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What's Happening Now
 
Why you should worry about cheap oil. Millions of Americans are laughing their way to the gas station. But should they be?
 
 

     
Will driverless cars become a significant part of the nation's transportation infrastructure in the near future?  What are the implications for the insurance industry?

 

 
Very few people are spreading the word about one simple thing you can do to help your child to be successful. Click here to find out more.
  
 


Macy's may have just announced the end of department stores as we know them.


  


Here are the toughest U.S. colleges to get into. If your son or daughter planned on attending College of the Ozarks, he or she may want to reconsider!

   

 
As always, Warren Buffett has plenty to say about money, and managing it properly. Here are seven of his money management tips.

 

     
Could you afford to live on the Champs Elysees in Paris?  What about Mykonos? Find out here how your city compares in cost to some of the world's most famous neighborhoods.

 
  

Sometimes even the most well intentioned car launches go horribly wrong. Here are the five worst cars at the 2016 Detroit auto show. 

 


Planning a trip? Why you should book your flight now. This is the best time in years to buy airfare. 
 
 

     
Will China's economic slowdown harm the rest of the world?  Here's why it doesn't make a lot of sense to freak out about the issue.

 


These 15 new "smart" inventions may be too stupid to catch on.  Does your dog need a Fitbit?

 


What the market plunge is saying about the economy. As stocks endure a brutal beginning to the year, is the stock market, which is typically seen as a forward economic indicator, saying a major American slowdown is coming? 
 
 


Some presidential candidates claim the rich pay a lower tax rate than many middle-class workers or that the poor pay nothing. How true is this claim?

 


If you eat more artery-clogging, saturated fats, you'll likely have a higher risk of heart disease. That's well documented, but a new study names four healthy fats to eat more of, six to cut for a longer life. 
 
   


Good style has no expiration date.
But what happens when those classic duds you're sporting suddenly become literal duds? These are the clothing and shoe brands that last the longest
 
 


Americans are flooding the government with appeals to have their student loans forgiven on the grounds that schools deceived them with false promises of a well-paying career. How's that working out?  
 
 
February 2016

What is the downside of cheaper gas at the pump?  Can you get a student loan forgiven?  Is the future of the department store uncertain? What are the toughest colleges and universities to get into?  What are the "healthy fats" that you should consume?

Our "What's Happening Now" section in the left-hand column contains a group of links that are definitely worth a click.
 
Many of you may not be familiar with 529 College Savings Plans. These are operated by a state or educational institution and are designed to help families set aside funds for future college costs. The plans are named after Section 529 of the Internal Revenue Code which created them in 1996.  Nearly every state now has at least one 529 Plan available. In the article below from Kiplinger, you'll learn about what's included. The rules have changed for this year and now computers, computer accessories, and even Internet charges are covered, in addition to tuition, room, and board.

Do you dread the scene in a car dealership after you've decided to purchase a new car and you're discussing the price?  Make sure you read the feature article below in which a former sales manager gives you the lowdown on how to get the best price for a new car. It turns out that shopping the weekly newspaper ads can pay off, but there are some disadvantages. 
 
We are open to your comments and questions on anything in this newsletter or any questions you may have about your personal finances. Contact us at 614-888-2121 or 877-389-2121 toll free, or by e-mail at [email protected].

Sincerely,

Joe



Calling all snowbirds: considerations for
buying a second home



Spending the cold winter months someplace warm is a goal for many Americans-especially during their retirement years. Once they're no longer tied to the office and have more free time for leisure-based pursuits.   

 
According to an msn.com article,  Hot-and not-destinations for relocating retirees," roughly 6 percent of retirees in the U.S. now split their time between two residences, a trend that will only grow as more baby boomers retire. Making the jump from casual vacationer to seasonal traveler or "snowbird" is not without challenges, though. If this lifestyle is part of your retirement vision, you need to be sure you're going into it with a solid plan. Here are some things to consider if you think you're ready to start flying south for the winter. 
 
Should you rent or buy?

One of the first decisions you'll need to make is whether to rent or buy property. Some find the certainty of knowing where they will be each year comforting. In addition, the resale and/or legacy value of buying a property can be attractive for those looking to make the investment. Others may hate feeling locked in to the same place year after year. But beyond the happiness that one strategy might bring over another, it's a good idea to review the financial realities of the different options.

One of the most important questions that needs to be answered is:

How will you pay for this property?

