketable Treasury Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS - more info) to the public. Individual investors, through the US Treasury (www.treasurydirect.gov) or their bank and brokerage accounts, have the opportunity to participate in U.S. Treasury note, bill, bond and TIPS auctions without commissions for new issues.

In every issue of The Retirement Advisor Newsletter we cover upcoming US Treasury Auctions with a more complete auction calendar. We also give our estimate for rates for 3 month bills to 30-year bonds plus 5-, 10- and 20-year TIPS.

Upcoming Auctions

Security
Term
CUSIP
Number
Auction
Date
Issue
Date
Maturity
Date
91-day Bill
912795S7710-26-200910-29-200901-28-2010
182-day Bill912795UP410-26-200910-29-200904-29-2010
2-yr Note
912828LT510-27-200911-02-200910-31-2011
4.5-yr TIPS
912828KM110-26-200910-30-200904-15-2014
5-yr Note912828LS710-28-200911-02-200910-31-2014
7-yr Note912828LU210-29-200911-02-200910-31-2016
29-day Bill912795Q5310-27-200910-29-2009 note 1
91-day Bill912795S8511-02-200911-05-2009 note 1
182-day Bill912795U4111-02-200911-05-2009 note 1

note 1: tentative subject to official announcement

  • Marketable securities can be bought, sold or transferred after they are originally issued.
  • Treasury uses an auction process to sell marketable securities and determine their rate or yield.
  • The value of Treasury marketable securities fluctuates with changes in interest rates and market demand.
  • Marketable securities held in your account can be sold at current market prices through brokers and many financial institutions.

13-WEEK TREASURY BILL
(Historical Quotes for: ^IRX)
5-YEAR TREASURY NOTE
(
Historical Quotes for: ^FVX)
Click for 1-Day Graph Click for 1-Day Graph
Click for 5-day graph Click for 5-day graph
Click for Yahoo! 1-Yr Quotes Click for Yahoo! 1-Yr Quotes
10-YEAR TREASURY NOTE
(
Historical Quotes for: ^TNX)
Click for 1-Day Graph
Click for 5-day graph
Click for Yahoo! 1-Yr Quotes

Broker Links:
For more details, see:

Saturday, October 10, 2009

Managing Your Retirement Portfolio - Rebalancing

At the Retirement Advisor, we are ultimately concerned with helping our subscribers maximize their portfolio returns while minimizing risk. We regularly cover topics to educate our subscribers on how to best manage their portfolios. One such topic is portfolio rebalancing.

Buy Low and Sell High With Rebalancing

Portfolio rebalancing brings your different asset classes back to your target asset allocation after a significant change in one or all. Rebalancing means you sell some of what has done well (sell high) to buy some more of what has lagged (buy low.)

In a volatile market, you can get added return over buy and hold from rebalancing but the main reason we rebalance is to control risk. Let’s use a simple, balanced, two-asset class, $100,000 portfolio made of the total stock market and money market funds from Vanguard (VTSMX & VMMXX) to illustrate.

You start with $100,000:

• $50,000 in VTSMX and $50,000 in VMMXX

Let’s assume the stock market gains 100% over the next ten years (average annual return of 7.2% per year) while the money fund gains 5% per year.

After ten years without rebalancing you have $163,814:

• $100,000 in VTSMX and $63,814 in VMMXX

You rebalance to control risks from bear markets. If the market were drop 50%, as it did in the 2000 to 2002 bear market, then after two more years you would have roughly
$120,355, a total decline of 27%:

• $50,000 in VTSMX and $70,355 in VMMXX

If you have 20 years before you retire for the higher returns of the stock market to make this loss up for you, then you simply wait. But if you are retired, that 27% is a painful decline.

