Throughout 2012, nervous investors did not have to look hard for reasons to avoid the financial markets. The daily headlines provided abundant gloom to feed their doubts but investors who acted on impulse could have missed a potential opportunity to participate in strong returns across the global financial markets.
In past decades, retirees have used bonds to meet current and future cash flow needs. Cash from bonds can substitute a regular paycheck. However, using bonds for the sole purpose of income can add unanticipated risk.
As the New Year is rapidly approaching, tax planning should be in full swing. Unfortunately there is such uncertainty with the looming Fiscal Cliff that many don’t know how or if to proceed with any year-end planning.
Despite continued economic instability, uncertainty regarding the upcoming Presidential Election, violence in North Africa and unrest in the Middle-East, the S&P 500 posted a positive 6.4% for the quarter and is up 16.4% year to date (By The Numbers, October 1, 2012).
Most investors purchase bonds or bond funds in order to provide an income stream and portfolio diversification. The fact that most bonds provide a steady income stream may lull investors into thinking that there is little risk to these investments. This is in fact not true.
The last twelve months have generated an increased number of financial articles proclaiming the “Death of Bonds”. Prognosticating pundits defend their forecast that bond holders will experience a decrease in the value of their bonds as historically low interest rates begin to rise.
The first quarter of 2012 provided the best stock market opening in 14 years, the market spent most of April flat and was rocked again in May with volatility. The S&P 500 rebounded gaining 4.1% in June and posted a 1st half gain of 9.5% (BTN Research, July 9, 2012).
There are basically two kinds of taxation on your Social Security benefits.
Federal Income tax is applicable if your “combined income” reaches a certain threshold. Then 50% to 85% of your Social Security benefit is taxable.
Long-term care (LTC) is the type of help an individual may need if they are unable to take care of themselves because of prolonged illness or disability. Service providers for long-term care include adult daycare, home health aides, assisted living facilities and nursing homes.
The first quarter of 2012 has provided the best stock market opening in 14 years. The S&P 500 posted a 1st quarter gain of 12.0% and a 6-month gain of 24.5% (InvesTech Research, March 30, 2012). The S&P 500 stock index has produced double-digit total returns in the last 2 quarters.