Tis’ the season for giving gifts, spreading joy & living in excess!
Here are 10 tips on how to become a lean, green holiday machine.
-We all love getting holiday cards in the mail, but this year save a tree and some money by sending out e-cards to your loved ones.
-If your family will gather around a tree this year why not make it a potted, living tree that you can either keep around for next year, or plant in the backyard as a reminder of a great holiday spent together?
-Purchase LED lights to make your tree sparkle! I will admit they take some getting use to, but you will be thankful when you energy bill comes due.
-Make your own ornaments from dough. This is a great activity for the whole family to take part in, and it only costs pennies.
-Pine cones can be used in all sorts of nifty ways. They can be made into a beautiful, inexpensive centerpiece with just a little spray paint or glitter, you can make bird feeders out of them with some peanut butter & bird seed, or you can give them as gifts by dipping them in candle wax to be used as a fire starter.
-Plan a holiday decoration swap meet! Invite your friends and family over to exchange their unwanted decorations. This is a great way to have fun, save money & get new-to-you decorations!
-Buy carbon offsets as a gift for friends & family who are traveling for the holiday season.
-Green your gift giving by hand making your own, re-gifting items, or buying LOCAL and/or battery-free gifts.
For more green gifting ideas you can visit treehugger.com and look through their 2010
Gift Guide.
After acquiring all of your groovy, green gifts remember to go light on the wrapping. Get inventive with your wrapping techniques. Use items around the house to make your own wrapping, or buy recycled wrapping paper.
Happy Holidays everyone!
Gracie Mohr
Thursday, December 9, 2010
Practical Prosperity
December 2010
“Lucy – Incidentally, I know how you feel about this Christmas business, getting depressed and all that. It happens to me every year. I never get what I really want! I always get a bunch of stupid toys, or a bike, or clothes, or something like that.
Charlie Brown – What is it you want???
Lucy – Real estate!”
It’s the holiday season and I thought it would be perfect to quote one of my favorite holiday shows “A Charlie Brown Christmas”. Whatever holiday you celebrate this month, Lucy may just have a sound solution to your gift giving problems.
Real estate is cheap and buyers are still in command of the market. This year has been an interesting year in terms of the economy. Many expected real estate to have turned a corner and the unemployment rate to be falling. While manufacturing is up, corporate profits are strong, and prices are being held in check, our economy is still not firing on all cylinders yet. Let’s take a quick look at where we are as of November 30, 2010.
GDP (Gross Domestic Product)
2% - 2.50%
Inflation (Core CPI)
0% - 1.50%
Unemployment Rate
8.00% - 9.00%
Federal Funds Rate
1.00%
S&P 500 Return
8.16%
Bond Market Returns
4%
While it is shaping up to be a decent year for stock market returns, GDP and unemployment are still just barely hanging on. This prompted many to begin speculating a double-dip recession might be on the horizon. (We don’t believe that is the case.) What is most important is to remember, that things are growing. We may not be happy with unemployment and GDP, but they are slowly improving. Marrying these improvements with a reasonably priced stock market and strong corporate earnings, 2011 may also be shaping up for a pretty good year.
The amount of debt consumers took on was massive and we will see continued deleveraging for a number of years, however the savings rate is beginning to level off from its previous skyrocket. That means more money to put into the economy and if consumers feel good, that will happen.
On that note, its time to get merry! Let’s follow up on a tip I gave you in our December 2008 newsletter. Buy stock. Your $50.00 holiday gift would be worth this today:
Dow Jones $66.56 up 33.11%
S&P 500 $69.36 up 38.77%
NASDAQ $83.60 up 67.20%
Emerging Markets $92.89 up 85.77%
With return figures like that, if you were the lucky recipient, you should be quite merry. Giving a gift like this to a child or grandchild not only keeps on giving, but it teaches a great and necessary financial lesson.
Finally, each December it is also fun to take a look at the annual Christmas Price Index calculated each year by The PNC Financial Services Group. After little movement last year, the index had its 2nd greatest year of inflation in 2010, rising 9.2%. Gold rings surged 30% on rising commodities, and ladies dancing must be in high demand as their prices soared 15%. For some holiday cheer click here and waste an hour on a cold day laughing your way through an economics lesson.
So once again my calling, if you are just totally stumped on someone’s holiday gift, buy stock. Whether you have $50.00 to spend or $50,000 to spend, now is the time. Efficiently priced markets perform well independently of stellar economic returns. This is our environment and we should make the best of it. One of our missions at Mackey Advisors™ has always been for you to continually be prosperous. Whether that means giving gifts, volunteering time, hosting the family dinner, or helping a family in need make it your mission too this holiday season. A most safe and happy holiday to you and yours.
Andy Pulsfort
“Lucy – Incidentally, I know how you feel about this Christmas business, getting depressed and all that. It happens to me every year. I never get what I really want! I always get a bunch of stupid toys, or a bike, or clothes, or something like that.
Charlie Brown – What is it you want???
Lucy – Real estate!”
It’s the holiday season and I thought it would be perfect to quote one of my favorite holiday shows “A Charlie Brown Christmas”. Whatever holiday you celebrate this month, Lucy may just have a sound solution to your gift giving problems.
Real estate is cheap and buyers are still in command of the market. This year has been an interesting year in terms of the economy. Many expected real estate to have turned a corner and the unemployment rate to be falling. While manufacturing is up, corporate profits are strong, and prices are being held in check, our economy is still not firing on all cylinders yet. Let’s take a quick look at where we are as of November 30, 2010.
GDP (Gross Domestic Product)
2% - 2.50%
Inflation (Core CPI)
0% - 1.50%
Unemployment Rate
8.00% - 9.00%
Federal Funds Rate
1.00%
S&P 500 Return
8.16%
Bond Market Returns
4%
While it is shaping up to be a decent year for stock market returns, GDP and unemployment are still just barely hanging on. This prompted many to begin speculating a double-dip recession might be on the horizon. (We don’t believe that is the case.) What is most important is to remember, that things are growing. We may not be happy with unemployment and GDP, but they are slowly improving. Marrying these improvements with a reasonably priced stock market and strong corporate earnings, 2011 may also be shaping up for a pretty good year.
The amount of debt consumers took on was massive and we will see continued deleveraging for a number of years, however the savings rate is beginning to level off from its previous skyrocket. That means more money to put into the economy and if consumers feel good, that will happen.
On that note, its time to get merry! Let’s follow up on a tip I gave you in our December 2008 newsletter. Buy stock. Your $50.00 holiday gift would be worth this today:
Dow Jones $66.56 up 33.11%
S&P 500 $69.36 up 38.77%
NASDAQ $83.60 up 67.20%
Emerging Markets $92.89 up 85.77%
With return figures like that, if you were the lucky recipient, you should be quite merry. Giving a gift like this to a child or grandchild not only keeps on giving, but it teaches a great and necessary financial lesson.
Finally, each December it is also fun to take a look at the annual Christmas Price Index calculated each year by The PNC Financial Services Group. After little movement last year, the index had its 2nd greatest year of inflation in 2010, rising 9.2%. Gold rings surged 30% on rising commodities, and ladies dancing must be in high demand as their prices soared 15%. For some holiday cheer click here and waste an hour on a cold day laughing your way through an economics lesson.
So once again my calling, if you are just totally stumped on someone’s holiday gift, buy stock. Whether you have $50.00 to spend or $50,000 to spend, now is the time. Efficiently priced markets perform well independently of stellar economic returns. This is our environment and we should make the best of it. One of our missions at Mackey Advisors™ has always been for you to continually be prosperous. Whether that means giving gifts, volunteering time, hosting the family dinner, or helping a family in need make it your mission too this holiday season. A most safe and happy holiday to you and yours.
Andy Pulsfort
Partnership and Win/Win as a new Business Model
The growth of Mackey Advisors has brought us to the threshold of buying our own building. Just recently, I found a fabulous, unique space and I was prepared to make the purchase, as I could see Mackey Advisors growing and thriving there. After weeks of exploration and negotiation, I sadly walked away. Negotiations involve give and take, but it seemed that Mackey Advisors was doing all the giving and the developer was doing all the taking. As I step back, I realize that fundamentally, we have different approaches to doing business.
Business has traditionally been conducted as a win/lose venture. I have something to sell to you. You want a bargain. The deal is consummated when one of the parties feel they have the upper hand. I have not conducted business in this way for many years. My attitude is one more aligned with partnership, where both parties’ needs are heard, respected, honored, and met to the fullest extent possible. Compromise is the name of the game.
If I am in need of a product or service, I want to exchange my resources with a vendor who will meet or exceed my expectations at a fair price. AND I want the vendor’s price to support their operation and to allow a profit. After all, if they do well, they will continue to provide the valuable service of being attentive to and meeting my needs.
In all of our ways of “coming together” financially, as vendors, customers, business partners, or even spouses, we can do so from a place of win/lose, or we can adopt a win/win form of “partnership.” Not partnership in the traditional sense, but partnership in the sense of mutual respect, knowing that we are both in this together, and that we both have needs that must be met. It’s still competition, but with a cooperative twist. After all, if I thrive at your expense, where does that leave me the next time I need to partner with someone to accomplish my goals?
From this place, where each party looks to find a way to support, cooperate with, and meet the needs of the other, win/win is created. You might call it “cooperative negotiation”, and it is a transformational place from which to conduct business. In this place of win/win, both parties thrive. In the place of win/lose, one or both parties are damaged by the relationship. Think of all the dysfunctions that occur around money because one person is trying to get more than the other. Think of the possibility in a world where business is conducted in a place of win/win. What world do you choose? It is yours to create!
Mackey McNeill
Business has traditionally been conducted as a win/lose venture. I have something to sell to you. You want a bargain. The deal is consummated when one of the parties feel they have the upper hand. I have not conducted business in this way for many years. My attitude is one more aligned with partnership, where both parties’ needs are heard, respected, honored, and met to the fullest extent possible. Compromise is the name of the game.
If I am in need of a product or service, I want to exchange my resources with a vendor who will meet or exceed my expectations at a fair price. AND I want the vendor’s price to support their operation and to allow a profit. After all, if they do well, they will continue to provide the valuable service of being attentive to and meeting my needs.
In all of our ways of “coming together” financially, as vendors, customers, business partners, or even spouses, we can do so from a place of win/lose, or we can adopt a win/win form of “partnership.” Not partnership in the traditional sense, but partnership in the sense of mutual respect, knowing that we are both in this together, and that we both have needs that must be met. It’s still competition, but with a cooperative twist. After all, if I thrive at your expense, where does that leave me the next time I need to partner with someone to accomplish my goals?
From this place, where each party looks to find a way to support, cooperate with, and meet the needs of the other, win/win is created. You might call it “cooperative negotiation”, and it is a transformational place from which to conduct business. In this place of win/win, both parties thrive. In the place of win/lose, one or both parties are damaged by the relationship. Think of all the dysfunctions that occur around money because one person is trying to get more than the other. Think of the possibility in a world where business is conducted in a place of win/win. What world do you choose? It is yours to create!
Mackey McNeill
Thursday, November 18, 2010
Go Green
The weather outside may be frightful, but here are a few ways to keep the inside delightful and not break the bank. With just a few changes in your lifestyle you can save the planet by cutting down on your energy use and save a little pocket change.
Energy Saving Tips for the Winter Ahead:
Close up rooms that are not used on a regular basis, like a guest bedroom. Close the vents, turn down the thermostat, and close the door. There is no sense heating a room that is not occupied
Turn down the thermostat and use space heaters in frequently used spaces. Turning down your thermostat even 1 degree can save you 3% on your energy bill!
Minimize the use of ventilation fans. A bathroom fan can suck all the heated air out of the average home in little more than an hour.
Keep your furnace, heat pump, or other heating equipment maintained and running as efficiently as possible. Look into purchasing a maintenance agreement. In the long run it could save your family lots of money.
Ceiling fans do more than keep you cool during the summer; they can warm during the winter. It’s as simple as flipping a switch to change the direction of the blades, which pushes warm air down.
Keep the water heater temperature at 120 degrees or cooler.
When washing clothes always wash full loads and use cold water whenever possible.
We all love those long hot showers in the winter, but by cutting your shower time in half you can save 33% on hot water costs.
Let Mother Nature lend a warm hand. Open up the curtains and blinds on all South facing windows during the day and let the sunlight heat the house naturally. But be sure to close them before the sun goes down to keep the heat within the house.
Gracie Mohr
Energy Saving Tips for the Winter Ahead:
Close up rooms that are not used on a regular basis, like a guest bedroom. Close the vents, turn down the thermostat, and close the door. There is no sense heating a room that is not occupied
Turn down the thermostat and use space heaters in frequently used spaces. Turning down your thermostat even 1 degree can save you 3% on your energy bill!
Minimize the use of ventilation fans. A bathroom fan can suck all the heated air out of the average home in little more than an hour.
Keep your furnace, heat pump, or other heating equipment maintained and running as efficiently as possible. Look into purchasing a maintenance agreement. In the long run it could save your family lots of money.
Ceiling fans do more than keep you cool during the summer; they can warm during the winter. It’s as simple as flipping a switch to change the direction of the blades, which pushes warm air down.
Keep the water heater temperature at 120 degrees or cooler.
When washing clothes always wash full loads and use cold water whenever possible.
We all love those long hot showers in the winter, but by cutting your shower time in half you can save 33% on hot water costs.
Let Mother Nature lend a warm hand. Open up the curtains and blinds on all South facing windows during the day and let the sunlight heat the house naturally. But be sure to close them before the sun goes down to keep the heat within the house.
Gracie Mohr
Practical Prosperity
November 2010
If you feel that 2010 has breezed by quickly, you are not alone. Many Americans have had an exciting year of ups and downs in their financial lives. We soared into the year with a rising stock market and signs that housing and unemployment were on the verge of being on much better footing.
Spring and summer however began to instill doubt in many investors. As incentives expired, home sales once again became tepid and unemployment seemed stuck as census jobs began to diminish. Thankfully this fall has brought on a newfound sense of optimism and markets are moving again, housing prices are stabilizing (in many regions), and slowly but surely jobs are being created.
It is only appropriate in this season of thanks that we be thankful for the things that the stock market can’t take away from us. We can also be mindful of ways we can have a great season without compromising the savings we have set aside for our future goals and dreams.
Let’s take a trip to your local auto showroom. If your car needs to be replaced, year end is a great time. If you don’t need “2011” on the sticker, there are deals galore to be had. Many dealers are “advertizing” the invoice price (their price to purchase from the manufacturer) as the sale price. This is where negotiations start, as dealers take losses to clear the lot. If you can swallow some pride, your wallet will swallow more car.
With home sales still crawling out of the deepest of doldrums, now is still a time to buy. Government incentives may be over; however sellers are eager to do just that, sell. Consider this. Its January, its 20 degrees, streets are slushy, and the sky is gray. Homes look awful, buyers aren’t out, and some people have taken their home off the market until the weather improves. Find your new home now, before this happens. It might make for hectic holidays, but sellers do not want a house on the market through the depths of the winter. A house on the market in December is often doomed until at least April. Deals are to be had!
It is also a great time to be shopping for home items, clothing, and gift items. Sales are in abundance as demand to clear inventory increases. If your accounts can handle it, consider some of your need expenses, not just holiday gifts. If you have some less than fresh suits in the closet, a threadbare sofa, or a television that won’t tune, this is a great time to find your replacement. Prices are marked down; coupon deals are available by the thousands online; shipping is being touted as free. Take advantage of this! You might be able to replace your worn out microwave by purchasing one on sale, with an additional 25% off, shipped to your door for free. How is that for savings and convenience?
It is about being smart, not cheap. The time and money saved means more resources for what is really important. You will spend more time with family, save for that dream vacation, and have an overall sense of prosperity. If you have taken advantage of the concepts mentioned, or found others, let us know. We would love to share your stories of abundance no matter how they manifest. Your efforts might also empower confident action in your friends and family to do the same.
