For the most part, bond investors have had a very nice, very long run.
Interest rates had been in a falling pattern for 30 years, and that meant solid gains for anyone who bought big yields and then held onto them while new securities offered lesser rates of return. ”If you were a little kid and hopped on the bond slide in 1981, you would have had a pretty fun ride until 2010,” said Steve Huxley, chief investment strategist of Asset Dedication, an investment research firm.
That ride may have ended in August of 2010, when yields bottomed out and started to rise. The yield on 10-year Treasuries hit 2.52 percent then; now they are trading at 3.61 percent. As the economy strengthens and inflation rises, interest rates could be entering a long upward trajectory. That leaves income-oriented investors unsure of how to collect the benefits of bonds while protecting themselves from a rout.
There’s not much that’s good or reassuring that can be said about rising oil prices and their effects on consumers. Crude costs rise halfway around the world, and U.S. drivers and shoppers feel it in their wallets faster than the actual oil could be shipped. On a macro level, analysts frequently suggest that every $10 per barrel increase in the price of oil cuts half a percentage point off of world gross domestic product growth.
The latest hit occurred because of turmoil in Libya, which interrupted production there. Oil prices surged, with prices for U.S. crude futures jumping over $103 a barrel in intraday trading Thursday, up 15 percent from Friday’s $89.71 close. That hike was short lived, as Saudi Arabia stepped up to guarantee supplies and oil prices walked part way back to under $97 a barrel.
WASHINGTON (Reuters) – The Internal Revenue Service is going to go easier on taxpayers who owe money, its commissioner said on Thursday.
“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” Doug Shulman told reporters. “I always encourage our employees to try to walk in the taxpayer’s shoes.”
WASHINGTON (Reuters) – What can you do when your parents are struggling to pay medical bills and your kids can’t land jobs? Why, write checks, of course!
Being surrounded by loved ones can be a costly proposition. Much has been made of the recession’s effect on recent college graduates; they’re pouring lattes and surfing sofas. And aging parents can run through money at rates that would challenge Donald Trump’s next wife.
Limited-time offers usually come from television pitchmen, but this year the Internal Revenue Service is tossing a couple at self-employed folks who cover their own health insurance. If that describes you, check out these breaks on your 2010 tax returns. They’re new this year, and could offer significant savings. Here are the details.
Health insurance premiums will offset the self-employment tax
People who have salaried jobs pay 7.65 percent in Social Security and Medicare taxes, and their employers pay a like amount. But self-employed workers pay both halves — a total of 15.3 percent — in what is called the self-employment tax. In all other years, they have been able to deduct their health insurance from their net income, but not until after the self-employment tax is calculated. So, a consultant earning $100,000 and paying $15,000 for health insurance would owe the self-employment tax on the full $100,000, and then be able to deduct $15,000 before the income tax is calculated. (Half of the self-employment tax is then deductible.) That would leave her with a $15,300 self employment tax, and a taxable income of $77,400.
Car dealers don’t just make money on cars. They make money on extended warranties, undercoating, fancy floor mats, extra insurance and loans. They make a lot of money on loans, according to the consumerist Center for Responsible Lending, which reckons that dealers rack up hundreds of dollars in kickbacks for every loan they offer.
How much? According to a new calculator at the center’s website, if you’re financing a $26,000 car for five years and you have a decent credit score, the dealer is getting between $556 to $2,223 back from the lender. That’s because the dealer is essentially acting as a loan broker, according to Chris Kukla, the center’s senior counsel for government affairs. Dealers make the loans and then sell them to third party lenders. The sale price includes a markup that goes into the dealer’s pocket… not yours.
What’s at the core of your retirement portfolio? If it’s an inexpensive index fund or exchange-traded fund (ETF), you’re up on the latest in investment science – circa 1995. But now, science may be moving on, and a new way of looking at portfolio construction has emerged.
Stock index funds like the widely-held Vanguard 500 Index Fund give investors access to broad markets for pennies in trading and carrying costs. Boatloads of research have demonstrated that they typically beat most actively managed funds on an after-fee basis. So if you’re depending on a fund or ETF like that, you’re not doing too badly.
WASHINGTON, Feb 16 (Reuters) – There is much said about the
need for a clear financial plan to maximize savings for
retirement, college and other goals. But before you create that
plan, you’ll want guidelines to help you write it.
It’s like this: If your plan is a road map, you need to
know where you want to go first, right?
President Obama’s proposal for the fiscal year 2012 federal budget is just that: A proposal that would have to wind its way through a Republican-controlled House and a divided Senate to become law. So there’s no sense in panicking about what’s in it and what isn’t.
But here is why you need to pay attention: The wish list, released on Feb. 14, is indicative of the themes that will dominate the remainder of this presidential term and the 112th Congress. Individual taxpayers will find a tight budget. Retirees could get an extra break, and students may lose valuable subsidies.
WASHINGTON, Feb 11 (Reuters) – The Obama Administration’s
newly unveiled housing finance plan may have clouded the
picture for policymakers, lenders and bond buyers, but it made
the future for borrowers starkly clear: It’s going to cost more
to get a home loan.
Mortgages have already become more expensive in recent
weeks, as Fannie Mae (FNMA.OB: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FMCC.OB: Quote, Profile, Research, Stock Buzz) began
began adding risk fees to almost all of the loans they sponsor.
Average rates on 30-year fixed rate-loans have already moved
from 4.4 percent in November to 5.2 percent now, according to
Mortgage Marvel, a loan comparison web site.