Weekly Economic Update

WEEKLY ECONOMIC UPDATE

CONSUMER PRICES RISE 0.5% FOR JUNE

Gas prices soared 6.3% last month, and they contributed greatly to the jump in the Consumer Price Index. Core inflation (minus food and energy prices) increased just 0.2% in June. As the headline CPI advanced only once during March-May, does this signal mounting inflation pressures? Maybe not. Looking deeper into the CPI, annualized core inflation actually decreased last month to 1.6%. That is the smallest yearly rise for that indicator in two years.1

CAR BUYING DRIVES RETAIL SALES INCREASE

The Commerce Department noted a 0.4% gain in U.S. retail purchases in June, following a 0.5% rise in May. Auto and truck sales were up 1.8% last month (in the last 12 months, the gain has been 11.4%). While vehicle sales improved, consumers bought less in other retail categories. That left the core retail sales advance at 0.2% for June – the weakest number since January.2

LEADING INDICATORS FLAT IN JUNE

The Conference Board’s leading economic index showed no advance last month; it was up 0.2% in May and 0.8% in April. The good news is that in the past six months, the LEI has advanced to 95.3, approaching the 100 mark it started at in 2004.3

S&P 500 NOTCHES 4-WEEK WINNING STREAK

A 0.71% weekly advance took the broad benchmark to 1,692.09 at the closing bell Friday – it had never settled higher. While the NASDAQ pulled back 0.35% last week to 3,587.61, the Dow wrapped up the week at a fresh high of 15,543.74 after a 0.51% gain across five trading days. The CBOE VIX settled at just 12.56 Friday.4

THIS WEEK: NAR presents its June existing home sales report Monday and Texas Instruments, McDonald’s, Halliburton, Hasbro, Kimberly-Clark and Netflix will all report earnings. On Tuesday, earnings from Broadcom, Discover Financial, Apple, Altria, DuPont, Travelers, United Tech, UPS, AT&T and Electronic Arts complement the latest FHFA home price index. Quarterly results from Caterpillar, Visa, Qualcomm, GlaxoSmithKline, Boeing, Eli Lilly, Ford, PepsiCo, Facebook, Akamai and Baidu appear Wednesday, along with Census Bureau data on June new home sales. Thursday brings new initial claims figures, durable goods orders data for June and earnings from Credit Suisse, Colgate-Palmolive, Starbucks, Bristol-Myers, GM, 3M, Sirius XM, Amazon.com, Gilead Sciences and Zynga. On Friday, Tyco presents Q2 results and the final July consumer sentiment index from the University of Michigan appears.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+18.62

+20.09

+7.04

+6.92

NASDAQ

+18.81

+20.96

+11.43

+11.00

S&P 500

+18.64

+22.93

+6.84

+7.03

REAL YIELD

7/19 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.29%

-0.62%

1.65%

2.04%

Sources: cnbc.com, bigcharts.com, treasury.gov – 7/19/134,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

«RepresentativeDisclosure»

 

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. 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 – forbes.com/sites/afontevecchia/2013/07/16/spiking-gasoline-prices-push-cpi-inflation-higher-but-weak-core-fuels-taper-uncertainty/ [7/16/13]

2 – usatoday.com/story/money/business/2013/07/15/retail-sales-rise-in-june-on-autos/2517443/ [7/15/13]

3 – conference-board.org/data/bcicountry.cfm?cid=1 [7/18/13]

4 – cnbc.com/id/100899240 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F19%2F12&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F19%2F12&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F19%2F12&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F18%2F08&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F18%2F08&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F18%2F08&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F18%2F03&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F18%2F03&x=0&y=0 [7/19/13]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F18%2F03&x=0&y=0 [7/19/13]

6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/19/13]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/19/13]

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

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IRA Rollovers For Lump Sum Pension Payouts

IRA ROLLOVERS FOR LUMP SUM PENSION PAYOUTS 

Give those dollars the opportunity for further tax-deferred growth.

A big payout leads to a big question. If you are taking a lump sum pension payout from your former employer, what is the next step for that money? It will be integral to your retirement; how can you make it work harder for you?

Rolling it over might be the right thing to do. If you don’t have substantial retirement savings, that lump sum may be just what you need. The key is to plan to keep it growing. That money shouldn’t just sit there.

