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Signs of Elder Abuse

Signs of Elder Abuse

Physical, mental & financial warning signals.

 

Provided by PlanningWorks

 

Is someone taking advantage of someone you love? June 15 is World Elder Abuse Prevention Day, a day to call attention to a crisis that may become even more common as baby boomers enter the “third acts” of their lives.1 

 

Every year, more than half a million American elders are abused or neglected. That estimate comes from the Centers for Disease Control, and the frequency of elder abuse may be greater as so many elders are afraid or simply unable to speak out about what is happening to them. In some cases, the abuse is limited to financial exploitation. In other cases, it may encompass neglect and physical or emotional cruelty.1

 

What should you watch out for? Different varieties of elder abuse have different signals, some less obvious than others.

 

Neglect. This is commonly defined as withholding or failing to supply necessities of daily living to an elder, from food, water and appropriate clothing to necessary hygiene and medicines. Signals are easily detectable and include physical signs such as bedsores, malnutrition and dehydration and flawed living conditions (i.e., faulty electrical wiring, fleas or cockroaches, inadequate heat or air conditioning).

 

Self-neglect also surfaces, stemming from the declining physical or mental capacity of an elder. If he or she foregoes proper hygiene, disdains needed medications or medical aids, or persists in living in an insect-ridden, filthy or fire-hazardous dwelling, intervene to try and change their environment for the better, for their health and safety.

 

Finally, neglect may also take financial form. If someone who has assumed a fiduciary duty to pay for assisted living, nursing home care or at-home health care fails to do so, that is a form of neglect which may be defined as elder abuse. The same goes for an in-home eldercare service provider that fails to provide an adequate degree or frequency of care.2

 

Abandonment. This occurs when a caregiver or responsible party flat-out deserts an elder – dropping him or her off at a nursing home, a hospital, or even a bus or train station with no plans to return. Hopefully, the elder has the presence of mind to call for help, but if not, a tragic situation will quickly worsen. When an elderly person seems to stay in one place for hours and appears confused or deserted, it is time to get to the bottom of what just happened for his or her safety.

 

Physical abuse. Bruises and lacerations are evident signals, but other indicators are less evident: sprains and dislocations, cracked eyeglass lenses, impressions on the arms or legs from restraints, too much or too little medication, or a strange reticence, silence or fearfulness or other behavioral changes in the individual.

 

Emotional or psychological abuse. How do you know if an elder has been verbally degraded, tormented, or threatened in your absence, or left in isolation? If the elder is not willing or able to let you know about such wrongdoing, watch for signals such as withdrawal from conversation or communication, agitation or distress, and repetitive or obsessive-compulsive actions linked to dementia such as rocking, biting or sucking.2

 

Financial abuse. When an unscrupulous relative, friend or other party uses an elder's funds, property, or assets illegally or dishonestly, this is financial exploitation of the elderly. This runs all the way from withdrawing an elder’s savings with his or her ATM card to forgery to improperly assuming conservatorship or power of attorney.2

 

How do you spot it? Delve into the elder’s financial life and see if you detect things like strange ATM withdrawals or account activity, additional names on a bank signature card, changes to beneficiary forms, or the sudden absence of collectibles or valuables.

 

Examine signatures on financial transactions – on closer examination, do they appear to be authentic, or studied forgeries? Have assets been inexplicably transferred to long-uninvolved heirs or relatives, or worse yet apparent strangers? Have eldercare bills gone unpaid recently? Is the level of eldercare being provided oddly slipshod given the financial resources being devoted to it?

     

Respect your elders; protect your elders. Some people aim to exploit senior citizens. Others simply don’t recognize or respect the responsibilities that come with eldercare. Whether the abuse is intentional or not, the emotional, physical or financial harm done can be reprehensible. Talk to or check in on your parents, grandparents, siblings or other elders you know and care for to see that they are free from such abuse.

 

PlanningWorks may be reached at 512 498-7526 or info@planningworks.biz

 

Market Commentary - Month of May 2015

PlanningWorks Presents:

 

MONTHLY ECONOMIC UPDATE

 

 

MONTHLY QUOTE

 

“Every individual matters. Every individual has a role to play. Every individual makes a difference.”
    

– Jane Goodall

 

 

MONTHLY TIP

 

Building up an emergency fund and reducing consumer debt before age 40 better positions a young adult to invest and ride out any financial shocks.

 

 

MONTHLY RIDDLE

 

Its teeth are sharp and its spine is straight. It is not innately vicious, it does not hunt, but to cut things up is definitely its fate. What is it?

 

 

Last month’s riddle:
You use it between your head and your toes, the more it works the thinner it grows. What is it?

 

 

Last month’s answer:

Soap.

 

May 2015

THE MONTH IN BRIEF
Stocks wavered in April, with the S&P 500 ultimately rising a decent 0.85%. Investors were cautious, readjusting their assumptions about the strength of the economy and the Federal Reserve’s timing for raising interest rates. Oil prices soared. While Q1 GDP and the latest hiring figures were unimpressive, there were nice gains for consumer spending and retail purchases. The pace of existing home sales picked up while new home sales slipped. Headlines about Greece and China weighed on U.S. equities at mid-month. The market was still choppy, but less so than it had been in March.1

 

DOMESTIC ECONOMIC HEALTH
Was the economy doing well? Or not as well as commonly believed? Last month, two headlines emerged that affected investor perceptions.

