This may be an ideal time to refinance your home.

On Wednesday (3/18) the Federal Reserve announced plans to buy $300 billion in Treasuries and another $750 billion in mortgage-backed securities. It also left the benchmark interest unchanged at between 0% and 0.25%.¹

What does this mean for homeowners? Already, people are talking about the potential “honeymoon effect” of the Fed’s move. As an effect of the Fed’s decisions, mortgage rates are probably going to stay low for a while – and they could go even lower.

If you’ve ever considered refinancing, it may be a good time to see what your options are and how they fit with your overall financial strategy. If you want more insight, you could consider contacting your local financial adviser for more information.

Citations.

¹ news.yahoo.com/s/ap/20090318/ap_on_bi_ge/fed_interest_rates [3/18/09]

These are the views of Peter Montoya Inc., and should not be construed as investment advice.

think twice about borrowing from your 401(k)

You may be tempted to do it – but do you really want to?

While you might be able to borrow from a 401(k), that doesn’t mean you should. Yes, we are in a recession. Yes, times are tough. But borrowing from your 401(k) could prove highly detrimental to your financial health.

Some 401(k) plans will not even allow you to take a loan. Those that do commonly permit you to borrow up to 50% of your vested account balance or $50,000, whichever is less.¹ How do you pay the money back? You pay it back (with interest) from future paychecks. How long have you got to pay it back? Usually, up to 5 years. If you use what you borrow to buy a home that will be your primary residence, you may be given longer to pay back the money.²

But again, this doesn’t mean you should. Here’s why this idea belongs in the category of “last resort”.

It could pressure you to reduce your 401(k) contributions. You’ll repay the loan out of your paychecks. Can you do that and continue to contribute to your 401(k)? If you have to lessen or cease 401(k) contributions as a consequence of this move, it could further hurt your retirement savings potential, especially if your company offers you a match on contributions.

If you can’t repay the loan, it becomes a distribution. If you can’t pay the money back within the time period allowed, it is considered a distribution, subject to federal and state income taxes. If you are younger than age 59½, you will face the usual 10% penalty for making a premature withdrawal from your retirement account on top of that.¹

If you lose your job, guess what: in most cases, you have to pay the loan back within 60 days, or it becomes a taxable distribution. Ow.³

The money isn’t tax-sheltered after you borrow it. Nor is the loan tax-deductible.¹

It works against the time value of money. In other words, compounding. One of the key tenets of investing is that money available to you now is worth more than money available to you in the future. Any money you put in a bank account or tax-advantaged investment account now has potential earning capacity – the capacity to grow and compound over time.

This is why we would all prefer to have, say, $20,000 to invest today rather than $20,000 to invest 30 years from now. If you wait 30 years to invest it, you will lose 30 years of time value. Additionally, that idle $20,000 will be worth less 30 years from now due to inflation.

If you borrow from your 401(k), you are working against the time value of money and the power of compounding. By removing assets from that tax-advantaged account, you are hindering its potential earning capacity.

Every 401(k) plan loan carries an opportunity cost. Years from now, you may have to reckon with some sobering questions – how much could those funds have earned if they were left inside the 401(k), and how much did they earn for you when you took them out of the 401(k)? Did the money you borrowed earn you a dime? Did you take on another debt using the money you borrowed?

Are you paying yourself interest? Think again. As you pay back a 401(k) plan loan, the 401(k) program puts the principal and interest back into your 401(k) account. So it looks like you are paying yourself interest. Technically, you are. But to pay that interest, you need to earn money (a salary) and pay income tax on what you’ve earned. You pay the interest on your loan with post-tax dollars. Guess what: when you withdraw those dollars from your 401(k) at retirement, they’re taxed again (as taxable income). So in essence, those dollars are being taxed twice. (It must be noted that specific tax rules apply to Roth 401(k) contributions.)²

Why harm your retirement fund? Borrowing from your 401(k) could amount to an injurious financial mistake, one that could haunt you for years. If the thought has crossed your mind, talk to your financial or tax advisor – there may be other ways to find the money you need.

These are the views of Peter Montoya Inc., and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

St. Patrick’s Day is March 17th!

Will you be participating in the wearin’ of the green?

Do you think of GREEN when you think of this Holiday? Did you know that originally the color of St. Patrick’s Day was not green, but BLUE? Green became Ireland’s national color in the 19^th century, and then became associated with the Holiday.

And while we’re on the subject, do you happen to know when Dublin’s first St. Patrick’s Day festival took place? Was it in the 17^th century? The 18^th century? Actually – it wasn’t until 1996. They began with a simple one-day festival that eventually turned into a three-day event, then a four-day event, and in 2006 it was a full five days of celebrating!

