Stock Market Commentary
For the week of November 9, 2009
The Federal Reserve Open Market Committee voted unanimously Friday to maintain interest rates at zero to 0.25 percent, where it has been since December 2008. Although the unemployment rate in October hit 10.2 percent, its highest in more than 26 years, the Department of Labor report revised job losses for earlier months lower than previously reported and showed that payroll losses have continued to decline. For the week, the Dow ended up 3.30 percent to close at 10,023.42. The S&P rose 3.26 percent to finish the week at 1,069.30, while the NASDAQ climbed 3.29 percent to end the week at 2,112.44.
Did It Work? – On March 18, 2009, the Federal Reserve announced its objective to buy as much as $300 billion of long-term government bonds over the subsequent six months, a plan that was anticipated to boost Treasury prices and drive down interest rates. The final purchases of this plan took place on Oct. 28, 2009, the 60th such Fed buy-back in the past seven months. The yield on the 10-year Treasury note was 2.50 percent on March 18, 2009. The yield on the 10-year Treasury note was 3.51 percent on Oct. 30, 2009 (Source: Financial Times, BTN Research).
What’s For Dinner? – The consumer price index (CPI) declined 1.3 percent for the year ending Sept. 30, 2009. One component of the overall index is “food,” representing 15 percent of the total index. The food index declined 0.2 percent for the year ending Sept. 30, 2009, its first year-over-year decrease since April 1967 or more than 42 years ago. The CPI is a measure of inflation compiled by the U.S. Bureau of Labor Studies (Source: Department of Labor, BTN Research).
Big Bucks For The Sixth Grader – The average cost for one year of college education at an in-state public college is $15,213 for the 2009-10 school year (including tuition, fees, room and board). The total one-year cost has increased 6.5 percent per year over the past 30 years. If that same annual rate of inflation continues into the future, then a sixth grader today will ultimately pay $104,000 for his/her four years of education at an in-state public college during the years 2016-20 (Source: College Board, BTN Research).
WEEKLY FOCUS – Open Enrollment Season
While benefits packages have expanded greatly since their inception, more choices can make your evaluation process more complex. The following questions may help you bring your company benefits into your financial big picture:
1. Is your 401(k) properly allocated? Your 401(k) may be your primary source of income in retirement. Unfortunately, employees who contribute to 401(k)s often put the account on auto-pilot. We can help you review your 401(k) selections to ensure your goals, time frame and risk tolerance match your asset allocation.
2. How much company stock do you own? While the Employee Retirement Income Security Act of 1974 (ERISA) restricts pension plans from investing more than 10 percent of assets in company stock, there is no similar restriction on 401(k) plans. We can help you determine an appropriate amount for your portfolio and what to do if your current holdings exceed that amount.
3. Is there a better choice for your health plan? Health insurance can be one of the most complex and overwhelming benefit decisions. We can help you evaluate your own situation to determine the best choices for your family.
4. Are you taking full advantage of Flexible Spending Accounts (FSAs)? No question, the use-it-or-lose-it rule is a hurdle to clear, but if you don’t take the time to calculate expenses that could qualify for a health FSA, you’re leaving money on the table. Your company may also offer a dependent care FSA.
5. Should you buy long-term care coverage and extra life insurance? A growing number of employers offer group long-term care and credit life insurance as a voluntary employee benefit. These policies may offer coverage that would have likely been more difficult or more expensive to obtain on the open market. While group policies may be less expensive, individual policies may better address portability and insurability issues.
6. What about the extras? Many companies offer attractive additional benefits from discounts on gym memberships and transportation costs to reimbursement for professional development, vision plans, and matching funds for your charitable contributions.
Call our office today to schedule a review of your benefits and make an informed decision during open enrollment season!
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment grade bond, fixed rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America. SAI# 301319
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