 

For the first time in a year, the economy added less than 200,000 jobs in a month: payrolls grew by 126,000 in March according to the Labor Department. In addition, 69,000 hires were retrospectively subtracted from January and February hiring totals. The headline unemployment rate stayed at 5.5% in March, with “total” unemployment (the U-6 rate including the underemployed) at 10.9%.2

 

The federal government’s first estimate of Q1 GDP was just 0.1%. Analysts polled by MarketWatch had forecast 1.1% expansion. In Q4 2014, the economy grew 2.2%.3

 

Countering these news items, personal spending improved 0.4% in March while retail sales rose 0.9%. Although the Commerce Department reported no personal wage growth in March, word came that the federal government’s employer cost index rose 0.7% in Q1 (those costs include wages). Both the headline and core Consumer Price Index were up 0.2% for March.3,4

 

News of rising oil prices and reduced hiring may have impacted consumer outlooks. While the University of Michigan’s consumer sentiment index rose 2.9 points in April to a mark of 95.9, the Conference Board’s consumer confidence index fell 6.2 points to 95.2.3

   

The manufacturing sector looked a bit tepid: U.S. industrial production had fallen 0.6% in March, and the Institute for Supply Management’s manufacturing PMI stayed at 51.5 in April. ISM’s service sector PMI came in at 56.5 for March, 0.4 points below its February mark.3,5

 

With energy costs rising, producer prices increased 0.2% for March, as opposed to the 0.5% retreat seen in February. After going negative for four straight months, headline durable goods orders increased by 4.0% in March.4,6

 

The latest Federal Reserve policy statement acknowledged paltry Q1 growth and the disappointing March jobs report, yet Fed officials maintained their view that “economic activity will expand at a moderate pace” in the near term. In other words, an interest rate hike in mid-2015 was improbable but not impossible.7

   

GLOBAL ECONOMIC HEALTH
The odds of Greece making its upcoming €200 million payment to the International Monetary Fund seemed to lengthen, even with the IMF extending the deadline to May 6. The Syriza party announced it would stick to its commitment to fully fund Greek social welfare programs and termed the austerity measures implemented as part of the IMF bailout “crimes”. A Grexit could happen in May and the Greek economy – which has already endured the worst recession recorded in any country since the Great Depression – could sink further. As for the broad euro area, its jobless rate remained at 11.3% with consumer prices expected to be unchanged for April after a 0.1% dip for March.8,9

 

In China, securities regulators discouraged margin lending in mid-April as small investors were borrowing dangerous amounts of money to buy stocks in a runaway bull market. New rules permitted fund managers to lend shares for short-selling, and investors were allowed to short a greater number of stocks. These developments prompted a brief global selloff on April 17.10

 

HSBC’s final April factory PMI for China showed contraction at 48.9, pointing to a distinct slowdown and perhaps a need for added stimulus. Markit’s April factory PMI for the euro area declined 0.2 points from its March level to 52.0.11

 

WORLD MARKETS
The multi-country Dow Jones and MSCI indices all posted April gains. Leading the way, the MSCI Emerging Markets Index rose 7.51%. The Asia Dow improved 4.99% last month, the Europe Dow 3.82%, the Global Dow 3.23%, the MSCI World Index 2.16% and the Dow Jones Americas 1.17%.1,12

  

In Europe, Russia’s ever-volatile RTS index soared 16.91%. Smaller monthly gains came for the U.K.’s FTSE 100 (2.77%) and France’s CAC 40 (0.26%); monthly losses came for Spain’s IBEX 35 (1.18%), Italy’s FTSE MIB (0.48%) and Germany’s DAX (4.26%).1

 

Turning to the Americas, Argentina’s Merval gained 11.19%, Brazil’s Bovespa 9.93%, Mexico’s IPC All-Share 1.96% and Canada’s TSX Composite 2.16%. In the Asia Pacific region, April brought losses of 1.72% for Australia’s S&P/ASX 200 and 3.38% for India’s Sensex, but also gains of 4.22% for South Korea’s Kospi, 1.63% for Japan’s Nikkei 225, 18.51% for China’s Shanghai Composite and 12.98% for Hong Kong’s Hang Seng.1

   

COMMODITIES MARKETS

Oil was the big story here. WTI crude ascended 25.86% during April, finishing the month at $59.63 on the NYMEX. Heating oil and unleaded gasoline saw respective gains of 15.62% and 15.60%. Additionally, April saw a 3.25% improvement in natural gas futures.13

 

Away from the energy sector, there were big gains for some crops and a loss for the U.S. Dollar Index. Cocoa prices were up 9.10% for the month; sugar prices rose 7.72%, cotton prices 7.58%. Coffee went +3.43%, soybeans +0.59%, corn -3.46% and wheat -8.46%. The USDX retreated 3.97% to a close of 94.60 on April 30. Copper logged a 5.04% gain for the month, and platinum rose 0.90%; gold lost 0.02% and silver 3.04%. Gold ended April at $1,182.40 on the COMEX, silver at $16.15.13,14

       

REAL ESTATE
The housing market approached its busiest season with momentum. Existing home sales rose 6.1% for March with the annualized pace hitting an 18-month peak, the National Association of Realtors reported. Existing home prices were up 5.1% year-over-year according to NAR; the 20-city S&P/Case-Shiller home price index measured their annualized improvement at 4.2%. NAR’s pending home sales index followed its 3.6% February advance with a 1.1% gain for March.3,15

 

Three other housing indicators went negative in March, however. New home sales fell 11.4%, but they were still up 19.4% compared to a year ago. The Census Bureau also found housing starts down 2.0% in March, and building permits down 5.7%; in annualized terms, starts were down 2.5% but permits up 2.9%.16,17

 

Freddie Mac’s April 30 Primary Mortgage Market Survey found the average interest rate on a conventional home loan down just 0.01% from March 26 at 3.68%. Rates on 15-year FRMs declined 0.03% to 2.94% and rates on 5/1-year ARMs dipped 0.07% to 2.85%; rates on 1-year ARMs rose 0.03% to 2.49%.18

 

