HeaderNew

Call us at 614.888.2121 or toll-free at 877.389.2121.           Visit our web site: www.chornyak.com.

Less uncertainty - what do we do now?  

 
JoeVideo01-12-2013
    To view video, click here , or on image above.

At the end of last year we were all talking about the "fiscal cliff." At the beginning of this year, the American Taxpayer Relief Act was passed and signed by the president, bringing about a lot of changes.

In our video this month, Joe Chornyak talks about the types of investments we should be thinking of as we go into the new year.


Improving your financial health in 2013
ECBFrankfurt
European Central Bank, Frankfurt, Germany
Commonwealth Financial Network highlights some positive economic facts, some cautions about the new year, and provides a checklist for maintaining your personal financial health.

Financial discussions going on in the U.S. government shouldn't overshadow some positive economic developments in our country, nor should it stop you from making improvements to your financial health in 2013.

Consumer markets look good

Consumer sentiment is as high as it has been since 2007; this can be attributed to three main areas:
  • At 7.7 percent, as of November 2012, the unemployment rate is well below its peak, and analysts expect slow but steady increases in employment in 2013.
  • Low borrowing rates have helped consumers reduce their obligations significantly, bringing debt to its lowest level since the start of the recession.
  • Demand for houses has risen, resulting in increased prices and leading both sellers and buyers to take action. Demand should stay high if the Federal Reserve continues its bond-buying program, which will keep mortgage rates low.
Uncertainty abroad

Although there are signs of optimism on the home front, international concerns could spill over into our economy in 2013:
  • A continued rebound in the euro could signal a potential end to the European debt crisis.
    -  It remains to be seen whether or not Spain will be too proud to
       accept the European Central Bank's offer to buy its bonds.
    -   Elections in Germany and Italy in 2013 are expected to have a
        significant impact on the future of the eurozone.
  • A current feud between China and Japan over ownership of several islands could restrain growth in this booming region.
  • The yen is also very weak.
Your personal financial health

Macroeconomic issues like these are beyond our control, and we often have to accept a degree of uncertainty when it comes to the financial outlook both at home and abroad. But you shouldn't leave your personal financial future to chance. You can make positive adjustments like these to help ensure that you are better prepared for whatever the future might bring:
  • Pay down debt. Start with credit cards that have the highest interest rates, and always pay more than the monthly minimum.
  • Increase your savings. No matter what your goal is-maybe a vacation or an emergency fund-create a timeline and action strategy to help you get there.
  • Develop a budget. Track your monthly and yearly expenditures so you can see exactly where your money goes-and how much discretionary income you have left to work with.
  • Review your credit report. Everyone is entitled to one free report a year from Equifax, TransUnion, and Experian. Request yours at www.annualcreditreport.com.
  • Assess life changes. Review your insurance coverage, retirement plan, will, and estate plan to ensure that they continue to meet your needs.
  • Protect your identity. Review statements for suspicious activity, avoid using your social security number, make online purchases only on secure websites (which have addresses that begin with https), and don't open e-mails from unknown senders.
  • Further your financial knowledge. There are countless websites, TV shows, and books that can help you learn more about personal finance.
No matter what 2013 brings, your financial advisor can help navigate your way to your goals.

Be sure to contact Chornyak & Associates at 614-888-2121, toll-free at 877-389-2121 or [email protected].  We're here to advise and help!

 

The key components of a cost-effective car   

The Mini Cooper is a good compromise between compact, affordable, practical, stylish and great to drive.
Cooltobefrugal.com is an excellent source on ways to save money, from saving for retirement to taking cost-effective vacations
We thought these tips on buying an new car and purchasing car insurance were sensible and potentially extremely helpful

Buying a car is a big commitment: make the right decision, and you will have a reliable, faithful companion that helps you make and save money. Make the wrong decision, and watch your cash spiral away.

Here are some tips to help you choose a reliable and affordable car that's cheap to insure and run - a car that you'll be happy to have by your side every day.
 
