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THE NEW 2010 ROTH IRA CONVERSION OPPORTUNITY - IS iT RIGHT FOR YOU?
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In 2010 the income limit on Roth
conversions will become extinct, so that anyone, regardless of their Adjusted
Gross Income, can convert from traditional IRAs to Roth IRAs.
Roth IRA's
have two major advantages over traditional IRAs. After a 5-year holding period
their distributions are tax-free to accountholders over 59.5 or in certain
circumstances that are not age dependent. And they are not subject to the
minimum mandatory distribution rules that apply to traditional
IRAs.
Anyone converting a traditional IRA to a Roth IRA will have an
income tax consequence from the action. For those who find paying those taxes in
2010 prohibitive, the IRS is offering the deferral of the tax owed in 2010 to be
payable half in 2011 and half in 2012.
There are many factors to consider
when determining whether to convert to a Roth IRA. We want to be sure that you
have the information and guidance you need to make an informed
decision.
We will be holding a conference call
on Wednesday, November 18 to share information about Roth IRAs and answer general questions.
You can call Sandy at (610) 437-3500 for information on how to join that conference call if you
would like to participate. We would also be happy to talk you personally about
your specific situation anytime, whether you choose to participate in the
conference call or not.
Roth IRAs can be a valuable
retirement tool. We hope we can help you investigate whether this conversion
opportunity could benefit you. |
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THE MARKETS |
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Can Sir Isaac Newton's first law of
motion help explain the continuing surge in the stock market?
In 1686, the great mathematician
and physicist first presented his three laws of motion. The first law stated
that, "Every object will remain at rest or in uniform motion in a straight line
unless compelled to change its state by the action of an external force." Well,
some unknown "external force" compelled the stock market to change its downward
spiral in early March and since then, it's been up, up, and away.
Last week, the S&P 500 index
rose another 2.3%, stopping just shy of the 1,100 mark. Better than expected
earnings from companies such as Disney and Abercrombie plus more merger and
acquisition activity (Hewlett-Packard agreed to buy 3Com at a large premium)
helped keep the market in upward motion. Gold continued its fabulous run and finished
the week with its ninth gain in the past 10 trading days, according to
Associated Press. And, the U.S. dollar became cheaper last week against most of
its major counterparts, partly due to reports showing other countries are
recovering faster than the U.S.,
according to Bloomberg.
We are keeping our eyes and ears
open for early signs of an "external force" that may change the upward course
of the markets. In the meantime, enjoy the ride.
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Data as of 11/13/09
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's
500 (Domestic Stocks)
|
2.3%
|
21.0%
|
25.2%
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-7.6%
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-1.6%
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-2.4%
|
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DJ Global ex US
(Foreign Stocks)
|
2.3
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39.0
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48.3
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-4.3
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4.5
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1.5
|
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10-year Treasury Note
(Yield Only)
|
3.4
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N/A
|
3.8
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4.6
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4.2
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5.9
|
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Gold (per ounce)
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0.7
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26.9
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54.7
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21.0
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20.3
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14.3
|
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DJ-UBS Commodity Index
|
0.2
|
12.3
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6.6
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-7.7
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-2.8
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3.7
|
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DJ Equity All REIT TR
Index
|
6.2
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19.4
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24.4
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-12.6
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-0.3
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10.3
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Notes: S&P 500, DJ
Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends
(gold does not pay a dividend) and the three-, five-, and 10-year returns are
annualized; the DJ Equity All REIT TR Index does include reinvested dividends
and the three-, five-, and 10-year returns are annualized; and the 10-year
Treasury Note is simply the yield at the close of the day on each of the
historical time periods.
Sources: Yahoo! Finance,
Barron's, djindexes.com, London Bullion Market Association.
Past performance is no
guarantee of future results. Indices are
unmanaged and cannot be invested into directly.
N/A means not applicable or not available.
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WHEN IS MONEY A GOOD INVESTMENT?
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When is money a good investment? Back in
1962, artist Andy Warhol completed a hand-drawn silkscreen painting titled "200
One Dollar Bills." True to its title, the massive 7½-foot wide painting
depicted 200 one dollar bills reproduced in tones of black on grey, according
to Bloomberg. The owner of the work, Pauline Karpidas, a London-based
collector, purchased the painting with her husband back in 1986 for $385,000. Last
week, Ms. Karpidas sold the painting for - are you ready for this - an
incredible $43.8 million! And we all thought the dollar was depreciating.
From $385,000 to
$43.8 million in 23 years translates into an average annual return of nearly 23%.
Not bad for a painting. By contrast, the S&P 500 index rose at a
modest-by-comparison average annual rate of approximately 6.5% from mid-1986 to
today, according to data from Yahoo! Finance.
As the stunning
value of the Warhol painting shows, investment opportunities may show up in places
you wouldn't normally think of. Unlike the financial markets, though, there are
no easy ways to invest in masterpiece paintings on behalf of our clients. However,
the point of mentioning Warhol is that we do search far and wide to try and
find investment opportunities that may help offset the volatility of the stock
and bond markets. Fortunately, innovation in the financial markets over the
past few years has expanded the types of products available and we continue to
analyze and perform due diligence on them to see how they might benefit our
clients.
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THINK ABOUT IT
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"Money is
neither my god nor my devil. It is a
form of energy that tends to make us more of who we already are, whether it's
greedy or loving."
--Dan Millman
|
|
 
Mary L. Nothelfer, CFP® Emilio
J. Morrone, CPA, CFP®
|
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Securities
offered through LPL Financial, Member FINRA/SIPC.
*
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities
considered to be representative of the stock market in general.
*
The DJ Global ex US is an unmanaged group of non-U.S. securities designed to
reflect the performance of the global equity securities that have readily
available prices.
*
The 10-year Treasury Note represents debt owed by the United States Treasury to
the public. Since the U.S. Government is seen as a risk-free borrower,
investors use the 10-year Treasury Note as a benchmark for the long-term bond
market.
*
Gold represents the London
afternoon gold price fix as reported by the London Bullion Market Association.
*
The DJ Commodity Index is designed to be a highly liquid and diversified
benchmark for the commodity futures market. The Index is composed of futures
contracts on 19 physical commodities and was launched on July 14, 1998.
*
The DJ Equity All REIT TR Index measures the total return performance of the
equity subcategory of the Real Estate Investment Trust (REIT) industry as
calculated by Dow Jones.
* Yahoo!
Finance is the source for any reference to the performance of an index between
two specific periods.
*
Opinions expressed are subject to change without notice and are not intended as
investment advice or to predict future performance.
*
Past performance does not guarantee future results.
*
You cannot invest directly in an index.
*
Consult your financial professional before making any investment decision.
* This
newsletter was prepared by PEAK.
* To
unsubscribe from the Weekly Market Commentary please reply to this e-mail with "Unsubscribe"
in the subject line.
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