Here’s to you and your family for a very warm, enjoyable, and prosperous season of thanks!
Andy Pulsfort
If you feel that 2010 has breezed by quickly, you are not alone. Many Americans have had an exciting year of ups and downs in their financial lives. We soared into the year with a rising stock market and signs that housing and unemployment were on the verge of being on much better footing.
Spring and summer however began to instill doubt in many investors. As incentives expired, home sales once again became tepid and unemployment seemed stuck as census jobs began to diminish. Thankfully this fall has brought on a newfound sense of optimism and markets are moving again, housing prices are stabilizing (in many regions), and slowly but surely jobs are being created.
It is only appropriate in this season of thanks that we be thankful for the things that the stock market can’t take away from us. We can also be mindful of ways we can have a great season without compromising the savings we have set aside for our future goals and dreams.
Let’s take a trip to your local auto showroom. If your car needs to be replaced, year end is a great time. If you don’t need “2011” on the sticker, there are deals galore to be had. Many dealers are “advertizing” the invoice price (their price to purchase from the manufacturer) as the sale price. This is where negotiations start, as dealers take losses to clear the lot. If you can swallow some pride, your wallet will swallow more car.
With home sales still crawling out of the deepest of doldrums, now is still a time to buy. Government incentives may be over; however sellers are eager to do just that, sell. Consider this. Its January, its 20 degrees, streets are slushy, and the sky is gray. Homes look awful, buyers aren’t out, and some people have taken their home off the market until the weather improves. Find your new home now, before this happens. It might make for hectic holidays, but sellers do not want a house on the market through the depths of the winter. A house on the market in December is often doomed until at least April. Deals are to be had!
It is also a great time to be shopping for home items, clothing, and gift items. Sales are in abundance as demand to clear inventory increases. If your accounts can handle it, consider some of your need expenses, not just holiday gifts. If you have some less than fresh suits in the closet, a threadbare sofa, or a television that won’t tune, this is a great time to find your replacement. Prices are marked down; coupon deals are available by the thousands online; shipping is being touted as free. Take advantage of this! You might be able to replace your worn out microwave by purchasing one on sale, with an additional 25% off, shipped to your door for free. How is that for savings and convenience?
It is about being smart, not cheap. The time and money saved means more resources for what is really important. You will spend more time with family, save for that dream vacation, and have an overall sense of prosperity. If you have taken advantage of the concepts mentioned, or found others, let us know. We would love to share your stories of abundance no matter how they manifest. Your efforts might also empower confident action in your friends and family to do the same.
Here’s to you and your family for a very warm, enjoyable, and prosperous season of thanks!
Andy Pulsfort
Getting Naked
I would never have purchased the book Getting Naked: A Business Fable About Shedding The Three Fears That Sabotage Client Loyalty by Patrick Lencioni, as the title does not speak to me and I was not familiar with Mr. Lencioni’s previous work. However in early November, I had the pleasure of hearing him speak. As I listened, I found myself challenged, aligned and ready to read anything Mr. Lencioni had written.
The essence of the book is about being vulnerable. Sounds simple enough. I certainly think of myself as an authentic person, willing to be real and vulnerable. Yet in business and in life, being vulnerable can be challenging for many people. Sometimes it requires that we admit to our lack of knowledge and our mistakes. It might also mean we have to tell the truth when a white lie would be much easier. It can also mean turning a client away when you are not the right fit.
In Getting Naked, Mr. Lencioni describes three fears we must walk through to deliver naked service:
Fear of Losing the Business - Worrying about losing a client's business may cause service providers and consultants to avoid the very things that ultimately engender trust and loyalty.
Fear of Being Embarrassed - Rooted in pride, this fear can lead service providers to withhold their best ideas from clients.
Fear of Feeling Inferior - To avoid feeling irrelevant or being overlooked, consultants try to achieve and preserve a high level of importance in clients' minds.
As he spoke about the fear of losing the business, I remembered my own experience:
An acquaintance called and asked me if I would work with her mother. I agreed. Both mother and daughter came to the appointment. After only fifteen minutes, I was clear that the daughter really wanted me to help her mother. And I was equally clear that what her mother really needed was to work with her local banker, someone she dearly trusted and with whom she felt safe.
At the end of our conversation, I looked at the mother, who had been sitting next to me with her arms crossed and with a scowling look on her face the entire meeting, and said, “I hear that the money you have is really important to you as a safety net. I also understand you want to use this money for special things in life, and you do not need it for everyday living. As you have spoken, it seems clear that you really trust your local banker, so I am curious as to why you would not continue to work with your banker.” Surprised, she relaxed, smiled and said, “Do you really think I should work with my banker?” “Yes,” I replied.
She told me how much she appreciated our meeting and gave me a big hug. She left my office with a clear plan on how to work with her banker. As she was leaving, she asked me what she owed me for our time today. “No charge” I replied.
The mother came to see me to make her daughter happy. I know that we could have done a great job for the mother, except that she wanted something else: to work with her banker. This meeting did not earn me any new business or revenue. Yet what I gained was priceless. I went to sleep that night knowing I had done the right thing. I had been willing to listen, to be vulnerable and say, “We are not the best fit for your needs.”
Being vulnerable does not mean throwing caution to the wind and dismissing the wisdom we have gained throughout our lifetime. But it does mean having an open mind, and speaking the truth when the truth is what serves the highest good of everyone. That is how strong, trusting relationships develop between us.
To continue learning about Mr. Lencioni’s book and to download his model, visit his web site at:
http://www.tablegroup.com/books/gettingnaked
One of the things I most love about being a successful CEO is being vulnerable enough to say “I don’t know it all”, which means I am open to the teachings and wisdom of others. That creates a world of endless possibilities! I hope you enjoy learning about Getting Naked much as I did!
Mackey McNeill
The essence of the book is about being vulnerable. Sounds simple enough. I certainly think of myself as an authentic person, willing to be real and vulnerable. Yet in business and in life, being vulnerable can be challenging for many people. Sometimes it requires that we admit to our lack of knowledge and our mistakes. It might also mean we have to tell the truth when a white lie would be much easier. It can also mean turning a client away when you are not the right fit.
In Getting Naked, Mr. Lencioni describes three fears we must walk through to deliver naked service:
Fear of Losing the Business - Worrying about losing a client's business may cause service providers and consultants to avoid the very things that ultimately engender trust and loyalty.
Fear of Being Embarrassed - Rooted in pride, this fear can lead service providers to withhold their best ideas from clients.
Fear of Feeling Inferior - To avoid feeling irrelevant or being overlooked, consultants try to achieve and preserve a high level of importance in clients' minds.
As he spoke about the fear of losing the business, I remembered my own experience:
An acquaintance called and asked me if I would work with her mother. I agreed. Both mother and daughter came to the appointment. After only fifteen minutes, I was clear that the daughter really wanted me to help her mother. And I was equally clear that what her mother really needed was to work with her local banker, someone she dearly trusted and with whom she felt safe.
At the end of our conversation, I looked at the mother, who had been sitting next to me with her arms crossed and with a scowling look on her face the entire meeting, and said, “I hear that the money you have is really important to you as a safety net. I also understand you want to use this money for special things in life, and you do not need it for everyday living. As you have spoken, it seems clear that you really trust your local banker, so I am curious as to why you would not continue to work with your banker.” Surprised, she relaxed, smiled and said, “Do you really think I should work with my banker?” “Yes,” I replied.
She told me how much she appreciated our meeting and gave me a big hug. She left my office with a clear plan on how to work with her banker. As she was leaving, she asked me what she owed me for our time today. “No charge” I replied.
The mother came to see me to make her daughter happy. I know that we could have done a great job for the mother, except that she wanted something else: to work with her banker. This meeting did not earn me any new business or revenue. Yet what I gained was priceless. I went to sleep that night knowing I had done the right thing. I had been willing to listen, to be vulnerable and say, “We are not the best fit for your needs.”
Being vulnerable does not mean throwing caution to the wind and dismissing the wisdom we have gained throughout our lifetime. But it does mean having an open mind, and speaking the truth when the truth is what serves the highest good of everyone. That is how strong, trusting relationships develop between us.
To continue learning about Mr. Lencioni’s book and to download his model, visit his web site at:
http://www.tablegroup.com/books/gettingnaked
One of the things I most love about being a successful CEO is being vulnerable enough to say “I don’t know it all”, which means I am open to the teachings and wisdom of others. That creates a world of endless possibilities! I hope you enjoy learning about Getting Naked much as I did!
Mackey McNeill
Monday, November 8, 2010
College Board Releases New College Cost Figures
On October 28, 2010, the College Board released college cost figures for the 2010/2011 academic year in its annual Trends in College Pricing report.
Here are a few highlight from the reports:
Four-year public colleges (in-state students):
Tuition and fees increased an average of 7.9% to $7,605
Room and board increased an average of 4.6% to $8,535
Total average cost* for 2010/2011: $20,339
Four-year public colleges (out-of-state students):
Tuition and fees increased an average of 6.0% to $19,595
Room and board increased an average of 4.6% to $8,535
Total average cost* for 2010/2011: $32,329
Four-year private colleges:
Tuition and fees increased an average of 4.5% to $27,293
Room and board increased an average of 3.9% to $9,700
Total average cost* for 2009/2010: $40,476
*"Total average cost" includes tuition and fees, room and board, books and supplies, transportation, and other miscellaneous costs.
The report also notes the estimated average amount of grant aid and federal education tax benefits that full-time college students received for the 2010/2011 year: $6,100 for students attending public colleges and $16,000 for students at private colleges.
Here are a few highlight from the reports:
Four-year public colleges (in-state students):
Tuition and fees increased an average of 7.9% to $7,605
Room and board increased an average of 4.6% to $8,535
Total average cost* for 2010/2011: $20,339
Four-year public colleges (out-of-state students):
Tuition and fees increased an average of 6.0% to $19,595
Room and board increased an average of 4.6% to $8,535
Total average cost* for 2010/2011: $32,329
Four-year private colleges:
Tuition and fees increased an average of 4.5% to $27,293
Room and board increased an average of 3.9% to $9,700
Total average cost* for 2009/2010: $40,476
*"Total average cost" includes tuition and fees, room and board, books and supplies, transportation, and other miscellaneous costs.
The report also notes the estimated average amount of grant aid and federal education tax benefits that full-time college students received for the 2010/2011 year: $6,100 for students attending public colleges and $16,000 for students at private colleges.
Tuesday, November 2, 2010
Smart Holiday Shopping
Smart Holiday Shopping
Many people tend to forget or forgo their financial plans during the holiday season for the sake of their loved ones. However, there are a few simple financial rules that can help you get the most bang for your holiday buck.
- Set your budget before you turn the computer on! It is very easy to get carried away. Try to make a list of exactly what you are looking for before shopping. Know your limit.
- Google offers a “Google Product Search.” This search is designed to find a particular item at the lowest price, taking a variety of retailers into account. Don’t forget to factor in shipping! Sometimes a low price on an item may end up being offset by a costly shipping fee.
- Websites like http://www.retailmenot.com list coupons and web deals for thousands of retailers. You can simply search for an item or a specific store.
- Keep an eye out for “free shipping” specials. Sometimes buying two of an item and receiving free shipping will result in a lower total cost.
- Check Facebook and other social media. Smaller and local retailers often post specials and coupons that can be used to save money.
- Don’t inadvertently blow your budget by purchasing things for yourself! If you find items you want, add them to your own holiday list.
- When shopping online for out of town relatives, it is generally more cost effective to have the item shipped to them. The alternative of having it shipped to you and repackaging it results in paying shipping costs twice. Plus you can usually have it shipped wrapped as a gift with a gift receipt.
- Shop early so you have plenty of time to use the lowest cost shipping. Waiting until the last minute can cause you to need express shipping, which can be very expensive.
- Keep your recipient in mind. Check the return/restocking policy and be sure to include a gift receipt.
-And as Jody Robinson puts it, "...shop local independent businesses where your money reinvests in
the community!"
Above all, Try to remember that the holiday season isn’t all about exorbitant consumerism. Focus on family, and don’t forget your budget!
Many people tend to forget or forgo their financial plans during the holiday season for the sake of their loved ones. However, there are a few simple financial rules that can help you get the most bang for your holiday buck.
- Set your budget before you turn the computer on! It is very easy to get carried away. Try to make a list of exactly what you are looking for before shopping. Know your limit.
- Google offers a “Google Product Search.” This search is designed to find a particular item at the lowest price, taking a variety of retailers into account. Don’t forget to factor in shipping! Sometimes a low price on an item may end up being offset by a costly shipping fee.
- Websites like http://www.retailmenot.com list coupons and web deals for thousands of retailers. You can simply search for an item or a specific store.
- Keep an eye out for “free shipping” specials. Sometimes buying two of an item and receiving free shipping will result in a lower total cost.
- Check Facebook and other social media. Smaller and local retailers often post specials and coupons that can be used to save money.
- Don’t inadvertently blow your budget by purchasing things for yourself! If you find items you want, add them to your own holiday list.
- When shopping online for out of town relatives, it is generally more cost effective to have the item shipped to them. The alternative of having it shipped to you and repackaging it results in paying shipping costs twice. Plus you can usually have it shipped wrapped as a gift with a gift receipt.
- Shop early so you have plenty of time to use the lowest cost shipping. Waiting until the last minute can cause you to need express shipping, which can be very expensive.
- Keep your recipient in mind. Check the return/restocking policy and be sure to include a gift receipt.
-And as Jody Robinson puts it, "...shop local independent businesses where your money reinvests in
the community!"
Above all, Try to remember that the holiday season isn’t all about exorbitant consumerism. Focus on family, and don’t forget your budget!
Tuesday, October 26, 2010
A Celebration of Abundance
William McDonough, author of Cradle to Cradle, spoke at Xavier last night to a packed house, including me. I was enlivened by his message of abundance, hope, and the promise of great design.
Below are some of the key points of his talk, as I heard and recorded it.
We need a Revolution. Revolutions are based on values. We need to change the way we act based on a new set of values, not a new set of metrics. To cause a revolution, you must have 5% of the thinking population aligned with your values. We are almost there.
New design is required. When we have regulations, it is a signal of design failure. Mr. McDonough is an architect, so he focuses on design. We have to ask ourselves, "What is our design for our species?"
Renewable energy is the answer. Sunlight is the only true income that the earth has. We need to celebrate renewable energy and get on it, now.
The earth belongs to the living. Life is abundant. We need to stop thinking in terms of limits of resources and design our world to mirror nature, a truly abundant renewable system. We need change now and we need it fast.
Nature is not a tool. We are part of nature. Nature is a treasure to be celebrated, not a resource to be used.
Natures design is:
• Waste is food
• Use
• Celebrate diversity
• Anticipate evolution
We can do better than recycle, we can upcycle. Upcycling is to take something toxic and make it pure.
Values are our starting point, followed by principles, goals, strategies, tactics and actions.
Monoculture is backward. Poly-culture is forward. Build the soil.
Be an optimist.
Don’t settle for doing less bad. Instead, actively strive to do more good.
I resonated with the values comments, as when we are taking clients thru The Prosperity Experience, we start with values. Everything springs forth from values and it changes the dynamics of everything that follows. If we lived all our lives that way, what a different world it would be.
What can you do? His answer was "Follow your bliss", but do it using the principles outlined. Use nature as your guide, celebrate abundance and expect evolution.
A new discovery is like fire, it has no chance but to spread.
Below are some of the key points of his talk, as I heard and recorded it.
We need a Revolution. Revolutions are based on values. We need to change the way we act based on a new set of values, not a new set of metrics. To cause a revolution, you must have 5% of the thinking population aligned with your values. We are almost there.
New design is required. When we have regulations, it is a signal of design failure. Mr. McDonough is an architect, so he focuses on design. We have to ask ourselves, "What is our design for our species?"
Renewable energy is the answer. Sunlight is the only true income that the earth has. We need to celebrate renewable energy and get on it, now.
