2013 Financial Review and Outlook

                                              
  First off, the U.S. stock market ended 2013 with big gains. The popular broad market averages rose 25% to 30%, with not much of any pull-back along the way. The easy money policy of the Federal Reserve kept interest rates very low, leading money into stock-based investments and out of low-interest bonds and fixed rate offerings. Most bonds (government, corporate) lost money, except the high yield category, up 6%, which compensates investors for the risks of rising interest rates by offering higher coupon interest.

  Fixed interest investments, such as fixed annuities, where your principal deposit is not subject to losses, improved as the year chugged along. (Remember, the Fed sets short-term interest rates; longer term rates, 5, 10 years, are set in the marketplace), so when interest rates rise by investors buying and selling, your income will increase because of competition for borrowers. The 10 year U.S. Treasury Note provided about 30% more income to an investor at the end of 2013 vs. 2012. Those rates rising trickle across many areas that affect our lives: mortgages, auto loans, CD’s, annuities, etc.

  So, the take-away point here is: it’s time to review your stock and bond holdings, and fixed rate investments to determine if you could earn more money this year and reduce your risks. Some options available: re-allocate stock market money to bonds or cash. Bonds can be sold and that money invested at a higher interest rate in other bonds. Annuities can likewise be upgraded by tranfers, free withdrawals or partial surrenders, moving money to a higher interest rate or better benefits – while keeping their tax-deferred status. Also, if your annuity is paying out income to you, or you are taking withdrawals, there may be features that could enhance your income – now or later.    
  I’ve spent many years dealing with these retirement planning products, so perhaps I can improve your situation this year. Give me a call and find out.

  Lastly, don’t go around sulking because you didn’t make a boat-load of money last year in stocks. Recall 2008-2009’s over 50% drop in prices. The risk of loss is still lurking about, in good times and bad. Risk may be sleeping now, but it can awake at any time.

  Set your expectations for your money, and then find a strategy that gets you closer to your goal without taking on excess risks. Keeping ahead of inflation and taxes, the twin evils of finance, is a good base-line strategy to aim toward, regardless of what type of investor you are.
 
Warm Regards and success for you in 2014 !

~Barry Unterbrink
Chartered Retirement Planning Counselor
Fort Lauderdale, Florida
(954) 719-1151