In addition, green means MONEY and we here at WEALTH STRONG wish you an abundance of it. Contact us at www.wealthstrong.com for further information.

Whether you celebrate for an hour, a day or even all week – we wish you a safe and happy St. Patrick’s Day!

ARE YOU A FUTURE FINANCIAL ADVISER?

Think seriously about exploring this terrific career.

It’s a great time to be a financial adviser. Repeat: It’s a great time to be a financial adviser. Even in a bear market, the financial services industry is calling to men and women from all walks of life – from recent college graduates in business and finance to retiring executives and managers.

If you’re in your forties or fifties, you may have thought once or twice about exploring another career. Maybe you could make more money doing this or that. Perhaps you are being forced to find another line of work due to the economy. Well, it might interest you to know that

Money Magazine and Salary.com have ranked “financial adviser” as one of the top 5 jobs for people seeking a new career after age 50.¹

Potentially outstanding income. It’s true: if you are good at this job, you can earn a six-figure income within a few years, perhaps even sooner. Some financial advisers earn well into six figures annually, and some even earn more than a million annually.

Immense satisfaction. Our work is about people plan for financial independence, and retirement – which today is really the transition away from a career to a new horizon. It is really gratifying to see a couple or family achieve a lifestyle goal or a lifelong dream as a byproduct (or direct result) of the financial decisions they made with our input.

Friendships and trust. We lend our perspective and expertise to help successful people with some of the most important financial decisions of their lives. Some of our clients become close friends. We not only know what they want, we know who they are. They know they can trust us and that we are acting in their best interest. (While many financial advisers start their careers working for financial services corporations, many become independent with time.)

Maybe it’s time… time to check out this career for yourself. If you’ve got a passion for the financial world and for helping people, this may be the ideal career for you.

These are the views of Peter Montoya Inc., and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Citations.

¹ money.cnn.com/galleries/2007/moneymag/0703/gallery.bestjobs_50plus.moneymag/4.html [7/3/07]

HOW CAN YOU CHECK UP ON AN INSURANCE COMPANY?

Ways that life insurance and annuity owners can learn about risks.

Read this if you own an annuity or life insurance policy. Read this even if you don’t, because you need to know about the ways you can check up on an insurance company’s rating.

Have insurance companies been exempt from federal bailouts and rescues? No. These are rough times for insurers too. So how can you learn about any risks to a) your policy, b) your annuity, or c) the insurer behind it? And how can you identify the insurance companies that have weathered the recession well?

Comdex rankings. You can’t judge a book by its cover, but you can judge an insurance company by its Comdex ranking. This is a useful place to start.

As the name implies, the Comdex is a composite index: an average percentile ranking of credit ratings provided for life and health insurance companies by firms such as Moody’s Investors Service, A.M. Best Company and Standard & Poor’s Corporation.¹

The Comdex ranks insurers using a weighted average on a scale of 1 to 100, 100 being best. If an insurer has a Comdex rating of 85, for example, that means the Comdex has ranked its strength and solvency as superior to 85% of the insurance companies in the index.²

If you want to see the actual ranking/opinion of Moody’s or Best or another credit firm rather than an average, visit iii.org/individuals/life/buying/strength/ – this is the website of the Insurance Information Institute, a longstanding information source for media and the public about the insurance industry. Or link to your state insurance department via naic.org.

What if the insurance company doesn’t have such a good ranking? Some small and mid-sized insurance firms will have lower safety rankings. That might make you think twice. If you hear that an insurance company has been downgraded three or four times, you want to keep an eye on it. In this financial climate, buying a new annuity from a top-rated company is especially wise.

There are state guaranty funds in case insurance companies fail. While annuities aren’t FDIC-insured, you may have up to $100,000 of coverage by your state’s guaranty association in case of failure. We’re talking cash value; death benefits are often protected by states to a limit of $300,000.³

State guaranty funds are designed to protect death benefits, guaranteed minimums, and other guarantees in an annuity contract. They usually don’t cover losses incurred by investment subaccounts.³

What about share prices? These are not necessarily indicative of an insurance company’s financial health. Some of those stock prices have dipped as a consequence of attempts to raise capital. While such efforts may weaken existing shares of a company, fresh capital improves the insurer’s capability to pay claims.

If an insurer is in real trouble … state insurance departments will usually monitor the company’s health and try to stave off failure by helping them find more capital or arranging a sale to a healthier insurance company that can fulfill annuity payments and the guarantees that come with long term care insurance, life and disability insurance, and living benefit riders.

