The Fiscal Cliff

by Marylove Moy 28. December 2012

Fiscal Cliff

I wish I had a dollar for every time I have heard the term "fiscal cliff" in the past six weeks - my Christmas bills would be paid off in full.

Evidently 25% of the voting population understands the term. In short, the FC refers to expiration of the Bush (W) tax cuts on December 31 in addition to "sequestration" which means radical cuts across the board in government spending.

So...what does that mean to you and me? Well, as a few examples, workers will see an immediate 2 ½% cut in their pay due to the lapsing of the payroll tax cuts. Annually, many middle income families will see their annual income taxes rise by roughly $2500. Many individuals on unemployment will lose their benefits. Many governmental programs that aide the middle class will be slashed: student loan grants, physician payments from Medicare could drop by up to 30%, governmental agencies budgets will be cut by approximately 7%. These are just to name a few.

Most people think the market will take a massive hit.

The biggest issue is that our economy—which is starting to strengthen – will most likely slip back in to recession. When businesses see uncertainty of this size they don’t hire, they don’t make capital purchases or expand. Individuals cut back on discretionary spending. Markets falter.

It ain't over 'til it's over; our friends in Washington have three days to prevent this fiasco. My guess? They will pass something in the 11th hour. Stay tuned.

Marylove Moy is Program Director of 1st Mariner Financial Services. Her opinions do not necessarily reflect the opinions and beliefs of 1st Mariner Bank.

To Buy Facebook or Not to Buy Facebook? That is the question...

by Marylove Moy 18. May 2012

Facebook IconHistory was made today with the roughly $16 billion dollar IPO of Facebook (FB).

Is it another Apple? Microsoft? Google? Absolutely…..

So, should I buy it today?

I think only the gutsiest of individuals should buy it today, just because there is so much hype in the stock that it may well skyrocket initially and then trend down over the coming weeks.  I may be very well wrong (I frequently am). However brilliant Zuckerberg is, he is now at the helm of a publicly traded company; he is going to face shareholders and analysts who will question and criticize his decisions. They can be a tough bunch. Zuckerberg is no longer operating in a black box.

A safer bet would be to buy either a mutual fund, which focuses on social networking, or a broader based technology fund that in all likelihood will buy it. Mutual funds offer the diversification that can absorb more efficiently erratic stock price swings than holding a stock outright.

Remember Enron? MCI Communications? Woe betide to the poor individual who held these stocks outright; their personal wealth would have been more protected if they had held these shares indirectly in a mutual fund.

Don’t get me wrong…if anyone can chart the future and shape it, I believe it is Mark Zuckerberg and FB; I just think he will need some time first.

Considering a Fixed Annuity for your maturing Certificate of Deposit? Not sure how they stack up against one another?

by Marylove Moy 26. April 2011

Recently, we sent out a Fixed Annuity (FA) mailer to our 18-month Certificate of Deposit (CD) customers. We did this in hopes of offering our customers an alternative option in the event that their Certificate of Deposit is nearing maturity.  With that being said, we thought there might be other folks out there (including those who received the mailer) that could be asking themselves, "What's the difference and more importantly, which one is the most beneficial for me?"

To answer this question, we went to our very own Marylove Moy, Program Director of 1st Mariner Financial Services, to see if she could shed some light on that matter. 

The Experienced Financial Advisor's Opinion.

Both (CDs) and (FAs) are considered savings vehicles, normally used to accumulate wealth: but there are key differences between the two options. 

Safety of Principal

Both are considered appropriate choices for the conservative investor. CDs are usually issued by banks and therefore offer the FDIC backing up to $250,000. Annuities, on the other hand, are issued by insurance companies; they are backed by the financial strength of the issuing company (regardless of dollar amount). Ratings agencies, such as S&P and Moody’s, provide critical information in assessing a company’s financial situation. 

Interest Rate

As a rule, CDs guarantee a rate of return for a period of time; many factors determine this rate. Fixed annuities can offer either a fixed rate for a predetermined contract term or a rate that adjusts periodically during the term. Annuities – unlike cds – offer a minimum floor interest rate that is guaranteed irrespective of market conditions. 

Tax Considerations

For those individuals concerned with minimizing taxes, a fixed annuity is an attractive option. Interest on a FA accrues on a tax-deferred basis; an investor is taxed on this interest only to the extent that it is withdrawn from the contract. This fact can – in the appropriate circumstance – reduce the taxes paid on an individual’s Social Security benefits.  On the other hand, the investor faces a 10% penalty on the interest withdrawn if he/she is under the age of 59 ½.  If you have tax related questions, please consult your tax advisor. 

Liquidity/Investment-term horizon

As a rule, a CD is the preferred option for those investors with a short term investment time frame. If an investor redeems a CD early, he/she is normally subject to penalties.

Fixed annuities usually offer the investor access to interest earned on the contract or a certain percentage of the contract value. It is critical for the investor to understand that interest withdrawn from an annuity contract is taxable at this point. Additionally, should the investor surrender the contract before its maturity date, surrender charges can apply (depending on the fixed annuity type, these surrender charges may or may not invade the contract principal)

Estate Considerations

Proceeds from a fixed annuity bypass the probate process; that is to say they go directly to the beneficiary once the contract is surrendered with proper documentation. The proceeds are not delayed by the court processing of the estate.


  

 

 

Program Director
1st Mariner Financial Services 

 

Still confused?

No worries.  Marylove and her team of Financial Advisors would be happy to help answer any questions or concerns that you still have.  Feel free to contact our Financial Services Department or call us at 410-558-4200. 

Please contact your financial advisor. Securities offered by 1st Mariner Financial Services, and Investment Advisors are registered with UVEST Financial Services, member FINRA. UVEST is independent of any financial institution. Securities (1) are not deposits of this institution; (2) are not insured or guaranteed by the FDIC or any other governmental agency; (3) are not obligations of, or guaranteed by, any financial institution; and (4) involve investment risks, including the potential for fluctations in investment return and the potential loss of principal.

 



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