Even tame inflation whittles away at the value of money over time. Most corporate pension payments aren’t inflation-indexed, so those monthly payments eventually purchase less and less. Lump sums are just as susceptible: if you receive $100,000 today, that $100,000 will buy 50% less by 2028 assuming consistent 3% inflation (and that is quite an optimistic assumption).1,2

Putting it in the bank might cause you some financial pain. If you just take your lump sum payout and deposit it, all that money will be considered taxable income by the IRS. (There are very few exceptions to that rule.) Moreover, you won’t get the whole amount that way: per IRS regulations, your employer must withhold 20% of it.2,3

Don’t you want to postpone paying taxes on those assets? By arranging a rollover of your lump sum distribution to a traditional IRA, you may defer tax on those dollars. You can even defer tax on a distribution already paid to you if you roll over the taxable amount to an IRA within 60 days after receipt of the payout.3

In doing so, you are keeping those assets in a tax-deferred account. They can be invested as you like, and that money will not be taxed until it is withdrawn. (You may only transfer a lump sum distribution from a company pension plan into a traditional IRA – you may not transfer it to a Roth IRA.)4

 

If you are considering taking a lump sum payout, make sure you position that money for additional tax-deferred growth. Talk to a financial professional who can help you with the paperwork and get your IRA rollover going.

 

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. 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 not a solicitation or a 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 – money.cnn.com/2012/09/01/pf/expert/pension-payments.moneymag/index.html [9/1/12]

2 – http://www.kiplinger.com/article/retirement/T037-C000-S002-pensions-take-a-lump-sum-or-not.html [9/11]

3 – http://www.irs.gov/taxtopics/tc412.html [1/4/13]

4 – http://www.fool.com/retirement/manageretirement/manageretirement2.htm [1/21/13]

The Retirement Group is not affiliated with nor endorsed by fidelity.com, ING Retirement, Chevron, Hughes, resources.hewitt.comGlaxosmithkline, Bank of America, Northrop Grumman, Raytheon, Merck, Pfizer, AT&T, Qwest, Verizon, netbenefits.fidelity.com, hewitt.com, ExxonMobil, access.att.com, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Weekly Economic Update

WILL THE EASING END SOONER, OR LATER?

Last Wednesday, Federal Reserve chairman Ben Bernanke lifted stocks by noting that the U.S. economy needed “highly accommodative monetary policy for the foreseeable future,” adding that the current 7.6% jobless rate “overstates the health of the labor market.” Remarks like these didn’t exactly suggest the Fed would scale back its asset purchases soon. The June Fed policy meeting minutes showed 11 of 12 Fed officials agreeing to sustain the central bank’s bond-buying campaign, with “about half” of these 11 envisioning QE3 wrapping up late this year. On Friday, Philadelphia Fed president Charles Plosser emerged from that camp, calling for a “gradual and predictable” end to the program before 2014.1,2,3

HOUSEHOLD SENTIMENT DECLINES A BIT

The initial July consumer sentiment index from the University of Michigan dipped mildly to 83.9. June’s final reading was 84.1, and economists polled by Reuters had expected the index to rise to 85.0.4

PRODUCER PRICES LEAP 0.8%

Minus food and energy prices, wholesale inflation wasn’t so pronounced in June. The core PPI rose just 0.2% last month. Analysts surveyed by Briefing.com had projected an overall PPI gain of 0.3%.4,5

WALL STREET GETS A BERNANKE BOUNCE

Dovish comments from the Fed chairman helped the S&P 500 to a new record close of 1,680.19 Friday. On the week, the S&P gained 2.96%. The NASDAQ rose 3.47% for the week to settle at 3,600.08 Friday. The Dow gained 2.17% last week and closed Friday at a fresh all-time peak of 15,464.30.4

THIS WEEK: Monday offers Q2 results from Citigroup, Census Bureau data on June retail sales and a Q2 GDP reading from China. The June CPI appears Tuesday, plus the latest NAHB housing market index, data on June industrial output and earnings from Goldman Sachs, Coca-Cola, Johnson & Johnson, Charles Schwab, Yahoo and CSX. Wednesday, Ben Bernanke begins two days of testimony in the Senate, a new Fed Beige Book arrives, and American Express, Bank of America, Bank of NY Mellon, Novartis, Abbott Labs, Mattel, eBay, IBM, Intel and SanDisk report earnings. Thursday offers earnings reports from Capital One, BlackRock, Morgan Stanley, United Health, Verizon, Nokia, Google, Microsoft, AMD and Chipotle, plus the latest initial claims figures and the Conference Board’s index of leading indicators. Friday, a G20 summit wraps up and Schlumberger, GE, Vodafone and Honeywell report Q2 results.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+18.01

