Stewart Welch Videos


Monday, December 28, 2009

Stewart Welch - What's the Outlook for 2010 Finances?

“What's the 2010 Economic and Market Outlook?”
2008 and 2009 were tumultuous years to say the least. We experienced an economic and stock market collapse second only to the Great Depression followed by a breath-taking stock market recovery to close out this year. So what should you expect for 2010 and how should you position your investments?

The Economy. It’s important for you to separate the economy from the stock market. You need look no further than last year to clearly see the two do not move in lock-step. Throughout most of 2009, the economy continued to worsen but at a slower and slower pace while the stock market soared over 60% from the March 9th lows.

There are many signs that the economy is continuing to improve amid historical low interest rates that have been orchestrated by Federal Reserve Chairman Ben Bernanke. Expect interest rates to remain at current levels at least through the first half of 2010. As inflation becomes more evident next year, the Federal Reserve is likely to reverse its course on interest rates and begin raising rates in the third or fourth quarter. The Obama Administration and Congress finally understand that priority number one is creating jobs so look for unemployment to fall. Unfortunately, unemployment will remain in high single digits suggesting we will see a mostly jobless recovery next year.

The Stock Market. Historically, the stock market leads the economy out of a recession and this recession appears to be no exception. Since the March lows, the stock market has risen over sixty percent and may be due for a breather before building a new base and rising further. On the bright side, corporations have diligently trimmed the fat from their organizations and are poised to be highly profitable as the economy reignites. Further good news is that there is approximately $3.2 trillion sitting in money market accounts. This is ‘scared’ money that is currently earning less than 1% but is anxious to move into the stock market once confidence is regained. In summary, we are likely to see one or more downward spikes before the market rebounds to what could easily be double-digit returns by year end.

What to do now. It’s impossible to know when a market correction will occur. If you have money on the sidelines, consider averaging those funds into the market over the next twelve months. Domestically, I like blue chip dividend-paying stocks. Make sure you own a minimum of twenty companies in at least five different sectors. Companies like AT&T, Southern Company, Kimberly Clark and Consolidated Edison are good prospects and pay dividends yielding three to four times the interest paid on current money market accounts so you’re getting paid handsomely while you wait for stock performance. International stocks should also do well. You’ll want to own a large basket of stocks so a good choice is an Exchange Traded Fund such as EFA. For emerging market stocks one of our favorites is EEM. Ultimately, you’ll want to plan on a holding period of at least three years. As always, seek guidance from a professional advisor.

Monday, December 21, 2009

Stewart Welch - Creating Accountability for Success

How can I Achieve my Goals?

It’s that time of year when people all across the globe reflect on what changes they are going to commit to for improving their life in the coming year. While people set their goals with the best of intentions, most fail to stick to the promises they make themselves because they are not good goal-setters. Use these 5 steps to create massive achievement:

Create clear, written, measurable goals. Many people believe that having a goal clear in their mind is enough. It’s not. This is what I call a ‘dream’. When you take a mental picture of what you want and articulate it in the form of writing, something magical happens and the brain automatically begins a process of solving the problem of how to get where you want to go as compared to where you are. The written word helps to create clarity. You must also include measurability. Measurability is the ability for you and someone else to know if you accomplished your goal.
Create a giant ‘Why’ for each goal. Setting goals creates a certain amount of excitement. But that excitement begins to wane as the hard work of implementation begins…unless you have a really big ‘Why?’ As you are writing your goal, include a section on why achievement is imperative for you.
Review your goals daily. Writing a goal and never reviewing it rarely results in high achievement. It only takes a couple of minutes each day to review your goals. This simple habit ‘re-boots’ your brain to maintain its focus. As part of this process, make sure that your daily activities are consistent with your goals.
Track your progress. Each goal should be broken down into ‘mini-goals’ or ‘actions’ that allow you to measure your progress towards the big goal. The best results tend to come from weekly measurements. For example, for each goal set a mini-goal for the week; schedule time directly into your calendar for completing the task related to that goal; then, at the end of the week, determine your progress. Create mini-rewards for accomplishing the weekly activities you set for yourself.
Create accountability. To achieve massive results, you are going to need an accountability partner. It’s one thing to fail when nobody (but you) knows. The more people that know about your goals, the more leverage you will create for yourself. Consider creating a Success Accountability Group of three to five people who are all committed to massive achievement and are willing to support each other. This can be as easy as a group email once a week. Step one: share your goals with your accountability partners as well as the ‘Why’ you must accomplish each goal. Step two: list the activities you intend to accomplish during the coming week. Step three: report whether you completed those activities and set your activity goals for the upcoming week. If an accountability partner begins to falter, you hold him or her accountable. Support him or her in re-committing to his or her goal.

You can achieve anything you choose if you are motivated enough. Think big; write it down; create a ‘Why’ that is bigger than you; review goals daily; track your progress; get support from others.