Ways to Save When Buying and Running a Car
  • High quality used cars are a far better value than affordable new cars. As soon a car is driven off the lot there will be a significant reduction in value - ludicrous but true - so by buying a barely used car you can save $750 to $1000 or more.  
  • Due to this rapid depreciation in value, extended warranty premiums don't necessarily justify what they cover. It's another way of burning a hole in the wallet - don't accept the hard sell, and research online before accepting these deals on the car lot  
  • Think small - not only does this result in cheaper insurance, but the running cost will also be significantly cheaper. Small doesn't mean unpleasant, however: for example, the Mini Cooper is a good compromise between compact, affordable, practical, stylish and great to drive.  
  • Did you know that running the air conditioning or heating can significantly eat into the fuel consumption? That's not to say that in the dead of winter, you need to be utterly miserable and refuse to turn on the heating - but be conscious of this additional running cost. Open the windows in summer and invest in some driving gloves in winter - the potential savings from cutting back are approximately $300 per year.
Ways to Save On Car Insurance
  • You may encounter a hard sell for insurance when you drive your car off the lot. Don't buy into this as it's possible to find cheaper and more comprehensive coverage by comparing insurance providers online. All in all, it's time in front of the computer well spent. By doing this you could potentially save around $300 per year.  
  • Here's a tip that your grandpa could tell you: old cars are cheap to insure. You may have your eye on a shiny new model, but an unsexy older car will save you heaps on your monthly payments because they are cheap to replace in case of an accident or theft.  
  • In addition, classic cars are often beloved possessions owned by enthusiasts or those with mechanical know-how, so insurance companies know that the cars will be looked after.  
  • Small cars are less likely to cause much damage to another vehicle, so are also cheaper to insure.  
  • Cars with excellent safety ratings are less likely to incur expensive repair bills (or hospital bills), so will result in lower premiums.  
  • If the car looks distinctly unattractive to a car thief, then this is going to make the insurance premium lower - your boxy old car may drive like a dream, but if the resale value is low, then thieves will leave it alone.
As sensible car owners (and your grandpa) will tell you, strike a balance between style and substance when purchasing a new car. A car may have a low price tag, but a car is a package deal - consider insurance, running costs and depreciative value during the search to make sure you choose a car that will work with you, rather than against you.


Downsize your debt before you retire

DownsizeDebt

Eleanor Laise of Kiplinger writes advises that, from mortgages to credit cards, dealing with debt now can provide retirement security down the road.

More and more Americans are stumbling through their final working years carrying a heavy debt burden. Those hoping for a long and happy retirement need to find a way to lighten the load.

Mortgages and credit card debt, along with the financial needs of college-age children and elderly parents, are taking a heavy toll on baby boomers and older retirees. Nearly half of boomers expect to retire with debt, according to a recent survey by Fidelity Investments.

Over the past two years, there has been a 27% spike in the number of retirees seeking help from members of the Association of Independent Consumer Credit Counseling Agencies, says David Jones, the group's president. "Older people, especially retired people, are the biggest growth area we've seen," Jones says. He notes that "it's a very serious situation," since seniors often have health problems and limited ability to return to work.

Even if you've never struggled to pay the bills, you can boost your retirement security by learning to spot the debt traps that tend to snare retirees. And for those already burdened with debt, a host of resources are available to help you move toward retirement with a lighter step.

The burden of credit cards.

Whether coping with rising health care costs, investment losses or family obligations, many seniors come to the same conclusion: Credit cards are the only way to make ends meet.

In a recent survey of low- and middle-income households carrying credit card balances, research and advocacy group Demos found that people 65 and up have more credit card debt than any other age group-nearly $9,300, on average. And while younger folks have unloaded much of their debt burden since the financial crisis, seniors' debt level has barely budged.

A worst-case scenario-credit card debt leading to bankruptcy-is becoming all too common among seniors. In a study of the significant increase in bankruptcy filings among older Americans, John Pottow, a professor at the University of Michigan Law School, found that these debtors most often cite credit card interest and fees as the cause of their financial problems.

When faced with overwhelming credit card bills, focus on paying down the debt with the highest interest rate first. And if it will take more than a few months to pay off the cards, consider consolidating your balances on a card offering a 0% interest rate-bearing in mind that you could face a steep rate increase when the promotional period is over.

Be wary of credit card "add on" products pitched by telemarketers. Regulators in recent months have cracked down on major card issuers for deceptive marketing of such products as credit monitoring or "payment protection," which promises to let consumers suspend payments for a limited time in event of unemployment, hospitalization or other troubles. Some consumers were signed up without their
consent, the regulators found.

