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68 - 15 - 3... What's Next?
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In this month's video, Joe Chornyak discusses the importance of being realistic in assessing your personal investment goals for the future and considering alternative investment srtategies.
Click here, or on the image below to view the video.
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Work Hard, Invest Wisely...Retire Early? Putting the American Dream Back Within Reach
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Affordable health insurance is a consideration if you plan to retire early. This article by Commonwealth Financial Network provides some ideas for health coverage in the gap years between early retirement and age 65 when you are eligible for Medicare.
Many people dream of retiring early, but few are able to make that dream a reality thanks, in part, to costs associated with health insurance coverage. Medicare benefits kick in at age 65, but one must fill the gap in between. And if there is a younger spouse or dependent in the equation, they likely won't be covered by Medicare at all. The Patient Protection and Affordable Care Act (PPACA), also known as the Health Care Reform Act, has changed the playing field somewhat; however, its provisions will take several years to be fully effective. So what can you do to find affordable care in the interim?
Enroll in the working spouse's group plan. This is probably the most common and least expensive way for a retired spouse to obtain health insurance. Note that:
- Some companies offer family coverage for domestic partners.
- There may be a limited time in which to enroll.
Qualify for retiree health insurance with your current employer. Employers seldom subsidize the cost of retiree health insurance, but such coverage still may be less expensive than an individual policy. If it's available, be aware that:
- Premiums can increase.
- Benefits can change.
- Employers can discontinue coverage.
Determine whether the coverage will replace or supplement Medicare. Missing the enrollment date for Medicare could be an expensive oversight.
Continue group health insurance under the federal Early Retiree Reinsurance Program (ERRP). The new ERRP reimburses employers a percentage of the premiums for group insurance for retirees age 55 or older, their spouses, and their dependents. Be aware that the federal subsidies for the employer do not automatically reduce the retiree's premium cost.
Elect COBRA benefits. Retirees and their dependents may be eligible for continued employer benefits under COBRA. COBRA mandates that employers with 20 or more employees must continue group health insurance for terminating employees for a period of time. The number of months someone can retain group insurance coverage depends on the state. At a minimum, retirees can continue their coverage for an additional 18 months, but at an unsubsidized cost.
See the Kaiser Family Foundation website, www.statehealthfacts.org, for more information about states' COBRA extension laws and guaranteed insurance protections. Buy a state-sponsored guaranteed health insurance plan These are called HIPAA-eligible plans or high-risk pools, depending on the program the state offers. Under PPACA, states must offer insurance coverage for qualified residents, regardless of preexisting conditions. By 2014, uninsured retirees who make too much to qualify for subsidized health plans will be able to buy coverage, regardless of health, through private insurers via a state-sponsored insurance exchange.
Click here to continue reading more ideas on obtaining health insurance if retiring early. |
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Bye bye BlackBerry. How long will Apple last?
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This article by Forbes' technology writer Adam Thierer reiterates the message of fast change in today's economic environment and causes us to ponder on the fickle world of consumer choice.
Just five years ago, "BlackBerry" was virtually synonymous with "smartphones." It was well on its way to becoming a generic trademark, like Kleenex or Band-Aid, that would seemingly forever be associated with its entire sector. "For many, the Blackberry is a must-have gadget, a wireless hand-held computer that can send e-mail and make phone calls," noted a 2005 NPR story on the "CrackBerry," as some BlackBerry addicts referred to the device. (Incidentally, the story compared the BlackBerry to the Palm Treo, an equally popular device at the time.) Today, however, Research in Motion Ltd. (RIM), the maker of BlackBerry smartphones, is a financial basket case that has come to symbolize just how turbulent life in the modern digital economy can be. On Thursday, RIM announced that it was laying off top execs as revenues continued to plummet and the firm's stock price hit its lowest mark since 2003. Industry analysts are lowering their projections for the firm and wondering if any corporate suitor - Microsoft is commonly mentioned - might be willing to step in and save the day by taking over the company. As a New York Times headline from earlier this year noted "The Blackberry [is] Trying to Avoid the Hall of Fame of Fallen Giants," joining the infamous ranks of the Sony Walkman, the Palm Pilot, the Atari 2600 gaming console, and the Polaroid instant camera. The article noted that "Over the last year, RIM's share price has plunged 75 percent. The company once commanded more than half of the American smartphone market. Today it has 10 percent." Both metrics continue their downhill slide. If RIM can't pull a rabbit out of the hat, the BlackBerry will become the latest case study exemplifying just how fast "information empires" can rise and fall in today's rapidly evolving information technology marketplace. I've devoted numerous installments of this column to documenting how Joseph Schumpeter's "perennial gales of creative destruction" are blowing harder than ever in today's tech economy and laying waste to those who don't innovate fast enough. Nowhere is that more true than in the mobile phone handset and operating system marketplace, which has undergone continuous change over the past 15 years and is still evolving rapidly. Like the BlackBerry, Palm smartphones were also wildly popular for a brief time and brought many innovations to the marketplace, but the company underwent many ownership and management changes and rapidly faded from the scene. After buying Palm in 2010, HP announced it would use its webOS platform in a variety of new products. That effort failed, however, and HP instead announced it would transition webOS to an open source software development mode. |
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Joe Chornyak invired to attend exclusive Barron's conference
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Joe Chornyak, ranked among the Top Independent Financial Advisors in the U.S., attended the fourth-annual Barron's Winner's Circle Top Independent Advisors Summit, hosted by Barron's at the JW Marriott Dessert Ridge, March 21-23 in Phoenix, AZ.