LOOKING BACK…LOOKING FORWARD
April saw a notable contrast between the big three and the Russell 2000. The Dow, Nasdaq and S&P posted respective monthly gains of 0.36%, 0.83% and 0.85%, yet the Russell fell 2.61%. The CBOE VIX also had a down month, losing 4.84%. At the close on April 30, here was where all five indices stood: DJIA, 17,840.52; COMP, 4,941.42; SPX, 2,085.51; RUT, 1,220.13; VIX, 14.55. Paralleling the climb in energy futures, the PHLX Oil Service Index gained 17.07% for April.1

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+0.10

+7.60

+12.41

+7.50

NASDAQ

+4.34

+20.09

+20.15

+15.71

S&P 500

+1.29

+10.70

+15.15

+8.03

REAL YIELD

4/30 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.11%

0.49%

1.29%

1.61%

 


Sources: wsj.com, bigcharts.com, treasury.gov – 4/30/151,19,20

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

As May unfolds, perceptions of the economy (and what the Fed will do to manage it) have subtly changed. Analysts at Citigroup and Bank of America Merrill Lynch now believe the Fed will probably wait until December to adjust interest rates, and questions are emerging about how robust the economy really is. When the Fed was aggressively buying bonds, Wall Street could accept subpar economic growth – but after the March hiring dip and the disappointing initial Q1 GDP estimate, bulls are less enthusiastic about how 2015 may play out. Still, this year may mirror 2014 – a bad first quarter, better subsequent quarters, and ultimately solid yearly returns for stocks. If hiring, consumer spending and other fundamental indicators are decent or better and corporate profits beat (reduced) expectations, a bit of a tailwind may help the aging bull market.21

 

UPCOMING ECONOMIC RELEASES: Among the notable news items for the rest of May, we find ISM’s April service sector PMI (5/5), the April ADP employment change report (5/6), the April Challenger job-cut report (5/7), the Labor Department’s April employment report and March wholesale inventories (5/8), April retail sales and March business inventories (5/13), April’s PPI (5/14), April industrial output and the preliminary May consumer sentiment index from the University of Michigan (5/15), April housing starts and building permits (5/19), the minutes from the April 29 Fed policy meeting (5/20), April existing home sales and leading economic indicators from the Conference Board (5/21), the April CPI (5/22), May’s Conference Board consumer confidence index, April new home sales and hard goods orders and March’s Case-Shiller home price index (5/26), April pending home sales (5/28), and then the final May University of Michigan consumer sentiment index and the second estimate of Q1 GDP from the Bureau of Economic Analysis (5/29). April consumer spending figures arrive on June 1.

 

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Using CRUTs & CRATs to Sell Your Business Interest

Using CRUTs & CRATs to Sell Your Business Interest

These estate planning tools may also help in exit planning.

 

Provided by PlanningWorks

     

Discover a pair of underappreciated exit planning vehicles. Charitable remainder unit trusts (CRUTs) and charitable remainder annuity trusts (CRATs) are commonly seen as estate planning tools. What frequently goes unseen is their value in exit planning for business owners.

 

Does it look like you will sell your company to a third party? Do your “second act” or “third act” goals include financial independence, philanthropy and leaving significant wealth for your heirs? If you find yourself answering “yes” to these questions, a CRUT or CRAT may help you accomplish those objectives and enhance your outcome.

CRUTs & CRATs are variations of charitable remainder trusts (CRTs). A CRT is an irrevocable tax-exempt trust that you can fund with highly appreciated C corporation stock (or optionally, other types of highly appreciated assets).

How do you sell your ownership interest through a CRUT or CRAT? As the trust creator (or grantor), you donate said C corp stock to the CRUT or CRAT. Because the trust is tax-exempt, it can sell those highly appreciated C corp shares without triggering immediate capital gains tax.1

The CRUT or CRAT sells your ownership shares to the outside buyer of your company, and it becomes your tax-exempt retirement fund. It invests the cash realized from the sale of your ownership shares in either fixed-income or growth securities; it provides you with recurring payments out of the trust principal, which occur for X number of years or for the duration of your life (or even longer). The payments can even go to people other than yourself – they can optionally go to your parents, they could go to your grandkids.1,2

You are offered another tax break as well. You can take a one-time charitable income tax deduction for the value of the donation used to fund the trust (i.e., a tax deduction applicable in the current tax year). This demands an appraisal of the highly appreciated assets being donated to the CRUT or CRAT, obviously. The deduction amount also depends on calculations using IRS life expectancy tables, the term of the trust, interest rates, and payout schedules and amounts.1,3

On one level, a CRUT or CRAT is an agreement you make with the IRS. In exchange for all these tax perks, you agree to give 10% or more of the initial value of the CRUT or CRAT to a qualified charity or non-profit organization. Many CRUT or CRAT grantors intend to leave no more than that to charity.2

When the grantor passes away, a last tax break occurs. While 100% of the trust assets now become part of his or her taxable estate, the estate may take a deduction for the remainder interest that goes to the qualified charity or non-profit.3

Some CRUT and CRAT grantors strategize to offset the eventual gifting of 10% (or more) of trust assets. They have the beneficiaries of the CRUT or CRAT fund an irrevocable life insurance trust (ILIT). When the grantor passes away, they receive insurance proceeds sufficient to replace the “lost” wealth. Since the ILIT owns the life insurance policy, the life insurance payout isn’t included in the taxable estate of the deceased and it isn’t subject to transfer taxes.3

 

What’s the fundamental difference between a CRUT & a CRAT? The difference concerns the recurring payments out of the trust to the grantor. In a CRUT, those payments represent a percentage of the fair market value of the principal of the trust (and that principal is revalued annually). In a CRAT, they represent a fixed percentage of the initial value of the principal.1

 

Older business owners may find the CRAT is a more appealing choice, while younger business owners may be more attracted to the CRUT. Yearly distributions from a CRUT must amount to at least 5% and no more than 50% of the trust principal revalued annually. Yearly distributions from a CRAT must come to at least 5% but no more than 50% of the initial value of the donated assets.1,3

 

Can an owner fund a CRUT or CRAT with S corp shares? No. A charitable remainder trust can’t serve as a shareholder in an S corp, so if you donate S corp stock to a CRT, there goes your S corp status. It should also be noted that C corp stock subject to recourse debt can’t go into a CRT.1

     

Are you interested in learning more? Talk to a financial or tax professional about the potential of CRUTs and CRATs. What you learn may lead you toward a better outcome for your business.

