2016 Insights

December 2016

The post-election market rally surprised many, especially with its tenacity.  Some experts see the imminent change in Washington as good for business, while others see the change as harmful for the middle class.  Like with every new president, we hope for changes that bring improvements for most people.  We don’t know how much of the new administration’s agenda will be implemented, or how the agenda itself may change in the coming months.  We will be watching for a bipartisan approach to major legislation, which we view as the key to changes with staying power.

November 2016

Nationwide, home values hit highs recently, topping their past record 10 years ago, although this doesn’t include the effects of inflation.  Still, this is progress and many millennials may be eager to purchase their own homes before price and interest rate increases make buying prohibitively expensive.  When looking at homes, review the property tax bill to see what the assessor valued the property.  Be aware that paying substantially more than the assessed value could very well mean an increase in your property taxes in the not-too-distant future!

October 2016

The National Association of Personal Financial Advisors (NAPFA) is an organization of fee-only, fiduciary financial advisors.  Until recently we were Chicago-area leaders, bringing advisors together for continuing education and networking.  As NAPFA members, we take the following fiduciary oath:

Fiduciary Oath

The advisor shall exercise his/her best efforts to act in good faith and in the best interests of the client.

The advisor shall provide written disclosure to the client prior to the engagement of the advisor, and thereafter throughout the term of the engagement, of any conflicts of interest, which will or reasonably may compromise the impartiality or independence of the advisor.

The advisor, or any party in which the advisor has a financial interest, does not receive any compensation or other remuneration that is contingent on any client’s purchase or sale of a financial product.

The advisor does not receive a fee or other compensation from another party based on the referral of a client or the client’s business.

Following the NAPFA Fiduciary Oath means I shall:

* Always act in good faith and with candor.
* Be proactive in disclosing any conflicts of interest that may impact a client.
* Not accept any referral fees or compensation contingent upon the purchase or sale of a financial product.

September 2016

Nest Builder Financial Advisors, Ltd. is hosting a complimentary educational workshop on the individual healthcare insurance market.  There is a lot of confusion in this area and Ester Viti of The Viti Companies will help clarify how the individual insurance, Obamacare, the exchange -www.healthcare.gov- and subsidies work.

This session will be especially helpful if you – or someone close to you – falls into one of the following categories:

  • Divorced or widowed, losing spousal employer coverage
  • Small business owner/self-employed
  • Early retiree without employer-sponsored insurance
  • Between jobs/COBRA
  • One spouse on Medicare, younger spouse needs insurance

The event will begin at 7:15 PM at the University Center of Lake County in Grayslake

Please email Mary@NestBuilderFinancial.com to reserve a seat.

August 2016

Fear of becoming a “bag lady” is a very real for some women, even some very rich and famous celebrities have admitted to the fear of going broke!  This phobia affects women more than men because, on average, women live longer than men, they often save less because they interrupt their careers for family reasons, and a divorce may wreak havoc on both party’s finances, but women can’t always bridge the pay gap while men often recover after child support is finished.  The key to getting over this fear is to become more knowledgeable about your current financial affairs and to work with a trusted professional to help navigate the road to a successful retirement.

July 2016

The stock markets reach new all-time highs after a rough start to the year.  As always there are so-called experts who claim that the market is too high and will come crashing down around us at any minute and the other experts are telling us that this is just the start, the market will go up for the foreseeable future.

Take all this with a big grain of salt.  There are enough opinions that surely one of them will be right…but which one?  We won’t know until it’s in the rear-view mirror!  When an expert makes the right call once, they are expected to do it again, and again, but it doesn’t work that way.

When you understand market risks and you have a long-term plan, you can ignore these prophecies and go about your day-to-day business.

June 2016

It’s graduation time and many high school graduates are looking forward to starting college…with a handful of scholarships!  While attending an awards ceremony at a local high school, we were amazed at the number of scholarships some of the students received.  While there was one for 1 full year tuition, most were relatively small amounts but the sheer number of scholarships a few enterprising students received was impressive.  Some of the parents weren’t aware of how many scholarships their student applied for and were in tears of joy by the end of the evening.  With some understanding of how money works and some motivation, students can be quite resourceful.

May 2016

Do you have a Health Savings Account?  These are tax-free savings plans can be a great way to build up for medical needs in the future.  One sticking point is that you need to have a high-deductible insurance plan to participate in an HSA,  In that light, HSAs are generally better for healthier people that don’t typically pay much out-of-pocket costs and have the emergency fund or a higher income that can cover the high deductible or risk draining the account with one major medical event.

More employers are offering HSAs as their only option and some are luring employees into HSAs by offering bonuses to switch.  Think about your past medical expenses and look at your family’s health history before deciding which route to go.

April 2016

See our latest newsletter for a Social Security update, estate planning and executor considerations, and other topics such as the cost of being disorganized and data breaches affecting children.

Cyberthieves are now also hacking into schools or toy companies that may have collected your child’s birth date and social security number.  With a Social Security number they can open a credit card with a fake birth date and you likely wouldn’t know it until he or she applies for credit years later, after much damage is done.   Read more in the newsletter.

March 2016

It’s Tax Time – do you know what your top “tax bracket” is?  Why should you even care?  If you know your tax bracket is, say 15%, and you work a lot of overtime, some of your overtime earnings could be pushed up into the 25% tax rate.  Your realized “extra income” could be taxed at $25 for every $100 you earn instead of $15 tax on your base income.

As your income increases up to the highest tax bracket of 39.6%, more taxes are owed not only because of higher tax brackets, but also due to phase-outs of the personal exemption and many common deductions; the Alternative Minimum Tax (AMT);  an increased capital gains tax of 20%, an additional 3.8% tax on investment gains to help support the Affordable Care Act (on top of the increased capital gains tax). And on and on…

The tax code is very complex and as your income increases, your personal finances, including taxes will become more and more complicated.

2016 started off with a thud: in December the Fed started what is expected to be  the first in a series of interest rate increases China’s growth was faltering, oil prices were crashing, and the Eurozone was struggling with the massive influx of refugees .  The market responded to the growing fear with a roughly10% drop, in what’s frequently referred to as a correction.

Let’s put that 10% decline in perspective.  Over the past 7 years the S&P 500 has had 7 years of positive returns, more than recovering the horrific losses in 2008.  Of these seven years of recovery, the S&P 500 had 5 years of double-digit returns.  Market corrections are fairly regular and may indicate underlying problems – or may be an opportunity to capitalize on opportunities.

If you have a financial plan in place, follow the guidelines; if you don’t have one, why not?  It could help put you at ease when the going gets tough.

January 2016

Thinking of borrowing from your 401(k)?  Mary was interviewed by Emily Brandon, Senior Editor at U.S. News and World for this article which talks about avoiding some of the penalties and fees associated with taking loans or other early distributions out of a 401(k).  Also see our last newsletter for more considerations before borrowing from your retirement plan.