 End of an era. A factory on Sao Paulo's outskirts is the last place in the world still producing the iconic VW van, or "bus" as it's known by aficionados, but VW says production will end December 31 of this year.
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 Without doubt, the most mathematically sophisticated television show in the history of prime-time broadcasting is The Simpsons. The show's writing team includes several mathematical heavyweights. Did you ever catch a mathematical allusion while watching Homer and the gang?
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 You can get great perks if you qualify for credit cards for people with excellent credit. Some examples: higher credit limit, rewards points, free gifts, cash-back deals, and low introductory rates.
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 Do you like a nice plate of grits in the morning? How about rice cakes and fat-free salad dressing to lose weight? You may want to have a look at these seven foods a nutritionist would never eat.
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 Five banned books that you should read (that you probably haven't). The earliest work of Western literature has been challenged and banned in schools in the United States! Do Puritan ethics still have an influence on American society?
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 Many seniors who spent much of their careers as corporate managers and professionals are competing for low-wage jobs. Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe. Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs, one for minimum wage.
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 Use-by dates are contributing to millions of pounds of wasted food each year. A new report says that says Americans are prematurely throwing out food, largely because of confusion over what expiration dates actually mean.
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 Do you love shiitake mushrooms? A small Vermont farm is getting up to $16 per pound for them, growing the spongy, rich gourmet ingredients outdoors. Learn about the traditional method for growing shiitakes here.
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 Bob Hope's estate in Toluca Lake, California is for sale. The compound that Hope shared with his wife, Dolores, and their four children has a nearly 15,000-square-foot house, a golf hole, an indoor pool and a manicured rose garden. Interested?
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 A 1966 Volvo sets record for most miles driven: three million!
That's like driving from New York to LA, and back, 537 times. Learn some other fascinating stats about this historic car here.
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 As the cost of attending weddings increases, so does the volume of RSVPs marked "Declines with regret." Some 43% of Americans say they've declined to attend a wedding for financial reasons, according to a new poll by American Consumer Credit Counseling. Learn why here.
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I hope you'll take a look at our video for this month. It's a personal message from me to our clients, potential clients, and friends. I want you all to know that I love what I do and I'm highly motivated to provide you the best financial counseling possible. It's a goal that all management and staff at Chornyak & Associates share and strive to achieve in our everyday dealings with you.
I think we have a good collection of articles this month that will give you some useful advice and entertain at the same time.If you have any comments or questions, please feel free to contact me at 614-888-2121, 877- 389-2122 (toll free) or chornyak@chornyak.com anytime. Sincerely, Joe
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Joe Chornyak, Sr.'s pledge: to excel for the benefit of his clients
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Joe Chornyak believes in excellence. He plans to be with his firm for a long time and to get better and better to benefit his clients. He believes that it's progress, not perfection, that matters, in business in general and in particular, dealing with portfolio mangers.Click here or on the image above to view the video.
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How to handle a financial windfall
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If you find yourself on the receiving end of a windfall, whether through the settlement of a lawsuit, a severance package, a family inheritance, or simply a larger-than-expected tax refund, following the advice outlined here will help you make the most of your good fortune.
. What would you do if you won the lottery? Unfortunately, when a large sum of money is thrust into their hands, otherwise smart people can make serious financial mistakes. In fact, as many as 70 percent of Americans who receive a windfall lose it all within a few years, according to the National Endowment for Financial Education.
Before you do anything
To avoid making choices you may regret later, take a step back and consider your situation, keeping these basic tips in mind:
- Know how much you really have. Oftentimes, recipients overvalue a windfall, failing to consider taxes and other factors. Before visions of sports cars and mansions start to fill your head, put a real number on the money you have. It's a good idea to establish a budget to keep from spending too much, and avoid hasty purchases on big-ticket items.
- Don't immediately quit your job. It's also unwise to assume you can stop working. You'll need to evaluate if you have enough money not only to replace your current income but also to see you through retirement.
- Involve your financial advisor. Working with your existing financial plan, we can guide you in the right direction and help you put your assets to best use, including weighing the potential benefits of strategies such as trust funds and special types of life insurance.
Spending wisely
Once you've evaluated your new financial situation, consider these smart spending strategies:
- Set aside emergency savings. If you don't already have a bank account or money market fund with enough to hold you over in case of a "rainy day," creating one should be a top priority. Ideally, you'll want to set aside sufficient funds to cover your expenses for 6-12 months (3-6 months at the least).
