Assess your health, wealth, career in 2010, experts adviseDecember 25, 2009
It's time to think about shaping up during 2010 — personally, professionally and financially. Here's some guidance from local experts:
(excerpt from article)
Advice on personal finances, from Don DeWaay, chief executive of DeWaay Capital Management in Clive:
- To convert or not convert. Beginning Jan. 1, investors can convert their traditional IRA or employee-sponsored retirement plans to Roth IRAs. DeWaay said investors should investigate whether the new option makes sense for them. Despite paying taxes on tax-deferred income, investors could avoid hitting higher tax brackets in the future and better control when they tap their savings. Traditional IRA accounts require investors to begin drawing down funds at age 70.5, whereas the Roth plans have no such mandate. DeWaay said Roths also can be a good vehicle for couples who seek to transfer wealth to their children or grandchildren.
- Planning for death and taxes. Estate planning takes on crucial importance as Bush-era tax cuts are set to sunset in 2010, DeWaay said. Wealthy families, business owners and farmers need to look at how changes in inheritance taxes will affect them. Now, a couple can pass on $7 million to their heirs without federal estate taxes, but that amount declines to $2 million for couples in 2011. If unchanged by Congress, a quirk in the law repeals federal inheritance taxes for a year, beginning Jan. 1. - Recalibrate your investment portfolio. DeWaay said investors need to expect more conservative returns and the possibility of higher inflation. He expects market volatility over the next year, with wide gains and losses, and the possible return of the 1970s "hyperinflation."
"It won't be like the '90s with the market rocketing back and everyone rolling in cash," he said. "The economy has not set the tone or foundation for a runaway market." With many commercial real estate loans expected to reset over the next two years, DeWaay said the nation could experience additional bank failures as investors and developers struggle to refinance mortgages for property with dramatically declining values. The fallout, however, will most likely create opportunity for investors, seeking long-term returns from discounted loans, properties and equipment leases.
DeWaay suggests that investors look where the "smart money" - hedge funds, pensions, among others - is investing. He warns investors to avoid real estate investment trusts that have legacy assets and debts. "Investors need to show discipline," he said. - Spend less, save more. With percentage returns from the stock market most likely to be in single digits, investors in their 40s and 50s will most likely need to save more for retirement. Otherwise, they may to need to work deep into retirement age or see a decline in their lifestyle. "I'm not suggesting a bunker mentality. But we all have attics and closets full of things we thought we couldn't live without," he said.
Investors need to re-examine their retirement needs with the changing economy, he said. For full article visit:
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