In addition to a down payment and the possibility of paying two mortgages during retirement, you may incur additional costs you hadn't considered:
  • Insurance-not just on your house but also on your car
          -   Depending on the state, you might need to
              purchase supplemental insurance. For instance,
              anyone staying in Florida for more than 90 days
              (not necessarily consecutively) has to register    
              the car and meet the state's minimum insurance
              requirements.
  • Property taxes
     
  • Utilities and maintenance
          -   Your primary house still needs to be tended to,
               even if you aren't there. If you normally handle
               it yourself, snow removal could be an added
               expense you might not have had otherwise.  
  • Furnishings
     
  • Association fees that come with living in a community setting
     
  • Management fees if you rent your property when you're not there
     
  • Travel costs to fly or drive back and forth
It's common practice for those splitting their time between two locations to downsize from their existing property and use the profits to finance a second property. But if buying a property isn't in line with your retirement budget, and you're still looking to get away, you might consider purchasing a time-share or simply renting a property. These are potentially less expensive and more flexible options, though they generally are for shorter-term stays.

Continue reading the article here.



Never pay full price for a car again, even If you hate haggling: Five tricks from a former sales manager


The Internet helps buyers be savvier, but you likely only buy a new car every six to eight years, so you're probably at a disadvantage compared to the sales manager, who haggles every day. Van Randon, a former sales manager, of thePennyHoarder gives us five strategies to get the best shot at a decent price.

1. Focus on Loss Leaders

For weekend sales ads, the dealer deeply discounts one or two cars, to the point where they'll sell at a loss.

The dealer then combines the deep discounts with any available manufacturer rebates - meaning it'll likely be the best deal you'll find.

However, the sales is first come, first served. Plan on showing up early Friday morning, and you'll be in and out of the dealership quickly.

Downside

The car probably won't be your favorite color or have every option you want.

Plus, you have to be there early Friday morning. This strategy's not ideal if you're picky - or can't skip work.

2. Use Discount Buying Programs

Third parties have pre-negotiated agreements with manufacturers and dealerships, often below the dealer invoice price - or the cost for the car alone.

Participating dealers agree to take a low-pressure approach, and usually only one dealership will contact you. Expect available manufacturer rebates and incentives with the price discount.

Through Costco's Auto Program, my customers got anywhere from $2,000 to $3,000 off MSRP.

I once had a customer who got $4,000 off - before rebates - making the $50 annual membership fee well worth it. Members also get 15% off accessories at participating service centers.

USAA's Car Buying Service comes in at a close second, helping armed forces members save an average of $3,400.

Not a member of Costco or USAA? TrueCar and Edmund's Price Promise offer everyone free buying programs on new vehicles. Sam's Club and AAA partner with TrueCar for their members.

In my experience, Costco had the best deals and the least hassle, but use at least two programs to get the best possible deal.

Downside

Discounts are for in-stock units only, and special orders are exempt.

3. Try the Shotgun Method

Use the Shotgun Method when you know what car you want, you're ready to buy and you don't want a salesperson calling you.

If your car will be a special order, use this method to get your best deal. Do research first, then send this email to all the dealerships in the area:

"I am buying a [year, make, model] in [color] with the [options package, trim level, list of options, etc]. I am contacting all the dealerships in the area for availability and pricing.

Please send window stickers [or information for used vehicles] for cars you have in stock that fit my requirements, and the best out-the-door price for each car to [your email]. Please line item the dealer discounts, manufacturer rebates [if new], taxes and fees separately.

I will email the dealership with the best match and price tomorrow to reserve the car and purchase it, so please respond promptly. Thank you in advance."

You want at least two responses, but having more is better.

Email the dealers on a Wednesday or Thursday. Dealerships get busy on the weekends, and you'll have a better chance of catching an upcoming weekend sales price.

Downside

You won't usually get as big of a discount as you will with a buying program, but this strategy is still pretty effective.

Read the rest of the article here
 

New rules for tax-free spending from your
529 College-Savings Plan


Kimberly Lankford of Kiplinger informs us that computers not specifically required for attendance are back on the tax-free list, as well as printers and the cost of Internet access on a 529 College-Savings Plan.
 
Congress recently passed legislation that permits the tax-free use of 529 money for computers - both retroactively for 2015 and permanently for future years (see 12 Valuable Tax Breaks Congress Brought Back to Life). A computer had been an eligible expense for tax-free withdrawals from a 529 in 2009 and 2010, but for the past few years it was eligible for tax-free withdrawals only if the computer was required by the college for attendance.