   

PlanningWorks may be reached at 512 498-7526 or info@planningworks.biz

 

T-Man Reunion

Mikiel Featherston attended The University of Texas at Austin Football Letterman’s Reunion the weekend of April 18th – here he’s pictured with current UT head football coach – Charlie Strong. He is also pictured with the oldest living T-Man – John Henderson – age 102(!) who graduated in 1945.  Although he seldom talks about his prior life’s achievement, Mikiel was a 4 year (1972-1976) UT scholarship football player lettering in 1975. Hook ‘em!

3.jpg 2.jpg 1.jpg

Market Commentary - Month of April 2015

PlanningWorks Presents:

 

MONTHLY ECONOMIC UPDATE

 

 

MONTHLY QUOTE

 

“Let me tell you the secret that has led me to my goal. My strength lies solely in my tenacity.”
    

– Louis Pasteur

 

 

MONTHLY TIP

 

Anyone who starts a business needs an operational strategy. A good one includes metrics, a day-to-day plan detailing who will do what, and an assessment of external and internal risks.

 

 

MONTHLY RIDDLE

 

You use it between your head and your toes, the more it works the thinner it grows. What is it?

 

 

Last month’s riddle:
Past mountains, plains, and hills, it follows a river while standing still. What is it?

 

 

Last month’s answer:

A riverbank.

 

April 2015

THE MONTH IN BRIEF
The stock market was hardly placid in March – while some key economic indicators, earnings news and M&A action encouraged investors, dollar strength and depressed oil prices weighed on stocks and commodities again. The Dow lost 1.97% for the month and ended the quarter down 0.26% YTD, and the S&P 500 and Nasdaq also staged March retreats. Consumer confidence and hiring were again bright spots, home sales took a turn for the better, and both consumer prices and wages managed to rise. On the downside, retail sales numbers and a key manufacturing index disappointed and data from overseas could have been better. The Federal Reserve downgraded its 2015 economic projections and reiterated that it would move very slowly in adjusting interest rates.1

 

DOMESTIC ECONOMIC HEALTH
March ended with the Conference Board’s monthly index defying expectations. It rose to 101.3 from its revised 98.8 February mark; analysts surveyed by Briefing.com felt it would come in at 96.4. (It was at 91.0 as recently as November.) March brought a 2.4-point dip for the University of Michigan’s consumer sentiment index, which posted a final reading of 93.0.2

 

More good news arrived pertaining to consumers: the Commerce Department said household wages had improved 0.4% in February, even though consumer spending increased just 0.1%. Households didn’t seem to be spending too much of those wage gains, however. U.S. retail purchases lessened 0.6% in February according to the Census Bureau (though minus auto buying, they were only off 0.1%). Inflation did actually pick up in the year’s second month: the Consumer Price Index rose 0.2% for February following its 0.7% January retreat, with the core CPI up 0.1%.3,4

 

On the producer front, wholesale inflation was certainly muted: both the headline and core Producer Price Index sank 0.5% in February, down for another month. Hard goods orders also went south in February: the 1.4% dip followed a 2.0% rise in January.3,4

 

Employers added 295,000 new jobs in February as the annualized pace of hiring improved 2.3% year-over-year. The headline unemployment rate ticked down to 5.5%, a low unseen since May 2008, while the broader U-6 rate measuring the unemployed and underemployed fell to 11.0%.5

 

Forward momentum seemed to be ebbing in the manufacturing sector, however. In March, the Institute for Supply Management’s manufacturing PMI fell to 51.5 from February’s mark of 52.9. The ISM service sector index was notably higher in February at 56.9.3

 

The Federal Open Market Committee seemed to present an old message in a new way in its March policy statement. Fed officials removed the word “patient,” but countered investor questions about the timing of a rate hike with reductions in their 2015 inflation and GDP forecasts and indications that no interest rate moves would be made until later in the year.6

   

GLOBAL ECONOMIC HEALTH
If the euro area economy wasn’t getting a whole lot better, at least it wasn’t getting worse. In March, according to the latest Eurostat flash estimate, consumer prices appeared down 0.1% annually; that was better than the 0.3% deflation recorded in February. The euro area jobless rate was at 11.3% in February, the lowest since May 2012. “Growth is gaining momentum,” European Central Bank president Mario Draghi maintained before the European Parliament on March 31, and some hopeful signs had emerged for the region: a 3.7% annualized growth in retail sales, slightly improved consumer confidence, and the year-over-year difference in euro area money supply about to turn positive.7,8

 

In the far east, the most-watched purchasing manager index was barely showing manufacturing sector growth. China’s official factory PMI came in at 50.1 for March, and that hinted at a subpar Q1 for that nation’s economic engine. Indonesia’s manufacturing activity shrunk for a sixth consecutive month in March, with the most severe drop in new orders ever recorded; Japan’s domestic factory orders declined for the first time in nearly a year. Falling crude oil prices were putting deflationary pressure on the region’s economies.9

 

WORLD MARKETS
European benchmarks made some substantial March gains. The DAX rose 4.95%, the STOXX 600 1.30%, the CAC 40 1.66% and the IBEX 35 3.07%. Italy’s FTSE MIB climbed 3.67%. The Europe Dow, on the other hand, lost 3.15% in March and the Russian RTS fell 1.81%; the FTSE 100 was off 2.50%.1

  