+22.99

+7.86

+6.96

NASDAQ

+19.23

+25.61

+12.16

+10.76

S&P 500

+17.81

+25.88

+7.11

+6.83

REAL YIELD

7/12 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.55%

-0.58%

1.48%

1.88%

Sources: cnbc.com, bigcharts.com, treasury.gov – 7/12/134,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

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. 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 – cnbc.com/id/100877586 [7/10/13]

2 – cnbc.com/id/100757576 [7/12/13]

3 – blogs.barrons.com/incomeinvesting/2013/07/10/treasury-yields-creep-higher-amid-parsing-of-fed-minutes-bernanke-speech/ [7/10/13]

4 – cnbc.com/id/100882518 [7/12/13]

5 – briefing.com/investor/calendars/economic/2013/07/08-12 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F12%2F12&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F12%2F12&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F12%2F12&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F11%2F08&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F11%2F08&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F11%2F08&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F11%2F03&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F11%2F03&x=0&y=0 [7/12/13]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F11%2F03&x=0&y=0 [7/12/13]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/12/13]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/12/13]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, ExxonMobil, Glaxosmithkline, Merck, Pfizer, AT&T, Hughes, Bank of America, ING Retirement, RaytheonQwest, Chevron, Northrop Grumman, Verizon, hewitt.com, resources.hewitt.com, access.att.com, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Should You Pay Off Your Mortgage or Invest?

Should You Pay Off Your Mortgage or Invest?

Owning a home outright is a dream that many Americans share. Having a mortgage can be a huge burden, and paying it off may be the first item on your financial to-do list. But competing with the desire to own your home free and clear is your need to invest for retirement, your child’s college education, or some other goal. Putting extra cash toward one of these goals may mean sacrificing another. So how do you choose?

Evaluating the opportunity cost

Deciding between prepaying your mortgage and investing your extra cash isn’t easy, because each option has advantages and disadvantages. But you can start by weighing what you’ll gain financially by choosing one option against what you’ll give up. In economic terms, this is known as evaluating the opportunity cost.

Here’s an example. Let’s assume that you have a $300,000 balance and 20 years remaining on your 30-year mortgage, and you’re paying 6.25% interest. If you were to put an extra $400 toward your mortgage each month, you would save approximately $62,000 in interest, and pay off your loan almost 6 years early.

By making extra payments and saving all of that interest, you’ll clearly be gaining a lot of financial ground. But before you opt to prepay your mortgage, you still have to consider what you might be giving up by doing so–the opportunity to potentially profit even more from investing.

To determine if you would come out ahead if you invested your extra cash, start by looking at the after-tax rate of return you can expect from prepaying your mortgage. This is generally less than the interest rate you’re paying on your mortgage, once you take into account any tax deduction you receive for mortgage interest. Once you’ve calculated that figure, compare it to the after-tax return you could receive by investing your extra cash.

For example, the after-tax cost of a 6.25% mortgage would be approximately 4.5% if you were in the 28% tax bracket and were able to deduct mortgage interest on your federal income tax return (the after-tax cost might be even lower if you were also able to deduct mortgage interest on your state income tax return). Could you receive a higher after-tax rate of return if you invested your money instead of prepaying your mortgage?

Keep in mind that the rate of return you’ll receive is directly related to the investments you choose. Investments with the potential for higher returns may expose you to more risk, so take this into account when making your decision.

Other points to consider

While evaluating the opportunity cost is important, you’ll also need to weigh many other factors. The following list of questions may help you decide which option is best for you.