Now you can take tax-free withdrawals for a computer, printer, scanner and other peripheral equipment, education-related software (not games) and the cost of Internet access - whether or not it is required by the school. The college student must be the primary user of the computer and equipment.

You can also use 529 money tax-free for college tuition, room and board, fees, and required books. "Most of the expenses related to taking classes count, but you can't use it for transportation," says Mary Morris, chairman of the College Savings Foundation and CEO of the Virginia 529 College Savings Plan.

You can even use 529 money tax-free for room and board if you live off-campus, as long as you're attending college at least half-time. Your actual expenses count, up to the amount the college specifies as the room and board figure in its cost of attendance for federal financial aid purposes (the cost is usually listed on the college's Web site, or ask the financial aid office).

You don't need to provide special documentation to your college savings plan administrator to withdraw money, but you do need to keep records of your expenses or the date and price of the purchases in your tax files. "If you're audited, you need to be able to establish that the 529 withdrawal was for qualified higher education expenses and that you have the records to match up with that," says Morris.

In years you make 529 withdrawals, you'll get a 1099-Q tax form from the plan administrator, usually by January 31 of the following year (although some may be delayed by a few weeks this year because of a technical change in how administrators report withdrawals, which was also included in the law signed in December). If the withdrawals were for eligible expenses, you don't need to do anything when you file your taxes - just keep the 1099-Q form and your receipts in your tax records. But if you use 529 money for any ineligible expenses, you'll have to pay taxes and a 10% penalty on the earnings withdrawn. The 1099-Q will specify which portion of the withdrawal is considered principal and which is earnings.

SEE ALSO: 529 Plans FAQs 


Market Update
Markets drop around the world

January was a terrible month for markets around the world. U.S. markets had their worst January since 2009, with all three major indices posting declines. The Dow Jones Industrial Average was down 5.39 percent; the S&P 500 Index did only slightly better, declining 4.96 percent; and the Nasdaq Composite Index did worst, dropping 7.82 percent.

A loss of confidence was the primary reason for the downturn. Market turbulence in China rattled investors, as the Federal Reserve's (Fed's) rate increase started to remove their security blanket. Fundamentals also weighed in. A further substantial drop in oil prices eroded that industry's revenue and profit prospects. Moreover, for the S&P 500 as a whole, earnings for the fourth quarter of 2015 were expected to decline 5.8 percent-the third decline in a row, which is something else that has not happened since 2009. Declining earnings made it difficult to justify the relatively high stock valuations that had prevailed at the start of 2016.

Technically, the markets remained in weak territory. All three indices were well below their 200-day moving averages, often a signal of future weakness. The Dow and the Nasdaq also failed to break technical resistance levels at month's end. The S&P 500, however, did break these levels, suggesting that the technical picture may stabilize.

International markets had an even worse January than U.S. markets. The MSCI EAFE Index, representing developed markets, dropped 7.23 percent, while the MSCI Emerging Markets Index declined slightly less, by 6.48 percent. Technically, both indices are now well below their 200-day moving averages. With China still attempting an economic transition, and the strong U.S. dollar threatening the financial stability of many countries, continued weakness looks quite possible.

Fixed income, a traditional beneficiary of market turbulence, did well in January. The Barclays Capital Aggregate Bond Index gained 1.38 percent for the month. Bond prices rose on a decline in U.S. rates, with the 10-year Treasury yield down from 2.24 percent at the start of January to 1.94 percent at month-end. With equity markets on the decline, bonds looked like the safer option, driving prices up and yields down-and U.S. assets down even more so.

U.S. economy grows, though more slowly

U.S. gross domestic product (GDP) growth for the fourth quarter of 2015, reported in January, was 0.7 percent, down from 2 percent in the previous quarter. The decline was due largely to continued weakness in U.S. manufacturing and exports, held in check by the strong U.S. dollar. A further sharp downturn in oil prices drove additional declines in U.S. energy investment and employment, which was also a substantial drag on GDP.

Consumer spending growth also declined in the fourth quarter, although there was some recovery in the last two months of the year. Consumer confidence, however, remained strong, and savings rates increased as workers opted to save rather than spend their rising wage income. These trends continued into January.

Positive signs for the economy included a strong jobs picture, with growth in the fourth quarter accelerating from a weak third quarter, and rising wage growth, something that had been missing in previous quarters. The housing market also continued to grow strongly, with December new home sales surprising to the upside and prices increasing at healthy rates. This factor appears to offer the prospect of further growth, as new home sales remain below historical levels and therefore could have room to improve.

