Tips You Can Use!
Perfecting Your GameHarry Eyres of the Financial Times had an interesting article on how staying focused on your task can help improve your investment performance. Consider a top tennis or golf athlete; they need to "keep their head down" while making a stroke to assure the ball goes the desired direction. If they look up too fast, because they are nervous or impatient, they tend to send the ball off course.
Know Your Investment Terms - January 2012"What is bond duration?"Duration measures how sensitive the bond or bond fund is to changes in interest rates or quality. It is one measure of the riskiness of a bond or bond fund. Bonds with a longer duration, higher number, will be more volatile. Duration can be calculated and is dependent on the coupon rate, yield to maturity and length of time to the bond matures. Bonds that have a lower coupon rate, longer maturity and higher yield to maturity will have a longer duration and their price will be more volatile. Bond prices are inversely related to market interest rates. That is, for a similar term bond, prices will decrease when interest rates rise. A bond with a duration of 2 would be expected to lose 2% of its value if interest rates were to increase by 1%. You can find duration data at Morningstar and other bond market providers. Want more information? Check out Investopedia for a more detailed explanation. Avoiding A MF Global MomentThe MF Global incident is another reminder of what can go wrong with your investment holdings. How can you avoid losing control of your investments?
Income Tax Changes2012 and 2013 will bring additional changes to the income tax rules. Some of the changes have been enacted and some are unknown. It is difficult to tell when Congress may approve changes and this makes it difficult to do your tax planning. However, you should be aware of the topics being considered. This Federal Income Tax Landscape 2012 & 2013 video outlines the top changes.
2012 Social Security, Medicare & IRS LimitsAfter a number of years with no changes, 2012 brings changes to government benefits, deductions and savings plan limits. The changes are triggered by inflation increases or to resolve funding problems.
Social Security - The cost of living adjustment is 3.6% for Social Security and SSI payments. The maximum income counted in the Social Security deduction from your paycheck has increased to $110,100. Other criteria used for determining benefit qualifications have also been raised by 3.6%. Medicare - The enrollment period is earlier this year. If you want to make any changes, do it before December 7, 2011. Some good news from Medicare! The base monthly premium for Part B (medical insurance) is $99.90 per month for 2012. This is a reduction from $115.40 in 2011. If your individual income is greater than $85,000, $170,000 for a couple, you will pay more on a sliding scale. The Part B deductible has been reduced to $140 from $162. Part A and skilled nursing deductibles have risen by 2.12%. IRS - Contribution limits have increased for 401k, 403b and 457 plans to $17,000. The over 50 catch up is still $5,500. The deduction phase out limits and Roth eligibility limits have also ratcheted up. For IRA deductions, income limits are $58,000 for singles, $92,000 for couples. Roth eligibility has risen to $110,000 for singles and $173,000 for couples. If you are not covered by a plan where you work, these limits are higher. Additonal information on tax rates and other limits will be available in early 2012. Archived Tips You Can Use!December 21, 2011 Tips on Keeping Perspective and Should Your Portfolio Match Your Age? June 21, 2011 Tips on Protecting bonds against rising rates and Why portfolio allocations matter May 24, 2011 Tips on What US debt hangover means to investors and Congratulations graduates! What the Tax Relief Law Means to You December 7, 2010 Tips on Trusteed IRAs and Year end checklist April 6, 2010 Tips on Health care reform law, Staying financially flexible and What Tom does |
Portfolio allocation from 30K feet - Bradenton Herald 11/15/11
It is no secret, having a well diversified investment portfolio can reduce the market rollercoaster effect. Without it, you are subject to the swings of a few investments. Investments that react similarly to economic and market conditions can be grouped into class buckets. To have a diversified portfolio you must choose complimentary classes. That is they do not react the same under similar conditions. The choice of asset classes and relative size of the buckets has been found to be the best predictor of overall portfolio performance. Getting the class and industry choices correct is about getting the strategy right. It is important to choose the right investment in each but, if you don't get the strategy right, it won't matter. |