  • What’s your mortgage interest rate? The lower the rate on your mortgage, the greater the potential to receive a better return through investing.
  • Does your mortgage have a prepayment penalty? Most mortgages don’t, but check before making extra payments.
  • How long do you plan to stay in your home? The main benefit of prepaying your mortgage is the amount of interest you save over the long term; if you plan to move soon, there’s less value in putting more money toward your mortgage.
  • Will you have the discipline to invest your extra cash rather than spend it? If not, you might be better off making extra mortgage payments.
  • Do you have an emergency account to cover unexpected expenses? It doesn’t make sense to make extra mortgage payments now if you’ll be forced to borrow money at a higher interest rate later. And keep in mind that if your financial circumstances change–if you lose your job or suffer a disability, for example–you may have more trouble borrowing against your home equity.
  • How comfortable are you with debt? If you worry endlessly about it, give the emotional benefits of paying off your mortgage extra consideration.
  • Are you saddled with high balances on credit cards or personal loans? If so, it’s often better to pay off those debts first. The interest rate on consumer debt isn’t tax deductible, and is often far higher than either your mortgage interest rate or the rate of return you’re likely to receive on your investments.
  • Are you currently paying mortgage insurance? If you are, putting extra toward your mortgage until you’ve gained at least 20% equity in your home may make sense.
  • How will prepaying your mortgage affect your overall tax situation? For example, prepaying your mortgage (thus reducing your mortgage interest) could affect your ability to itemize deductions (this is especially true in the early years of your mortgage, when you’re likely to be paying more in interest).
  • Have you saved enough for retirement? If you haven’t, consider contributing the maximum allowable each year to tax-advantaged retirement accounts before prepaying your mortgage. This is especially important if you are receiving a generous employer match. For example, if you save 6% of your income, an employer match of 50% of what you contribute (i.e., 3% of your income) could potentially add thousands of extra dollars to your retirement account each year. Prepaying your mortgage may not be the savviest financial move if it means forgoing that match or shortchanging your retirement fund.
  • How much time do you have before you reach retirement or until your children go off to college? The longer your timeframe, the more time you have to potentially grow your money by investing. Alternatively, if paying off your mortgage before reaching a financial goal will make you feel much more secure, factor that into your decision.

The middle ground

If you need to invest for an important goal, but you also want the satisfaction of paying down your mortgage, there’s no reason you can’t do both. It’s as simple as allocating part of your available cash toward one goal, and putting the rest toward the other. Even small adjustments can make a difference. For example, you could potentially shave years off your mortgage by consistently making biweekly, instead of monthly, mortgage payments, or by putting any year-end bonuses or tax refunds toward your mortgage principal.

And remember, no matter what you decide now, you can always reprioritize your goals later to keep up with changes to your circumstances, market conditions, and interest rates.

 

 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, Merck, Pfizer, Verizon, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of Albert Aizin and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

Albert Aizin is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Understanding the Markets

 

 

What the acronyms signify & what affects investors.

 

Provided by «representativename»

 

Dow. NASDAQ. S&P 500. Fear index. NYSE. Commodity prices. Earnings. Economic indicators. These are the gauges and signposts of investing, but if you stopped most people on the street, you’ll find they have only a hazy understanding of what these terms signify or reference. If you’ve ever been left dizzy by the jargon of the financial world, here is a brief article that may help clarify some of the arcana. Let’s start on Wall Street.

The major U.S. indices. The Dow Jones Industrial Average tracks how 30 publicly owned companies trade on a market day – the “blue chips”, 30 titans of U.S. and global business chosen by the Wall Street Journal, most not actually industrial. The NASDAQ Composite records the performance of 3,000+ companies on the NASDAQ Stock Market (see below), including many technology firms. The S&P 500 logs the performance of 500 leading publicly traded companies across ten different sectors (business/industry categories), as determined by financial research giant Standard & Poor’s (there was actually a Mr. Poor, hence the name).1,2

At the end of the trading day, these indices settle or “close” at a price level. The Dow is a price-weighted index – that is, its value each trading day rides up or down on the price movements of its 30 components. By contrast, the S&P 500 and NASDAQ (and most other stock indices) are cap-weighted, meaning the index value reflects the total market value of the companies in the index and not simply the prices of individual components. The S&P 500 has both a price return and a total return (the total return includes dividends).1,2

   

While the nightly news tells everyone what the Dow did today, many seasoned investors pay more attention to the S&P 500, which represents about 70% of the value of the U.S. stock market. There are other indices that also grab Wall Street’s attention. Investors watch the Russell 2000 (which lists the “small caps”, usually newer and younger firms than found in the predominantly “large-cap” S&P 500) and the Wilshire 5000, which tracks stocks of almost every publicly owned company in America (6,000+ components). Eyes are also on the “fear index”, the CBOE VIX (Chicago Board Options Exchange Volatility Index), which measures investors’ expectations of volatility (read: market risk) in the S&P 500 for the next 30 days. Important multinational indices (the MSCI World and Emerging Markets indices, the Global Dow, the S&P Global 100, and many more) and foreign indices (Japan’s Nikkei 225, Germany’s DAX, China’s Shanghai Composite and many others) also get a look.2,3,4,5

