Could recent economic data be showing that subprime auto loans may be the next danger zone in the economy?
I have noticed that auto loans have been getting a lot of attention lately. In a recent issue of Barron’s, two unrelated articles discussed auto loans as a potential source of worry for the economy and regulators.
Since the financial crisis, auto loans have been one of the major sources of credit. Indeed, the volume of auto loans grew steadily, until just recently.
One concern is that the standards used to make the loans were gradually relaxed in recent years. The practices helped to cause consistently strong auto sales since the financial crisis ended but also could have added credit risk.
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Estate taxes affect fewer and fewer people, so today the bigger threat that aims to separate your wealth from your loved ones and delay or block the transfer to them, is probate.
Regardless of the value of your estate, you need to spend time considering whether you want the decision over the disposition of your wealth to be decided by a court.
The probate estate is different from the federal taxable estate. And the differences between the two are important.
The federal estate tax is the way the Internal Revenue Service determines the value of the assets you owned and the amount of tax, if any, due on them.
Probate is a State process. It is used to clear the legal title of the assets you owned, ensure that your debts are paid and transfer the remaining assets to either your designated beneficiaries or to the beneficiaries set by State law when you don’t have a will.
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One of the most frequently asked questions by investors these days seems to be: how do I adjust my portfolio for the new administration in Washington?
We’re in a period of what I think is unusual uncertainty in the markets. Before considering any potential change in policies, uncertainty already was very high.
As you know, we’re still dealing with the change in the long-term credit and debt cycle. Debt increased steadily from about the end of World War II until 2007. Debt growth helped increase economic growth above what it would have been.
In 2007, however, we reached a point where the debt levels were unsustainable. That led to the financial crisis. We’re still in a transition period in which debt is slowly retreating to levels that are sustainable over the long-term. The debt-reduction causes lower levels of economic growth. This transition period is when we’re also at risk of policy mistakes causing deflation and negative economic growth.
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As 2017 began, you may have reflected, as I did, about bad habits to break by making New Year’s resolutions.
Those habits to shake often involve unhealthful or unwise practices such as drinking to excess, smoking, wasting time, being mean to children and animals, etc. We strive to adopt good new habits, such as eating better, exercising more, being nicer to everyone, reading the classics and all kinds of other worthy goals.
But there is no guarantee we will live up to our ambitious aspirations. It may not be very long before we slip into the old practices we so wanted to stop.
Other than making resolutions, many people begin the year setting expectations for the next 12 months. In the financial circles, people tend to set expectations for themselves, the economy and the markets. If you like to make forecasts, or want to assess the forecasts of other prognosticators, here are some guidelines to consider.
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Thanksgiving this year gave my family and me many blessings to count, even though the past year also brought a number of surprises in the market.
My hope is that you will be thankful for the following tips to help you prepare for retirement and to shield you from unexpected market moves. A good plan for retirement can buffer your portfolio from unforeseen events that otherwise can shake up investors.
Remember how badly 2016 started for the economy and the markets. Economic and market reports from China worried investors, global stocks fell and interest rates dipped. Decisive moves by central bankers help to address those concerns.
U.S. stocks recovered so well that major indexes hit new highs more than a dozen times so far this year. Retirement Watch subscribers received recommendations from me about how to profit from this market climb, and you can do so too by clicking here to learn about how to join them.
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You put effort and resources into accumulating your IRA.
As a result, assets in those accounts are among your estate’s most valuable. In taking the time to include IRAs in your estate plan, you are seeking to pass along those assets to your loved ones at the lowest tax cost.
You also probably planned for your loved ones to benefit from a Stretch IRA to allow the wealth and tax-deferred compounding to last for a long time. Unfortunately, in too many families the beneficiaries mess up all that planning.
It doesn’t have to happen, but it frequently does. Here is a way to ensure your wealth accumulation and planning don’t go to waste. Take precautions to help your loved ones avoid common mistakes with inherited IRAs and tax-law traps.
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Most discussions of estate planning focus on discrete topics and strategies. Once in a while, especially early in the year, it is good idea to step back and look at the broader picture. There are concepts and strategies common to every estate plan and estate owner. Use these concepts and strategies whether you are drafting a new estate plan or reviewing an existing plan.
Change and flexibility. This wasn’t always a key principle, but now the estate tax law is uncertain. The current law expires after 2010 and will revert to the 2001 law if Congress does nothing. So far, Congress has been unable to agree on a plan of action. The result is that most estate owners do not want to be locked into an irrevocable long-term plan. Why give away assets or put them in an irrevocable trust if the estate tax might be repealed?
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