Advisors are chosen to attend the Summit based on the volume of assets overseen by them and their teams and the quality of the advisors' practices. The Top Independent Advisors are comprised of Registered Independent Advisors and Advisors from Independent Broker Dealers.
This exclusive conference is designed to promote best practices and generate new ideas across the industry. Attendees conducted workshops led by the Top 100 Independent Financial Advisors that explored current issues including business development ideas, managing high-net-worth accounts, investment planning for families, portfolio management, and retirement planning.
"The work these independent advisors do and their influence will only increase as the nation's Baby Boomers plan for retirement and all Americans nurture their portfolios and husband their businesses through difficult times," said Ed Finn, Editor and President of Barron's.
Barron's is America's premier financial magazine, renowned for its market-moving stories. Published by Dow Jones & Company since 1921, it reaches an influential audience of senior corporate decision makers, institutional investors, individual investors and financial professionals.
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What's happening now
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Several food manufacturers use cellulose (read: wood pulp) as an extender in a roster of food products, from crackers and ice creams to puddings and baked goods. Here are 15 of these companies.
Euro zone unemployment just hit a 15-year high. German unemployment just hit a 15-year low. What are the lessons to be learned?
Everyone knows that the year you have a baby, you typically see a generous tax refund, but it doesn't stop there - certain things can be deducted, year-after-year.
Apple has filed a patent application for an iPhone made entirely of glass. This could be for the new iPhone, or a future version of the product
If employer-based health insurance is the heart of both the U.S. and French healthcare systems, why is ours so much more expensive? Find out here. The flying car comes to the New York Auto Show. Called the "Transition", the fold-up vehicle will fly 100 miles per hour for a range of nearly 500 miles. You can still become a millionaire. Here's the secret: It's all in your head, your attitude, your state of mind. If you want to retire a millionaire, you can. Here's how: You control your mind. |
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This communication is strictly intended for individuals residing in the States of: AL, AR, AZ, CA, CO, CT, FL, GA, IA, IL, IN, KY, LA, MA, ME, MI, MT, NC, NY, OH, PA, SC, TX, VA WI, WV. No offers may be made or accepted from any resident outside these States due to various state requirements and registration requirements regarding investment products and services. Securities and Advisory Services Offered Through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed-insurance products and services offered by Chornyak & Associates, LTD are separate and unrelated to Commonwealth. This informational e-mail is an advertisement. To opt out of receiving future messages, follow the "Unsubscribe" instructions below. Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor's. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000� Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury's daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS. |
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April 2012
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A constant topic of discussion among both clients and advisors, especially in these turbulent times, is " Where are the markets headed and what are they going to look like?" In this month's video I discuss market trends over the past three years and during the first quarter of this year. Your reaction, as I point out, will be based upon your personal investment goals and objectives as well as your expectations for future income. I'm sure most of you think about retirement from time to time. We wanted to give you some ideas for planning for health insurance coverage if you decide to enter retirement before age 65. Our article, provided by Commonwealth Financial Network, identifies how you may choose a COBRA plan, elect to continue health insurance coverage through your current employer, take out a state-sponsored guaranteed health insurance plan, or other alternatives. One of the ways we keep in touch with trends and issues in the financial industry is to attend conferences throughout the country. This year I was invited to participate in the Barron's Winner's Circle Top Independent Advisors Summit1, on March 21-23 in Phoenix, AZ. I was privileged to join a select group of financial advisors to discuss best practices and generate new ideas. As always, I will pass on to you insights from what I've learned. 1Advisors are chosen to attend the Summit based on the volume of assets overseen by them and their teams and the quality of the advisors' practices.
One of the reasons for the difficulty in predicting the financial future these days is the rapid pace of change in technology and consumer choice. Blackberry, which had almost become synonymous for "smartphone," is near to entering the "Hall of Fallen Giants" as the media point out. Is the iPhone as secure as many have been led to believe? Be sure to read our article on Blackberry's rise and fall. In "What's happening now" there are several links to articles that we found interesting and informative. Are you aware that some of the foods you eat contain a high percentage of wood fiber? Why does Germany's economy appear to be so strong? Let me know your thoughts on any of the points we bring up that strike a note of relevance with you. You can reach me at: 614-888-2121 (or toll free 877-389-2121), e-mail:
Sincerely, Joe
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Market Update
| The rally continues
February continued January's strong market performance. The S&P 500 Index was up another 4.32 percent, for a year-to-date return of 9 percent, while the Dow Jones Industrial Average climbed 2.89 percent. This was the best February market performance since 1998.