The stock exchanges. Stocks trade on exchanges, with the most prominent in America being the New York Stock Exchange (NYSE), the “big board” at which celebrities are seen ringing the opening or closing bell. Other notable U.S. stock and securities markets include the American Stock Exchange (AMEX), the CBOE and the NASDAQ Stock Market. While the NYSE trading day runs from 9:30am-4:00pm EST, pre-market and after-hours trading also occurs as investors respond to earnings announced after or before the bell or overseas developments.

     

The NYMEX, the COMEX & the forex market. The CME Group of Chicago owns and operates the New York Mercantile Exchange (NYMEX), the biggest physical commodities exchange on the planet. The NYMEX tracks energy futures such as oil and natural gas and it also has a COMEX division for metals such as gold, silver and copper futures. (Platinum and palladium futures actually trade on the NYMEX instead of the COMEX.) Agricultural commodity futures and options are traded on the CME Group’s Chicago Mercantile Exchange. Over-the-counter currency trading occurs via the worldwide, decentralized forex (foreign exchange) market. Short-term movements in exchange rates do influence stocks. 6,7

    

The bond market. Further decentralized trading occurs here, conducted by institutional and individual investors, governments and traders buying, selling and issuing government, corporate and mortgage-linked securities (and other varieties). Bond prices fall when bond yields rise, and vice versa. Interest rate changes affect the bond market more than any other factor; credit rating adjustments and changes in the appetite for risk (i.e., a race to or retreat from stocks by investors) can also play roles.

What moves the markets up and down? Information – or more precisely, the way large institutional investors respond to it. Things really move when the equilibrium of the market is upset by either positive or negative breaking news – it could be a geopolitical development, a natural disaster, a central bank decision, a comment from a Federal Reserve official or the Treasury Secretary, it could be many things. It could be earnings reports – corporate earnings are sometimes called the “mother’s milk” of stocks, and when two or three big companies beat estimates, Wall Street may see big gains that day.

The markets also respond to an ongoing stream of economic news releases from the federal government and other organizations. Federal Reserve policy announcements (interest rate adjustments, the implementation or cessation of stimulus efforts) get the most attention, and the Labor Department’s monthly employment report finishes second. Other critical monthly releases include the Commerce Department’s consumer spending report, the Bureau of Labor Statistics Consumer Price Index measuring consumer inflation, and monthly reports on existing home sales (from the National Association of Realtors), new home sales (from the Census Bureau) and home values (via the S&P/Case-Shiller Home Price Index).

There are other key reports: the occasionally contradictory consumer confidence surveys from the University of Michigan and the Conference Board (the CB poll is more respected, as it surveys 5,000 people; the Michigan poll surveys only 500, but asks many more questions) and the Institute for Supply Management’s monthly purchasing manager indexes assessing the health of the manufacturing and non-manufacturing sectors of the economy (these are simply surveys of purchasing managers at businesses, minus hard data).8,9

    

Hopefully, this makes things a little less mysterious. It takes a while to get to know the financial world and its pulse, but that knowledge may reward you in tangible and intangible ways.

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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 – investorguide.com/article/11617/introduction-to-stock-indexes-djia-and-the-nasdaq-igu/ [1/25/13]

2 – fool.com/school/indices/sp500.htm [6/6/13]

3 – fool.com/school/indices/russell2000.htm [6/6/13]

4 – fool.com/school/indices/Wilshire5000.htm [6/6/13]

5 – investopedia.com/terms/v/vix.asp [6/6/13]

6 – investopedia.com/terms/n/nymex.asp [6/6/13]

7 – cmegroup.com/trading/agricultural/ [6/6/13]

8 – foxnews.com/us/2012/05/29/how-2-us-consumer-confidence-surveys-differ/ [5/29/12]

9 – briefing.com/Investor/Calendars/Economic/Releases/napm.htm [6/3/13]

 

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of Albert Aizin, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


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