- Pay off high-interest debt. If you have any debt, getting it out of the way is likely a wise move. High-interest debt, such as credit card balances and payday loans, can be particularly worthwhile to pay off in the short term.
- Evaluate your health and retirement plans. You may want to maximize your contributions to your employer's retirement plan and consider the benefits of a Roth IRA. Also, if you contribute to a health savings account (HSA), think about paying your health care costs out of pocket and letting your HSA grow tax-free.
- Treat yourself a little. Clearly, it's best to proceed with caution when making decisions regarding a financial windfall. At the same time, it doesn't hurt to enjoy a bit of freedom with your newly found wealth. Perhaps you'd like to travel to a place you've never had the extra money to visit or treat the family to a fancy dinner and night out. A small indulgence could actually reduce any urge you might feel to spend the funds unwisely.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend that you consult a tax preparer, professional tax advisor, or lawyer.
� 2013 Commonwealth Financial Network�
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Health insurance exchanges gear up for action
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Eleanor Laise of Kiplinger's Retirement Report gives some answers to key questions that will help you prepare for the new health care marketplace.
If you're under 65, you may be in for whole new outlook on your health, wealth, and retirement security when the Affordable Care Act is implemented.
October 1 marks the start of open enrollment on the new state-based health insurance exchanges created under the 2010 health care overhaul law. And it will give many older consumers their first opportunity to sign up for health insurance plans that guarantee comprehensive coverage regardless of health status, in many cases subsidized by tax credits. Coverage will begin January 1, 2014, when most people are required to have insurance or pay a penalty.
People who have long been charged hefty premiums because of their age, denied coverage for preexisting conditions or rejected completely will suddenly find multiple insurers competing for their business.
For people in their fifties and early sixties who are not yet eligible for Medicare, the health law provisions taking effect in the coming months "really are a game-changer," says Sara Collins, a vice-president at the Commonwealth Fund, a nonprofit research group in New York. "People won't have to make career decisions based on whether or not they have health insurance through a job," she says. That dream of entrepreneurship or early retirement could become a reality.
The launch of the exchanges should reverse a troubling decline in insurance coverage among older adults not yet eligible for Medicare.
In 2012, 20% of people 50 to 64 did not have insurance for the full year, up from 15% in 2005, according to the Commonwealth Fund. A previous survey found that cost concerns caused 75% of people in this group to skip needed health care, including avoiding doctor visits when they were sick.
A decline in workplace coverage and rising long-term unemployment among the age 50-to-64 group have contributed to the coverage gaps. "Even someone with hefty savings and a lot of retirement income could find themselves in a lot of trouble in the individual market today," particularly if they have a chronic condition such as diabetes, says Karen Pollitz, senior fellow at the Kaiser Family Foundation. "Even if you do get a good rate when you're healthy, if something happens to you, kiss it goodbye."
People with employer coverage should pay close attention to the exchanges, too. Workers and early retirees offered only skimpy employer plans can shop for their own coverage on the exchanges.
The upcoming changes remove some big question marks from the retirement planning process, reducing the risk that you'll have to go uninsured and limiting the premiums you can be charged as you grow older. That should bring relief to people like Ray Swartz, 61, a retired public speaker in San Francisco. The premium on his individual health plan, now about $600 a month, has climbed roughly 10% year after year. Health care, he says, "is the number one expense I have, by far." He's planning to look for other coverage options when the exchanges open later this year.
There are still big challenges ahead for consumers seeking affordable coverage. A 62-year-old who is eligible for tax credits on the exchange, for example, could still spend as much as 27% of his income on premiums and out-of-pocket costs if he incurs a very high level of health care charges, according to a Commonwealth Fund report. Consumers may also find that plans on the exchange don't include the broader provider networks they're used to seeing.
The details of insurance offerings are not available yet. But you don't have to wait to start exploring your health care choices. Here are answers to some key questions that will help prepare you for the new health care marketplace.
Will I be required to switch plans?
If you're currently covered by a plan that you purchased on the individual market, you may not have to change plans, but you may want to shop on the exchange anyway.
If your policy was active before March 23, 2010-the day that health care reform was signed into law-your plan may be "grandfathered," meaning you can simply keep your current coverage. But you may miss out on some of the benefits that the health law requires for newer plans, including the elimination of annual coverage limits and free coverage of preventive services. Grandfathered plans must, however, comply with some other aspects of the law, such as the elimination of lifetime coverage limits and protections against insurers canceling your coverage after you get sick.