The earth belongs to the living. Life is abundant. We need to stop thinking in terms of limits of resources and design our world to mirror nature, a truly abundant renewable system. We need change now and we need it fast.
Nature is not a tool. We are part of nature. Nature is a treasure to be celebrated, not a resource to be used.
Natures design is:
• Waste is food
• Use
• Celebrate diversity
• Anticipate evolution
We can do better than recycle, we can upcycle. Upcycling is to take something toxic and make it pure.
Values are our starting point, followed by principles, goals, strategies, tactics and actions.
Monoculture is backward. Poly-culture is forward. Build the soil.
Be an optimist.
Don’t settle for doing less bad. Instead, actively strive to do more good.
I resonated with the values comments, as when we are taking clients thru The Prosperity Experience, we start with values. Everything springs forth from values and it changes the dynamics of everything that follows. If we lived all our lives that way, what a different world it would be.
What can you do? His answer was "Follow your bliss", but do it using the principles outlined. Use nature as your guide, celebrate abundance and expect evolution.
A new discovery is like fire, it has no chance but to spread.
Friday, October 22, 2010
Go Green this Halloween!
Holidays are a great way to spend time with your family & friends, but it is also a time for buying excessive decorative items & clothing you don’t need. Here are a few ways to green up your Halloween…
1. Instead of buying new costumes and decorative items this Halloween organize a swap with your friends, neighbors and family.
2. To reduce your carbon footprint take your kids trick-or-treating in your own neighborhood, or carpool if it is necessary to travel.
3. Use your plastic grocery bags, reusable shopping bags, or old pillow cases to carry the kiddo’s candy stash.
4. If you choose to give candy, try to buy locally! Check out Findlay Market, or Schneider’s Candy for some yummy Cincinnati treats. If you are looking for non-candy treats pick up some temporary tattoos, stickers, or crayons.
5. Keep Mother Earth clean and teach your kids a lesson in littering by having a separate bag to pick up rouge candy wrappers while trick-or-treating.
6. Make homemade Halloween decorations from household items like tin cans, glass jars, plastic containers and toilet paper rolls. Click here for some ideas.
7. And don’t forget the greenest decoration of all! Jack-o-lanterns!
By Gracie Mohr
1. Instead of buying new costumes and decorative items this Halloween organize a swap with your friends, neighbors and family.
2. To reduce your carbon footprint take your kids trick-or-treating in your own neighborhood, or carpool if it is necessary to travel.
3. Use your plastic grocery bags, reusable shopping bags, or old pillow cases to carry the kiddo’s candy stash.
4. If you choose to give candy, try to buy locally! Check out Findlay Market, or Schneider’s Candy for some yummy Cincinnati treats. If you are looking for non-candy treats pick up some temporary tattoos, stickers, or crayons.
5. Keep Mother Earth clean and teach your kids a lesson in littering by having a separate bag to pick up rouge candy wrappers while trick-or-treating.
6. Make homemade Halloween decorations from household items like tin cans, glass jars, plastic containers and toilet paper rolls. Click here for some ideas.
7. And don’t forget the greenest decoration of all! Jack-o-lanterns!
By Gracie Mohr
The Future
Mackey Advisors was pleased to host David Houle, www.DavidHoule.com for our Corporate Fall Education event. It is our goal to offer our corporate clients the best in innovative thinking so they can thrive and prosper. This is our fourth annual Fall Education Event, and David certainly delivered. Everyone left jazzed and with a bit of trepidation about the future.
After giving a review of the pace of historical change, David presents the current time as The Shift Age, a time when change becomes part of our everyday environment. In other words, the constant is change.
There are three fundamental forces in The Shift Age:
1. The flow to Global. More than ever before, we are global citizens. We are personally impacted by global events as never before due to instant access on the Internet. Our problems must be considered and solved on a Global level.
2. The flow to the Individual. The power of institutions is in decline. We no longer define ourselves by the institutions we belong to. We want our products and services personalized.
3. Accelerated Connectedness. Particularly from the rise of the use of cell phones, we can be connected to virtually anyone in the world in just a few seconds.
Change equals disruption, confusion, chaos and a tremendous opportunity for wealth creation. But to gain wealth, not lose it, we have to lead with more vision than ever.
David gave us five attributes leaders need to use and master to navigate The Shift Age with success. Below are the five attributes along with my personal take on what we as CEO’s can do now to embody them.
Adaptability
-With the speed of change increasing, every CEO needs a daily, weekly and monthly score card. Historical and trending key performance indicators are a must. Your numbers will give you guidance on the changes needed.
-Know your core business and align your marketing with that core.
-Set aside time to work ON your business. As the CEO, you cannot adapt without being aware of the big picture.
Resilience
-Lower your fixed cost, and keep your capacity strong by replacing those costs with variable costs. Design a business that can ebb and flow with change and be profitable on many levels.
-Monitor your liquidity You must know where you cash is at all times. You cannot afford to be asset rich and cash poor.
Collaborative on-going reorganization
-Transform your business. If you have a buggy whip business, you can be the best one ever and still have no market.
Trust and change of “authority”
-Social media is here to stay. Learn it, love it and use it.
-Make your product custom and personal
-Adapt to the new work force; it won’t adapt to you.
The Morph Corp
-Know the emotional content of your brand and your intellectual property value.
-Treat your business like your greatest asset (it probably is) and look at what needs to happen to maximize its return on investment.
-Look global.
If you missed this event, I encourage you to pick up David’s book, The Shift Age and make time to read and understand the new future. We cannot afford to be complacent or static.
Natalie, Karen, Andy, Grace or I would be happy to meet you at your office or for lunch to talk about these changes and how you can ready your business for the future.
As your wealth advocate, we are committed to your prosperity, now and in the future. Onward!
By Mackey McNeill
After giving a review of the pace of historical change, David presents the current time as The Shift Age, a time when change becomes part of our everyday environment. In other words, the constant is change.
There are three fundamental forces in The Shift Age:
1. The flow to Global. More than ever before, we are global citizens. We are personally impacted by global events as never before due to instant access on the Internet. Our problems must be considered and solved on a Global level.
2. The flow to the Individual. The power of institutions is in decline. We no longer define ourselves by the institutions we belong to. We want our products and services personalized.
3. Accelerated Connectedness. Particularly from the rise of the use of cell phones, we can be connected to virtually anyone in the world in just a few seconds.
Change equals disruption, confusion, chaos and a tremendous opportunity for wealth creation. But to gain wealth, not lose it, we have to lead with more vision than ever.
David gave us five attributes leaders need to use and master to navigate The Shift Age with success. Below are the five attributes along with my personal take on what we as CEO’s can do now to embody them.
Adaptability
-With the speed of change increasing, every CEO needs a daily, weekly and monthly score card. Historical and trending key performance indicators are a must. Your numbers will give you guidance on the changes needed.
-Know your core business and align your marketing with that core.
-Set aside time to work ON your business. As the CEO, you cannot adapt without being aware of the big picture.
Resilience
-Lower your fixed cost, and keep your capacity strong by replacing those costs with variable costs. Design a business that can ebb and flow with change and be profitable on many levels.
-Monitor your liquidity You must know where you cash is at all times. You cannot afford to be asset rich and cash poor.
Collaborative on-going reorganization
-Transform your business. If you have a buggy whip business, you can be the best one ever and still have no market.
Trust and change of “authority”
-Social media is here to stay. Learn it, love it and use it.
-Make your product custom and personal
-Adapt to the new work force; it won’t adapt to you.
The Morph Corp
-Know the emotional content of your brand and your intellectual property value.
-Treat your business like your greatest asset (it probably is) and look at what needs to happen to maximize its return on investment.
-Look global.
If you missed this event, I encourage you to pick up David’s book, The Shift Age and make time to read and understand the new future. We cannot afford to be complacent or static.
Natalie, Karen, Andy, Grace or I would be happy to meet you at your office or for lunch to talk about these changes and how you can ready your business for the future.
As your wealth advocate, we are committed to your prosperity, now and in the future. Onward!
By Mackey McNeill
Wednesday, September 22, 2010
Tips For Boosting Your Credit Score
In this economy, many seek to improve their financial well-being. One effective measurement of the health of your prosperity is your credit score. When seeking to improve your score, you must keep in mind that there is no “quick fix” for a problematic credit history. However, there are several things you can do to ensure that your score is headed in the right direction.
• Keep track of your credit score. Credit scores run from 300 to 850. Your personal score is based on the information that the three big credit bureaus (Equifax, TransUnion and Experian) have on file for you. Be sure to check your credit report on a regular basis as mistakes can be made that can adversely impact your financial health. http://www.AnnualCreditReport.com is a government-run website which
allows you to access your credit report annually at no cost.
• Be smart with installment plans. Your credit score is based on how much unused credit you have compared to how much you currently owe. If you are often late or very close to your maximum credit line on your account(s) this will impact your credit score in a negative way. One way to take care of this problem is to take out an installment loan to pay off your credit cards. Get a second mortgage or line of credit and take care of these cards quickly. Note: If you are committed to your financial health this is not generally considered a desirable move. However, improving your credit score and making good long-term financial decisions do not always go hand in hand.
• When in doubt, pay off the cards closest to their maximum balance. The intention with this technique is to free up as much credit as possible. A general rule of thumb is that you want to owe 30% or less than your available credit.
• Using old cards is a good credit-building practice. Paying off an older credit card and never using it again can actually harm your credit score. Regularly charge a small balance and pay it off quickly. The key here is to resist charging more than you can pay off at the end of the month.
• Don’t close accounts. Closing a card once you pay it off can actually lower your credit score. As stated above, it is better to shake the dust off that old card and charge a small amount on it, then pay it off before it collects interest.
• Increase your credit limit. Remember the rule of thumb: having a large amount of available credit does wonders for your score. The key here is to have as much difference as possible between the amount of credit available and the amount you owe.
• Take advantage of automatic payments. Often, late or missed payments are the product of a memory lapse.
• Beware late payment penalties. Even a late fee from your local library can impact your credit score.
• Don’t get sent to collections. It is more beneficial to you to pay that extra $30 fee you don’t agree with than to have your score damaged as a result of stubbornness.
• Keep track of your credit score. Credit scores run from 300 to 850. Your personal score is based on the information that the three big credit bureaus (Equifax, TransUnion and Experian) have on file for you. Be sure to check your credit report on a regular basis as mistakes can be made that can adversely impact your financial health. http://www.AnnualCreditReport.com is a government-run website which
allows you to access your credit report annually at no cost.
• Be smart with installment plans. Your credit score is based on how much unused credit you have compared to how much you currently owe. If you are often late or very close to your maximum credit line on your account(s) this will impact your credit score in a negative way. One way to take care of this problem is to take out an installment loan to pay off your credit cards. Get a second mortgage or line of credit and take care of these cards quickly. Note: If you are committed to your financial health this is not generally considered a desirable move. However, improving your credit score and making good long-term financial decisions do not always go hand in hand.
• When in doubt, pay off the cards closest to their maximum balance. The intention with this technique is to free up as much credit as possible. A general rule of thumb is that you want to owe 30% or less than your available credit.
• Using old cards is a good credit-building practice. Paying off an older credit card and never using it again can actually harm your credit score. Regularly charge a small balance and pay it off quickly. The key here is to resist charging more than you can pay off at the end of the month.
• Don’t close accounts. Closing a card once you pay it off can actually lower your credit score. As stated above, it is better to shake the dust off that old card and charge a small amount on it, then pay it off before it collects interest.
• Increase your credit limit. Remember the rule of thumb: having a large amount of available credit does wonders for your score. The key here is to have as much difference as possible between the amount of credit available and the amount you owe.
• Take advantage of automatic payments. Often, late or missed payments are the product of a memory lapse.
• Beware late payment penalties. Even a late fee from your local library can impact your credit score.
• Don’t get sent to collections. It is more beneficial to you to pay that extra $30 fee you don’t agree with than to have your score damaged as a result of stubbornness.
Thursday, August 26, 2010
Boringly Powerful
In the financial planning world, we're all trying to get better at what we do, and so whenever we get together at conferences, we trade thoughts and ideas and insights.
One of the most informative stories you're likely to hear came from an advisor who told the audience that he hosts yearly client appreciation dinners. Lately, he's been grouping the guests according to how long they've worked with him. At one table, those who've retained his services for the past five years. Another, people he's been advising for ten years. There's a 15-year table, 20 years, 25 and, at the table in front, people who he's worked with for 30 years.
"As I looked over at the 30-year table," he said, "I saw people who, when we first started out, were not wealthy and never expected to be." Now they're worth millions and (more importantly) able to live their life on their own terms.
One woman in particular caught his eye, a school teacher who had come to him in the first year of her teaching career. She had gotten into the not-unusual habit of spending a little more than she made. She was in debt, and one of the first things they talked about was whether she could afford an expensive car that she'd talked to the local dealer about.
The advisor's advice, which she took, was to buy a much more affordable, serviceable vehicle. He worked with her to pay off the credit cards, and over the rest of her teaching career, he encouraged her put the maximum into her 403(b) plan and save ten percent of her income and managed her growing retirement portfolio. The change in lifestyle was not dramatic, but it had a huge impact on her life: the year of this particular dinner, she had accumulated enough that she could afford to retire and travel the world.
"What's interesting," the advisor told the audience, "is that when she told the other teachers that she was going to quit work, their first question was: how can you afford it? The other teachers," he continued, "were still in the habit of spending a little more than they made, living year-to-year, and couldn't afford to retire."
Looking at this one person at the 30-year table, sitting among other people with stories like hers, he was struck by the huge difference a small course correction and a little financial coaching can have on somebody's life over longer periods of time: the difference between squeaking by financially and retiring with millions.
His first insight (which made the audience laugh) was: "I don't charge nearly enough for my services."
His second was: even though he worked hard to manage the portfolio efficiently, her rate of return was just about equal to what the market offered. That, in itself, is surprisingly extraordinary; according to data compiled by the Morningstar fund tracking organization, mutual fund investors, on average seem to get about half of market returns--because people tend to buy hot funds right before they cool off, and sell out of underperforming funds right before they hit a hot streak. By staying consistent with the schoolteacher's investments, the advisor added far more value than you'll likely find in any kind of fancy investment strategy.
But the real point--the most important insight--is that the difference between a table full of millionaires and their peers who spent thirty years spinning their wheels is a boringly powerful formula: consistent savings habits, avoiding debt, and living within their means in a world that constantly tempts us to overspend. When you reduce all the spreadsheet analyses, forecasts and formulas down to their purest essence, this is what most financial planners are trying to help people achieve in their lives. For the people at some of those 20-30 year tables, the real challenge now is how to use their excess money to have fun, and who they want to leave the excess to at the end of their lives.
Andy Pulsfort
One of the most informative stories you're likely to hear came from an advisor who told the audience that he hosts yearly client appreciation dinners. Lately, he's been grouping the guests according to how long they've worked with him. At one table, those who've retained his services for the past five years. Another, people he's been advising for ten years. There's a 15-year table, 20 years, 25 and, at the table in front, people who he's worked with for 30 years.
"As I looked over at the 30-year table," he said, "I saw people who, when we first started out, were not wealthy and never expected to be." Now they're worth millions and (more importantly) able to live their life on their own terms.
One woman in particular caught his eye, a school teacher who had come to him in the first year of her teaching career. She had gotten into the not-unusual habit of spending a little more than she made. She was in debt, and one of the first things they talked about was whether she could afford an expensive car that she'd talked to the local dealer about.
The advisor's advice, which she took, was to buy a much more affordable, serviceable vehicle. He worked with her to pay off the credit cards, and over the rest of her teaching career, he encouraged her put the maximum into her 403(b) plan and save ten percent of her income and managed her growing retirement portfolio. The change in lifestyle was not dramatic, but it had a huge impact on her life: the year of this particular dinner, she had accumulated enough that she could afford to retire and travel the world.
