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FINANCIAL TEA TIME
Your freshly brewed cup of financial updates
May 2010 |
Greetings!
It's that time of the year when birds are chirping, flowers
are blooming and Warren Buffet is holding his annual shareholder meeting with
about 37,000 investors. The American economy is recovering, with most signs of
life coming from manufacturing businesses, he told The Washington Post yesterday.
This month's newsletter has the usual Month in Review. For
Fun is just for fun and last but not least, a few pointers for those courageous
souls who are paying or will be paying for college one day soon. |
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Month in Review
Despite the selling on Friday - the worst since late January, stocks ended April with broad gains, with Dow up 1.4%, S&P 500 up 1.5% and Nasdaq up 2.6% for the month.
The U.S. economy expanded at a 3.2% annualized rate in the first quarter. As this number will be revised over the next couple of months, it is expected to inch up somewhat. The largest component of GDP, consumer spending gained 3.6%, its fastest rate of increase in three years. However, compared to the increase after the recession of 1981-82 when unemployment was much higher, this number remains sub-par.
Consumption was fueled by real spending on durables - the purchase of big ticket items that had been put off for sometime. Another factor was the continued strength in business spending on equipment and software. However, housing investment dropped from the two previous quarters but is expected to resume growth this quarter.
A preliminary investigation was initiated by the Manhattan U.S. Attorney's Office into whether Goldman Sachs and its employees committed securities fraud in connection with mortgage trading. No determination to bring charges has been made yet.
As its debt was downgraded to "junk", the government of Greece negotiated a bailout with the European Union and International Monetary Fund, which reportedly could reach $158 billion. Following suit was the downgrade of Portugal and Spain by reporting agencies. This steered nervous investors towards U.S. debt driving the yield of 10-year treasuries down.
All in all, it looks like the U.S. economy is headed for a sub-par recovery for now - just like it had been predicted. As for the European nations, more will be apparent in the coming weeks.
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| For Fun...
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12 Tips on Paying for College in Tough Times
I found this article on www.msnbc.msn.com and it's an excerpt from "Paying for
College without Going Broke: 2010 Edition" by Kalman A. Chany. The content has been edited for space but I've
tried to capture the important points.
The competition for resources can be stiff, especially
in tough economic times. The most important rule? Start early.
1. Start researching aid possibilities sooner rather
than later. Those who plan ahead for the aid process will do much better than
those who procrastinate and miss deadlines.
2. Take steps that improve your aid eligibility. For
example, if you have lost your job, you should avoid the temptation to spend
any assets in your retirement plan. In addition to the likely early
distribution penalties and additional income taxes, the higher income will
reduce your aid eligibility.
3. Apply for financial aid no
matter what your circumstances - flush or not. Applying by the priority
deadlines, even if you think you won't qualify, will help you if your finances take
a turn for the worst. Some schools will only accept requests for
reconsideration due to a decline in income from those students who filed for
aid on time - even if they were turned down initially.
4. You should still not initially rule out any school as
being too expensive. Many colleges - especially the private ones - have
increased their aid budgets to attract applicants whose families are now more
price resistant given the state of the economy.
5. Pay less for a four-year degree. You can save on costs
if the student attends a community college for two years and then transfers to
a pricier school for his or her remaining two years. However, be sure that the
college to which the student plans to transfer will accept the credits from the
community college.
6. Encourage your student to take as many AP courses as
possible and to prep well for AP exams. High scores on AP exams can save
considerably on college tuition. Many colleges award course credits for them,
which can reduce the amount you need to pay in tuition.
7. Apply strategically to colleges. If you exceed the
school's admission criteria, you are much more likely to get a better aid
package than a marginal applicant. Be sure to prep for the standardized tests
such as the SAT or ACT, so that the student is more desirable.
8. Be realistic about how much debt the student can
incur, given the starting salaries for his or her probable major and career
path.
9. If you have to borrow, pursue federal loans first and
avoid having the student take on private loans at all costs.
10. If your circumstances have taken a turn for the
worst, request additional aid. But expect that the college may require
considerable supporting documentation.
11. In addition to your aid planning, focus on planning
for the various education tax benefits you can claim. After all, a dollar you
can save on your taxes is worth the same as getting an additional dollar in
grant or scholarship aid.
12. Don't put tuition on a credit card. This debt is
more expensive than ever, given the recent changes to interest rates and other
fees that many card issuers are now charging. You also want to be sure you
avoid maxing out on your borrowing limit, just in case you need to use the card
to pay for an unexpected emergency.
Excerpted from "Paying for College Without Going
Broke: 2010 Edition" by Kalman A. Chany (Random House/Princeton Review Books,
Published October 2009).
Read more: http://today.msnbc.msn.com/id/34810896
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| Rashida Lilani CFP CMFC
Lilani Wealth Management
1624 Santa Clara Drive, Suite 235, Roseville, CA 95661
Phone: (916) 782-7752
Fax: (916) 720-0194
Lilani Wealth Management is a Registered Investment Advisor. Securities offered through Foothill Securities Inc. Lilani Wealth Management and Foothill Securities are not affiliated companies. Member FINRA/SIPC. |
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