News & Views 
Presidents Day Edition 

February 15, 2015

I hope all is well.  In this edition of News & Views, I will discuss the recent stock market performance and Japan's interest rate policy along with some solutions for low or no interest in your bank accounts.  As always, please contact me with any questions or suggestions you may have.

Market Update
Stocks Down & Japan Goes Negative

The stock market had the worst 10-day start to a year in history and is down about 8.5% year-to-date.

Fortunately, the larger than usual cash position in your accounts coupled with some timely hedging to reduce stock market exposure has kept most accounts positive year-to-date.  We will continue to be patient and wait for opportunities to move back to our normal asset allocation.

The Bank of Japan introduced a -0.1% rate on some of the reserves that financial institutions hold at the central bank causing rates on 10-year Japanese government bonds to fall into negative territory.  Japan follows some European countries that have introduced negative rates in an attempt to spur economic growth.

What does a negative interest rate actually mean?  It means you must pay the bank to hold your money.

Low Rates Got You Down?
Here Are A Two Solutions

Problem #1 - My checking/savings account pays little or no interest on my balance.

Solution - Use an "online" or "direct to consumer" bank such as EverBank.  Most online banks are FDIC-insured like traditional banks, but because they don't maintain branch locations, they can pay you a higher interest rate on your checking/savings account balances.  These online banks have many of the same features your current bank has - direct deposit, online bill pay, ATM deposits / withdrawals, etc.

Problem #2 - My bank pays very little interest on certificate of deposits (CDs).

Solution - Use a fixed annuity with a guaranteed interest rate.  I work with highly rated insurance companies whose fixed annuity rates may exceed what your bank is offering you for a CD.  Call me and I will run the comparison to see if this is a viable option for you.

Tax Forms
It's that time of year again.  Your 2015 Form 1099s are on their way for your non-retirement accounts or any retirement account transfers that occurred last year.  Feel free to contact me or have your tax professional contact me with any questions regarding these forms.


Paul Hewitt
(949) 727-4734 x1