Stock Market Commentary
For the week of February 2, 2009
The Market
Major indexes declined last week amid corporate earnings disappointments and continued weak economic data. Personal income dropped 0.2 percent in December, less than the expected 0.4 percent decline. Personal spending fell 1 percent versus an expected 0.9 percent drop. The Senate begins debate this week on the proposed stimulus package. For the week, the Dow lost 0.95 percent to close at 8,000.86. The S&P lost 0.71 percent to end the week at 825.88, and the NASDAQ fell 0.06 percent to finish the week at 1,476.42.
Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week” returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.
Still Saving – Despite the financial and economic turmoil of 2008, employees kept their faith in 401(k) plans, contributing slightly more in 2008 than in 2007 — $5,600 compared to $5,500, according to a Fidelity study of 11 million participants in its 17,095 corporate 401(k) plans. Participants took fewer loans last year than in 2007 – 9 percent versus 9.7 percent – and 96 percent continued contributing to their 401(k), even during the fourth quarter.
Homes Again – Existing home sales rose 6.5 percent in December from the previous month, according to the National Association of Realtors. December sales were down 3.5 percent from the previous year, and prices are down 15 percent in the past 12 months, which may be bringing bargain seekers back into the market.
Go Green – The Internal Revenue Service will process an estimated total of 240,132,700 tax returns for 2008. Of those, an estimated 141,495,000 will be filed on paper, while 98,636,800 will be filed electronically. The IRS projects that by 2014, nearly half of taxpayers will file electronically. The IRS recently announced that taxpayers with adjusted gross income (AGI) of $56,000 or less can file online for free. Visit www.irs.gov for information about filing your taxes online.
Bowl Deflation – The average price for a ticket to Sunday’s Super Bowl XLIII is $2,600, according to U.S. News & World Report, down 26 percent from $3,536 in 2008 and $4,004 in 2007.
WEEKLY FOCUS – Protect Your Income With Disability Insurance
You’ve insured your home and personal property, your vehicles and your life, but are you overlooking your most substantial asset – your ability to earn income?
Steve Strauss, author of The Small Business Bible, uses this example: If you are 40 years old and net $50,000 annually from your business, over the 25 years until retirement, you will earn $1.25 million – and that’s assuming your income does not grow. That’s an asset worth protecting.
Disability insurance protects your ability to earn income. But say “disability,” and many people visualize impairment from an accident. According to the American Council of Life Insurers, the majority of long-term disabilities are because of illnesses, such as cancer and heart disease. Each year, 12 percent of adult Americans suffer a long-term disability. For every seven employed Americans, one will have a period of disability five years or longer before age 65. A 35-year-old has a 50 percent chance of a disability lasting longer than three months before age 65.
Europeans and Australians may have the right idea in calling disability insurance “income insurance.” Your chances of becoming disabled are much higher than of dying – and if you become disabled, you continue to require living expenses like food, clothing and shelter, not to mention medical care – with no income to pay for them. According to the U.S. Department of Housing and Urban Development, 46 percent of home foreclosures occur because the homeowner has suffered a disability and can no longer make mortgage payments.
Choosing appropriate disability insurance takes careful consideration of not only your current situation but your future circumstances – and the worst-case circumstances at that. If you depend on your current income to live, you need to ensure it goes on flowing even if you can’t go on working. We can work with your insurance professional and help you determine what resources you may have in the event you can no longer earn a salary and ways you can protect yourself and your family from financial hardship. Call us any time for an appointment.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. The Money Alert does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to this web site or incorporated herein, and takes no responsibility. All such information is provided solely for convenience purposes only. The Money Alert is not affiliated with any of the firms or entities listed unless specifically stated. The Money Alert does not provide investment, tax or legal advice. Please consult the appropriate professional regarding your personal situation.