"What's interesting," the advisor told the audience, "is that when she told the other teachers that she was going to quit work, their first question was: how can you afford it? The other teachers," he continued, "were still in the habit of spending a little more than they made, living year-to-year, and couldn't afford to retire."
Looking at this one person at the 30-year table, sitting among other people with stories like hers, he was struck by the huge difference a small course correction and a little financial coaching can have on somebody's life over longer periods of time: the difference between squeaking by financially and retiring with millions.
His first insight (which made the audience laugh) was: "I don't charge nearly enough for my services."
His second was: even though he worked hard to manage the portfolio efficiently, her rate of return was just about equal to what the market offered. That, in itself, is surprisingly extraordinary; according to data compiled by the Morningstar fund tracking organization, mutual fund investors, on average seem to get about half of market returns--because people tend to buy hot funds right before they cool off, and sell out of underperforming funds right before they hit a hot streak. By staying consistent with the schoolteacher's investments, the advisor added far more value than you'll likely find in any kind of fancy investment strategy.
But the real point--the most important insight--is that the difference between a table full of millionaires and their peers who spent thirty years spinning their wheels is a boringly powerful formula: consistent savings habits, avoiding debt, and living within their means in a world that constantly tempts us to overspend. When you reduce all the spreadsheet analyses, forecasts and formulas down to their purest essence, this is what most financial planners are trying to help people achieve in their lives. For the people at some of those 20-30 year tables, the real challenge now is how to use their excess money to have fun, and who they want to leave the excess to at the end of their lives.
Andy Pulsfort
Monday, August 2, 2010
Sustainable Homestead Tour: August 14th
Join the Kenton County Conservation District on Sat., Aug. 14, 2010 between 10 a.m. and noon to tour Red Sunflower Farm, Kenton County’s self-sustaining homestead in-the-making. Learn how to use permaculture principles and the three pillars of sustainability – reduce, reuse and recycle – to design, create, and steward Earth-friendly indoor and outdoor living spaces. Allow about an hour for your visit, with tours led by owners Mackey McNeill and Barry Schlimme. You will see the Energy Star-rated home, the gardens and the recreational area along beautiful Banklick Creek. Children are welcome. The farm is located on Webster Road. Visit www.redsunflowerfarm.com for directions (directions provided by internet map searches are not accurate). Sponsored by the Kenton Co. Conservation District. Please pre-register by contacting the Kenton County Conservation District at 859-586-7903.
Kentucky Conservation Districts are governmental subdivisions of the state, organized under Kentucky Revised Statute 262. Conservation Districts are responsible for protecting our soil, water and other natural resources. The Kenton County Conservation District was established in 1942 following a referendum of the citizens of the county. Seven locally elected officials, who serve a four-year term without pay, govern the Conservation District. The Conservation District makes technical and financial help available to reduce soil erosion, prevent water pollution, and maintain and improve the quality and productivity of our farmlands, forests, and other natural resources. Assistance is available to everyone in dealing with natural resources issues, including farmers, homeowners, businesses, schools, organizations, agencies, cities and local governments.
For information about this news release, contact Mary Kathryn Dickerson, District Coordinator for the Boone, Campbell and Kenton County Conservation Districts at 859-586-7903 or 859-635-9587 or e-mail: mary.dickerson@ky.nacdnet.net.
Kentucky Conservation Districts are governmental subdivisions of the state, organized under Kentucky Revised Statute 262. Conservation Districts are responsible for protecting our soil, water and other natural resources. The Kenton County Conservation District was established in 1942 following a referendum of the citizens of the county. Seven locally elected officials, who serve a four-year term without pay, govern the Conservation District. The Conservation District makes technical and financial help available to reduce soil erosion, prevent water pollution, and maintain and improve the quality and productivity of our farmlands, forests, and other natural resources. Assistance is available to everyone in dealing with natural resources issues, including farmers, homeowners, businesses, schools, organizations, agencies, cities and local governments.
For information about this news release, contact Mary Kathryn Dickerson, District Coordinator for the Boone, Campbell and Kenton County Conservation Districts at 859-586-7903 or 859-635-9587 or e-mail: mary.dickerson@ky.nacdnet.net.
Monday, July 26, 2010
Weekend Getaway on a Budget
How To Take a Weekend Getaway Without Breaking the Bank
Often our lives get so hectic that we realize that we could really use a little time out of our daily routine in order to reboot and reenergize for the coming week. One tried and true method of accomplishing this recharge is the weekend mini-vacation. There are however, many financial drawbacks to these types of vacations, mainly because they are often booked at the last second. Here are a few tips to help reduce the cost of your mental health weekend:
• Check the internet for deals. Simply typing in the destination name on Google or a similar search engine can yield coupons and discounts you would probably have never known about. When you find rates, do not assume that the price quoted is the best deal. Often, booking through the lodging company will result in lower rates because you can see if they will provide a better deal. For example, if you are traveling with multiple people, ask if there is some deal that includes lodging and free breakfast. There are also packages that include other activities as well.
• Travel to off-season locations. Going to the beach at the end of summer rather than smack in the middle can result in much lower prices. Remember to be flexible…the much hyped locations are the most expensive. Take the opportunity to travel somewhere a little more off the beaten path.
• When considering your accommodations, look at the cost of renting a condo in the area for a short time. While the condo may be more expensive on paper, taking the cost of eating out every meal in a hotel versus being able to cook in the condo may make a big difference in the money you spend daily.
• Be conscious of local events in your destination area. If there is a big event going on lodging may automatically be more expensive. If the event holds no interest for you, consider rescheduling to another time.
• Plan with a budget. Look at how much money you will need to spend everyday (including lodging) and add 10% for unexpected expenses. If the total is a figure that you can pay from savings without adding to your debt, then its affordable. If it’s too expensive, consider holding off until you can build enough savings to cover it.
• Getaway weekends are great, but remember, lodging, meals and activities may cost more on the weekend. Turning your weekend retreat into a mid-week mini-vacation can end up saving you some serious money.
• To estimate fuel cost for the trip, check out www.fuelcostcalculator.com or www.costtodrive.com .
• There are often perks involved with being a member of certain “clubs.” For instance, more than 100 museums, zoos and science centers offer free admission on the first weekend of every month to people who have a Bank of America ATM, credit or check card. Check out what you may have to help you hold onto your cash.
• Join a bed and breakfast club. You can end up paying only $10-$20 for a room with breakfast, in the homes of other travelers. In return you offer your spare room to people on the road.
• Pack a cooler. If you drive during a trip this will save you a considerable amount of money.
• Consider traveling to visit family and friends. This will drastically cut down on your daily expenses since relatives generally let you stay for free. Just limit your stay to three days or less.
• Plan for picnic lunch or dinner. Stopping at a grocery store to pick up picnic fare for a family is much cheaper than feeding that same family at a restaurant…and its much more fun! Find a nice spot and dine while you enjoy some local natural beauty.
Ultimately, taking a vacation, however small, is always taxing on finances. But planning smart and saving the money to go beforehand can render your last minute mini-vacation stress free and much more enjoyable for everyone!
Often our lives get so hectic that we realize that we could really use a little time out of our daily routine in order to reboot and reenergize for the coming week. One tried and true method of accomplishing this recharge is the weekend mini-vacation. There are however, many financial drawbacks to these types of vacations, mainly because they are often booked at the last second. Here are a few tips to help reduce the cost of your mental health weekend:
• Check the internet for deals. Simply typing in the destination name on Google or a similar search engine can yield coupons and discounts you would probably have never known about. When you find rates, do not assume that the price quoted is the best deal. Often, booking through the lodging company will result in lower rates because you can see if they will provide a better deal. For example, if you are traveling with multiple people, ask if there is some deal that includes lodging and free breakfast. There are also packages that include other activities as well.
• Travel to off-season locations. Going to the beach at the end of summer rather than smack in the middle can result in much lower prices. Remember to be flexible…the much hyped locations are the most expensive. Take the opportunity to travel somewhere a little more off the beaten path.
• When considering your accommodations, look at the cost of renting a condo in the area for a short time. While the condo may be more expensive on paper, taking the cost of eating out every meal in a hotel versus being able to cook in the condo may make a big difference in the money you spend daily.
• Be conscious of local events in your destination area. If there is a big event going on lodging may automatically be more expensive. If the event holds no interest for you, consider rescheduling to another time.
• Plan with a budget. Look at how much money you will need to spend everyday (including lodging) and add 10% for unexpected expenses. If the total is a figure that you can pay from savings without adding to your debt, then its affordable. If it’s too expensive, consider holding off until you can build enough savings to cover it.
• Getaway weekends are great, but remember, lodging, meals and activities may cost more on the weekend. Turning your weekend retreat into a mid-week mini-vacation can end up saving you some serious money.
• To estimate fuel cost for the trip, check out www.fuelcostcalculator.com or www.costtodrive.com .
• There are often perks involved with being a member of certain “clubs.” For instance, more than 100 museums, zoos and science centers offer free admission on the first weekend of every month to people who have a Bank of America ATM, credit or check card. Check out what you may have to help you hold onto your cash.
• Join a bed and breakfast club. You can end up paying only $10-$20 for a room with breakfast, in the homes of other travelers. In return you offer your spare room to people on the road.
• Pack a cooler. If you drive during a trip this will save you a considerable amount of money.
• Consider traveling to visit family and friends. This will drastically cut down on your daily expenses since relatives generally let you stay for free. Just limit your stay to three days or less.
• Plan for picnic lunch or dinner. Stopping at a grocery store to pick up picnic fare for a family is much cheaper than feeding that same family at a restaurant…and its much more fun! Find a nice spot and dine while you enjoy some local natural beauty.
Ultimately, taking a vacation, however small, is always taxing on finances. But planning smart and saving the money to go beforehand can render your last minute mini-vacation stress free and much more enjoyable for everyone!
Tuesday, July 13, 2010
Mid-Year Financial Check Up
At this point in the year there are a few very simple steps to check that you are progressing along your financial path in a way to achieve and even exceed your expectations.
• If you do not have a financial plan in place, this is a great time to begin! There are many ways planning pays dividends. One thing to remember is that people make moment to moment decisions with their emotional brain, while long term decisions are made with their analytical brain. Some refer to it as the old brain and the new brain. Regardless of what you call it, it is a fact of how we make decisions. Without a plan, we simply move moment to moment, making decisions with our emotional brain. We later justify these decisions with logic in an attempt to convince ourselves that we were acting with our analytical brain. When you establish a financial plan you engage your analytical brain, the one that deals with the future. This brain is logical, linear and uses language. This financial plan is a great way to keep our emotional brains in check, creating accountability. For example, your financial plan calls for saving $2000 a month, but you decide to go on an impromptu vacation that lowers your savings to $500. Without a plan there is no accountability. With a plan, we can look into the mirror and say “Well, I said I wanted to be financially independent and that requires $2000 per month. I saved $500 last month, so I either need to change my plan or hold myself more closely to it.” The feedback loop between your everyday action and the plan is what makes the greatest impact on behavior. Everyone who has wealth or wants to have wealth needs a plan. Sadly, many people believe that plans are only useful for those who have already achieved wealth and this is not the case.
• Review your asset allocation. Determine whether you are comfortable with your risk/return profile.
• If you already have a financial plan, call your planner and communicate with them about any updates or changes that need to be made. Keeping your plan up-to-date and current to your life is a way to ensure accountability.
• Talk to your partner about money. Over 50% of divorce is due to money issues. Find out how your partner thinks about wealth. If you are in a partnership (married or not) that means both partners consistently require that their needs are met to the highest degree possible. That means that you need to come together and communicate about how you each see money and what you individually need. After this meeting of the minds you can then begin the compromise phase and eventually joint goals can be developed. Without this sort of clear and conscious communication, the relationship can become riddled with conflict, resentment and passive aggressive behavior, all of which are destructive not only to your wealth, but your relationship in general.
• Lastly, learn something new. Find an area of wealth that you desire to gain knowledge in. Take a class, read a book, sit in on an online seminar, find a friend who has knowledge to share, spend time researching points of interest on the internet, and so on. Make yourself a more educated buyer and you will take the knowledge gained with you on your life journey.
• If you do not have a financial plan in place, this is a great time to begin! There are many ways planning pays dividends. One thing to remember is that people make moment to moment decisions with their emotional brain, while long term decisions are made with their analytical brain. Some refer to it as the old brain and the new brain. Regardless of what you call it, it is a fact of how we make decisions. Without a plan, we simply move moment to moment, making decisions with our emotional brain. We later justify these decisions with logic in an attempt to convince ourselves that we were acting with our analytical brain. When you establish a financial plan you engage your analytical brain, the one that deals with the future. This brain is logical, linear and uses language. This financial plan is a great way to keep our emotional brains in check, creating accountability. For example, your financial plan calls for saving $2000 a month, but you decide to go on an impromptu vacation that lowers your savings to $500. Without a plan there is no accountability. With a plan, we can look into the mirror and say “Well, I said I wanted to be financially independent and that requires $2000 per month. I saved $500 last month, so I either need to change my plan or hold myself more closely to it.” The feedback loop between your everyday action and the plan is what makes the greatest impact on behavior. Everyone who has wealth or wants to have wealth needs a plan. Sadly, many people believe that plans are only useful for those who have already achieved wealth and this is not the case.
• Review your asset allocation. Determine whether you are comfortable with your risk/return profile.
• If you already have a financial plan, call your planner and communicate with them about any updates or changes that need to be made. Keeping your plan up-to-date and current to your life is a way to ensure accountability.
• Talk to your partner about money. Over 50% of divorce is due to money issues. Find out how your partner thinks about wealth. If you are in a partnership (married or not) that means both partners consistently require that their needs are met to the highest degree possible. That means that you need to come together and communicate about how you each see money and what you individually need. After this meeting of the minds you can then begin the compromise phase and eventually joint goals can be developed. Without this sort of clear and conscious communication, the relationship can become riddled with conflict, resentment and passive aggressive behavior, all of which are destructive not only to your wealth, but your relationship in general.
• Lastly, learn something new. Find an area of wealth that you desire to gain knowledge in. Take a class, read a book, sit in on an online seminar, find a friend who has knowledge to share, spend time researching points of interest on the internet, and so on. Make yourself a more educated buyer and you will take the knowledge gained with you on your life journey.
Wednesday, May 26, 2010
Corrections Unsettling, Not Unusual
By Andy Pulsfort
The last month has brought an increase in volatility to stock markets and investment accounts. As global and domestic issues work out, it is important to keep a clear head and take a focused approach. The S&P 500 was up 80% from its low before the recent tumble. A correction in equities was overdue and we are experiencing that now.
One important fact is that global financial markets are in much better condition now than they were a year ago, so we did enter this recent uncertainity on much better footing.
We are 14 months into the current bull market, which is close to the average time for the first correction (17 months). It is usually found that markets begin to correct after a 60% recovery. In 2009 and early 2010 we blew past that threshold by a third again as much. This welcome, but unsustainable return suggested that any correction would be swift and perhaps a bit more significant than others.
What defines a correction? Most financial gurus consider a decline of 10% or greater as putting the market into correction mode. So far we are a bit over -12%. This can be expected from the greater than average run up in value. The success of the market recovery also caused the one clear area where this market correction differs. in that generally it takes 54 days to reach the -10% mark, and in this case it took only 27.
While no one has enjoyed seeing their earnings relinquished, it is important to remember that the activity we are seeing now is normal. Stock markets progress better when operating efficiently, which means investors making choices based on sound financial knowledge. Since 1928, 70% of the years have experienced a correction at some point.
While its important not to ignore what is occuring around the globe, it is also important to continue taking prudent approaches to investing. Many will even argue it is time to buy.
The last month has brought an increase in volatility to stock markets and investment accounts. As global and domestic issues work out, it is important to keep a clear head and take a focused approach. The S&P 500 was up 80% from its low before the recent tumble. A correction in equities was overdue and we are experiencing that now.
One important fact is that global financial markets are in much better condition now than they were a year ago, so we did enter this recent uncertainity on much better footing.