Compare that 27% portfolio decline to a portfolio that grew to $163,814 with regular rebalancing such that it started the two year bear market with

• $81,902 in VTSMX and $81,902 in VMMXX

After the two year bear market, this would become $131,248 a decline of “only” 20% vs. 27% without rebalancing:

• $40,951 in VTSMX and $90,297 in VMMXX

Rebalancing forces you to sell some of your winners to buy more of your losers. In our case, we sold some of the more risky stocks to increase our lower risk cash. For
many of our subscribers, even a 20% portfolio loss is too painful so we offer model portfolios two and three with thirty and zero percent allocated to equities, respectively.

Finally, bonds can do well when stocks do poorly so your total portfolio loss is usually less than shown in our example that used a money fund with constant returns. For this reason, we use bond funds in our model portfolios.

* * *

To learn how to subscribe to The Retirement Advisor Newsletter, visit our web site where you can download a free issue with instructions on how to subscribe. Subscribers are able to obtain all of our back issues at no extra cost.

Click to Subscribe Now

Don't Delay Your Financial Health Any Longer!
The Retirement Advisor
Portfolios
Dollar Value on 9/30/09 Change
Model Portfolio 1 $208,276 4.1%
Model Portfolio 2 $219,741 9.9%
Model Portfolio 3 $235,541 17.8%
DJIA 12,501.52 on 1/1/2007 $9,712 (24.0%)
S&P500 1,418.30 on 1/1/2007 $1,057.08 (28.0%)
The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

Friday, October 02, 2009

CD Rates at Largest US Banks

This table, updated today, shows the best CD rates for the five largest banks operating in the United States. These banks are Bank of America, JP Morgan Chase, Citibank, Wells Fargo Bank, and HSBC Bank North America.

CD rates (APY) at the largest US banks (Current Data) for a $10,000 deposit.
Bank
CD Rates - APY in %
as of 10/02/09 for $10,000

6- Mo
1-Yr
18-Mo
2-Yrs
3-Yrs
5-Yrs
Bank of America (BAC)
0.50
1.45
1.00
2.01
2.30
3.01
JP Morgan Chase (JPM)
0.75
1.25
1.50
2.00
2.25
3.00
Citibank (C)
0.75
1.49
1.73
1.98
2.23
3.44
Wells Fargo Bank (WFC)
0.35
0.50
0.90
16-mo
1.40
21-mo
1.90
27-mo
NA
HSBC Bank North America -
Branch & Telephone Rates
0.25
0.55
0.55
15-mo
0.75
0.75
1.01
HSBC Online Rates
1.10
1.85
1.85
15-mo
1.60


US Treasury Rates
0.13
0.34
NA
0.86
1.35
2.20

To see the table in full size with the current rates, click the
Notes:
  • Bank of America or BofA (BAC stock quotes and charts) was "Nations Bank" before it bought Bank of America and took the name. BofA also bought Merrill Lynch officially as of January 1, 2009.
  • JP Morgan Chase (JPM stock quote and charts) bought Washington Mutual, fondly known as "WaMu"
  • Citibank (C stock quote and charts) is also known as Citigroup & Citicorp
  • Wells Fargo Bank (WFC stock quotes and charts) bought Wachovia Bank- that bought World Savings Bank)
  • HSBC Bank North America is the American subsidiary of UK-based HSBC Holdings plc. The Hong Kong and Shanghai Banking Corporation, also a subsidiary of HSBC Holdings, acquired a 51% shareholding in Marine Midland Bank of New York in 1980 and extended to full ownership in 1987. The banks continued to operate under the Marine Midland name until 1998, when the branch offices were rebranded as HSBC Bank USA.

Thursday, September 10, 2009

CD Rates at Largest US Banks

This table shows the CD rates for the largest banks operating in the United States. These banks are Bank of America, JP Morgan Chase, Citibank, Wells Fargo Bank, and HSBC Bank North America.

CD rates (APY) at the largest US banks (Current Data) for a $10,000 deposit.