Review your bank and credit card statements regularly for any unusual charges. And if you're interested in any bank or credit card services, get the information in writing rather than signing up over the phone.

Don't hesitate to ask for help. Seniors seeking to conceal financial problems from family members or friends may be attracted to the anonymity of credit cards-and drawn into overwhelming debt.

"Rather than have an awkward conversation with the kids or asking someone else for help, they're borrowing to finance consumption," Pottow says.

Mortgage-debt pitfalls.

Paying off the mortgage before you hit retirement may be a worthy goal. Given today's rock-bottom yields on savings accounts and certificates of deposit, you'll likely save more money eliminating mortgage interest payments than by stashing cash in the bank. But homeowners near retirement shouldn't accelerate mortgage payments if it means ignoring other high-interest debt or cutting their cash cushion to the quick. Also, if you withdraw from a 401(k) or traditional IRA to pay off the debt, taxes due on the distribution will counteract the benefits of paying down the mortgage. Online prepayment calculators such as the one at www.hsh.com can help you weigh the benefits of accelerating payments.

Over the past two decades, a steadily growing number of homeowners have been carrying mortgage debt well into their retirement years, according to a recent study by AARP. And among those age 50 and older, 6% of mortgage loans were seriously delinquent in 2011, up from 1.1% in 2007, AARP found.

"I don't think people are making a conscious decision to carry debt," says Lori Trawinski, senior strategic policy adviser at AARP Public Policy Institute and author of the study. "People have no choice, because they have other obligations they need to take care of." Many older people have relied on home equity to cover health care, home repairs and other big-ticket items.

Some seniors struggling to make mortgage payments may be able to downsize to a smaller home and slash their maintenance, insurance and tax bills at the same time. Alternatively, those who have good credit may be able to take advantage of today's low interest rates and refinance their mortgage. If you are current on your mortgage payments but having trouble refinancing because the value of your home has dropped, the Home Affordable Refinance Program (HARP) may help. This federal program, which is available for mortgages owned or guaranteed by Fannie Mae or Freddie Mac, helps borrowers refinance even if they owe more than the value of their home.

For information on HARP and other programs designed to help homeowners, go to MakingHomeAffordable.gov. Also get in touch with a government-approved housing counselor by calling 888-995-4673.

Be wary of advertisements or other promotions promising to help you modify your mortgage or avoid foreclosure. The Consumer Financial Protection Bureau recently reviewed hundreds of mortgage-related ads, particularly those targeting seniors and veterans, and found that many misrepresented a government affiliation or promoted misleadingly low rates. And if a mortgage-relief firm asks for money upfront, "that's a huge warning sign," says consumer debt expert Steve Rhode, who runs the Web site GetOutofDebt.org. Under Federal Trade Commission rules that took effect in 2011, firms offering mortgage assistance aren't allowed to charge upfront fees-although there's a loophole for some services offered by lawyers.

A reverse mortgage, which allows a homeowner 62 or older to convert some home equity into cash, can make sense for some seniors who understand the risks. The loan must be repaid with accumulated interest when the borrower dies, sells the home or no longer uses it as his primary residence. There are no monthly principal or interest payments while the homeowner lives in the house, but the borrower must stay current on tax and insurance premiums. "We see people coming to us in a panic" after taking a reverse mortgage and being threatened with foreclosure because they don't have the money to pay the taxes, says Jones of the credit counseling agency group. A government-approved housing counselor can help you weigh a reverse mortgage against other options.

Finding help.

Use extreme caution when considering "debt settlement" services. These programs typically tell debtors to stop paying their bills and instead send payments directly to the debt settlement company or a separate account while the company tries to persuade creditors to settle for less than the amount owed. This can mean that consumers default on their debts, rack up late fees and wreck their credit scores.

Some lenders won't work with debt settlement firms, and many consumers enrolled in the programs end up filing for bankruptcy anyway, according to the consumer group Center for Responsible Lending. Plus, consumers who settle non-mortgage debt for less than the amount owed will typically get an income-tax bill for the amount of debt forgiven.