When new companies take over annuities, the annuity owners make payments to or collect payouts from the new insurer. The terms of the annuity usually aren’t affected as a result.³

Surrender? Not if you can help it. If you surrender an annuity, you might end up with less than you would get if the insurer had failed. Surrender charges can be sizable, while state guaranty funds commonly offer protection up to $100,000 or $300,000.³

If your annuity provider appears to be on shaky ground and the surrender charge period is over or just about over for the annuity, you could consider a 1035 exchange – a tax-free exchange from your current annuity contract into a contract with new terms, which could be provided to you by a higher-rated insurance firm.³

Need to know more? Talk to your financial consultant or insurance agent. It’s a good time to make sure your annuity and policy are with a highly-rated insurer.

These are the views of Peter Montoya Inc., and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Citations.

¹ lifelinkcorp.com/vitalsigns/comdex.asp?nb=11&sb= [2/27/09]

² lifelinkcorp.com/vitalsigns/comdex.asp?nb=11&sb= [6/06]

³ marketwatch.com/news/story/annuities-risk-now/story.aspx?guid={FECE6C1E-6CD0-4372-B63F-49DACBCAAF42}&print=true&dist=printMidSection [10/28/08]

COULD YOU RAISE YOUR SOCIAL SECURITY INCOME BY $1,000 A MONTH?

How filling out Form SSA-521 could help you put more money in your mailbox.

A couple of years ago, Boston University economics professor Laurence Kotlikoff publicized a mindblowing discovery: retirees could dramatically increase their Social Security checks by reapplying for Social Security benefits.

It was entirely legal; it was an opportunity that had lay unnoticed for years. It was soon discussed on National Public Radio and PBS, and in USA Today and a number of in financial magazines. Let’s discuss it here.

Hit “restart” and reset your SSI. Everyone eventually applies for Social Security, but few people reapply – and that’s the key to this strategy, which can potentially bring retired couples $1,000 or more in additional SSI per month. Kotlikoff calls it “restarting the Social Security clock”. If you have retired within the last few years, it is a move worth considering.

You can start collecting Social Security benefits when you’re first eligible, and then restart your payments at a higher rate later. You simply file Form SSA-521 (www.ssa.gov/online/ssa-521.pdf) to request a withdrawal of your Social Security application. After the SSA processes that form, you reapply for Social Security – and since you are older now than when you first applied, this time you will receive much higher payments.

For example, a 63-year-old individual who started Social Security benefits in 2008 at age 62 would have received a payout of $18,794 a year; waiting until age 66 or age 70 would have meant $25,732 or $35,250 annually for that person.¹

So if you feel you applied for Social Security too soon, this presents you with a remedy. As Kotlikoff noted in USA Today in 2008, a 70-year-old receiving $11,556 as a result of claiming early retirement benefits could reapply for Social Security benefits at age 70 and boost her standard of living by 14%. It would be like having an inflation-indexed annuity for about 40% less than the cost of a similar investment from an annuity provider.²

What’s the catch? You have to repay the Social Security benefits you have already received. But you don’t have to pay interest on that money.² Basically, you’re repaying an interest-free loan from Uncle Sam.

Now if enough people do this, there is the risk that the federal government may say, “Wait a minute – look at all these people exploiting this opportunity.” But very few retirees do.

If you do reapply, there’s nothing fishy about it. Visit your local Social Security office (make an appointment by calling 1-800-772-1213). Bring Form SSA-521 with you, or ask for it and fill it out while you are there. Don’t be surprised if the person on the other side of the desk doesn’t know what you’re talking about when you mention reapplying for benefits. So bring a copy of the formal SSA explanation (www.ssa.gov/OP_Home/handbook/handbook.15/handbook-1515.html ) with you.³

Once you repay your benefits, you can restart them whenever you want. If you fill out Form SSA-521 and hand over a check repaying the money you’ve received, you can reapply for benefits right then and there – the request is routinely approved.⁴

For the record, Form SSA-521 only allows you to check one of two boxes for why you want to reapply for benefits. The first is “I intend to continue working” and the other is “Other (please explain fully)”.⁵ Mickie Douglas, a spokeswoman with the Social Security Administration, told Financial Advisor Magazine that it is entirely legitimate to write down that you are reapplying because it is “financially better for you”.¹

What risks do I run by doing this? The big risk is that you could die soon after you repay your benefits – you could be out, say, $50,000 or $60,000 without living long enough to enjoy much of the additional income. But survivor benefits would be larger for your spouse, of course. Speaking of spouses, widows and widowers cannot employ this strategy to reapply for a deceased spouse’s benefits.²

Is this a good move for you? It might be. In case you are wondering, Kotlikoff is no hack – he holds a Harvard Ph.D. in economics and is a former member of the President’s Council of Economic Advisors. He knows his stuff, and so should you. If you have the money to repay a lump sum equivalent to the benefits you have received, this may be a great move – but talk with your financial or tax advisor to see how this decision affects your overall financial strategy.