Major Asian bourses were up and down: Sensex, -4.78%; Shanghai Composite, +13.25%; Nikkei 225, +2.18%; Hang Seng, +0.31%. The Asia Dow lost 0.72%. In the Americas, Brazil’s Bovespa lost 0.84%, Mexico’s IPC All-Share 1.05% and Canada’s TSX Composite 2.18%; March also brought a 1.65% dip for the Dow Jones Americas index. Argentina’s always-volatile Merval jumped 12.87% for the month. The Global Dow went -2.47%, the MSCI Emerging Markets Index -1.59% and the MSCI World Index -1.81%.1,10

   

COMMODITIES MARKETS

Losses characterized this sector, again. Some metals did advance. Gold fell 2.44% for the month, settling at $1,183.10 on the COMEX on March 31; platinum declined 4.17%. Copper futures gained 1.38%, however, and silver futures rose 0.24%, closing March at $16.60. The U.S. Dollar Index settled at 98.36 on March 31 and finished February at 95.29, so its monthly advance was 3.22%.11,12

 

Crude oil wrapped up the month at a NYMEX price of $47.60, sinking 3.96% for March. Heating oil dropped 22.25%. Monthly losses were smaller for unleaded gasoline (1.40%) and natural gas (2.55%). Key crops declined across the board: cotton lost 1.81%, sugar 13.93%, wheat 0.29%, soybeans 5.08%, cocoa 12.77%, coffee 3.49% and corn 1.37%.11

         

REAL ESTATE
Home sales improved in February, with a major boost evident for new home buying. According to the Census Bureau, new home sales rose 7.8% in the second month of 2015, which put the annualized gain at an impressive 24.8%. The National Association of Realtors found the pace of resales up 1.2% for February, and NAR’s pending home sales index showed a 3.1% rise for the same month. As for house prices, the January edition of the S&P/Case-Shiller home price index showed an overall 4.5% year-over-year gain.3,13

 

Eyeing Freddie Mac’s March 26 and February 26 Primary Mortgage Market Surveys, we see it became even cheaper to finance a home purchase last month. On March 26, the average interest rate on the 30-year FRM was 3.69%, down from 3.80% in February’s last PMMS. In the same interval, the average interest on the 15-year FRM declined a tenth of a point to 2.97%. Average interest rates on the 5/1-year ARM and the 1-year ARM were respectively 2.92% and 2.46% in late March compared with 2.99% and 2.44% in late February.14

 

As for groundbreaking and new projects, the Census Bureau reported a 3.0% February rise in the pace of building permits (with multifamily construction permits up 18.3%). That was the good news. It also reported a 17.0% plummet in housing starts, possibly influenced by weather, less available land and a decrease in builder sentiment.15

 

LOOKING BACK…LOOKING FORWARD
The Russell 2000 outshone the Dow, S&P and Nasdaq last month, gaining 1.57% to settle at 1,252.77 and bring its quarterly performance to +3.99%. March 31 saw the Dow settle at 17,776.12, the Nasdaq at 4,900.88 and the S&P at 2,067.89; the Dow fell 1.97% in March, the S&P 1.74% and the Nasdaq 1.26%. As for fear, the CBOE VIX rose 14.62% across March to end the month at 15.29. It was truly an up-and-down month: the S&P went 28 straight trading days without consecutive gains until March 30. Only twice in the past 58 years has that happened.1,16

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

-0.26

+8.01

+12.75

+6.92

NASDAQ

+3.48

+16.72

+20.88

+14.51

S&P 500

+0.44

+10.44

+15.37

+7.52

REAL YIELD

3/31 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.18%

0.60%

1.60%

1.79%

 


Sources: online.wsj.com, bigcharts.com, treasury.gov – 3/31/151,17,18,19

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

Can stocks overcome widespread pessimism about this oncoming earnings season? With the dollar being so strong, S&P 500 earnings are truly challenged to surprise to the upside this quarter. FactSet projects a 4.7% slip for Q1, which would mark the first retreat since Q3 2012. While the past is no indicator of the future, bulls may be reassured by how the S&P has performed in recent Aprils: over the past ten years, its median advance has been 0.3% in the first half of the month and 1.8% in the second half of the month. In fact, April is the second-best month in S&P history since 1950, with the index up an average of 1.5%. Perhaps strong economic indicators here and better ones abroad will help history repeat.16

 

UPCOMING ECONOMIC RELEASES: Announcements, press releases and reports investors will pay attention to during the rest of April include the March jobs report from the Labor Department (4/3), March’s ISM services PMI (4/6), the minutes from the March Fed policy meeting (4/8), February wholesale inventories (4/9), March retail sales, February business inventories and the March PPI (4/14), the latest Fed Beige Book and March industrial output (4/15), March housing starts and building permits (4/16), the preliminary April consumer sentiment index from the University of Michigan, March’s leading economic indicators from the Conference Board and the April CPI (4/17), March existing home sales (4/22), March new home sales (4/23), March durable goods orders (4/24), the February Case-Shiller home price index and April Conference Board consumer confidence index (4/29), March pending home sales, a new Fed policy statement and the first estimate of Q1 GDP (4/29), and then the March personal spending report (4/30). By a quirk of the calendar, the final April University of Michigan consumer sentiment index will be released May 1.

 

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Are Your Children Financially Literate?

Are Your Children Financially Literate?

New Approaches to a Changing Problem.

 

Provided by PlanningWorks

 

How bad is financial illiteracy today? So bad that your children may be at risk of making some serious financial mistakes. Some are finding that talking to children about finances has become less about the nuts and bolts of money and more about putting money’s importance to our daily lives in the correct context.