Instead, contact a nonprofit credit counseling agency, avoiding any services that charge big upfront fees. Find an agency in your area at www.aiccca.org or www.nfcc.org, the web site of the National Foundation for Credit Counseling. Counselors will help consumers review their budget and develop a spending plan. These agencies can also help establish a schedule for repaying debts through "debt management plans," which typically involve a sharp reduction or waiver of interest charges and penalties.

  

Please read the full article here.   
 
 

  

What's happening now

  
MarissaMayer
Marissa Mayer, Yahoo CEO
 
Marissa Mayer, Yahoo's new 37-year-old CEO, has laid out plans for how she plans to turn the company around, starting with upgrading its engineering, design, and business talent, through hires and small acquisitions, as well as reform of Yahoo's bureaucratic culture.

A new app, called Facewash, is the latest tool that aims to help the inexperienced social-network user flush out inappropriate words and potentially questionable photos. Users can also search for specific terms if they think Facewash's list might have missed something.

Who were the worst CEO's of 2012? Does Best Buy make you think of mismanagement?  Mark Zuckerberg was a candidate, but didn't make the list.

Does Apple really care if Samsung sold more smartphones in 2012? Some think the answer is "No".

Everybody is so happy that the housing industry is recovering, but is it real, and is it a good thing

 

  



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.
February 2013
JoeSrNewJune12

Not all of the issues of what was called the "fiscal cliff" have been resolved.  However, as I point out in my video this month, the types of investments that you should be making today, in many instances, are the same investments that you should have been making in the recent past.  

 

Our article provided by Commonwealth Financial Network in this issue is both optimistic and precautionary.  While U.S. consumer markets are starting out the year strong, the situation abroad is still unsettled.  This piece provides some tips for caring for your personal financial health.

 

We've also included some tips on what you should consider when purchasing a new car. The U.S. auto industry is back. Production lines are humming, a group of new and redesigned models are in the showrooms, and sales of new vehicles are up for the third straight year.  Now may be the time to upgrade or think about buying an American-made car.  

 

As the Commonwealth Financial Network article mentioned, paying down personal debt is one of the ways to keep your finances healthy. There has been a tendency, and a need, in our country in recent years to resort to debt to make ends meet.  In an article from Kiplinger this month, we provide you with some facts and advice on getting rid of debt either as you approach retirement, or after.

 

"What's Happening Now?"  From the new female CEO of Yahoo to the "Facewash" app and the iPhone5's slipping market share, we'll keep you informed.

We'd be glad to speak to you personally about your financial investment needs and concerns. Please contact us at 614-888-2121 (or toll- free 877-389-2121), or send an e-mail to:

Sincerely,

 

Joe 

Market Update

Off to a great start

January got the year off to a great start. The S&P 500 Index was up 5.18 percent, and the Dow Jones Industrial Average climbed 5.91 percent. The perceived successful resolution of the fiscal cliff sparked the best January market performance since 1997. The beaten-down energy sector led markets upward, while the technology sector lagged. The S&P 500 ended the month only about 2 percent below its 2007 peak, having posted double-digit returns in three of the past four years.

The strong market action continued on good corporate earnings data and in spite of mildly disappointing revenue results. As of the most recent data, 71 percent of S&P 500 companies beat earnings expectations in the fourth quarter of 2012, but only 43 percent beat on revenues. Since late 2009, when nearly 80 percent of companies beat earnings estimates, the trend has been downward. According to Bloomberg, only 64 percent of companies beat in the third quarter. So the possible rebound to 71 percent may be another reason why investors have been optimistic.

Technically, equity markets show signs of continued strength. The S&P 500 remains above both its 50- and 200-day moving averages and briefly crossed a key price level of 1,500. Other technical market factors are also positive. The strong performance of the Dow Jones Transportation Average and the breadth of stock price appreciation suggest that bullish investors are enjoying significant momentum.

Developed international markets beat U.S. markets, but emerging markets lagged. The MSCI EAFE Index rose 5.27 percent, and the MSCI Emerging Markets Index returned 1.31 percent on a price basis for the month. Given the diversity of markets and economies included in these indices, it is difficult to draw general conclusions. It does appear, however, that continued economic recovery and the reduction in political uncertainty have made the U.S. and developed markets relatively more attractive.
 
Value stocks outperformed growth stocks across the globe, and European peripheral countries such as Italy and Portugal were top performers. Analysts expect European gross domestic product (GDP) to contract 0.1 percent in 2013, but investor spirits continue to be buoyed by the European Central Bank's pledge to buy sovereign debt if necessary.