Individual or family policies purchased after March 23, 2010, and with coverage effective before January 1, 2014, are not grandfathered. Some insurers may simply notify people with such coverage of plan changes that will meet the health law requirements, says Robert Hurley, a senior vice-president at online insurance marketplace eHealthInsurance.com. Others may require consumers to actively switch plans. In the next few months, Hurley says, "It's really important to read anything you're mailed from your health insurance company," because insurers will be notifying policyholders of the process for moving to new plans. No matter what type of plan you have currently, it can make sense to at least explore your options on the insurance exchange.
One big reason: Premium tax credits are only available to people who enroll in plans through the exchange. The credits are available to people with income between 100% and 400% of the federal poverty level. In 2013, that means income between $11,490 and $45,960 for an individual.
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Mortgage tips: learn about the mortgage approval process & signing a mortgage
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If you're thinking of buying a home or in the process right now, here are some important things you should know about the mortgage process from Cool to be Frugal.
You've found your dream home and settled on a price with the buyer. Now all you need is the right financing. Before signing a mortgage application, have a conversation with your lender about the mortgage approval process. The mortgage tips on this page will give you a good starting point, and may bring up some questions you hadn't thought of yet.
How long does the mortgage approval process take?
The typical mortgage approval process takes about 45-90 days, but it could be longer if you're building a home. Getting pre-approved for a mortgage may expedite this process, giving you leverage over other bidders because a seller may be more likely to consider a buyer already approved for financing.
What types of mortgage rates are available?
When applying for a home loan, you can choose between fixed-rate, adjustable-rate and jumbo mortgages. Fixed-rate loans may have higher rates in exchange for a low down payment and the security of a rate that is locked in throughout the length of your loan. On the other hand, adjustable mortgage rates are often lower but change with market fluctuations. If you're considering a larger house, you may need a jumbo mortgage to provide you with a little extra financing. These can be structured as either fixed or adjustable and you should talk to your lender to decide which best fits your situation.
What fees should I be aware of?
Fees associated with signing a mortgage may depend upon whether you choose an adjustable or fixed-rate mortgage. Ask your lender if any of these common fees apply:- Pre-payment fees: Some lenders may penalize you for paying off your home loan before the term ends. Be aware that there may also be penalties for canceling the mortgage approval process.
- Closing costs:
These can cover the property appraisal, your credit report, attorney's fees and more. They should be included in your Good Faith Estimate when you sign the mortgage application.
- Mortgage points
: Normally these are an optional way to pay interest up front in order to get a lower interest rate. Make sure points aren't included if you didn't ask for them.
- Mortgage Insurance: You may have to obtain private mortgage insurance if you're unable to make a down payment of at least 20%. There are also low down payment alternatives from the Federal Housing Administration (FHA) and 0% down payment options available through the department of Veteran Affairs (VA).
Click here to continue reading the article and learn what to expect after the mortgage is signed.
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This communication is strictly intended for individuals residing in the States of: AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, IA, IL, IN, KY, LA, MA, MD, ME, MI, MN, MS, MT, NC, NH, NJ, NV, NY, OH, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, 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.
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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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Despite turbulence, a strong September and third quarter
Despite economic and political turmoil, markets performed well across the board in September, with almost all asset classes showing strong returns, reversing many of August's losses. This also resulted in positive overall quarterly performance.
Markets rallied early in September but dropped back somewhat toward month-end, as the Federal Reserve (Fed) and U.S. Congress introduced more uncertainty into the picture. The S&P 500 Index returned 3.14 percent in September, which was better than the 2.27-percent return for the Dow Jones Industrial Average, though below that of the Nasdaq, which rose 5.06 percent.
For the quarter, these indices were up 5.25 percent, 2.12 percent, and 10.82 percent, respectively.
From a technical perspective, the strong start to the month brought the market back above technical support levels, and the S&P 500 stayed above its 50-day moving average despite the month-end drawdown. Fundamentals appeared supportive of current valuations, with consensus earnings expectations likely to be reasonable for the third quarter, although downward adjustments to fourth-quarter earnings seem probable. Valuations remain elevated on longer-term metrics and on the upper end of reasonable for shorter-term metrics.
International stock markets did even better than U.S. markets. The MSCI EAFE Index rose 7.39 percent for the month and 11.56 percent for the quarter, while the MSCI Emerging Markets Index was up 6.23 percent for the month and 5.01 percent for the quarter. The decision by the Fed not to taper its asset purchasing program was particularly beneficial for international markets.
Economic reports out of China and several eurozone countries also showed better-than-expected results, which provided further support for prices.