Bank
CD Rates - APY in %
as of 9/9/09 for $10,000

6- Mo
1-Yr
18-Mo
2-Yrs
3-Yrs
5-Yrs
Bank of America (BAC)
0.55
0.95
1.00
2.15
2.30
3.01
JP Morgan Chase (JPM)
Bought WaMu -
Washington Mutual
0.75
1.25
1.50
2.15
2.25
3.00
Citibank (C)
aka
Citigroup & Citicorp
0.80
1.49
1.98
1.73
2.23
3.44
Wells Fargo Bank (WFC)
Bought
Wachovia - World Savings
0.30
0.60
1.40
19-mo
2.00
25-mo
NA
NA
HSBC Bank North America -
Branch & Telephone Rates
0.45
0.55
0.55
15-mo
0.75
0.75
1.01
HSBC Online Rates
1.25
2.00
2.00
15-mo
1.60


US Treasury Rate
0.20
0.39
NA
0.94
1.51
2.41

To see the table in full size with the current rates, click the
Notes:
  • Bank of America or BofA (BAC stock quotes and charts) was "Nations Bank" before it bought Bank of America and took the name. BofA also bought Merrill Lynch officially as of January 1, 2009.
  • JP Morgan Chase (JPM stock quote and charts) bought Washington Mutual, fondly known as "WaMu"
  • Citibank (C stock quote and charts) is also known as Citigroup & Citicorp
  • Wells Fargo Bank (WFC stock quotes and charts) bought Wachovia Bank- that bought World Savings Bank)
  • HSBC Bank North America is the American subsidiary of UK-based HSBC Holdings plc. The Hongkong and Shanghai Banking Corporation, also a subsidiary of HSBC Holdings, acquired a 51% shareholding in Marine Midland Bank of New York in 1980 and extended to full ownership in 1987. The banks continued to operate under the Marine Midland name until 1998, when the branch offices were rebranded as HSBC Bank USA.

Saturday, September 05, 2009

Current Taxable Equivalent Yield for Municipal Bonds

With US Treasury rates (US Treasury Rates as of Sept 5) so low, investors often look to municipal bonds for higher yield.
TermCurrent
Yield
28% Taxable
Equivalent Yield
(note 1)
2-Year0.83%1.15%
5-Year1.86%2.58%
7-Year2.42%3.36%
10-Year3.20%4.44%
15-Year3.89%5.40%
20-Year4.21%5.85%
30-Year4.62%6.42%

Investors give up some safety because municipalities can not print money. If they go bankrupt, you can lose everything!

To get our current recommendation (pg 5 of the September issue) for municipal bonds, subscribe to The Retirement Advisor Now!

Note 1: “Taxable equivalent yield” is the “tax-free rate” divided by “one minus your federal tax bracket.” For example, if you are in the 28% tax bracket and can get a AAA rated GO bond paying 3.20% this is equivalent to getting 4.44% in a fully taxable AAA rated bond. [ 3.20% / (1 – 0.28) = 4.44% ]

For more information, read:

US Treasury Rates

Below is a table of US Treasury rates (coupon and yield) as of September 5, 2009.

U.S. Treasuries Term
COUPONMATURITY
DATE
CURRENT
YIELD %
3-Month0.00012/03/20090.13
6-Month0.00003/04/20100.22
12-Month0.00008/26/20100.40
2-Year1.00008/31/20110 .93
3-Year1.75008/15/20121.43
5-Year2.37508/31/20142.35
7-Year3.00008/31/2016 3.05
10-Year3.62508/15/2019 3.44
30-Year4.50008/15/20394.27
Data from bloomberg.com

For historical data, current quotes and more, see:

Saturday, August 08, 2009

Municipal Bond Primer – Part 2

We continue our discussion of municipal bonds in Part II of our series.

General Obligation Credit Bond Risks

Any investment carries risk. In the world of finance, the reward you get should be commensurate with the risk. That is why United States Treasuries generally pay the least yield, the theory being that the Treasury can always print more money to pay off its obligations. Thus, unless the Federal government fails, you will get your investment paid back hence the lowest risk.

Municipal bonds (munis) are not backed by the “full faith and credit” of the Federal government so they are not as safe as Treasuries. However, some munis are backed by the taxing power of State governments making them much less risky than corporate bonds. These are generally called general obligation munis and they tend to be the “safest” of municipal bonds.