Technically, the MSCI EAFE and Emerging Markets indices remain above their 50- and 200-day moving averages, though the emerging markets benchmark is getting close to its 50-day, suggesting an erosion of investor confidence.

Bonds lost ground over the month, as investors moved out of lower-risk assets. The Barclays Capital Aggregate Bond Index declined 0.7 percent. Both Treasuries and investment-grade corporates sold off. Only municipals and high-yield posted positive performance. The Barclays Capital U.S. Corporate High Yield Index returned 1.34 percent. Yields have risen year-to-date. The 10-year Treasury began January at 1.75 percent; by month-end, it had increased to 1.98 percent. Though still extremely low, Treasury yields are at their highest levels since last April.

Signs of life in the U.S. economy

On the whole, economic data was positive in the first month of the new year. Most notably, employment continued its slow but steady recovery, adding 155,000 jobs for December, which left the unemployment rate unchanged at 7.8 percent. Retail sales continued to grow, and housing continued to improve, with prices increasing even as the supply of homes for sale dropped to multiyear lows.

Results for the fourth quarter of last year, released in January, were also positive. Consumer spending, which is about two-thirds of the economy, was up 2.2 percent-an acceleration over the previous quarter's figure of 1.6 percent. This took place despite the dual headwinds of Hurricane Sandy and the fiscal cliff. Business investment, which had been a piece missing from the recovery, increased 8.4 percent, more than reversing its 1.8-percent decline in the third quarter. Finally, residential investment popped by more than 15 percent, as a result of the housing recovery.

Negatives for the month included a drop in consumer confidence, which seemed driven by the tax increases in the fiscal cliff deal, and a surprising end-of-month report that the economy had contracted 0.1 percent in the fourth quarter of 2012. The decline was due to three official factors: weak inventory spending, a decrease in net exports, and the largest drop in defense spending in 40 years. So the basis for this anomaly appears to have been a mix of one-time factors, seasonal adjustments, and revisions.

Fourth-quarter 2012 GDP, despite being unexpectedly feeble, does not seem to represent a substantial long-term weakening of the economy. The biggest risk is that the headline might shake consumer confidence. For last year as a whole, GDP grew 2.2 percent, up from 1.8 percent in 2011. The recovery, while slow, continues to strengthen in spite of the occasional statistical blip. In summary, this doesn't appear to be the start of a new recession.

Washington, DC remains a factor

The fiscal cliff deal at the start of 2013 made the Bush tax cuts permanent for the majority of the population, but the expiration of the payroll tax waiver meant that everyone saw his or her taxes increase anyway. Lower paychecks led to reduced consumer confidence early in the month. Meanwhile, politicians failed to address expenditures, putting off sequester spending cuts for two months and leaving substantial political uncertainty in place.

Another source of uncertainty, the debt ceiling, was postponed, as Congress agreed to raise the ceiling for the next couple months while budgets are negotiated. Again, nothing has actually been settled, but the decision to negotiate rather than issue ultimatums was rightly seen by the markets as a positive step.

In the face of persistent uncertainty and still elevated unemployment, the Federal Reserve (Fed) maintained its support of the markets by continuing to buy about $85 billion per month of Treasuries and mortgage securities, a rate of about $1 trillion per year. At this point, the Fed is buying a very large proportion of the new securities issued. There is speculation that this intervention could end sometime in 2013, although it will depend on the health of the economy.

Looking forward into 2013

From the perspective of equity market performance, the beginning of 2013 has mirrored the start of 2012. While political and economic concerns remain, a sustainable economic recovery appears well under way. The housing market should continue to improve, and there are reasons to believe that employment growth may accelerate.

In the U.S., government spending is the biggest item to watch, as cuts appear increasingly likely. Nevertheless, the overall signs for the U.S. economy and markets are generally positive. Investors should take the opportunity to celebrate the strong returns of the past few years while they maintain the allocations necessary to achieve their long-term goals.

Authored by Brad McMillan, vice president, chief investment officer, and Sean Fullerton, investment research associate, at Commonwealth Financial Network.
 
Click here to get today's market activity.   

 

 

Join Our Mailing List