Fixed income also had a strong September, with the Barclays Capital Aggregate Bond Index posting a return of 0.95 percent for the month and 0.57 percent for the quarter. Year-to-date returns are still negative, due to the increase in interest rates; however, prices benefited from a recent drop in rates after the Fed's "no taper" announcement. Interest rates on the 10-year U.S. Treasury note increased from 2.4 percent to 2.6 percent in July and from 2.6 percent to 2.8 percent in August. September also began with an increase, to 3 percent; however, since the Fed's decision to postpone the taper, rates have fallen to around 2.6 percent (see chart). This coincided with an increase in bond prices.
disposable income by the largest amount since March of this year, enabling consumers to spend more.
Strength in the real economy continues The rise in equity markets was driven in part by continuing improvements in the real economy. Initial unemployment claims dropped to a multiyear low early in September, and, despite some worries that the improvement was a result of data issues, later reports substantiated the good news. The unemployment rate ticked down from 7.4 percent to 7.3 percent in August, despite a weaker-than-expected new jobs report, and average hours worked also increased. These factors, along with a rise in average wages, combined to increase real disposable income by the largest amount since March of this year, enabling consumers to spend more. U.S. economic strength was matched by good news elsewhere. The eurozone showed marked improvement, emerging from six quarters of economic contraction. Germany led, but the improvement was widespread. China also showed better economic results, which helped the emerging market space as a whole. Part of what drove the general improvement in the U.S. was manufacturing, which benefited from increased exports on the back of higher demand from Europe and China. The housing market continued to do well, and rising prices-up 12.4 percent year-over-year in July for existing homes-created a positive wealth effect for homeowners. In response to the general improvement, consumer confidence reports were up at the end of September. The index of leading economic indicators ticked up as well, suggesting that, absent the effects of politics, the recovery in the real economy was continuing.
Politics returns to center stage
Better economic trends notwithstanding, the primary market movers in September were the Fed and the federal government. The Fed, against expectations, decided not to start reducing the bond-buying program it had implemented to keep interest rates low and stimulate the economy. It did so in the face of a general sense that the requirements for such a reduction had been met. At his press conference after the announcement, Chairman Ben Bernanke said that the Federal Open Market Committee believed that, among other things, employment gains were uncertain and that the political risk of the pending government funding and debt ceiling debates justified continued easing.
Markets initially celebrated the continuation of the stimulus program, but they reversed on worries that the economy might be weaker than anticipated. These declines segued into further selling because of concerns about the potential government shutdown, as Congress proved unable to agree on a budget to fund the federal government into October. (As of October 1, the shutdown did indeed occur.)
The pending debt ceiling negotiations also moved into focus as a risk. The fact that the U.S. hit the debt ceiling last May, and is likely to run out of accounting tricks in late October, brings back memories of 2011, when the market slid by double digits on a combination of debt ceiling concerns and a downgrade of U.S. debt by Standard & Poor's. The solution reached then-sequestration-has already been implemented and is not available this time around. The debate also appears to be increasingly ideological, with mutually beneficial compromise less attainable.
Although the domestic focus has been on U.S. politics, other governments have also shifted. The German election went off well from the perspective of European stability, with Angela Merkel's party winning re-election. But the unexpected elimination of Merkel's coalition partner party from the legislature has led to uncertainty as to the actual makeup of the next government. In addition, Italy nearly returned to political crisis mode at month-end, as five ministers resigned in protest of a tax hike. Finally, Greece moved closer to needing an additional bailout and debt forgiveness. Just as with the U.S., a European recovery remains at risk due to political factors.
Uncertainty prevails at quarter-end
Although the month and quarter were good to investors, the turbulence in both markets and politics at quarter-end was due to unusual uncertainty. Much of the hard-won stability and slow-but-steady recovery of the economies around the world appears to be at risk because of irresponsible political leadership.
The damage certainly could be noteworthy, but the probability is that a resolution will be found at some point. We have been here before and gotten through. It is therefore important to be alert and monitor the situation, but not to overreact. Longer term, the U.S. economic recovery continues, and any damage will hopefully be contained to the short term. Investors should maintain a diversified portfolio appropriate to their risk tolerance and time horizon, rebalancing opportunistically. Based on past experience, we remain cautiously optimistic that the current debates will be resolved, allowing the economic recovery to continue.
Authored by Brad McMillan, vice president, chief investment officer, and Sean Fullerton, investment research analyst, at Commonwealth Financial Network.
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