Equity markets continued to enjoy strong technical support during the month. All three major indices remained above their 200- and 50-day moving averages. The S&P 500 blew through the 1,350 resistance level we identified last month and is making an attempt to break the next resistance level of around 1,370. On a sector basis, information technology and energy led the pack while materials and utilities lagged.
International markets performed even better than domestic investments, with the MSCI EAFE Index up 5.74 percent and the MSCI Emerging Markets Free Index up 5.89 percent. The significant steps taken in Europe to reduce the risk of the sovereign debt crisis there have clearly comforted investors. Fears of a hard landing in China have also eased. The EAFE joined the emerging markets index in moving above its 200-day moving average, and a positive technical trend is clearly in place in both.
The Federal Reserve stands pat
In February, the Federal Reserve (Fed) reiterated its commitment to maintaining sustained low rates but appeared unwilling to enact additional easing in the near term. Yields for 10-year government bonds remained at historically low levels, fluctuating around 2 percent, and the Barclays Capital Aggregate Bond Index declined 0.02 percent over the month. Bond investors have continued to demonstrate a cautious outlook, despite improving economic fundamentals, and do not appear to share the optimism of equity investors.
The dominant drivers of the Treasury market remain both Fed policy and the perceived risk levels associated with other assets. If fears continue to recede, Treasuries may begin to come under some selling pressure. Historically, when new unemployment claims drop to around where they are now, the Fed has raised rates within the next 18 months. Although the current environment differs from previous periods, bond investors might be well-served to keep this historical correlation in mind.
Municipals continued to perform well in February, with yields falling across the short end of the curve and investment inflows remaining strong. Municipals were supported by improvements to the health of state and local balance sheets, with Bloomberg reporting that state tax revenues increased at their fastest pace since 2006.
Mixed economic signals
February saw continued improvement in the employment situation, with weekly initial jobless claims fluctuating around 350,000 and January's unemployment rate declining to 8.3 percent. Demand for new employees has been widespread across industries and particularly strong for small- to medium-sized businesses. These changes in the jobs situation did not go unnoticed. Consumer confidence rose to levels not seen since February 2011, as respondents became more optimistic about business conditions and the labor market.
On the other side of the coin, housing has continued to be an economic drag. According to Case-Shiller data, home prices fell 0.5 percent in December 2011. Sales data has been somewhat better, but downward revisions have shown that transaction levels remain depressed. Prices have increased in some regional markets, however, and housing affordability is near peak levels.
Equity markets appear to be pricing in a rebound in housing in 2012. Now that the banking industry has resolved outstanding lawsuits over improperly processed loans, the only remaining risk is that foreclosures could increase as the year progresses. Data from early spring will likely be telling, as this is typically a time of increased housing demand.
American manufacturing and industry continue to demonstrate signs of growth. February marked the 31st consecutive month of manufacturing expansion, according to the Institute of Supply Management Index. Recent data, however, has implied slightly less robust growth levels than in the previous two months.
Oil and gasoline prices rise
Oil and gasoline prices rose significantly in February, due to a combination of supply constraints and an increased risk premium. The U.S. sanctions program on Iran has constrained supply from that country. Supply disruptions in Syria, Libya, and Sudan, resulting from civil conflicts, have also been significant. The combined effect has tightened oil output, and, although other producers are attempting to make up the difference, they do not appear to have been completely successful.
Perhaps more significantly, growing tensions in the Middle East have caused a risk premium to be baked into the price of oil. Rhetoric between Iran and Israel has become increasingly hostile, as Israel has threatened to make a preemptive strike against Iran's nuclear program. In the event of an attack, Iran has pledged to close the Strait of Hormuz, an action that could drive oil prices considerably higher. Higher oil and gasoline prices are among the most significant risks for both markets and the world economy in 2012.
Europe-two steps forward
Substantial progress seems to have been made on the European crisis. The most recent Greek bailout was successfully passed and now awaits implementation. Although real obstacles remain in the execution, the train is on the track. Additionally, the European Central Bank's (ECB) Long-Term Refinancing Option (LTRO) program has significantly relieved concerns about banking system liquidity. These two factors have been key contributors to the trend of improving investor outlooks.
Despite the good news, continued risks still exist in Europe. One major issue that remains is the pending process of standardizing fiscal practices across the European Union. Political backlash in peripheral countries against austerity measures could grow going forward, even as governments rely on the ECB and core European nations for financial support. The situation remains uncertain, and substantial risks remain.
A strong start but continued uncertainty
Markets had a very strong start to the year, and many economic indicators have been surprisingly positive, but uncertainty remains. In the U.S., investors will monitor consumer spending and manufacturing data closely. European debt issues remain a risk as well. Nevertheless, though volatility can be expected to persist, the global outlook is showing signs of improvement.
Authored by Brad McMillan, vice president, chief investment officer, at Commonwealth Financial Network.
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