We are 14 months into the current bull market, which is close to the average time for the first correction (17 months). It is usually found that markets begin to correct after a 60% recovery. In 2009 and early 2010 we blew past that threshold by a third again as much. This welcome, but unsustainable return suggested that any correction would be swift and perhaps a bit more significant than others.
What defines a correction? Most financial gurus consider a decline of 10% or greater as putting the market into correction mode. So far we are a bit over -12%. This can be expected from the greater than average run up in value. The success of the market recovery also caused the one clear area where this market correction differs. in that generally it takes 54 days to reach the -10% mark, and in this case it took only 27.
While no one has enjoyed seeing their earnings relinquished, it is important to remember that the activity we are seeing now is normal. Stock markets progress better when operating efficiently, which means investors making choices based on sound financial knowledge. Since 1928, 70% of the years have experienced a correction at some point.
While its important not to ignore what is occuring around the globe, it is also important to continue taking prudent approaches to investing. Many will even argue it is time to buy.
Monday, May 24, 2010
Never Lose Hope
by: Harvey Mackay
In Greek mythology, Pandora opened her fabled box and let out all evils except for hope, which the Greeks considered to be as dangerous as the world's other evils. Soon they discovered that without hope to offset their troubles, humanity was filled with despair. So Pandora let out hope as well. In the myth, hope was more potent than any of the other major evils.
In modern times, we consider hope to be anything but evil. It's what gets many of us through our worst days. Lingering unemployment, foreclosures, dwindling retirement funds, businesses folding -- any of these could make a person lose hope.
Fortunately, Pandora recognized the relevance of hope -- an element that is critical to our very existence. In the current business climate, hope is what keeps us from throwing in the towel. I'm a realist, but I'm also an optimist. And while hope and optimism are not exactly the same, they are intrinsically linked.
For example, I am optimistic that the economy will eventually improve, and I am hopeful that we can learn lasting lessons from events that led to our business challenges. But I can't just wait and hope. I have to help things happen.
Hope looks at what is possible and builds on that. As former television executive and author SQuire Rushnell (yes, that's the way he spells his name) puts it, "Take the 'imp' out of impossible!" Instead, he says, read it as "I'm possible."
In one of my favorite inspirational books, Tough Times Never Last, but Tough People Do, my friend Robert Schuller offers up this observation: "Understand the power of this word: impossibility. When uttered aloud, this word is devastating in its effect. Thinking stops. Progress is halted. Doors slam shut. Research comes to a screeching halt. Further experimentation is torpedoed. Projects are abandoned. Dreams are discarded. The brightest and the best of creative brain cells turn off. In this defensive maneuver, the brain shelters itself against the painful sting of insulting disappointments, brutal rejections, and dashed hopes.
"But let someone utter the magic words, it's possible. Buried dreams are resurrected. Sparks of fresh enthusiasm flicker. Tabled motions are brought back to the floor. Dusty files are reopened. Lights go on again in the darkened laboratories. Telephones start ringing. Typewriters make clattering music. Budgets are revised and adopted. 'Help wanted' signs are hung out. Factories are retooled and reopened. New products appear. New markets open. The recession has ended. A great new era of adventure, experimentation, expansion and prosperity is born."
This advice, penned more than 25 years ago, is just as pertinent today. In fact, when you consider the advances of the past quarter century, look at how we have changed the face of businesses: Did anyone have a website in 1985? What was your cell phone number? Were you video-conferencing with your South American office with the touch of a button?
What will the next 25 years hold? I suspect that coming generations will use their technologies in ways we are just beginning to imagine are possible. I am certain that products will be developed that will make life easier, safer, and better. I have every hope that we have the brainpower and the will to do just that.
But we cannot accomplish much at all if we don't have hope. Hope is believing that every cloud has a silver lining, and when that cloud rains, it makes things grow. And then the sun comes out again.
British anthropologist Jane Goodall has spent more than 50 years conducting landmark research on wild chimpanzees and great apes and observing the tremendous power of nature to restore itself. She shares these thoughts:
"I carry a few symbols with me … to remind me of the hope that there is in the world: the human brain, with the technology that we are now working to try and live in greater harmony with the environment; the resilience of nature; the tremendous energy, commitment, excitement, and dedication of young people once they know what the problems are and we empower them to act to do something about it. And finally, the indomitable human spirit, those people who tackle impossible tasks and won't give in … that are shining inspiration to those around them."
Mackay's Moral: Hope for the best and then find a way to make it happen.
[This article appears courtesy of Early to Rise]
In Greek mythology, Pandora opened her fabled box and let out all evils except for hope, which the Greeks considered to be as dangerous as the world's other evils. Soon they discovered that without hope to offset their troubles, humanity was filled with despair. So Pandora let out hope as well. In the myth, hope was more potent than any of the other major evils.
In modern times, we consider hope to be anything but evil. It's what gets many of us through our worst days. Lingering unemployment, foreclosures, dwindling retirement funds, businesses folding -- any of these could make a person lose hope.
Fortunately, Pandora recognized the relevance of hope -- an element that is critical to our very existence. In the current business climate, hope is what keeps us from throwing in the towel. I'm a realist, but I'm also an optimist. And while hope and optimism are not exactly the same, they are intrinsically linked.
For example, I am optimistic that the economy will eventually improve, and I am hopeful that we can learn lasting lessons from events that led to our business challenges. But I can't just wait and hope. I have to help things happen.
Hope looks at what is possible and builds on that. As former television executive and author SQuire Rushnell (yes, that's the way he spells his name) puts it, "Take the 'imp' out of impossible!" Instead, he says, read it as "I'm possible."
In one of my favorite inspirational books, Tough Times Never Last, but Tough People Do, my friend Robert Schuller offers up this observation: "Understand the power of this word: impossibility. When uttered aloud, this word is devastating in its effect. Thinking stops. Progress is halted. Doors slam shut. Research comes to a screeching halt. Further experimentation is torpedoed. Projects are abandoned. Dreams are discarded. The brightest and the best of creative brain cells turn off. In this defensive maneuver, the brain shelters itself against the painful sting of insulting disappointments, brutal rejections, and dashed hopes.
"But let someone utter the magic words, it's possible. Buried dreams are resurrected. Sparks of fresh enthusiasm flicker. Tabled motions are brought back to the floor. Dusty files are reopened. Lights go on again in the darkened laboratories. Telephones start ringing. Typewriters make clattering music. Budgets are revised and adopted. 'Help wanted' signs are hung out. Factories are retooled and reopened. New products appear. New markets open. The recession has ended. A great new era of adventure, experimentation, expansion and prosperity is born."
This advice, penned more than 25 years ago, is just as pertinent today. In fact, when you consider the advances of the past quarter century, look at how we have changed the face of businesses: Did anyone have a website in 1985? What was your cell phone number? Were you video-conferencing with your South American office with the touch of a button?
What will the next 25 years hold? I suspect that coming generations will use their technologies in ways we are just beginning to imagine are possible. I am certain that products will be developed that will make life easier, safer, and better. I have every hope that we have the brainpower and the will to do just that.
But we cannot accomplish much at all if we don't have hope. Hope is believing that every cloud has a silver lining, and when that cloud rains, it makes things grow. And then the sun comes out again.
British anthropologist Jane Goodall has spent more than 50 years conducting landmark research on wild chimpanzees and great apes and observing the tremendous power of nature to restore itself. She shares these thoughts:
"I carry a few symbols with me … to remind me of the hope that there is in the world: the human brain, with the technology that we are now working to try and live in greater harmony with the environment; the resilience of nature; the tremendous energy, commitment, excitement, and dedication of young people once they know what the problems are and we empower them to act to do something about it. And finally, the indomitable human spirit, those people who tackle impossible tasks and won't give in … that are shining inspiration to those around them."
Mackay's Moral: Hope for the best and then find a way to make it happen.
[This article appears courtesy of Early to Rise
Despite Market Swells, Advisors Maintain Allocations
By: Donna Mitchell
May 21, 2010
The financial planners at Seattle-based Moss Adams Wealth Advisors knew how to respond to the ongoing European sovereign debt crisis, which included the punishing market dip on Thursday. Largely, they did nothing, and that was alright with their clients.
There was no dumping of equities across the board. They did not pull up stakes and hunker down in cash positions. “We don’t change our allocations based on the markets dropping or increasing,” said Sheryl Rowling, a San Diego-based partner at Moss Adams Wealth Advisors.
The company generally takes a passive approach to investing, and uses institutional mutual funds for their low costs to investors. The firm does believe in using talented managers when the markets are less efficient, Rowling said, but there was no overwhelming sense that clients were clamoring for change.
After the so-called flash crash on May 6, and leading up to the $1 trillion debt bailout extended to Greece, Moss Adams emailed letters to its clients assuring them that such market upheavals happen, and that they should not react by changing their positions. “Not surprisingly, we got zero phone calls and emails expressing concerns,” Rowling said. “They understand that the market will be volatile, and they understand that what they have is a long-term strategy to meet goals in the long run.”
Certainly, the markets have given advisors and clients enough to spur them to action. The MSCI EAFE Index, a benchmark used by many international mutual funds, was down 13% through Wednesday night. Negative currency exchanges made matters worse, says Alec Young, an international equity strategist at Standard & Poor’s. On Monday, the Euro was down 20.3% against the dollar, and by Wednesday had hit a four-year low below $1.22. Early Friday, the Euro had recovered briefly against the dollar.
“That is more currency risk than clients are used to taking,” Young said. S&P, which lowered its recommendation on international stocks from overweight to marketweight, now says clients should hold back on making new investment decisions. “We are not recommending initiating any new positions.”
Further upstream, executives at asset management firm PIMCO, based in Newport Beach, Calif., say independent advisors on a whole are not shifting their portfolios around dramatically. Instead, they are making changes on the margins. They are hedging for inflation by picking up Treasury Inflation-Protected Securities. To ensure that clients will have money on hand for short-and longer-term needs, they are buying staggered durations of money markets, Doug Ongaro, a managing director at PIMCO, said in a phone call. Ongaro is head of its registered investment advisor channel and a member of the management team for the firm’s global wealth management group. Aside from that, advisors are mainly asking a lot of questions about what their appropriate allocations should be. “They have strategic allocations and methodologies that they stick with,” Ongaro said. “They are trying to be smart about what those allocations mean, and they are trying to be more flexible, in terms of what the markets are providing.”
But some professionals, like the ones at Rockingstone Advisors, a wealth management firm that manages separate accounts for high-net-worth clients, felt they had the answers to those questions: overhaul the portfolio. Rockingstone, based in Larchmont, N.Y., slashed its European equity positions, holding on to just one stock, the AerCap Holdings [AER] the Dutch aircraft leasing company. Emerging markets positions, which used to account for 15% of its clients’ holdings, were also dumped. But it did hold on to emerging market government bonds from markets like Chile and Vietnam. It kept long positions on large-cap technology companies like Apple [AAPL] and Intel [INTC], said Brandt Sakakeeny, the firm’s managing partner.
The market was disappointed with the $1 trillion debt bailout, and felt that Greece should have been allowed to default and leave the Euro, Sakakeeny said. But Germany’s unilateral ban on naked short selling of securities two weeks later really undermined the market’s confidence in European leadership during the crisis. In that practice, a trader sells assets he or she does not own hoping to buy them back cheaper at a later date.
“I confess, we were on the long side of this,” said Sakakeeny. “We thought the initial European response would have been sufficient, but clearly it was not.”
May 21, 2010
The financial planners at Seattle-based Moss Adams Wealth Advisors knew how to respond to the ongoing European sovereign debt crisis, which included the punishing market dip on Thursday. Largely, they did nothing, and that was alright with their clients.
There was no dumping of equities across the board. They did not pull up stakes and hunker down in cash positions. “We don’t change our allocations based on the markets dropping or increasing,” said Sheryl Rowling, a San Diego-based partner at Moss Adams Wealth Advisors.
The company generally takes a passive approach to investing, and uses institutional mutual funds for their low costs to investors. The firm does believe in using talented managers when the markets are less efficient, Rowling said, but there was no overwhelming sense that clients were clamoring for change.
After the so-called flash crash on May 6, and leading up to the $1 trillion debt bailout extended to Greece, Moss Adams emailed letters to its clients assuring them that such market upheavals happen, and that they should not react by changing their positions. “Not surprisingly, we got zero phone calls and emails expressing concerns,” Rowling said. “They understand that the market will be volatile, and they understand that what they have is a long-term strategy to meet goals in the long run.”
Certainly, the markets have given advisors and clients enough to spur them to action. The MSCI EAFE Index, a benchmark used by many international mutual funds, was down 13% through Wednesday night. Negative currency exchanges made matters worse, says Alec Young, an international equity strategist at Standard & Poor’s. On Monday, the Euro was down 20.3% against the dollar, and by Wednesday had hit a four-year low below $1.22. Early Friday, the Euro had recovered briefly against the dollar.
“That is more currency risk than clients are used to taking,” Young said. S&P, which lowered its recommendation on international stocks from overweight to marketweight, now says clients should hold back on making new investment decisions. “We are not recommending initiating any new positions.”
Further upstream, executives at asset management firm PIMCO, based in Newport Beach, Calif., say independent advisors on a whole are not shifting their portfolios around dramatically. Instead, they are making changes on the margins. They are hedging for inflation by picking up Treasury Inflation-Protected Securities. To ensure that clients will have money on hand for short-and longer-term needs, they are buying staggered durations of money markets, Doug Ongaro, a managing director at PIMCO, said in a phone call. Ongaro is head of its registered investment advisor channel and a member of the management team for the firm’s global wealth management group. Aside from that, advisors are mainly asking a lot of questions about what their appropriate allocations should be. “They have strategic allocations and methodologies that they stick with,” Ongaro said. “They are trying to be smart about what those allocations mean, and they are trying to be more flexible, in terms of what the markets are providing.”
But some professionals, like the ones at Rockingstone Advisors, a wealth management firm that manages separate accounts for high-net-worth clients, felt they had the answers to those questions: overhaul the portfolio. Rockingstone, based in Larchmont, N.Y., slashed its European equity positions, holding on to just one stock, the AerCap Holdings [AER] the Dutch aircraft leasing company. Emerging markets positions, which used to account for 15% of its clients’ holdings, were also dumped. But it did hold on to emerging market government bonds from markets like Chile and Vietnam. It kept long positions on large-cap technology companies like Apple [AAPL] and Intel [INTC], said Brandt Sakakeeny, the firm’s managing partner.
The market was disappointed with the $1 trillion debt bailout, and felt that Greece should have been allowed to default and leave the Euro, Sakakeeny said. But Germany’s unilateral ban on naked short selling of securities two weeks later really undermined the market’s confidence in European leadership during the crisis. In that practice, a trader sells assets he or she does not own hoping to buy them back cheaper at a later date.
“I confess, we were on the long side of this,” said Sakakeeny. “We thought the initial European response would have been sufficient, but clearly it was not.”
Thursday, May 20, 2010
Hiring Children to Work in the Family Business can Generate Tax Savings
When times were better, many college students looking for summer employment and graduates looking for permanent jobs thought of working for the family business only as a last resort. In today's tough job market, however, the family business may be the only place for some kids to find work. As this Practice Alert points out, employing a child may generate tax-savings regardless of how the family business is organized. Although the focus is on seasonal or part-time employment, the rules in the article also apply if the child works for the family business full-time.
Income shifting. Regardless of how a business is organized, its owners may be able to turn some of their high-taxed income into tax-free or low-taxed income by employing their children. The work done by the children must be legitimate, and the amount that the enterprise pays them must be reasonable for the wages to be deductible.
RIA illustration: A business person in the 33% tax bracket for 2010 hires her 17-year-old son to help with office work full-time during the summer and part-time into the fall. He earns $5,700 during the year (and doesn't have earnings from other sources). If that $5,700 otherwise would be paid to the business person, she saves $1,881 (33% of $5,700) in income taxes at no tax cost to her son, who can use his $5,700 standard deduction for 2010 to completely shelter his earnings.