These are the views of Peter Montoya Inc., and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Do your young people know about money?

Are you a responsible representative of your community and will you teach your children to be the same?

Unfortunately, research indicates that 43% of parents and caregivers have discussed the importance of prioritizing needs vs. wants with their kids.

42% haven’t taken any steps at all to talk financial basics with their children.

Many parents incorrectly assume that their kids learn money management essentials as a part of their schooling basics. When in fact, fewer than half of the US states require a basic economics course of study.

Sound financial knowledge and a firm grounding in fiscal responsibility are basic self defense for all people, especially young people.

An investment now in educating America’s youth how to attain, save, and buget-a lesson in credit-will pay dividends in the long haul.

How can young people get this financial knowledge they so desperately need?

Contact your local Certified Financial Coach to find out and take action today!

Citations: Capital One’s 2006 Back to School Survey; Post Independent Newspaper, Glenwood Springs, Colorado

Poll: What do you think?

On February 17, President Obama signed the 1,071-page American Recovery and Reinvestment Act (H.R. 1) into law.

Some of the things within the Stimulus Plan are:

· $116 billion in refundable tax credits towards individuals and families

· $14 billion to broaden the child tax credit

· $13.9 billion toward education tax credits

· $6.3 billion to assist homebuyers

· $23 billion to states: $18 billion of this goes towards public school systems and for economically distressed neighborhoods

· $87 billion goes to Medicaid

· $78 billion to the jobless: included in this is a one-time $250 check to Social Security, $9 billion to increase unemployment checks by $25/week, $25 billion funds continued group healthcare coverage for those who lost their jobs between 9/1/08 through 12/31/09

· $20 billion for healthcare

· $308 billion in discretionary spending: which includes; job training and education, transportation projects, energy projects, health and science funding, food stamp benefits and housing projects

With this plan signed and in preparation for its commencement , what’s your opinion?

What do you hope to see happen for yourself and your life?

Financial Coaching is like a Free Hug, really.

If you haven’t seen this video for a while (or ever) it will touch your heart again.

This is a true story and if you see it with new eyes, you will see and hear many of the components of coaching.

>Spaciousness

>Taking action

>Facing adversity

>Empowerment

>Making a difference in the world!

So the question is, what is your TRUE story?

TAX EFFICIENCY

What it means, why it counts.

A little phrase that may mean a big difference. When you read about investing and other financial topics, you occasionally see the phrase “tax efficiency” or a reference to a “tax-sensitive” way of investing. What does that really mean?

The after-tax return vs. the pre-tax return. Everyone wants their investment portfolio to perform well. But it is your after-tax return that really matters. If your portfolio earns you double-digit returns, those returns really aren’t so great if you end up losing 20% or 30% of them to taxes. In periods when the return on your investments is low, tax efficiency takes on even greater importance.

Tax-sensitive tactics. Some methods have emerged that are designed to improve after-tax returns. Money managers commonly consider these strategies when determining whether assets in an investor’s account should be bought or sold.

Holding onto assets. One possible method for realizing greater tax efficiency is simply to minimize buying and selling to reduce capital gains taxes. The idea is to pursue long-term gains, instead of seeking short-term gains through a series of steady transactions.

Tax-loss harvesting. This means selling certain securities at a loss to counterbalance capital gains. In this scenario, the capital losses you incur are applied against your capital gains to lower your personal tax liability. Basically, you’re making lemonade out of the lemons in your portfolio.

Assigning investments selectively to tax-deferred and taxable accounts. Here’s a rather basic tactic intended to work over the long run: tax-efficient investments are placed in taxable accounts, and less tax-efficient investments are held in tax-advantaged accounts. Of course, if you have 100% of your investment money in tax-deferred accounts such as 401(k)s or IRAs, then this isn’t a consideration.

How tax-efficient is your portfolio? It’s an excellent question, one you should consider. But this brief article shouldn’t be interpreted as tax or investment advice. If you’d like to find out more about tax-sensitive ways to invest, be sure to talk with a qualified financial advisor who can help you explore your options today. What you learn could be eye-opening.

These are the views of Peter Montoya, Inc., and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.