International problems multiply

Much of the slowdown in U.S. GDP appeared to stem from problems in the rest of the world. Headlines highlighting the slowing Chinese economy, the European refugee crisis, and other issues clearly raised the perception of risk. The direct negative effect of these worries on the industrial and manufacturing sectors of the U.S. economy received extensive coverage, and this also kept consumers from spending freely.

Substantial declines in China's stock markets through most of January forced concerns about China's economy and financial system to the forefront of world attention. The declines also rattled emerging markets in general, shaking the confidence of many investors in the ability of China's government officials to manage that nation's economy. In addition, concern about China's growth helped push oil prices down even further. Although the People's Bank of China continues to drive stimulus, there are signs that the bank's ability to affect the economy is waning.

Europe has continued to struggle. With the ongoing refugee crisis dividing governments, and economic growth still at low levels despite the European Central Bank's (ECB) stimulus policies, signs of new problems are on the horizon. The Italian banking system, in particular, has become an area of concern and is driving new political conflict around deposit guarantee programs.

Finally, at the end of January, Japan announced a new step in monetary stimulus-negative interest rates. This is widely considered a radical move and one that Japan's central bank only took because all other measures had not succeeded.

In summary, the increasing monetary stimulus by central banks around the world reflects the failure of their economies to resume healthy levels of growth. China's attempt to transition away from export-led growth has slowed growth rates substantially, which has led to capital flight and market turbulence. Europe is growing but very slowly, and structural problems remain. Moreover, political turmoil has made dealing with economic problems even harder, increasing the role of the ECB. Japan has attempted to jump-start its economy for more than 20 years, without success. So the possibility that economies around the world simply will not grow in the future at the rates at which they have grown in the past is becoming increasingly likely.

The Fed starts to raise interest rates

Despite the problems around the globe, the U.S. economy remains solid. With employment growing strongly, the housing market substantially recovered, and both consumers and businesses paying down debt, the Fed finally felt confident enough to raise rates.

By raising rates, however, the Fed has exacerbated other concerns, notably about the future strength of the U.S. dollar. After moving to multiyear highs in 2015, the strong dollar has made U.S. manufacturers less competitive in international markets and has been a significant headwind for the U.S. economy as a whole. With other central banks stimulating their economies by easing monetary policy and the Fed conversely starting to tighten U.S. monetary policy, the divergence could drive the dollar even higher, which would further damage U.S. exports and manufacturing. Moreover, much of the concern in emerging markets lies around debt taken on in dollar terms. A stronger dollar would mean that those debts would be even more difficult to repay.

Historically, the dollar has actually started to decline as interest rates have begun to increase, but the policy divergence in January suggests that this time things might be different. If so, the headwinds for the U.S. economy could actually strengthen, even as other systemic risks increase. With all of these factors in play, it appears likely that the Fed may raise rates more slowly than it now projects.

Rising risks mean nervous markets

The substantial declines in stock markets around the world in January reflect this increasingly risky economic environment, as investors move away from their more optimistic perceptions of the past several years. Nevertheless, although risks abound, there are opportunities. U.S. growth continues, and more forward-looking indicators suggest that it may accelerate. In addition, the current perceptions of risk seem excessive. China, for example, has enormous resources and can very probably negotiate its challenges successfully. Should some of the negative perceptions abate, the possibility of a positive outcome and reaction is very real.

Given the negative perceptions but still solid U.S. economic foundation, things are not nearly as bad as they seem. Even the recent turbulence reflects this. By historical standards, turbulence is normal and even overdue. Although further volatility is very likely, the factors that have led to sustained downturns in the past-such as a recession, rapidly rising interest rates, or higher commodity prices-simply are not there.

Consequently, even though it has been a difficult month and there is a great deal to pay attention to, investors should remain calm. January's events underscore the need for maintaining a diversified portfolio and a long-term perspective aligned with investor goals. The ongoing growth of the U.S. economy, which appears to be on track, should provide a cushion for any market adjustments in the short term, and proper diversification should further limit their effects on investor portfolios. Longer term, cautious optimism remains the appropriate stance, as history has shown us that markets and economies consistently return to a growth path.

Authored by Brad McMillan, senior vice president, chief investment officer at Commonwealth Financial Network.

All information according to Bloomberg, unless stated otherwise.