Women at particular risk. The U.S. Department of Labor reports that only 45% of working women ages 21-64 have a retirement plan. The DOL also notes that more women work in part-time jobs, and are more likely to interrupt their careers to take care of family, whether that be raising children or looking after parents. Some of these patterns are just luck of the draw, but others may come from what parents teach children about money, and how they teach it.1

 

Start at a young age. New York Times money columnist Ron Lieber’s book The Opposite of Spoiled discusses ways to prepare children for dealing with financial issues. The title refers to the author’s search for an antonym to the word “spoiled” in the context of an entitled and demanding personality. Lieber suggests focusing on values like graciousness in communication, which can lead to more openness in discussing money. Money can be frightening or mysterious to many, even well into adulthood, and Lieber encourages approaching the topic with fewer facts and figures and more as an emotional issue. The reasoning for this is that money is, for children and adults, an emotional topic.2

 

The emotional toll of money issues. While most people have experienced money worries at one time or another, the science surrounding this phenomenon is compelling. Many mental health organizations have special literature dealing with the emotions that surround money troubles, including Duke University’s Personal Assistance Service. They cite an American Psychological Association survey asserting that 80% of Americans experience genuine stress related to money, and that half of Americans worry about their ability to provide for their family. While money is always an uncertain and fluid factor in our lives, how we deal with these stresses may be strengthened through early experiences and developing good emotional habits early on. Frank talk about these emotions may demystify money and, in the process, boost financial literacy.3

 

Education is still needed. Of course, money is far more than an emotional issue; being comfortable with a topic doesn’t guarantee proficiency, it merely makes it easier to learn.

 

In 2014, the Organization for Economic Cooperation and Development tested 29,000 students aged 15 from 18 member countries or economic regions. Students in top-scoring Shanghai had the highest average score at 605, while the lowest average score belonged to 15-year-olds from Colombia at 375; the average score for U.S. students was a mediocre 490.4

While a number of factors may contribute to the lower scores, there were few obvious indicators, beyond a simple lack of financial sophistication. For example, while those with better math and reading skills were more likely to demonstrate financial literacy, not all with high proficiencies were demonstrably better with money. However, those who indicated that they enjoyed solving complex problems earned higher scores. This may be key. U.S. Education Secretary Arne Duncan indicated that teens needed to be more financially proficient, and in ways that their parents and grandparents never had to be.4

 

Prescriptions in progress. There are a number of online sources for financial education, helpful to both teens and young adults. The Ad Council and the American Institute of Certified Public Accountants have a national campaign, Feed the Pig™, to try and correct this dilemma (learn more by visiting www.feedthepig.org). The National Council on Economic Education has also helped launch www.TheMint.org to acquaint young adults with vital financial principles.

 

PlanningWorks may be reached at 512 498-7526 or info@planningworks.biz

 

Avoiding the Common 1040 Mistakes

Avoiding the Common 1040 Mistakes

 

Don’t let these slip-ups creep into your federal tax return.

 

Provided by PlanningWorks

 

No one wants to delay their federal tax refund. As you certainly don’t, filling out your 1040 form correctly is essential. To that end, it is worth noting some of the common 1040 mistakes – the little slip-ups that aggravate both the IRS and the taxpayer. 

 

Not signing your return. If you file online (and who doesn’t), you have to type your name on the “Your Signature” line in the “Sign Here” section, along with your spouse’s name if you file jointly. If you still file a hard-copy return, you’ve got to sign your name on the “Your Signature” line, and the same goes for your spouse on the “Spouse’s signature” line. No valid signature equals an invalid return.1

 

Not getting your name right. Believe or not, some people mistype their names as they e-file. More commonly, they enter an old name – a maiden name, for example – that doesn’t match the name linked to this taxpayer identification number. If you’ve changed your name, the Social Security Administration (and other federal agencies, as applicable) need to know that.1

 

Missing the filing deadline(s) applicable to you or your business. Is your company an S corp? That means you will probably need to file a Form 1120S by March 15. Is it a sole proprietorship? That means you have until April 15 to file a Form 1040C. If you are new to making estimated tax payments, you have hopefully pored over Form 1040-ES with a tax professional to figure out how much tax is due by each quarterly payment period.2

 

Turning in Form 4868 (the “extension”) gives you until October 15 to file, although any federal taxes owed must still be paid by April 15. If you are a servicemember on duty outside the U.S. and Puerto Rico, you have until June 15 to file your return and pay taxes, and you can also use Form 4868 to file as late as October 15.3

 

If you file late (that is, you submit your return after April 15 without using Form 4868 to request an extension), you face a penalty – a 5% penalty per month following the return’s due date, capping out at a 25% maximum penalty after five months. The penalty for unpaid taxes is .5% per month after the April 15 deadline, and 6% interest a year. If you have taxes a year overdue, you will be assessed both the monthly and yearly penalties.2

 

Making numerical errors. Even with some of the great tax prep software now available, math errors still happen. In fact, they happen largely because people don’t use the software: the taxpayers who insist on filing paper returns are 20 times more likely to commit math mistakes than those who e-file, the IRS reports.1

 

If an electronically filed return contains a math mistake, it gets sent back to the taxpayer or tax professional for correction and resubmission. If a paper return has a math mistake, the IRS has to refigure it on the taxpayer’s behalf. That takes time.1

 

Additionally, some taxpayers get Social Security numbers wrong – not necessarily their own, but those of their spouses. Also, a smooth direct deposit of a federal tax refund won’t happen if a taxpayer types in an inaccurate bank account number.1

 

Selecting the wrong filing status. This happens a lot with divorced moms and dads. To determine if they should check the “head of household” box or the “single” box, they should take the online interview at irs.gov/uac/What-is-My-Filing-Status%3F.4

 

Claiming a credit or deduction you shouldn’t. Again, tax prep software tends to ward off this mistake. Credits often inappropriately claimed (or ignored): the Child and Dependent Care Credit, the Earned Income Tax Credit and even the standard deduction.1

 

Many business owners overlook deductions or claim them in error. Sometimes this can be traced back to slipshod recordkeeping; other times, it stems from faulty assumptions. According to a survey from small business accounting software maker Xero, the most common merited deductions that aren’t claimed by SBOs are those for depreciation (30%), out-of-pocket capital expenses (29%) and car and truck expenses (16%).2

 

Claiming employees as independent contractors. Some small business owners try to save money by doing this, but the IRS may disagree with such claims. If so, the business can end up on the hook for employment taxes related to that employee.2

 

So what steps can you take to try and reduce the risk of errors on your 1040 form? You can file electronically, you can use some of the terrific tax prep software available, and you can turn to a skilled tax professional to help you prepare and file your return. No one is perfect, but those are all good moves to make this tax season.

