Tips

Consider the mutual fund theory in your asset allocation.

With so many variables in the economy that are still, well, variable, it would be prudent to have diverse portfolio components (stocks, bonds, gold, real estate, indexed funds) that will allow you to, at some level, take advantage of different trends as they emerge. When the economy levels off (maybe by the second half of 2010 –?), you can re-balance if necessary.

Play catch-up!

If you need to bolster your retirement fund balances, consider increasing your contributions to tax-deferred retirement savings plans. Retirement plan contribution limits are increasing through 2010 as a result of 2001 tax law changes. This includes additional catch-up contributions available to workers age 50 and older for both tax-deferred employer plans and IRAs.

Trends

• Better. Americans are currently (November 2009) saving 3.7% of their income, up from 0.2% in 2008.

• Worse. Over the next 25 years, America’s share of the worldwide economic pie will slip from 28% to 24%, and during that same stretch Asia’s share of the global market will almost double – meaning it will account for a whopping 55% of the global economy by 2030.

• Housing Market Stats Reflect the Larger Picture.
  October 2009 home sales reached their highest level in years, but remain incredibly low. While the number of unsold new homes during that period shrank to the lowest level in nearly four decades, the time those houses stayed on the market reached 13.5 months, the longest period since the government began collecting data in 1963.

  As Paul Volcker, former Fed Chairman states, “Recovery will be a long slog.”

How should your strategy benefit from these tips and leverage these trends?

Let’s talk.

John Karas
President & CEO
johnkaras@riverviewbank.com
(360) 693-7442

Source: smartaboutmoney.org 11/09

Cnnmoney.com 11/22/09
New York Times 11/26/09