Family taxes are cut even if the child's earnings exceed his or her standard deduction. That's because the unsheltered earnings will be taxed to the child beginning at a rate of 10%, instead of being taxed at the parent's higher rate.
Kiddie tax implications. The kiddie tax applies to the child if he or she does not file a joint return for the tax year and (1) hasn't reached age 18 before the close of the tax year or, (2) his or her earned income doesn't exceed one-half of his support and the child is age 18 or is a full time student age 19-23. (Code Sec. 1(g)(2)1). Thus, employing a child age 18 or a full-time student age 19-23 could cause his or her earned income to exceed more than half of his or her support. This, in turn, could help to avoid the kiddie tax on the child's unearned income (there is no earned income escape hatch from the kiddie tax for children under age 18).
Even if the kiddie tax applies, it only causes a child's investment income in excess of $1,900 (for 2010) to be taxed at the parent's marginal rate. It has no impact, however, on the child's wages and other earned income, which can be sheltered by the child's standard deduction.
Retirement plan savings. Additional savings are possible if the child is paid more (or works part-time past the summer), and deposits the extra earnings into a traditional IRA. For 2010, the child can make a tax-deductible contribution of up to $5,000 to his or her own IRA. The business also may be able to provide the child with retirement plan benefits, depending on the type of plan it uses and its terms, the child's age, and the number of hours worked.
Tax savings via education credits. Additional intra-family tax savings in the form of education credits may be available.
For 2010, taxpayers may claim an American opportunity tax credit (AOTC)/Hope scholarship credit equal to 100% of up to $2,000 of qualified higher-education tuition and related expenses plus 25% of the next $2,000 of expenses paid for education furnished to an eligible student in an academic period. Thus, the maximum AOTC) Hope scholarship credit is $2,500 a year for each eligible student. (Code Sec. 25A(a)(1), Code Sec. 25A(i)(1))
The AOTC/Hope credit may be elected for a student's expenses for 4 tax years, and only for students who have not completed the first 4 years of post-secondary education as of the beginning of the tax year. (Code Sec. 25A(b)(2), Code Sec. 25A(i)(2))
Subject to an exception, 40% of a taxpayer's otherwise allowable AOTC/Hope credit for 2010 is refundable. No portion of the credit is refundable if the taxpayer claiming the credit is a child subject to the kiddie tax under Code Sec. 1(g) or a resident of a U.S. possessions (who instead claim the credit where they reside). (Code Sec. 25A(i)(6))
Taxpayers may elect a Lifetime Learning credit equal to 20% of up to $10,000 of qualified tuition and related expenses paid during the tax year. The maximum credit for a tax year is $2,000, regardless of the number of students. (Code Sec. 25A(a)(2), Code Sec. 25A(c)(1)) For 2010, the credit is phased out ratably for taxpayers with modified AGI from $50,000 to $60,000 ($100,000 to $120,000 for marrieds filing jointly).
Where a parent pays the college education expenses of a child whom he claims as a dependent, only the parent may claim the education credits (if otherwise eligible). However, if a parent is eligible to but does not claim a student as a dependent, the student may claim the education credit for qualified expenses paid by him or the parent. (Reg. § 1.25A-1(f)(2), Ex. 2; IRS Publication 970, 2009, pg. 15)
RIA recommendation: It may pay for a parent not to claim the student as a dependent if (1) the parent can't claim education credits because of high modified AGI, and (2) the student pays or is deemed to pay the expense and has sufficient tax liability (e.g., from summer or part-time employment) to claim the credit.
RIA illustration: Mr. and Mrs. Green have AGI of $250,000 and are in the 33% bracket. For 2010, claiming their college-freshman son as a dependent would save $1,204.50 in taxes (33% of $3,650 dependency exemption for the son). The Greens spend $24,000 on the son's AOTC/Hope-credit-eligible qualified tuition, and the son has $10,000 of taxable income from his salary working for the family business. The Greens can't claim an education credit for their child because of their high income and would be better off not claiming their son as a dependent. This way, the son may completely eliminate his $1,081.25 tax liability (10% of $8,375 taxable income, plus 15% of the $1,625 balance). He also may claim a refund for another $1,000 of the AOTC/Hope credit (40% of $2,500), so the total credit (and total savings to the child, is $2,081.25, versus the $1,204.50 the Greens would save if they claimed their son as a dependent.
RIA caution: If a parent is eligible to claim child as a dependent but doesn't, the child still cannot claim an exemption for himself.
Income tax withholding. Regardless of how the family business is organized, it probably will have to withhold federal income taxes on the child's wages. Usually, an employee who had no federal income tax liability for the prior year, and expects to have none for the current year, can claim exempt status. However, exemption from withholding can't be claimed if (1) the employee's income exceeds $750 and includes more than $250 of unearned income (such as dividends), and (2) the employee may be claimed as a dependent on someone else's return (whether or not he actually is claimed). (Instructions to Form W-4 for 2010) Keep in mind that the child probably will get a refund for part or all of the withheld tax when he or she files a return for the year.
FICA and FUTA. Employment for FICA tax purposes doesn't include services performed by a child under the age of 18 while employed by a parent. (Code Sec. 3121(b)(3)(A)) This can generate some savings for a parent who runs an unincorporated business. For example, let's say a sole proprietor who usually takes $120,000 of earnings from the business pays $4,750 to her 17-year-old child in 2010. The sole proprietor's self-employment income would be reduced by $4,750, saving her $137.75 (the 2.9% HI portion of the self employment tax she would have paid on the $4,750 shifted to her child). This doesn't take into account a sole proprietor's income tax deduction for one-half of his or her own social security taxes. That's on top of the $363.37 (.0765 × $4,750) in employee FICA that the child saves by working for Mom instead of someone else. A similar but more liberal exemption applies for FUTA, which exempts earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his parents.
However, there is no FICA or FUTA exemption for employing a child in an incorporated business or in a partnership that includes non-parent partners. The children are subject to the same rules that apply to all other employees.
RIA caution: The Hiring Incentives to Restore Employment Act (HIRE Act, P.L. 111-147) carried two valuable incentives for employers that boost payroll this year: a payroll tax holiday for employers that hire unemployed workers; and an up-to-$1,000 tax credit for keeping such new hires on the payroll for at least one year. Neither of these tax breaks is available for hiring a child (see Federal Taxes Weekly Alert 05/06/2010).
Source: Federal Tax Updates on Checkpoint Newsstand tab 5/20/2010
Income shifting. Regardless of how a business is organized, its owners may be able to turn some of their high-taxed income into tax-free or low-taxed income by employing their children. The work done by the children must be legitimate, and the amount that the enterprise pays them must be reasonable for the wages to be deductible.
RIA illustration: A business person in the 33% tax bracket for 2010 hires her 17-year-old son to help with office work full-time during the summer and part-time into the fall. He earns $5,700 during the year (and doesn't have earnings from other sources). If that $5,700 otherwise would be paid to the business person, she saves $1,881 (33% of $5,700) in income taxes at no tax cost to her son, who can use his $5,700 standard deduction for 2010 to completely shelter his earnings.
Family taxes are cut even if the child's earnings exceed his or her standard deduction. That's because the unsheltered earnings will be taxed to the child beginning at a rate of 10%, instead of being taxed at the parent's higher rate.
Kiddie tax implications. The kiddie tax applies to the child if he or she does not file a joint return for the tax year and (1) hasn't reached age 18 before the close of the tax year or, (2) his or her earned income doesn't exceed one-half of his support and the child is age 18 or is a full time student age 19-23. (Code Sec. 1(g)(2)1). Thus, employing a child age 18 or a full-time student age 19-23 could cause his or her earned income to exceed more than half of his or her support. This, in turn, could help to avoid the kiddie tax on the child's unearned income (there is no earned income escape hatch from the kiddie tax for children under age 18).
Even if the kiddie tax applies, it only causes a child's investment income in excess of $1,900 (for 2010) to be taxed at the parent's marginal rate. It has no impact, however, on the child's wages and other earned income, which can be sheltered by the child's standard deduction.
Retirement plan savings. Additional savings are possible if the child is paid more (or works part-time past the summer), and deposits the extra earnings into a traditional IRA. For 2010, the child can make a tax-deductible contribution of up to $5,000 to his or her own IRA. The business also may be able to provide the child with retirement plan benefits, depending on the type of plan it uses and its terms, the child's age, and the number of hours worked.
Tax savings via education credits. Additional intra-family tax savings in the form of education credits may be available.
For 2010, taxpayers may claim an American opportunity tax credit (AOTC)/Hope scholarship credit equal to 100% of up to $2,000 of qualified higher-education tuition and related expenses plus 25% of the next $2,000 of expenses paid for education furnished to an eligible student in an academic period. Thus, the maximum AOTC) Hope scholarship credit is $2,500 a year for each eligible student. (Code Sec. 25A(a)(1), Code Sec. 25A(i)(1))
The AOTC/Hope credit may be elected for a student's expenses for 4 tax years, and only for students who have not completed the first 4 years of post-secondary education as of the beginning of the tax year. (Code Sec. 25A(b)(2), Code Sec. 25A(i)(2))
Subject to an exception, 40% of a taxpayer's otherwise allowable AOTC/Hope credit for 2010 is refundable. No portion of the credit is refundable if the taxpayer claiming the credit is a child subject to the kiddie tax under Code Sec. 1(g) or a resident of a U.S. possessions (who instead claim the credit where they reside). (Code Sec. 25A(i)(6))
Taxpayers may elect a Lifetime Learning credit equal to 20% of up to $10,000 of qualified tuition and related expenses paid during the tax year. The maximum credit for a tax year is $2,000, regardless of the number of students. (Code Sec. 25A(a)(2), Code Sec. 25A(c)(1)) For 2010, the credit is phased out ratably for taxpayers with modified AGI from $50,000 to $60,000 ($100,000 to $120,000 for marrieds filing jointly).
Where a parent pays the college education expenses of a child whom he claims as a dependent, only the parent may claim the education credits (if otherwise eligible). However, if a parent is eligible to but does not claim a student as a dependent, the student may claim the education credit for qualified expenses paid by him or the parent. (Reg. § 1.25A-1(f)(2), Ex. 2; IRS Publication 970, 2009, pg. 15)
RIA recommendation: It may pay for a parent not to claim the student as a dependent if (1) the parent can't claim education credits because of high modified AGI, and (2) the student pays or is deemed to pay the expense and has sufficient tax liability (e.g., from summer or part-time employment) to claim the credit.
RIA illustration: Mr. and Mrs. Green have AGI of $250,000 and are in the 33% bracket. For 2010, claiming their college-freshman son as a dependent would save $1,204.50 in taxes (33% of $3,650 dependency exemption for the son). The Greens spend $24,000 on the son's AOTC/Hope-credit-eligible qualified tuition, and the son has $10,000 of taxable income from his salary working for the family business. The Greens can't claim an education credit for their child because of their high income and would be better off not claiming their son as a dependent. This way, the son may completely eliminate his $1,081.25 tax liability (10% of $8,375 taxable income, plus 15% of the $1,625 balance). He also may claim a refund for another $1,000 of the AOTC/Hope credit (40% of $2,500), so the total credit (and total savings to the child, is $2,081.25, versus the $1,204.50 the Greens would save if they claimed their son as a dependent.
RIA caution: If a parent is eligible to claim child as a dependent but doesn't, the child still cannot claim an exemption for himself.
Income tax withholding. Regardless of how the family business is organized, it probably will have to withhold federal income taxes on the child's wages. Usually, an employee who had no federal income tax liability for the prior year, and expects to have none for the current year, can claim exempt status. However, exemption from withholding can't be claimed if (1) the employee's income exceeds $750 and includes more than $250 of unearned income (such as dividends), and (2) the employee may be claimed as a dependent on someone else's return (whether or not he actually is claimed). (Instructions to Form W-4 for 2010) Keep in mind that the child probably will get a refund for part or all of the withheld tax when he or she files a return for the year.
FICA and FUTA. Employment for FICA tax purposes doesn't include services performed by a child under the age of 18 while employed by a parent. (Code Sec. 3121(b)(3)(A)) This can generate some savings for a parent who runs an unincorporated business. For example, let's say a sole proprietor who usually takes $120,000 of earnings from the business pays $4,750 to her 17-year-old child in 2010. The sole proprietor's self-employment income would be reduced by $4,750, saving her $137.75 (the 2.9% HI portion of the self employment tax she would have paid on the $4,750 shifted to her child). This doesn't take into account a sole proprietor's income tax deduction for one-half of his or her own social security taxes. That's on top of the $363.37 (.0765 × $4,750) in employee FICA that the child saves by working for Mom instead of someone else. A similar but more liberal exemption applies for FUTA, which exempts earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his parents.
However, there is no FICA or FUTA exemption for employing a child in an incorporated business or in a partnership that includes non-parent partners. The children are subject to the same rules that apply to all other employees.
RIA caution: The Hiring Incentives to Restore Employment Act (HIRE Act, P.L. 111-147) carried two valuable incentives for employers that boost payroll this year: a payroll tax holiday for employers that hire unemployed workers; and an up-to-$1,000 tax credit for keeping such new hires on the payroll for at least one year. Neither of these tax breaks is available for hiring a child (see Federal Taxes Weekly Alert 05/06/2010).
Source: Federal Tax Updates on Checkpoint Newsstand tab 5/20/2010
Monday, May 17, 2010
Success Through Goal Setting
By Brian Tracy
Becoming an expert at goal setting and goal achieving is something that you absolutely must do if you wish to fulfill your potential as a human being. Goals enable you to do the work you want to do, to live where you want to live, to be with the people you enjoy, and to become the kind of person you want to be.
Yet, according to the best research, less than 3 percent of Americans have written goals, and less than 1 percent review and rewrite their goals on a regular basis.
Why do so few people set goals? I think there are five basic reasons:
1. They are simply not serious.
Whenever I speak with a man or woman who has achieved something remarkable, I learn that the achievement occurred after that person decided to "get serious." In other words, until you become completely determined about your goals, nothing really happens.
2. They don't understand the importance of goals.
Young men and women who begin setting goals very early in life invariably come from families in which the importance of goals is emphasized.
3. They don't know how to do it.
One of the greatest tragedies of our educational system is that you can receive 15 to 18 years of education and never once receive a single hour of instruction on how to set goals.
4. Fear of rejection. The fear of rejection is caused by destructive criticism in early childhood and is manifested, in adulthood, in the fear of being criticized by others. Many people hold back on setting worthwhile goals because they have found that every time they do set a goal, somebody steps up and tells them that they can't achieve it or that they will lose their money or waste their time.
5. Fear of failure -- and this may be the most important reason of all.
People don't set goals because they are afraid they might fail. In fact, the fear of failure is probably the greatest single obstacle to success in adult life. It can hold you back more than any other psychological barrier.
If you can overcome all of these obstacles and set well-defined goals, it will enable you to channel your efforts and focus your energy toward something that's important to you. Goal setting gives you a target to aim at and enables you to develop the self-discipline to continue working toward your target rather than becoming distracted and going off in other directions.
Let me share with you five keys that will help you do that. Each of these keys starts with one of the letters in the word "goals." Whenever you find yourself getting off the track, simply repeat the word "goals," and think about how each letter stands for a key that just might apply to your current situation.
The first letter is G, and it stands for "Get to it."
Sometimes, the only difference between a successful person and a failure is that the successful person has the courage to get started, to do something, to begin moving toward the accomplishment of a specific goal.
The second letter, O, stands for "Opportunity."
Successful people do not wait for opportunities to turn their goals into reality. They make their opportunities, because they are perfectly clear about the kind of life they wish to create. Once you have taken the time to decide exactly what you want, you will experience an endless flow of opportunities that will help move you in that direction.
The letter A stands for "Ability."
Many people hesitate to set high, challenging goals because they lack the ability to turn those goals into reality. But remember that we all lacked knowledge and experience when we started out in our careers or fields of expertise. Since you gain the ability necessary for high achievement through knowledge and experience, if you increase the speed at which you acquire both of those, you increase the speed at which you move ahead.