 

PlanningWorks may be reached at 512 498-7526 or info@planningworks.biz

 

Market Commentary - Month of March 2015

PlanningWorks Presents:

 

MONTHLY ECONOMIC UPDATE

 

 

MONTHLY QUOTE

 

“The truth is that there is nothing noble in being superior to somebody else. The only real nobility is in being superior to your former self.”
    

– Whitney Young

 

 

MONTHLY TIP

 

If you know you are spending way too much, going all-cash for a spell might be a good move for your budget and might lead you revise your spending habits for the better.

 

 

MONTHLY RIDDLE

 

Past mountains, plains, and hills, it follows a river while standing still. What is it?

 

 

Last month’s riddle:
It begins and ends with E yet it may contain only one letter. What is it?

 

 

Last month’s answer:

An envelope.

 

March 2015

THE MONTH IN BRIEF
What a difference a month makes. After a rough January, the S&P 500 soared 5.49% in February. Steadying oil prices, solid earnings, improving indicators in Europe and Asia and central bank action all prompted the bulls to run freely. Stateside, inflation gave way to a touch of deflation, home sales cooled off and consumer spending and confidence were disappointing – but the labor market was in good shape and so were the manufacturing and service sectors. February brought some reassuring economic news, and that was all Wall Street needed for a rally.1

 

DOMESTIC ECONOMIC HEALTH
Cheaper fuel and energy costs meant two things: less consumer spending and falling consumer prices. Important economic indicators reflected these developments. January’s Consumer Price Index dipped 0.7% (although the core CPI rose 0.2%), resulting in annual deflation in the United States for the first time since October 2009. Personal spending lagged 0.2% during January. The federal government also reduced Q4 GDP in its second estimate, taking growth down to 2.3% from the previously announced 2.6%.2,3

 

Consumer confidence retreated, perhaps in the wake of a bad January for stocks and word that gas prices were poised to go back up. February’s Conference Board index slipped 7.4 points to 96.4; the final February University of Michigan consumer sentiment index came in at 95.4, down from 98.1 in the final January survey.2,4

 

Fortunately, there was enough good news to offset the bad. The Labor Department’s January jobs report showed 257,000 new hires. Companies were hiring at the fastest clip in 18 years – non-farm payrolls had swelled by an average of 336,000 workers a month from November-January. The unemployment rate did tick north to 5.7% in January and the underemployment (U-6) rate was up at 11.3%, but this reflected an increase in job seekers. Hourly wages were up 0.5% in January, personal incomes up 0.3%.2,5

 

America’s manufacturing sector continued to grow and expand. February’s ISM factory PMI came in at 52.9, not too far off of January’s 53.5 reading; the Federal Reserve found manufacturing output up 0.2% for that month. ISM’s service sector PMI had notched a reading of 56.7 for January, rising 0.2 points. Hard goods orders improved 2.8% in January after slipping 3.7% in December. The Producer Price Index declined 0.8% in January thanks largely to a record 10.3% monthly plunge for wholesale energy prices (January saw a seventh consecutive monthly decline).2,6

     

Fed chair Janet Yellen underlined the central bank’s commitment to patience on raising interest rates in her February testimony before the Senate banking committee, saying it seemed “unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of FOMC meetings.”7

   

GLOBAL ECONOMIC HEALTH
There was no “Grexit” in February: Greece and the European Union hammered out a deal in principle to extend aid to that nation’s beleaguered economy through the end of June. (Without a deal, the €240 billion bailout for Greece would have ceased at the end of February). Greece remained on shaky ground with the EU and the International Monetary Fund, but at least it remained in the eurozone. A Eurostat flash estimate showed euro area deflation halved in February from January levels (consumer prices retreated only 0.3% annually as opposed to 0.6%). Unemployment ticked down to 11.2% in the 19-country euro area in January, a 33-month low.8,9

   

February ended with a surprise from the east: the People’s Bank of China made its second interest rate cut in three months (the benchmark rate was lowered 0.25% to 5.35%). Also, the final February HSBC/Markit China manufacturing PMI showed sector growth again at a better-than-expected 50.7 reading, up a full point in a month. February HSBC/Markit factory PMIs in other key Asia Pacific nations were all above 50 as well: 52.9 in India, 51.6 in Japan, and 51.1 in South Korea.10,11

 

WORLD MARKETS
Just how good was February for stocks? You not only had all-time highs for the S&P and Dow by the end of the month, you also had historic peaks for Germany’s DAX and Great Britain’s FTSE 100 and Japan’s Nikkei 225 reaching a 15-year high.12

 

Almost all foreign indices of note rose last month – two that didn’t were Turkey’s BIST 100 (-5.39%) and Pakistan’s KSE 100 (-2.36%). Another two indices actually gained more than 20% for February – Russia’s RTS index (21.60%) and Greece’s ATG index (21.96%). Elsewhere in Europe, you had the following gains: FTSE MIB, 8.95%; STOXX 600, 6.85%; DAX, 6.61%; FTSE 100, 2.92%; CAC 40, 7.54%; ISEQ, 9.24%; Europe Dow, 6.39%. On other continents, more gains: Asia Dow, 4.93%; Nikkei 225, 6.36%; S&P/ASX 200, 6.09%; Hang Seng, 1.29%; Sensex, 0.13%; Shanghai Composite, 3.11%; Dow Jones Americas, 5.50%; Bovespa, 9.97%; IPC All-Share, 7.91%; TSX Composite, 3.82%. February saw the Global Dow advance 5.78%; the MSCI World Index rose 5.68% on the month, the MSCI Emerging Markets Index far less at 2.98%.1,13

