Portfolio Advisors Blog

As we approach mid-year 2013, rampant pessimism as measured by consumer sentiment has recently dipped to its lowest level in over 30 years. This degree of pessimism is so pervasive that some would suggest that “America’s best days are behind her.” As an investor, how worried should you be? Maybe not as worried as so many others seem to be as suggested in this month’s article entitled Investors Flee Stocks At Precisely The Wrong Time. The article points out that historically, consumer sentiment and stock market performance are often at odds. Read more of this month’s insightful article by following the link below.

http://portadvisors.com/featured-news

There is still time to reduce your 2012 tax liability by making an IRA contribution before the filing deadline of April 15, 2013 (but please don’t wait until the last minute). You may be able to contribute up to $5,000 for 2012. If you are over age 50, you may be able to contribute up to $6,000*. If you are married and both over age 50, you could save up to $3,360 combined in Federal Income Tax for 2012 (28% tax bracket) provided that both of you have contributed up to the $6,000 threshold. Not only would your tax burden be reduced by $3,360, your $12,000 combined IRA contributions would continue to grow tax deferred until withdrawal at retirement age.

Another option to consider is a Roth IRA contribution up to the same $5,000 limit. Similarly, those over 50 can contribute up to $6,000**. There is no immediate tax benefit to the Roth IRA as after tax dollars are used to fund this retirement vehicle. However, the benefit is that the Roth IRA is allowed to grow free of Federal and State tax. Unlike the traditional IRA, there is no tax due when you begin to take money out at retirement age***. Because Roth withdrawals at retirement are not taxable, they can provide the additional benefit of tax bracket management. Simply put, money taken from a Roth IRA at retirement might allow one to control in which tax bracket they fall. Roth IRAs can be a consideration for those who will be in the same or higher tax bracket upon retirement.

If you have not already received your 1099 Composite and Year-End Summary for your respective accounts for 2012, it should arrive from Charles Schwab no later than the end of February. Should you have any questions regarding your Portfolio Report or your 1099 statement, please do not hesitate to call us. We also request that once you have completed your 2012 tax return that you provide us with a copy so that we may better advise you.

Warm Regards,

We just came across a great Financial Planning Flowchart that was published in the December 20 issue of Business Week. It was put together by the Business Week team of Nick Summers and Karen Wise with input from Milo Benningfield, a San Francisco-based financial planner; Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards; Tim Steffen, Director of Financial Planning and Wealth Management at Robert W. Baird; Maria Bruno a senior investment analyst at Vanguard Group and Meir Statman, finance professor at Santa Clara University.

The chart does a nice job of mapping out basic financial planning tenets and touches on debt management, retirement planning and insurance needs. We thought you might find it worthwhile in your planning for 2013 and perhaps even a little fun.

As we enter the new-year, it may be worthwhile to reflect on 2012. Please see the article below written by Weston Wellington, Vice President with Dimensional Fund Advisors, entitled “2012: The Year It Didn’t Happen.” The article reminds us that, as is so often the case, earning the rewards offered by the world’s capital markets requires a combination of discipline and detachment from the ominous headlines that we are bombarded with daily. I hope that you find the article worthwhile.

We at Portfolio Advisors wish you the very best that 2013 can offer, and we remain here to serve you.

In his article, “The Top Ten Money Excuses,” Dimensional Funds Vice President Jim Parker suggests that we often deceive ourselves when it comes to our own money. How can this happen, one might ask? It can happen by constructing a façade of logical-sounding arguments that can often lead to decisions that are counter to our own long-term interests. Read on to learn about those top ten arguments and excuses along with how to avoid them.

From time to time, you may have the need to calculate the cost of a loan, or you may need to calculate the impact of increasing or decreasing contributions to your retirement plan. You may be interested in knowing if it is better to lease or buy a new vehicle. Perhaps you are curious about whether an auto rebate is a preferable choice versus securing a lower interest rate.

A wide variety of on-line tools can be found on our website and can be helpful with these and other common financial questions. In addition to those mentioned, you can also find a 1040 tax calculator, an amortizing loan calculator and a Roth IRA Conversion calculator to name a few. These useful tools can all be found on the Portfolio Advisors website at Online Tools.

Quiz Question: What do these companies have in common—Whitbread of the United Kingdom, Molson Coors of North America, Qantas of Australia, Honda of Japan, and Adidas of Germany?

Dimensional Funds Vice President, Jim Parker, provides the answer in his column “Sharing the Wealth: The Case for Equities”.

Portfolio Advisors, Inc. is proud to announce that Tina Mistry has completed her financial planning training and has passed the CFP® Certification Exam. She has obtained her Certified Financial PlannerTM certification, demonstrating that she has met the standards required by the CFP® Board.

The year 2011 could be remembered for the unsettling volatility seen in the S&P 500 index, a measure of large company US stocks. January offered a promising start with a 2% gain and by April, the S&P was up 8%. Wobbling followed during May and June, and volatility really began in mid-July with the index diving 17% in just 11 days. In August, the index rose or fell 4%+ on 5 of 6 consecutive days.