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Preserving the Family Vacation:
Tips to Keep Spending in Check
By the Financial Planning Association
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As the economy struggles to climb out of recession, many families might be thinking twice about what they spend on the annual summer vacation. But there are ways to preserve the tradition by being smart about spending. Here are some ideas:
Get on the mailing list:
For any possible destination you can think of, go to their websites early and sign up for their mailing list(s). You may even consider creating an alternate email address for mailing list purposes, just to weed out possible spam from your primary email address. You might get plenty of endless chatter from the hotels, amusement parks and other destinations you’re interested in, but you might also find coupons to those locations and other linked businesses that could save you money. Look through travel magazines to see whether signing up might deliver similar money-saving offers. Most important, go to the tourism Web sites of the states you’re planning to visit to take advantage of coupons and specials – you might also find events and activities to attend that aren’t publicized anywhere else.
Weigh the value of driving vs. flying:
Even though energy prices might not approach the stratospheric levels of 2008 this summer, you might find that driving vacations aren’t necessarily the cheapest alternative. If you haven’t measured the gas mileage lately on your car, do so after your next fill-up and see what it would really cost you to drive to your desired destination – and don’t forget wear and tear on the car (roughly 10-20 cents/mile), meals and hotels on the road. If you plan significantly ahead of time, traveling by air might not only get you there faster – but cheaper. At the same time, if you fly and need a rental car, don’t forget to figure in that cost. Also, go to websites of the airlines you fly most and sign up to get advance notice of cheap fares.
Make your reservations online:
Tourism businesses save money when you reserve online – that’s one less human they have to pay to handle your call. So chances are good you might get a discount for using that option. If you’re not a regular user of the internet, you should know that airlines and hotels particularly have migrated more of their deals for rooms and meals to their websites because visitors can complete the whole reservation process themselves. That saves airlines, hotels and rental car companies considerable labor cost.
Go for the package deal:
Online travel sites make it easy to combine hotel, airfare and rental car at a cheaper rate. And remember the days and times that are typically cheaper to fly – Tuesdays, Wednesdays and Saturdays - if you’re willing to fly early in the morning or late in the evening.
Know when to use travel agents:
A good travel agent can be a great money saver, particularly for lengthy or complex trips. It’s O.K. to compare prices yourself, but consult a travel agent if you are going to remote destinations – they’ll know the territory, and if you have to make changes, they might be able to help you do so without paying a lot of extra money. Don’t be afraid to consult the company travel agent since their corporate status may make them a destination for specific deals that non-affiliated travelers wouldn’t get.
If you’re going abroad:
Do a review of currency rates before you go to see how much money you’ll really have to spend on the trip. Also, see if there are specific ways you can save money for dining, lodging and shopping in that country. Remember to check with your credit card company before you go – some might charge high currency conversion fees, and you can either negotiate them downward or apply for a card with a lower conversion rate that you’ll use only for this kind of travel.
Make sure phoning home is affordable:
Make sure you can use your cell phone affordably wherever you go. Check with your wireless provider to make sure your destination has adequate network strength for your phone, and particularly check what it will cost to call home or other destinations abroad if you’re overseas. There’s nothing like the shock of a wireless bill with unchecked charges. You might also check with your arriving airport to see if local stores rent cell phones or disposable cell phones at a significant savings.
Check on car insurance:
We’ve all heard how buying rental car insurance is a bad deal, but not so fast. For domestic trips, double check whether your own car insurance policy is likely to pick up the bill if you crash your rental car. For overseas trips, check with rental agencies as well as your credit card company to see what insurance options you have. Don’t think only in terms of accidents. Think about blown transmissions in small towns with only one mechanic who doesn’t speak English. Also, if you’re driving to Canada or Latin America in your own car, be very sure you have adequate coverage required in every country. You might have to buy supplemental coverage.
Consider travel insurance:
There is insurance coverage available for travelers who face sudden cancellations as well as medical needs. Trip cancellation can reimburse you for non-refundable costs in the event of things like an illness for you or a family member that causes you to cancel your trip. Look into what your current health insurance covers at your destination, so that you can understand your risk exposure and weigh it against the cost of supplemental insurance. It’s important to realize that health insurance issues crop up on domestic trips as well as those overseas – for instance, your health insurer may not cover claims in other parts of the country. Always check. Also, if you’re on a business trip, make sure your company health plan will cover you in an emergency, and if your work takes you to a dangerous country, ask if your employer carries kidnapping and ransom insurance. Don’t laugh - according to the Insurance Information Institute, kidnapping is on the rise internationally.