The letter L stands for "Leadership."
Leadership is simply the ability to get results. And you begin to get results when you accept full responsibility for yourself, for your job, and for the outputs required in your position. You demonstrate leadership when you refuse to make excuses or blame anyone or anything for the problems you are having. The acceptance of the responsibility of leadership enables you to move ahead and take action.
The final letter, S, stands for "Stay with it."
This is the resolution to persist in the face of adversity until you succeed. Between you and every goal that you wish to achieve, there is a series of obstacles. The bigger the goal, the bigger the obstacles. Your decision to be, have, and do something out of the ordinary entails facing difficulties and challenges that are out of the ordinary as well. Sometimes, your greatest asset is simply your ability to stay with it longer than anyone else.
When you look around you, you will see that all achievement is the triumph of persistence. You will see men and women everywhere who are struggling with and overcoming adversity in order to accomplish something that is important to them. And so can you.
G-O-A-L-S. That's what you have to remember. And "G" is the first thing: "Get to it!"
Becoming an expert at goal setting and goal achieving is something that you absolutely must do if you wish to fulfill your potential as a human being. Goals enable you to do the work you want to do, to live where you want to live, to be with the people you enjoy, and to become the kind of person you want to be.
Yet, according to the best research, less than 3 percent of Americans have written goals, and less than 1 percent review and rewrite their goals on a regular basis.
Why do so few people set goals? I think there are five basic reasons:
1. They are simply not serious.
Whenever I speak with a man or woman who has achieved something remarkable, I learn that the achievement occurred after that person decided to "get serious." In other words, until you become completely determined about your goals, nothing really happens.
2. They don't understand the importance of goals.
Young men and women who begin setting goals very early in life invariably come from families in which the importance of goals is emphasized.
3. They don't know how to do it.
One of the greatest tragedies of our educational system is that you can receive 15 to 18 years of education and never once receive a single hour of instruction on how to set goals.
4. Fear of rejection. The fear of rejection is caused by destructive criticism in early childhood and is manifested, in adulthood, in the fear of being criticized by others. Many people hold back on setting worthwhile goals because they have found that every time they do set a goal, somebody steps up and tells them that they can't achieve it or that they will lose their money or waste their time.
5. Fear of failure -- and this may be the most important reason of all.
People don't set goals because they are afraid they might fail. In fact, the fear of failure is probably the greatest single obstacle to success in adult life. It can hold you back more than any other psychological barrier.
If you can overcome all of these obstacles and set well-defined goals, it will enable you to channel your efforts and focus your energy toward something that's important to you. Goal setting gives you a target to aim at and enables you to develop the self-discipline to continue working toward your target rather than becoming distracted and going off in other directions.
Let me share with you five keys that will help you do that. Each of these keys starts with one of the letters in the word "goals." Whenever you find yourself getting off the track, simply repeat the word "goals," and think about how each letter stands for a key that just might apply to your current situation.
The first letter is G, and it stands for "Get to it."
Sometimes, the only difference between a successful person and a failure is that the successful person has the courage to get started, to do something, to begin moving toward the accomplishment of a specific goal.
The second letter, O, stands for "Opportunity."
Successful people do not wait for opportunities to turn their goals into reality. They make their opportunities, because they are perfectly clear about the kind of life they wish to create. Once you have taken the time to decide exactly what you want, you will experience an endless flow of opportunities that will help move you in that direction.
The letter A stands for "Ability."
Many people hesitate to set high, challenging goals because they lack the ability to turn those goals into reality. But remember that we all lacked knowledge and experience when we started out in our careers or fields of expertise. Since you gain the ability necessary for high achievement through knowledge and experience, if you increase the speed at which you acquire both of those, you increase the speed at which you move ahead.
The letter L stands for "Leadership."
Leadership is simply the ability to get results. And you begin to get results when you accept full responsibility for yourself, for your job, and for the outputs required in your position. You demonstrate leadership when you refuse to make excuses or blame anyone or anything for the problems you are having. The acceptance of the responsibility of leadership enables you to move ahead and take action.
The final letter, S, stands for "Stay with it."
This is the resolution to persist in the face of adversity until you succeed. Between you and every goal that you wish to achieve, there is a series of obstacles. The bigger the goal, the bigger the obstacles. Your decision to be, have, and do something out of the ordinary entails facing difficulties and challenges that are out of the ordinary as well. Sometimes, your greatest asset is simply your ability to stay with it longer than anyone else.
When you look around you, you will see that all achievement is the triumph of persistence. You will see men and women everywhere who are struggling with and overcoming adversity in order to accomplish something that is important to them. And so can you.
G-O-A-L-S. That's what you have to remember. And "G" is the first thing: "Get to it!"
Thursday, May 13, 2010
Join Me in Being Outraged
As oil continues to pour into the Gulf of Mexico we are killing an entire ecosystem. Since April 20th the day of the explosion, I have avoided looking at the photographs. This has been my way of insulating myself from the horrors we as human beings are perpetrating on the plant and animal life in the Gulf of Mexico.
I went onto Yahoo today to find the latest oil spill news. In the top stories of the day only one pertained to the spill, it was about the Congressional hearing and holding oil executives accountable. As I searched further, ads from litigation attorney’s popped up asking if I was damaged in the oil spill. There was more news about celebrity homes, clothes, babies and cars than the Gulf story. Where are our priorities?
I asked a friend recently, “If the incident in the Gulf of Mexico is not sufficient to create a national outcry for alternative energy, what does it take?” His response was, “Personal hardship.”
As I reflect on this statement, I know he is correct. When the price of gasoline rises, it makes headline news. When we destroy an ecosystem, we turn our attention elsewhere.
Over the last few years I have altered my life substantially to reduce my carbon footprint. Most of those changes seemed awkward at first, but over time they have become part of the flow of life. I have reaped priceless rewards, in terms of my physical, mental and emotional health, in the connection with like-minded community sharing a common vision of a life lived in harmony with the natural world, and in my heightened appreciation and respect for the natural world.
What most of us do not realize is the personal power we each have to make a difference. We cannot change our lives overnight to be oil independent. Yet, we can make simple changes that add up.
Tonight, I will walk out to my raised beds and pick greens for my salad. The average item on a grocery store shelf has traveled 1500 miles to get there. Add to that the average 10 miles a person drives to get to the store, and my simple act of planting a few lettuce seeds, will save 1510 miles. Not bad for a little lettuce seed.
Don’t like to garden? Join a local CSA (Community Supported Agriculture) or buy from your local farmers market.
What is so incredible about focusing on sustainable living is that it produces so many other unintended positive outcomes. For example, buying local also means the money stays in the local economy. Eating local means your food has a higher nutritional content, so your physical health improves. As your physical health improves, your mental acuity increases. As you slow down your life you spend more time in community, creating heart connection with others, enhancing your emotional health. There are benefits for your pocketbook as well, as most things that reduce carbon footprint save you money.
Here are some simple ways you can make a difference in your carbon footprint today:
Drive a smaller car or hybrid. Car pool or take public transit to work or school. If you live close enough to work or school try biking. It lessens your dependence on oil and is a nice workout.
Unplug your appliances when not in use, your TV, microwave, electric blanket, etc use electricity even if they are not on. Unplug, be green and save some money.
Turn down your hot water heater a few degrees.
Get a clothes line. Hanging your clothes out can save you as much as 6% on your electric bill.
Plant your favorite vegetable. Front yard, back yard, etc, pick a place and turn it into a place of bounty in your yard.
Grow your own herbs. Most are perennial and will come back each year. They produce large bounties and are easily dried by simply hanging them upside down in a well ventilated area.
Join us the 3rd Sunday of any month for our monthly pot luck and farm tour. You’ll get even more ideas. If you live out of town, we have 2 guest rooms ready and waiting. Learn more at www.RedSunflowerFarm.com
Start or join a transition movement in your community, www.transitionus.org
Green your portfolio, there are many green screened investments available. Learn more at www.SocialInvest.org , call Andy or I at 859-331-7755 or e mail me at Mackey@CultivatingProsperity.com
What is happening in the Gulf of Mexico isn’t about someone else, somewhere else, it is about you and me. Let others do the finger pointing. Use your energy for personal change. Join me in being outraged, step up and make a difference, in your own life and in the future generations to come.
I went onto Yahoo today to find the latest oil spill news. In the top stories of the day only one pertained to the spill, it was about the Congressional hearing and holding oil executives accountable. As I searched further, ads from litigation attorney’s popped up asking if I was damaged in the oil spill. There was more news about celebrity homes, clothes, babies and cars than the Gulf story. Where are our priorities?
I asked a friend recently, “If the incident in the Gulf of Mexico is not sufficient to create a national outcry for alternative energy, what does it take?” His response was, “Personal hardship.”
As I reflect on this statement, I know he is correct. When the price of gasoline rises, it makes headline news. When we destroy an ecosystem, we turn our attention elsewhere.
Over the last few years I have altered my life substantially to reduce my carbon footprint. Most of those changes seemed awkward at first, but over time they have become part of the flow of life. I have reaped priceless rewards, in terms of my physical, mental and emotional health, in the connection with like-minded community sharing a common vision of a life lived in harmony with the natural world, and in my heightened appreciation and respect for the natural world.
What most of us do not realize is the personal power we each have to make a difference. We cannot change our lives overnight to be oil independent. Yet, we can make simple changes that add up.
Tonight, I will walk out to my raised beds and pick greens for my salad. The average item on a grocery store shelf has traveled 1500 miles to get there. Add to that the average 10 miles a person drives to get to the store, and my simple act of planting a few lettuce seeds, will save 1510 miles. Not bad for a little lettuce seed.
Don’t like to garden? Join a local CSA (Community Supported Agriculture) or buy from your local farmers market.
What is so incredible about focusing on sustainable living is that it produces so many other unintended positive outcomes. For example, buying local also means the money stays in the local economy. Eating local means your food has a higher nutritional content, so your physical health improves. As your physical health improves, your mental acuity increases. As you slow down your life you spend more time in community, creating heart connection with others, enhancing your emotional health. There are benefits for your pocketbook as well, as most things that reduce carbon footprint save you money.
Here are some simple ways you can make a difference in your carbon footprint today:
Drive a smaller car or hybrid. Car pool or take public transit to work or school. If you live close enough to work or school try biking. It lessens your dependence on oil and is a nice workout.
Unplug your appliances when not in use, your TV, microwave, electric blanket, etc use electricity even if they are not on. Unplug, be green and save some money.
Turn down your hot water heater a few degrees.
Get a clothes line. Hanging your clothes out can save you as much as 6% on your electric bill.
Plant your favorite vegetable. Front yard, back yard, etc, pick a place and turn it into a place of bounty in your yard.
Grow your own herbs. Most are perennial and will come back each year. They produce large bounties and are easily dried by simply hanging them upside down in a well ventilated area.
Join us the 3rd Sunday of any month for our monthly pot luck and farm tour. You’ll get even more ideas. If you live out of town, we have 2 guest rooms ready and waiting. Learn more at www.RedSunflowerFarm.com
Start or join a transition movement in your community, www.transitionus.org
Green your portfolio, there are many green screened investments available. Learn more at www.SocialInvest.org , call Andy or I at 859-331-7755 or e mail me at Mackey@CultivatingProsperity.com
What is happening in the Gulf of Mexico isn’t about someone else, somewhere else, it is about you and me. Let others do the finger pointing. Use your energy for personal change. Join me in being outraged, step up and make a difference, in your own life and in the future generations to come.
Monday, May 3, 2010
Do you get a payroll tax holiday and retention credit for hiring your spouse?
Practice Alert
The Hiring Incentives to Restore Employment Act (HIRE Act, P.L. 111-147) carried two valuable incentives for employers that boost payroll this year:
· a payroll tax holiday for employers that hire unemployed workers;
· and an up-to-$1,000 tax credit for keeping such new hires on the payroll for at least one year.
Practitioners have raised the question as to whether these tax breaks apply if a business person hires his or her formerly unemployed spouse. As this Practice Alert explains, the answer in many instances will be “yes.”
Background. Under Code Sec. 3111(d), as amended by HIRE Act Sec. 101(a), qualified employers are exempted from paying the employer 6.2% share of Social Security (i.e., OASDI) employment taxes on wages paid in 2010 to a newly hired qualified individual. This is an individual who:
1. begins employment with the employer after Feb. 3, 2010 and before Jan. 1, 2011;
2. certifies by signed affidavit, under penalties of perjury, that he or she hasn't been employed for more than 40 hours during the 60-day period ending on the date employment begins with the qualified employer;
3. does not replace another employee of the employer (unless that other employee left voluntarily or for cause); and
4. is not related to the qualified employer in a way that would disqualify the individual for the work opportunity tax credit (WOTC) under Code Sec. 51(i)(1). (Code Sec. 3111(d)(3))
The payroll tax relief applies only for wages paid with respect to employment beginning on Mar. 19, 2010 (the day after the HIRE Act was signed into law by the President) and ending on Dec. 31, 2010. The payroll tax holiday doesn't apply for wages paid during the first calendar quarter of 2010. Instead, the amount by which the qualified employer's OASDI tax for wages paid during the first calendar quarter of 2010 would have been reduced if the payroll tax holiday had been in effect for the first quarter is treated as a payment against the employer's OASDI tax for the second calendar quarter of 2010.
A qualified employer is any employer other than the
Popping the question. Does the payroll tax holiday apply if the taxpayer (e.g., a sole proprietor or someone operating a business as a corporation) hires a spouse as a bona fide employee? Although it's not clear that Congress intended this result, the answer is “yes,” assuming the conditions highlighted above are met.
Reasoning. Under condition (4), above, an individual cannot be an “individual described in Code Sec. 51(i)(1) (applied by substituting 'qualified employer' for 'taxpayer' each place it appears.” The fact is that while Code Sec. 51(i)(1) casts a very wide net in preventing related parties from qualifying, it does not include a spouse within its rule.
The portions of Code Sec. 51(i)(1) that are most likely to be relevant (i.e., situations other than those dealing with estates and trusts) are as follows (applied by substituting 'qualified employer' for 'taxpayer'):
· Under Code Sec. 51(i)(1)(A), an individual can't bear any of the relationships described in Code Sec. 152(d)(2)(A) through Code Sec. 152(d)(2)(G) to (1) the qualified employer, or, (2) if the qualified employer is a corporation, to an individual who owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation, or, (3) if the qualified employer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50% of the capital and profits interests in the entity, (determined with the application of Code Sec. 267(c)).
· Under Code Sec. 51(i)(1)(C), an individual can't be a dependent (described in Code Sec. 152(d)(2)(H)) of the qualified employer, or, if the qualified employer is a corporation, of an individual described in Code Sec. 51(i)(1)(A).
Code Sec. 152(d)(2)(A) through Code Sec. 152(d)(2)(G) enumerate the taxpayer's children or their descendants, siblings or step-siblings, parents or a parent's ancestor, step-parents, nephews, nieces, uncles, or aunts, and in-laws. They don't mention a spouse. Also a person's spouse isn't his or her dependent, so Code Sec. 51(i)(1)(C) doesn't apply. So there's no rule in the Code barring the payroll tax holiday from being claimed for a person just because he or she is a spouse.
This conclusion is bolstered by IRS's recently issued Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, which newly hired, but formerly unemployed, workers must sign (or its equivalent) in order for their new employers to treat the workers as qualified individuals (see Federal Taxes Weekly Alert 04/15/2010). The brief instructions to the Form essentially restate the Code Sec. 51(i)(1) restrictions and don't mention spouses. If IRS thought spouses shouldn't qualify for the payroll tax holiday, presumably it would have said so.