If you’d like a goal planning worksheet, email me at

Monday, December 14, 2009

There's Still Time to Cut Your 2009 Tax Bill

As the clock ticks down on calendar year 2009, don’t forget to use these last minute tips to reduce your income taxes:

Review realized and unrealized gains and losses. From the stock market peak in 2007 to its bottom on March 9, 2009, the market lost more than fifty percent. However, since the March 9 bottom the stock market is up over sixty percent. With this wide range of volatility, now is a great time to review your investment accounts. Figure out your net ‘realized’ gains or losses based on sales you’ve already made this year. If the net result is a loss, you can take up to a $3,000 deduction against ordinary income. Any excess losses can be carried forward and used in future tax years. If your losses are less than $3,000, consider selling other securities with losses to maximize the $3,000 deduction. If the net result is a gain, consider selling enough shares with losses to offset your gains, particularly if your gains are short-term which will be taxed as ordinary income versus long-term capital gains rates (15% federal).
Make your January home mortgage payment by year-end. By paying your January mortgage payment in late December, you’ll get to deduct an ‘extra’ months worth of interest this year.
Claim a tax deduction for a new car purchase. While the Cash for Clunkers deals are no longer available, the federal stimulus package offers tax incentives for the purchase of a new vehicle bought between February 17 and December 31, 2009. Under this temporary law, you are allowed to deduct the state and local sales and excise taxes on the purchase of new cars, light trucks, motorcycles and motor homes. The amount of the deduction is limited to the amount of taxes paid on the first $49,500 of the purchase price and the deduction is phased out for taxpayers filing a joint tax return whose modified adjusted gross income (MAGI) is $250,000-$260,000 and single filers whose MAGI is $125,000-$135,000.
Don’t panic over Required Minimum Distributions from your IRA. Normally, if you are age 70½ or older, you are required to take a minimum distribution from your IRA account each year. For calendar year 2009, the government has waived this requirement. Use this as an opportunity to defer the income taxes on retirement account distributions for an additional year.
Give to charities. Don’t forget that gifts of cash, securities, clothing and other personal items to charities are deductible. With an estimated fifty million people either out of work or facing severe financial stress, it’s more important than in any time in recent history that we support the charities that support those in need.
Contribute to your retirement account. If your company offers a 401k plan, you still have time to up your contribution and receive a tax deduction this year. Contact your Human Resources Department for help. You’ll have until April 15, 2010 to make a tax deductible contribution to your IRA account.

Monday, December 7, 2009

Free Money for Home Buyers

Mortgage rates are near all time lows and Congress has extended tax credits for first-time home buyers that was set to expire last week. In addition, they expanded the law to provide tax credits for existing homeowners who purchase a new home. It all adds up to an excellent opportunity to buy a home now. Here are all the details:

First-time home buyers. If you have not owned a home for the past three years, you qualify as a first-time home buyer under this federal program. Buy a home now and you can receive a tax credit of ten percent of the purchase price up to $8,000. Unlike a tax deduction, a tax credit is a dollar-for-dollar offset against federal taxes owed. For first-time home buyers, homes bought between January 1, 2009 and May 1, 2010 qualify for the tax credit.

Long-term homeowners. To qualify as a long-term homeowner, you must have owned your current home for a minimum of five years. The tax credit for you is equal to ten percent of the home’s purchase price up to a maximum of $6,500 for homes purchased after November 6, 2009.

General rules. The home you buy must be your primary residence, so a vacation home at the beach won’t qualify. Also, under the extended and expanded law, you don’t qualify if you purchase your home from a family member. You are likewise ineligible if you make too much money. For single tax filers, the tax credit is phased out between $125,000 to $145,000 adjusted gross income. For joint tax filers, the phase out is between $225,000 and $245,000. Homes purchased for more than $800,000 do not qualify for the tax credit. “If you sell your new home or fail to occupy it as your primary residence within three years of the purchase date, you’ll owe the federal government back all of the tax credit you received,” according to Scott McFadden, a Certified Mortgage Planner with MortgageBanc, LLC in Birmingham, AL.

It’s also important to note that you won’t be able to use the tax credit as part of your down payment. You’ll receive the tax credit at the time you file your tax return, which for most people will be April 15, 2010. If the tax credit exceeds your federal income tax, you’ll receive the excess as a tax refund.

Combine these tax credits with low mortgage rates and a very favorable home buyers market and now is a great time to buy a home. Both 15-year and 30-year mortgage interest rates are under five percent. And while the housing market is showing signs of recovery, home prices are still very attractive. This is a great opportunity for parents and grandparents to get involved in helping adult children buy their first home by assisting with the down payment. You might even help them become a real estate investor.

Consider this strategy. Sometime after the required three-year primary residence period, your child could turn the home into a rental property. The result? Your child bought the home at a time when home prices were depressed with the help of the government at a low interest rate and he or she is now receiving rent and tax benefits of owning rental property.