Prevent theft at home and abroad:
Photocopy your driver’s license and passports and keep the originals with your valuables in the hotel safe. Also, don’t forget to hold your mail and pay all your bills before leaving town so identity thieves aren’t attracted.
This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided and revised by Capital Advantage, Inc., a local member of the FPA. |
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Why Financial Planning
Matters in the Toughest of Times
By the Financial Planning Association
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Why enlist the services of a financial planner when your holdings are down and you’re facing a host of financial problems? Because as dark as times may seem, you’re actually giving yourself a fresh start in building a stronger financial future...
Indeed, many people don’t make that choice. A recent Financial Planning Association survey showed that many people try to go it alone when it comes to financial planning—and they suffer considerably worse performance in their investment and savings goals over time than those who do. The cost of a financial planner may not be prohibitive due to factors we’ll mention below and young people have a particular advantage when planning because they have time on their side.
Here are some things to know about financial planning process:
It’s a collaboration and a learning experience:
A financial planner is not a substitute for your own final decision-making. Planners serve as guides, editors and strategists. They should begin by asking questions of you—plenty of them. Their purpose is to find out all the goals you have right now – and maybe determine a few you haven’t thought of. Some of these dreams might include buying a home or business for yourself, saving for college education, taking a dream vacation, reducing taxes and retiring comfortably. Financial planning is the process of wisely managing your finances so that you can achieve your dreams and goals—while at the same time helping you negotiate the financial barriers that inevitably arise in every stage of life.
Planners often specialize:
Planners, like many professionals, tend to specialize in certain areas of interest, and they are required to receive continuing education in more than a dozen areas of expertise. Planning professionals earn continuing education credits in asset management, employee benefits, commercial real estate, insurance, investment management, estate management, retirement planning, 401(k) administration and health topics, among others.
Ask about tackling specific problems:
If your problem is credit card debt or difficulty refinancing, a planner may have specific contacts or the ability to make certain recommendations on how to get yourself in a better position to plan for the future.
They charge based on specific services:
Planners charge for their services in a variety of ways – always ask up front what they charge and how they expect to be paid. Some ‘fee only’ planners charge for a consultation, plan development or investment management, and they may charge on an hourly or project basis depending on the client’s needs or as a percentage of assets under management. Some charge commissions for the sale of financial products they are licensed to sell, and others have hybrid structures mixing fees and commissions. Discuss advisory services first before committing to buying any particular products.
They can talk about your personal and work investments:
One of the best advantages to working with a financial planner is the chance to have a second set of eyes look at your wages, investments and benefits at work vs. what you’ll be investing on your own outside work-based retirement and other savings plans. Be prepared to bring all of your finances into the discussion.
Please call our office at (925) 299-1500 or toll free (888) 299-1500 if you are interested in scheduling a review of your investment strategy and/or financial plan. If you are not a client of Capital Advantage, Inc., we offer free no obligation consultations.
This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided and revised by Capital Advantage, Inc., a local member of the FPA.
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Capital Advantage, Inc. May 2009 Market Update
By Capital Advantage, Inc.
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Markets in April continued their strong snap-back rally based upon hope and a lack of overwhelming negative news, instead of more concrete signs such as improving fundamental and technical data. All major indices finished ahead in April, marking the second consecutive month of positive equity returns: The Dow finished up 7.4%, while the broader based S&P 500 was up 9.4% and tech heavy NASDAQ led the way, finishing up 12.4%. Meanwhile, foreign markets continued their strong rebound: The MSCI-EAFE returned 12.8% and emerging markets returned 16.28%. Could history provide any guidance as to where the current market may be headed?