The fact that general obligation municipal bonds are safer than corporate bonds doesn’t mean they carry no risk. There are many State and local governments that are in dire financial straits right now. While most people believe that general obligation bonds can’t fail because either the government entity will simply raise taxes to pay them, or the Federal Government will bail them out, it is by no means certain that will always be the case. Moreover, a government could in theory change the terms of its General obligation bonds and defer payment of its interest.

Examples of general obligation bond defaults include New York City in 1975 and Cleveland in 1978. In the case of New York, the City defaulted on its debt and gave bondholders the choice of sitting still for a moratorium on payments, or exchanging their bonds for new paper that would later be converted to cash. Eventually, creditors were paid in full for both New York City and Cleveland, but the interim period was not a good time for the bond- holders.

For individuals approaching or in retirement that rely on the income from municipal bonds, not getting your money back in a timely manner can be extremely stressful and the interruption of cash flow can be life-changing. The point of this discussion is not to denigrate the benefits of general obligation bonds, but simply to point out that they do carry some risk — a point that is not usually addressed by the institutions that are selling these bonds, or the government entities that are raising capital through their issuance.

A more current example of the risk in general obligation bonds is the State of California. On May 29, 2009, Fitch Ratings changed its outlook to negative from stable on California's long-term general obligation bond rating of A, citing growing concerns with the state's widening budget and cash-flow deficits. If the state legislature fails to act quickly, other actions are likely, Fitch said, adding that it’s “A” rating depends on the state's ability to find solutions to its cash flow and budget problems amid the weak economy. Fitch said in a statement. "While there appears to be consensus for quick action by the legislature, should it be delayed or fail to materialize, further rating actions may occur.”

We do not currently recommend California General Obligations and have no intent to at this juncture due to our philosophy of not chasing yield in the fixed-income side of a portfolio. For subscribers who have investments in California General Obligations, you should be aware that although the principal and interest on all GO bonds are paid out of the State’s general fund, the State Constitution provides that all state revenues shall first be applied by the State for support of the public school system and public institutions of higher education. The California bondholders are next in line.

If you own or plan to own any General Obligation, we recommend you request from the issuing entity a copy of any specific constitutional or statutory protections that are afforded the debt holders.

Revenue Bond Risks

Revenue bonds, a different type of municipal bonds, are more risky than general obligation bonds because their repayment is dependent on specific revenue streams such as user fees (e.g. highway tolls) or lease payments.

In 2003, Fitch Ratings published a study that covered municipal defaults. There are a few important points to be gleaned from their study. First, default rates varied significantly across municipal sub-sectors with industrial revenue bonds having a cumulative default rate of 14.62%; multi-family housing 5.72%, and non-hospital related healthcare 17.03%. These three sectors accounted for 8 percent of all bonds issued but 56 percent of defaults! Safer bets were education and general-purpose sector bonds that accounted for 46 percent of issuance but only 13 percent of defaults.

The study also concluded that there was a moderate correlation of default risk with economic cycles. Not much of a surprise there, but what is noteworthy that a one-year lag produced a higher correlation. Given that we are about one year after the beginning of the economic downturn, we expect to see more and more defaults in this area. In a sign of the times, Moody's recently assigned a "negative outlook" to the creditworthiness of all of the nation's local governments. That was an unusually broad and sweeping generalization that Moody's defended on the grounds of the magnitude of the recession.

Some good news from the Fitch study was that defaulted municipal bonds have a fairly high recovery rate of 68.33% based on the number of defaults. But it can take time.

Next month, we will continue our discussion of municipal bonds by addressing the issues associated with owning individual municipal bonds or bond funds.

* * *

To learn how to subscribe to The Retirement Advisor Newsletter, visit our web site where you can download a free issue with instructions on how to subscribe. Subscribers are able to obtain all of our back issues at no extra cost.

