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Tax Free Gifts Can Go To Anyone

Clients often have questions about making gifts to relatives and friends.  We thought it would be helpful to provide some background on what is known as the "annual gift tax exclusion."  This is an IRS tax law that allows you to gift a certain amount tax free each year.

Under the annual exclusion, you can give as much as $14,000 this year to as many people as you like – without any tax considerations or burdensome paperwork.  The total amount to any one person can only be $14,000.

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Top Reasons Women Need to Plan for Long-Term Care

Long term care planning is important for everyone, but in certain ways it's even more critical for women.

Not only is the average life expectancy for women rising, but women typically live longer than men—four years on average. We are statistically more prone to disability or chronic illness. And that means we need to factor in higher health care costs and the possibility of assisted living and other senior care.  What's more, we are more likely to be the caregivers for others, or to live alone at some point, as a result of widowhood or divorce. All women need to plan carefully to ensure they'll have adequate resources to provide for their needs throughout their lives.

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DFA Board of Director Eugene Fama awarded the Nobel Prize in Economics

We are pleased to announce that last month, DFA (Dimensional Fund Advisors) board director Eugene Fama was awarded the Nobel Prize in Economics. Fama shared the prize with Robert J. Shiller and Lars Peter Hansen Eugene.

Eugene Fama, professor at the University of Chicago is known as the father of the "Efficient Markets Theory." Professor Fama's groundbreaking work on asset pricing and markets inspired the founding of Dimensional Fund Advisors (DFA). For investors, the main practical implication of the EMT is that attempting to "beat the market" without taking additional risk is a costly and futile endeavor and that you can't add value through individual security selection or "stock picking". Northstar's investment management is grounded in this philosophy and we remain convinced that it serves your best financial interests.

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U.S. to Be Top Oil Producer by 2015

The U.S. will surpass Russia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations, the International Energy Agency said.

Crude prices will advance to $128 a barrel by 2035 with a 16 percent increase in consumption, supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil, the IEA said today in its annual World Energy Outlook. The role of the Organization of  [Read On...]

The U.S. will surpass Russia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations, the International Energy Agency said.

 

Crude prices will advance to $128 a barrel by 2035 with a 16 percent increase in consumption, supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil, the IEA said today in its annual World Energy Outlook. The role of the Organization of P [...]

 

 

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Is It Time To Sell Bonds?

If you follow the markets closely on a day-to-day basis, you've probably been a little unsettled lately.

Back in May, Federal Reserve chairman Ben Bernanke signaled that the bank may soon start to scale back its aggressive program of buying bonds. Because the Fed's so-called "quantitative easing" has been credited with keeping borrowing costs down and aiding the economic recovery, the markets reacted with fear. Investors retreated from stocks, and they sold off bonds, causing an increase in bond yields. Certain commodities and currencies declined as well, in additional evidence of investor fears.

This week, markets are down reflecting investor fears that Bernanke will snatch away the "punch bowl" come the Fed's policy meeting this mid-September. Many fear this could lead to rising interest rates and are questioning allocations to fixed income.

In the short term, making decisions based on what you think lies ahead makes little sense. After all, the typical individual investor doesn't have the savvy to predict the course of bond yields, commodity prices or global monetary policy.

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I Wish I Knew

 2011 kristina george

Six years removed from my divorce has allowed me to gather some perspective on a transition that lasted a lot longer than I wanted it to.

During the unraveling of my marriage and the dividing  up of furniture and bank accounts, I remember feeling like it would never be over.  Like many in the midst of a major life transition, I wanted to move from the end of my marriage to my new normal - whatever that was to become, without spending time in the unsettling, uncomfortable passage stage in between.  Everything was so uncertain including; where I was going to live, how I was going to support my two children and what the future held for us.

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Where Widows Go

Most widows switch advisors when their spouses die-but that has more to do with the advisors than with the widows.

My friend's aunt was recently widowed.  The aunt wanted a new financial advisor because she didn't have a relationship with the one chosen by her late husband.  She didn't know how to find an advisor and this friend recommended someone he thought would be perfect. To be helpful, he went along to the initial meeting for support.

The meeting didn't go well, since this advisor spent time telling this new widow how he invested only in exchange-traded funds (ETFs) and why his portfolio theory was superior to that of his peers. The recently widowed women walked out not because she didn't understand the investments but because she wanted to sit down with someone who would spend time listening to her. This advisor had no idea who she was or what mattered to her.

This was an eye-opening experience for my friend. He assumed that any smart and experienced advisor would know how to help his aunt through her transition.  But this advisor didn't and he is not alone.  In fact, recent research tells us that 70% of widows seek out new financial advisors after their husbands' death.

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A Deeper Kind of Financial Planning

Suppose you suddenly found out that you only have 24 hours to live.

What are the things you'd regret not getting a chance to do? Which experiences, relationships or opportunities would you miss? Which dreams would you regret not having the chance to achieve?

These might seem like strange questions for a financial advisor to ask—after all, we're supposed to help our clients with money, right? It's true that at Northstar, we take financial planning and investing very seriously. But these sorts of profound "what if" questions can help open a window into our clients' deepest wishes, values and goals. And that can provide the basis for creating more-meaningful financial plans.

I learned this lesson in 2005, when I was trained as a Registered Life Planner by George Kinder, a pioneer who is helping to change the way we think about money and goals. The traditional approach to financial advice is mainly technical—it deals with maximizing investment returns, for example, or paying for specific goals such as retirement.

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Getting Engaged in Investing

Women have broken down plenty of barriers over the years, in everything from the professional world to the political arena.

But there's one line that many women are still reluctant to cross: Becoming investors. Women's lack of engagement in investing really came through at Northstar's Successful Investing for Women workshop last month.  Please join us in our next workshop "Money Fears and What to do About Them" on Wednesday, May 15.

Participants shared with us that in many cases, investing had been the province of their husbands. Not surprisingly, these women said they lacked a clear understanding of their financial picture—where all of their investments are, how they are invested, even how much they are worth.

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Dimensional versus Vanguard ... Again

This past weekend, The New York Times published an article, "Challenging Management (but Not the Market)." In addition to comparing proxy voting records (a subject we won't address here), it revisits a familiar debate. Which should a passive investor prefer: Dimensional Fund Advisors evidence-based funds or Vanguard index-based funds?

The "Dimensional vs. Vanguard" Debate

In comparing the two fund managers, the author concludes that Vanguard’s low-cost funds are even lower-cost than Dimensional’s. He also states: “Investors in Vanguard stock mutual funds have had higher actual returns than investors in Dimensional funds. On an asset-weighted basis in the 10 years through Jan. 31, the return received by Vanguard investors was 6.614 percent, annualized, compared with 5.05 percent for Dimensional funds, Morningstar calculates.”

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The Big Retirement Question: What Now?

Retirement can be a strange thing. Many of us eagerly look forward to it, expecting that it will be a time of freedom and new possibilities. But many recently retired women find themselves yearning, on some level, for what they've left behind.

Now, they may not want all their old responsibilities back, mind you. But in stepping away from a career, many women find that they've lost more than a job.They've lost a community of colleagues. They've left the structure of the workday, work week, work year. More broadly, they've left behind an identity—the professional role that they had filled for years. And they typically have left behind an income, which cannot help but trigger conscious or unconscious financial anxiety.

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