Despite the seemingly positive market turn, this market behavior bears a striking resemblance to the last major market dislocation of 1929. The 1929 collapse began with a troubled financial sector that eventually spilled into the entire market, igniting a secular bear market that lasted until 1949. As we witness equities jump up 35% in less than two months time, we can not help but ask ourselves if history is repeating itself. Since we are currently at a comparable point in time, let us take a look at the years between 1929 and 1932, when multiple strong rallies all proved to be false alarms. Five rallies during these years exceeded 15% (including one reaching 48%), and each time, investors thought a new bull market was underway. However, in the end, the Dow fell from 300 to 60 for a total market loss of 80%. While we certainly do not expect this scenario to repeat today, it does inspire caution, so remaining in the capital preservation camp still makes sense. Remember, we are not entirely out of equities; we have just limited our exposure.
Remaining disciplined and contrarian is difficult in times such as this. However, as a fiduciary, we make asset preservation our primary concern. We monitor several investment triggers to help signal a market entry point with more favorable long term prospects. Let us examine just a few of the many triggers Capital Advantage, Inc. tracks to provide a strong fundamental and technical (as opposed to emotional) case to increase our equity allocation. Primary triggers include:
Fundamental:
1) Housing Prices must stabilize before a bottom can be assumed; we have yet to reach this point.
2) Unemployment numbers must stabilize; the latest figures are not encouraging.
3) U.S. Dollar Strength has remained reasonably strong; in time, we expect this to weaken due to hefty government deficit spending.
4) S&P 500 Valuations, best shown by the Schiller 10-Year Normalized Price-to-Earnings Ratio (price divided by earnings), are high at 15.69; historical research has evidenced that new bull markets begin when a P.E. ratio attains single digits.
5) Market Psychology, evidenced by the conference board’s monthly consumer sentiment indicator, has been extremely negative; investors must feel confident they will earn money before they are willing to invest.
6) Volatility, or price movement, tracked by the VIX, remains below 30 in normal market conditions but reached an all time high (over 80) in November 2008; this measure has yet to normalize back down.
7) Commodity Prices, the cost of goods used in production had fallen dramatically; prices have shown positive movement upward over the last few months.
Technical:
8) The 50/200 Crossover tracks the S&P 500 50-day moving average against the 200-day moving average; bull markets generally commence when the 200-day crosses the 50-day, and currently, these two have quite a spread to tighten.
9) The Market Timing Indicator (MTI) tracks stock supply and demand (buyers vs. sellers), as well as stock market breadth (number of stocks moving up vs. down); this indicator currently signals to sell.
10) Gut Feeling, combined with experience, knowledge, and education, has us more optimistic now than at the start of 2009.
Despite the strong cyclical bull rally now continuing into its third month, we remain steadfast in the belief that the problems that precipitated the strongest and deepest market correction since the Great Depression have yet to be remedied. The deleveraging of 25 years of debt accumulation continues, and remembering that it was excessive borrowing that created the market problems initially, we ask ourselves how additional debt could provide a solution. Nonetheless, with unprecedented government intervention in credit markets (and even corporate ownership), we must admit we are sailing in uncharted waters. While the stock market appears healthier now then in October of last year, we still believe another market downturn is probable between now and the third quarter.
Capital Advantage, Inc. remains defensive, dutifully following our fixed income strategy. We continue to seek opportunities and our entry point for equity investment, where our focus will most likely be on dividend paying stock funds and possibly Asia – one of the only regions left in which profound debt and deleveraging are not problematic. Meanwhile, our bond investments continue to yield 5%+, with additional capital appreciation. As underlying causes of the synchronized global market decline begin to show sustainable improvement, we will place more of your money back into equity positions. In the meantime, Capital Advantage, Inc. is here to answer your questions, address your concerns, and explain in further detail our investment strategy and current plan of action. As always, we thank you for your continued trust and confidence. |
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Contact Us
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John Hayman, CFP
Founder & President
Email John |
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Donna Zinman
Senior Financial Advisor
Email Donna |
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Gary Clarke
Senior Financial Advisor
Email Gary |
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Rick McNamara, CFMC
Director of Investments
Email Rick |
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Dawnalizabeth Henke
Chief Compliance Officer
Email Dawnalizabeth |
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Catherine Norris
Manager of Client Service
Email Catherine |
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Aimee Schwartze
Director of Client Service
Email Aimee |
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Amy Montano
Office Manager
Email Amy (AJ) |
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