Click to Subscribe Now

Don't Delay Your Financial Health Any Longer!

Tuesday, August 04, 2009

Table of US GDP Growth - Gross Domestic Product By Quarter

Table of US GDP Growth

The US Economy measured by gross domestic product (GDP) contracted at a 1.0% annualized rate in Q2-2009. This marked the fourth straight quarter with GDP contraction that has not happened since records began in 1947.

Quarter Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
GDP Growth % (0.2) 0.9 3.3 (0.5) (5.4) (6.1) (1.0) ??

For more information about the US economy, our take on the data plus our model portfolios subscribe today to get our just published August 2009 issue of The Retirement Advisor.

We are very proud of our results:
The Retirement Advisor Portfolios Dollar Value on 7/31/09 Change
Model Portfolio 1 $197,717 (1.1%)
Model Portfolio 2 $211,427 5.7%
Model Portfolio 3 $230,970 15.5%
DJIA 12,501.52 on 1/1/2007 $8,447 (32.4%)
S&P500 1,418.30 on 1/1/2007 $919.32 (35.2%)

The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

At the Retirement Advisor, we have consistently advocated against “chasing” asset classes that have already risen significantly. Likewise, we also do not believe in abandoning positions simply because they have declined in value. Instead, we believe our subscribers should focus on determining their most suitable asset allocation and focusing on ensuring their portfolio meets that goal.

Our three Model Portfolios are designed to provide a framework that investors approaching or in retirement can adopt for their asset allocation. For those interested in The Retirement Advisor Model Portfolio 1 (up 10.4% YTD), studies have shown that a balanced portfolio with 50% in a broadly diversified basked of equities and 50% in fixed income, has a 98% chance of success of lasting 30 years with a 4.0% annual withdrawal rate.

The Retirement Advisor Model Portfolio 2, with about 30% in equities (up 6.8% YTD), does not have the same potential upside as Model Portfolio 1 but it allows you to retire with less volatility than Model Portfolio 1. We believe that subscribers will be able to implement a 3% per year withdrawal rate from this portfolio.

For those investors with no tolerance for the volatility of the stock market, The Retirement Advisor Model Portfolio 3 (up 2.8% YTD), provides a more consistent and relatively steady rate of return – especially when contrasted to the stocks during periods of downside volatility.

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"Where to live in Retirement"

While California may be a sunny place to live or retire, its high income and sales tax rates, both near 10%, plus high housing prices can rain on anyone’s parade. Taxes reduce the purchasing power of your hard earned savings. This month (August 2009) we update a reader favorite “where to live in retirement” with links to the latest information to help make this important decision.



Saturday, July 25, 2009

Libor Rates At Historic Lows

London Interbank Offered Rates (LIBOR) set a new historical low this week. The short term, 1-month LIBOR rate is down to a new record low at only 0.29% from 2.46% just a year ago.

This table shows all LIBOR rates are down significantly from a year ago.

Updated 7/25/2009 This week Month ago Year ago
1 Month LIBOR Rate 0.29 0.31 2.46
3 Month LIBOR Rate 0.50 0.61 2.80
6 Month LIBOR Rate 0.96 1.15 3.14
1 Year LIBOR Rate 1.49 1.74 3.26

New historical lows shown in red

Data from
###### LIBOR ###### Prime Fed
1993 to
1 Mo 3 Mo 6 Mo 1 Yr Rate Funds
7/25/09





Rate
Current % 0.29 0.50 0.96 1.49 3.25 0.25
Min % 0.29 0.50 0.96 1.46 3.25 0.25
Max % 6.94 6.85 7.07 5.43 9.5 7.063


See Libor Rates at a Glance for current rates and graphs.

Definition: LIBOR is the London Interbank Offered Rate. It is a daily reference rate based on the interest rates banks in the London wholesale money market (or interbank market) offer to lend unsecured funds to each other. LIBOR is usually slightly higher than the London Interbank Bid Rate (LIBID). LIBID is the rate the same banks are prepared to accept deposits.

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