Santa has put a large gift under the tree this year for taxpayers in the form of the Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act. Carefully sliding off the bi-partisan bow and tearing into this 30-pages of calculated compromise reveals a plethora of goodies including rate cut extensions for ordinary income, dividend, and capital gains taxes; depreciation revisions for business owners; and a much needed retooling of the 2010 estate tax sunset. Although many are referring to these bestowals as “permanent,” the bulk of them are only codified through 2012. Seems even $858B gifts don’t last forever.

For a comprehensive summary of the bill:  Click Here

With the recent tax cut extensions and payroll tax freezes, our national debt could easily increase by $1T over the next few years.  As troubling as that may sound in isolation, the even more dubious news is that the hole left by this “shadow spending” will almost certainly be filled with dollars slated for future Social Security benefits.

Just exactly what does this mean for the retirees of tomorrow?  For some insight on the potential impact of these tax cuts as well as how difficult it may be for the United States to digest the proverbial “pig in the python” that is the Baby Boom generation, read the following:

The 18-member, bi-partisan committee on deficit reduction:  The National Commission on Fiscal Responsibility and Reform, released its recommendations last week, aimed at reducing both the current deficit ($1.3T) and the national debt ($14T). Ominously entitled “The Moment of Truth,” the report included the following suggestions: Read the rest of this entry »

2010 marks a significant change in the rules for Roth IRA conversions, and with the 12/31 deadline rapidly approaching, a review of some of the key points is in order. Read the rest of this entry »

Insider Monkey posted an article this morning on containing a few shots at Bill Gross and Mohamed El-Erian’s widely-publicized theory of “New Normal.”  In short, the theory suggests that, given the above-mean returns of the 80’s and 90’s as well as the current fiscal state of the country, returns (particularly, in the US) are going to be lower than historical averages, e.g. 4-5%/yr going forward.

We mention this article, not because we disagree with the luminaries at PIMCO.  Actually, we continue to tilt client portfolios to emerging markets and alternatives based on a similar line of longer-term thinking.  We simply mention it, because it is an interesting example of how theories take on a life, and sometimes a history, of their own.

Home country bias is a term used to describe investment behavior whereby investors display a tendency to hold a large percentage of their assets in investments within their borders.  This bias may have a positive net effect during periods when their home country is growing faster than foreign competitors and/or their currency is appreciating relative to other currencies.  However, this bias may lead to missed opportunities if foreign competitors are gaining world market share due to faster economic growth and/or their currencies are appreciating versus the home currency. Read the rest of this entry »

Saving for higher education can be challenging enough.  This article explores some of the nuances and pros/cons of different savings vehicles.  It also references moving assets between taxable UTMA and tax-free 529 plans, while addressing both tax and financial aid considerations.  This is a good resource for anyone interested in planning for higher education.