Retention credit applies, too. HIRE Act Sec. 103 also provides employers with an up-to-$1,000 tax credit for retaining qualified individuals, as defined for payroll tax holiday purposes. The workers must be employed by the employer for a period of not less than 52 consecutive weeks, and their wages for such employment during the last 26 weeks of the period must equal at least 80% of the wages for the first 26 weeks of the period. If a spouse is a qualified individual under the payroll tax holiday rules, and works for the requisite period of time, then the retention credit also should apply to him or her.
RIA caution: Depending on family relationships, there may be situations where a spouse will not qualify for either HIRE Act tax break. For example, if Dad owns 60% of a corporation, and Son who runs the company owns the 40% balance, then the corporation can't claim the payroll tax holiday or the retention credit if it hires Son's wife. In this situation, the wife is treated as “related” to a more than 50% owner of the qualified employer and therefore is ineligible under (Code Sec. 3111(d)(3)(D) and Code Sec. 51(i)(1)(A).
Source: Federal Tax Updates on Checkpoint Newsstand tab 5/3/2010
5 Most Important Money Lessons for Kids
1. Life isn’t about stuff. The most important lesson a child needs to learn to lead a healthy money life is that stuff isn’t the most important thing. A great way to teach this to your children is to lead by example, and have conversations with your kids about what their perceptions of rich and poor are. It’s sometimes shocking what comes out. Another way to instill this important principle is by giving gifts for birthdays & other special events that aren’t things but memories to make. A family play day at a park, or hosting a sleep over for friends.
2. Money is earned! Kids have a completely abstract concept of money. They need or want something and money appears to acquire whatever that something might be. Instead of just purchasing something for your child make them earn it. Everyday they make their bed, take out the trash, or put their toys away they earn money toward their new toy.
3. You can’t always get what you want. Instant gratification is not just a problem for children. Many adults have to deal with it too. This is why so many people end up with mountains of credit card debt. Instead of buying them a new video game when they see it in the store make them wait a week and see if they still really want it. Most of the time they have already forgotten about it.
4. Save for big ticket items. Too many adults rely on credit to buy a new big screen TV. If they want a new bike have them save for it. Get your child a savings account. ING has a free one online. See if they will start saving on their own, and as an extra incentive match what they save. Every month sit down and look at how much they have saved, how close they are to their goal and how much interest they have earned.
5. Have a rainy day fund. My mother always said, “keep a quarter in your pocket so you can call home.” This is obsolete now, but the idea is still important. This is a hard lesson to teach children since we want to make sure our children are taken care of. But next time the unexpected happens, the air conditioner breaks or the car needs repaired sit your children down and talk to them about how you financially deal with the unexpected.
By: Gracie Mohr
2. Money is earned! Kids have a completely abstract concept of money. They need or want something and money appears to acquire whatever that something might be. Instead of just purchasing something for your child make them earn it. Everyday they make their bed, take out the trash, or put their toys away they earn money toward their new toy.
3. You can’t always get what you want. Instant gratification is not just a problem for children. Many adults have to deal with it too. This is why so many people end up with mountains of credit card debt. Instead of buying them a new video game when they see it in the store make them wait a week and see if they still really want it. Most of the time they have already forgotten about it.
4. Save for big ticket items. Too many adults rely on credit to buy a new big screen TV. If they want a new bike have them save for it. Get your child a savings account. ING has a free one online. See if they will start saving on their own, and as an extra incentive match what they save. Every month sit down and look at how much they have saved, how close they are to their goal and how much interest they have earned.
5. Have a rainy day fund. My mother always said, “keep a quarter in your pocket so you can call home.” This is obsolete now, but the idea is still important. This is a hard lesson to teach children since we want to make sure our children are taken care of. But next time the unexpected happens, the air conditioner breaks or the car needs repaired sit your children down and talk to them about how you financially deal with the unexpected.
By: Gracie Mohr
Sunday, April 25, 2010
Goldman Sachs vs. SEC - Missing the Point - It's About Fiduciary Duty To Your Clients - R.W. Roge - April 22, 2010
Clearly this is the most critical issue in delivery of financial services today. Mainly because the public does not understand the regulatory differences in advisors. Education yourself about the fiduciary standard before you engage a financial professional.
Goldman Sachs vs. SEC - Missing the Point - It's About Fiduciary Duty To Your Clients - R.W. Roge - April 22, 2010
Goldman Sachs vs. SEC - Missing the Point - It's About Fiduciary Duty To Your Clients - R.W. Roge - April 22, 2010
Friday, April 16, 2010
Free paper recycling in Cincinnati
Cintas is sponsoring free document shredding in honor of Earth Day. I have a huge pile and thought maybe you would also have piles to shred. Pass the word to anyone you think might like to participate – Cintas is working to shred 400 tons of paper to celebrate Earth Day’s 40th anniversary on April 22.
For every ton of paper recycled, you help save 17 trees, 7000 gallons of water, 4000 kw of energy and 3 cubic yards of landfill space.
Here’s where to go:
April 17 10am – 2pm Ft. Wright Police Dept 409 Kyles Lane, Ft. Wright
April 17 10am – noon Cinti Financial Corp 6200 S Gilmore Road, Fairfield
April 24 7:30am – 5pm Miami Twshp Civic Center; 6101 Meijer Drive Miami Township
For every ton of paper recycled, you help save 17 trees, 7000 gallons of water, 4000 kw of energy and 3 cubic yards of landfill space.
Here’s where to go:
April 17 10am – 2pm Ft. Wright Police Dept 409 Kyles Lane, Ft. Wright
April 17 10am – noon Cinti Financial Corp 6200 S Gilmore Road, Fairfield
April 24 7:30am – 5pm Miami Twshp Civic Center; 6101 Meijer Drive Miami Township
Monday, April 12, 2010
Just for Laughs
These were sent to us by one of our clients with a great sense of humor. Hope you enjoy.
Wednesday, April 7, 2010
Simple Wisdom
by Spencer Sherman & Brent Kessel
It happened again last week. I met a well educated investor (a Master's degree in finance) who knew better than to put all his eggs into one basket--but did anyway. He lost 30 years worth of accumulated savings and his residence.
I meet people regularly who invest in complicated and undiversified strategies and deals in the hopes of retiring early or beating the market. While most of these investors have a lot of formal financial education, it is common sense and bringing awareness to our fear and greed that creates financial success. If we all just followed these adages, we would eliminate investment stress, avoid cotastrophe, and most likely make more money:
Don't put all your eggs into one basket.
Invest for the long-term.
Diversify. (Unless it's a very diversified index mutual fund, put no more than 2%-5% of all your money into any one investment, one piece of real estate, one stock)
Start investing on an automatic monthly basis even if you're over your head in credit card and other debt. Start with $50 per month for example. Don't wait for your finances to improve--take advantage of the magic of compounding for a longer stretch of time by acting today rather than tomorrow.
Simple. And rarely followed. But if you want to be one of the few and NOT follow the herd, follow these rules and enjoy financial freedom.
It happened again last week. I met a well educated investor (a Master's degree in finance) who knew better than to put all his eggs into one basket--but did anyway. He lost 30 years worth of accumulated savings and his residence.
I meet people regularly who invest in complicated and undiversified strategies and deals in the hopes of retiring early or beating the market. While most of these investors have a lot of formal financial education, it is common sense and bringing awareness to our fear and greed that creates financial success. If we all just followed these adages, we would eliminate investment stress, avoid cotastrophe, and most likely make more money:
Don't put all your eggs into one basket.
Invest for the long-term.
Diversify. (Unless it's a very diversified index mutual fund, put no more than 2%-5% of all your money into any one investment, one piece of real estate, one stock)
Start investing on an automatic monthly basis even if you're over your head in credit card and other debt. Start with $50 per month for example. Don't wait for your finances to improve--take advantage of the magic of compounding for a longer stretch of time by acting today rather than tomorrow.
Simple. And rarely followed. But if you want to be one of the few and NOT follow the herd, follow these rules and enjoy financial freedom.
Wednesday, March 24, 2010
Investing is an inside game
I read this March 20, 2010 post on The Research Puzzle blog with interest. It explains very well why investing is an inside game.
Investing for you is about your goals, your cash flow, your dreams and your financial status. Read and enjoy
http://researchpuzzle.com/
Investing for you is about your goals, your cash flow, your dreams and your financial status. Read and enjoy
http://researchpuzzle.com/
Investing Luck vs. Skill
Friends,
At Mackey Advisors™ we are always looking for ways to keep our clients educated on what we do and why we do it. I have included this latest piece for your enjoyment.
Thanks,
Andy Pulsfort
Investing Luck vs. Skill
Periodically, we hear about this or that person who called the market top, who predicted a major downturn--or, sometimes, a mutual fund manager who managed to beat the market by some astronomical amount. Last year was no exception: for example, the Encompass Fund was up 122.05% in 2009 according to Morningstar--which, of course, means that its investors would have doubled their money if they'd invested at the start of the year and held on for the next 12 months. The Birmiwal Oasis Fund was up 102.94% last year.
These people are geniuses, right?
Usually not. The simple law of averages says that somebody, somewhere, will have a streak of correct predictions or hold, for a year, maybe two, stocks that dramatically outperform the markets. Certain unsavory people who hung out at race tracks knew how to make money at this game; they would go around the track telling some people that Horse A was going to win the next race, others that Horse B was a shoo-in, and still others to put their money on Horses C, D and E.
Then, if horse D won the race, the unsavory tout would go back to the people for whom he had "correctly" predicted the outcome, and offer to give them more "inside tips" for a generous fee.
To see how the normal patterns of luck can bring about even the most extraordinary results, imagine that instead of managing investment portfolios, we were talking about people who flipped coins in a huge nationwide contest. On Day One of the contest, 300 million people flip their coins, and those whose coin comes up tails are out of the contest. By the law of averages, 150 million (or so) people will be able to play the game on Day Two, and after they flip, the number of contestants will have shrunk to 75 million.
Then come Day Three (37.5 million left), Day Four (18.75 million), Day Five (9.4 million)--and by the end of three weeks, the amateurs have been weeded out, and there are only 144 people left. In newspaper accounts, these are all described as remarkable coin flippers who somehow managed to throw a coin in the air and have it land on heads 21 consecutive times. This is exactly what would be predicted by the law of averages, but now, suddenly, reporters in each city are interviewing their local champion, asking about their "winning techniques." And, of course, the local champions are starting to believe in their own remarkable coin-flipping skills, telling their friends and the press about their wrist movements and the preferred height of the coin toss.
The next day, only 72 of these highly-skilled coin flippers are left, and the following day, just 36, and as the number diminishes, as the number of consecutive flips goes up, the media attention becomes frenzied. Eighteen, then nine, then four finalists are flown to Hollywood for the nationally-televised coin flipping face-off, and all America believes in the skills that allowed these remarkable people to consistently cause a coin to land with the head of the coin facing up.
Finally, two flips later (maybe three), there is a winner--and who can seriously believe that this person managed to get a coin to land on heads 29 or 30 consecutive times without a tremendous amount of coin-flipping skill?
When one or two of the 8,000 mutual funds break dramatically from the pack in any one year, this is no more than what the law of averages would predict. Yet investors flock into these funds, believing in their stellar investment skill. The next time these winning managers confidently flip the coin, it just as likely turns up tails, the performance falls back into the pack, and experts call it "mean reversion," which just means that the luck ran out and the statistics caught up with the process. Investors put their money in too late to catch the first remarkable flip, but just in time to catch the fall, the return to normalcy. It is the oldest trap in the book, and it sucks away millions, perhaps billions, from consumer retirement portfolios.
There ARE excellent fund managers, but you rarely see them break from the pack, and if they do, they will be the first to tell you that there was as much luck as skill involved. Sometimes, a great manager will experience a terrible year, for the same reasons. Investing is a game where you take the luck that is offered you, and inevitably you give something back when the luck runs out. Those investors who are diligent and careful and humble in the face of this reality, who don't chase the hot coin flipper right after a great run, will usually win more often than they lose--because, unlike a casino, the odds in the investment markets have, over most historical periods, tended to favor the patient investor. The markets go up more than they go down, and so you can have more than your share of coin flips going your way with no more skill than the patience to stay invested.
Advisory services offered through Mackey Advisors, LLC, a registered investment advisor.
At Mackey Advisors™ we are always looking for ways to keep our clients educated on what we do and why we do it. I have included this latest piece for your enjoyment.
Thanks,
Andy Pulsfort
Investing Luck vs. Skill
Periodically, we hear about this or that person who called the market top, who predicted a major downturn--or, sometimes, a mutual fund manager who managed to beat the market by some astronomical amount. Last year was no exception: for example, the Encompass Fund was up 122.05% in 2009 according to Morningstar--which, of course, means that its investors would have doubled their money if they'd invested at the start of the year and held on for the next 12 months. The Birmiwal Oasis Fund was up 102.94% last year.
These people are geniuses, right?
Usually not. The simple law of averages says that somebody, somewhere, will have a streak of correct predictions or hold, for a year, maybe two, stocks that dramatically outperform the markets. Certain unsavory people who hung out at race tracks knew how to make money at this game; they would go around the track telling some people that Horse A was going to win the next race, others that Horse B was a shoo-in, and still others to put their money on Horses C, D and E.
Then, if horse D won the race, the unsavory tout would go back to the people for whom he had "correctly" predicted the outcome, and offer to give them more "inside tips" for a generous fee.
To see how the normal patterns of luck can bring about even the most extraordinary results, imagine that instead of managing investment portfolios, we were talking about people who flipped coins in a huge nationwide contest. On Day One of the contest, 300 million people flip their coins, and those whose coin comes up tails are out of the contest. By the law of averages, 150 million (or so) people will be able to play the game on Day Two, and after they flip, the number of contestants will have shrunk to 75 million.
Then come Day Three (37.5 million left), Day Four (18.75 million), Day Five (9.4 million)--and by the end of three weeks, the amateurs have been weeded out, and there are only 144 people left. In newspaper accounts, these are all described as remarkable coin flippers who somehow managed to throw a coin in the air and have it land on heads 21 consecutive times. This is exactly what would be predicted by the law of averages, but now, suddenly, reporters in each city are interviewing their local champion, asking about their "winning techniques." And, of course, the local champions are starting to believe in their own remarkable coin-flipping skills, telling their friends and the press about their wrist movements and the preferred height of the coin toss.
The next day, only 72 of these highly-skilled coin flippers are left, and the following day, just 36, and as the number diminishes, as the number of consecutive flips goes up, the media attention becomes frenzied. Eighteen, then nine, then four finalists are flown to Hollywood for the nationally-televised coin flipping face-off, and all America believes in the skills that allowed these remarkable people to consistently cause a coin to land with the head of the coin facing up.
Finally, two flips later (maybe three), there is a winner--and who can seriously believe that this person managed to get a coin to land on heads 29 or 30 consecutive times without a tremendous amount of coin-flipping skill?
When one or two of the 8,000 mutual funds break dramatically from the pack in any one year, this is no more than what the law of averages would predict. Yet investors flock into these funds, believing in their stellar investment skill. The next time these winning managers confidently flip the coin, it just as likely turns up tails, the performance falls back into the pack, and experts call it "mean reversion," which just means that the luck ran out and the statistics caught up with the process. Investors put their money in too late to catch the first remarkable flip, but just in time to catch the fall, the return to normalcy. It is the oldest trap in the book, and it sucks away millions, perhaps billions, from consumer retirement portfolios.
There ARE excellent fund managers, but you rarely see them break from the pack, and if they do, they will be the first to tell you that there was as much luck as skill involved. Sometimes, a great manager will experience a terrible year, for the same reasons. Investing is a game where you take the luck that is offered you, and inevitably you give something back when the luck runs out. Those investors who are diligent and careful and humble in the face of this reality, who don't chase the hot coin flipper right after a great run, will usually win more often than they lose--because, unlike a casino, the odds in the investment markets have, over most historical periods, tended to favor the patient investor. The markets go up more than they go down, and so you can have more than your share of coin flips going your way with no more skill than the patience to stay invested.
Advisory services offered through Mackey Advisors, LLC, a registered investment advisor.
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