   

COMMODITIES MARKETS

Oil found a floor and took a step up: on the NYMEX, light sweet crude ended the month at $49.76 a barrel, going +3.32% for February. The big leap was taken by RBOB gasoline, which rose 24.43% on the month. February also saw gains of 14.74% for heating oil and 1.05% for natural gas. Cocoa futures were up 15.59% for February, corn futures 3.58%, cotton futures 7.87%, soybean futures 7.24% and wheat futures 3.59%. Last month’s losers among ag futures included coffee (-15.10%) and sugar (-5.81%).14

 

Gold retreated 4.70% to $1,213.10, silver 2.56% to $16.56. Platinum fell 3.60%. As for the U.S. Dollar Index, it wrapped up February at 95.29 (+0.52% on the month).14,15

 

REAL ESTATE
Brutal weather across two-thirds of the country held homebuying back. The Census Bureau found new home sales tailing off 0.2% in January. More significantly, the National Association of Realtors measured a 4.9% fall in existing home sales. The NAR did announce a 1.7% January gain in its pending home sales index. According to the latest S&P/Case-Shiller home price index, prices across 20 major metro areas climbed an average of 4.5% during 2014.2,16

 

Snow, sleet and ice had also slightly hindered new construction. The Census Bureau reported groundbreaking down 2.0% for January, and there were also 0.7% fewer building permits issued. Starts were still up 18.7% from a year prior, and permits were 8.1% above year-ago levels.17

 

Home loan interest rates increased in February. Freddie Mac’s February 26 Primary Mortgage Market Survey found the average interest on a 30-year FRM at 3.80%, a 15-year FRM at 3.07%, a 5/1-year ARM at 2.99% and a 1-year ARM at 2.44%. In its January 29 survey, interest averaged 3.66% for the 30-year fixed, 2.98% for the 15-year fixed, 2.86% for the 5/1-year ARM and 2.38% for the 1-year ARM.18

 

LOOKING BACK…LOOKING FORWARD
February brought a major drop for the CBOE VIX; the so-called “fear index” ended the month 36.39% lower at 13.34. The Nasdaq climbed 7.08% to 4,963.53, the Russell 2000 5.83% to 1,233.37, the Dow 5.64% to 18,132.70 and the S&P 5.49% to 2,104.50. February, in fact, was the S&P’s hottest month since October 2011.1,12

 

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+1.74

+11.43

+15.12

+6.84

NASDAQ

+4.80

+14.92

+24.35

+14.19

S&P 500

+2.21

+13.49

+18.11

+7.49

REAL YIELD

2/27 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.17%

0.49%

1.48%

1.70%

 


Sources: online.wsj.com, bigcharts.com, treasury.gov – 2/27/151,19,20,21

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

March opened with the Nasdaq closing above 5,000 for only the third time in history and the S&P, Russell 2000 and Dow all settling at record levels. Have headwinds suddenly ceased? No. In Europe, the restructured Greek debt deal is still a shaky one, deflation is lingering and the jobless rate is twice ours. Demand for key commodities isn’t where it was two years ago; oil prices are half what they once were. Warnings that the majority of stocks are overvalued continue, with bears maintaining that the S&P will only make a minor gain for 2015. Still, the bulls staged a remarkable return last month and March has begun with the sense that obstacles have been cleared from their path. While this bull market is growing venerable, it does not yet seem vulnerable to many investors.22

 

UPCOMING ECONOMIC RELEASES: The roll call of indicators and reports for the rest of March includes ... February’s ISM services PMI, a new Fed Beige Book and ADP’s February job-change report (3/4), February’s Challenger job-cut report (3/5), the February employment report from the Labor Department (3/6), January wholesale stockpiles (3/10), January business stockpiles and February retail sales (3/12), the February PPI and March’s initial consumer sentiment index from the University of Michigan (3/13), February industrial output (3/16), February housing starts and building permits (3/17), a Fed policy statement (3/18), the February set of leading economic indicators from the Conference Board (3/19), February existing home sales (3/23), February new home sales and February’s CPI (3/24), February hard goods orders (3/25), the final estimate of Q4 GDP plus the University of Michigan’s final March consumer sentiment index (3/27), February personal spending and pending home sales (3/30), and finally the Conference Board’s March consumer confidence index and the January edition of the Case-Shiller home price index (3/31).

 

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PlanningWorks supports Amplify Austin

We want to remind you of Amplify Austin's 24-hour fundraising day starting TOMORROW at 6:00pm. The goal is to raise $7 million in 24 hours for Central Texas nonprofits!
 
Sometime between 6:00pm on Thursday, March 5th and 6:00pm on Friday, March 6th, please:
•    Go to Amplify Austin
•    Select your favorite nonprofit, searching by name or category
•    Make a donation to your favorite nonprofit
•    Enter your credit card information on the secure site - any amount helps
•    All donations made on Amplify Austin are 100% tax deductible 
•    Feel great about supporting our Central Texas community

We also wanted to remind you that you can also go online anytime before 6:00pm tomorrow and schedule your donation through the Amplify Austin homepage!
 
If you have more questions, please check out the FAQs page.
 
Community support is a key focus for Lisa, Mikiel & the PlanningWorks team, here are some of our favorites:
 
Impact Austin
Mobile Loaves and Fishes
The Junior League of Austin's FIT - Food In Tummies Program
Sammy's House
...and many more
 
Thank you for your help, let's support our Central Texas nonprofits together through Amplify Austin!

Which Trust to Use?

If you think you need a trust, which one should you use?

Click to read more: http://www.financial-planning.com/news/estate_planning/which-trust-to-use-2691877-1.html

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