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Stocks rebounded in October enjoying the biggest monthly gain of the year after
hitting the index’s 2011 low on October 3.
The S&P 500 index ended the month up 10.77% to close at 1,253. The low on October 3 was set at 1,099 giving
the index a 14% rebound off the bottom.
Gold and Oil also made gains in October.
Oil surged on positive economic news gaining 16.80% to close at
$92.04. Gold added 6% to close at
$1,721. The Dollar was 3% lower against
other major world currencies at $76.16.
Through the end of October the S&P 500 is now down 0.37%, Gold is up 21.23%, Oil is
up 0.70% and the dollar is down 3.66%.
Markets continue to struggle with up weeks and
down weeks looking for progress in the Europe debt situation so that it can
then focus on global growth and current economic conditions.
Europe has come to an agreement on how to handle
Greece debt but the details on the deal are still pretty sketchy and it may be
more of a band-aide than a long-term fix.
Next up is Italy with the Prime Minister defeated and Italian bond rates
soaring they will be a challenge for Europe as well.
In the US there was plenty of reason for the
gains in October. Here are a few of them:
US 3Q Gross Domestic Product was higher than
expected at 2.5%
- Durable Goods orders beat expectations
The index of Leading Economic indicators gained
for the 5th straight month
- 3Q earnings continue to be positive
- Auto sales beat expectations
- Payrolls rose
It was a pretty good month for US economic
news. Many of the growth gauges are not
growing as fast as we would like but they are making gains.
November’s big story could come from Congress as
the “Supercomittee” decides how to tackle the $1.5 trillion budget deficit
cut. It appears as though the republican’s
may be more willing to raise taxes than initially thought and may provide a
basis for compromise and an actual deal.
If a deal is not met it is hard to tell how the markets will react but I
believe it could get ugly.
Mortgage rates moved lower over the last month.
The Schwab Bank 15-year rate is
now at 3.46% and the 30-year rate is at 4.21%. These rates are as of 11/08/2011
and assume no points, no origination fee and a $250,000 mortgage. Again, if you have the equity in your home
and a 5+ year time frame this could be a great time to refinance and lock in
historically low rates.
With the money you save you could be paying off your mortgage sooner, paying off
other bills, increasing your cash reserves or building up your long-term
investments. Another great thing to do
would be to save for that vacation you have always wanted.
CD rates were slightly higher over the last month.
Charles Schwab has access to CD’s from banks all over the country. Here are some of the current CD rates
6 mo CD @ 0.25% 1-Yr CD @ 0.70%
2-Yr CD @ 1.15% 5-Yr CD @2.10%
Currently I am not doing much with CD Ladders. I
will start using them again as rates begin to rise. If you want to know what I am doing as an
alternative let me know.
Tips and Suggestions
Have you projected out your 2011 Income taxes? Is there anything you should change to pay
less in taxes over the next few years?
Are your cash reserves earning less than 1%?
Consider a short-term US treasury fund or Corporate Bond fund to give
your secondary cash reserves a yield boost.
Medicare Open enrollment begins October 15 to December 7. This is a date change from previous
years. If you have questions yourself or
for a loved one please let me know. I
can get you in touch with an expert who will help you out.
Wondering when you should sign up for social security? I have a new tool which will help to figure
that out. Give me a call and we can run
Do you have a question on your health benefits? Should you sign up for disability insurance
or additional group term life insurance?
It is open enrollment season, please let me know how I can help!
If you have any question or if you would like to have help with your financial
plan please give me - your Fee-only Certified Financial Planning ™ Practitioner
All articles are now found on my website which has been combined with my blog : www.aamllc.com
What is a Hardship Withdraw?
A hardship withdraw is special type
of distribution from an employer-sponsored retirement plan, which the IRS
allows only for participants who can prove they are facing an “immediate and
heavy financial need”.
Sovereign Debt Downgrades : The Trend
Since the start of the year, S&P
has downgraded a number of major developed countries, including Portugal,
Ireland, Greece, the United States, and, most recently, Italy. What’s dehind the spate of downgrades and
what do they mean for bondholder’s?
Strategies for Building a Laddered Retirement
A look at different types of bond
laddering strategies and how they can be used to reach specific portfolio
management objectives, such as creating a long-term income stream.
Want more information on how I can help you? Give me a call or drop
me an email to review or set up a free initial consultation.
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Weekly Blog Updates and My Website www.aamllc.com