Financial Fellow

Written by J.P. Wicklein

     In the spirit of Thanksgiving I thought it appropriate to make a list of financial things to be thankful for.  Although some of the items listed below are certainly negative they also present a silver lining. 

1.   The Bear Market:  Sure your portfolio may down over 40%…..but stocks are cheap!  Provided you are decades away from retirement your portfolio should have plenty of time to recover.  Meanwhile, if you were looking to move some money into stocks now may be a very good time.  Five years from now we could be looking back at today’s stock prices marveling at how cheap they were. 

2.   The Mortgage Interest Deduction:  It seems too good to be true.  The federal government will allow you to deduct the interest portion of your mortgage payment.  If you’re a single filer with $15,000 in mortgage interest the government will allow you to deduct an additional $9,550 (beyond the standard deduction of $5,450).  For someone squarely in the 25% tax bracket that amounts to saving almost $2,400 in one year.

3.   The Roth IRA:  Under current rules, the assets within a Roth IRA are never taxed (assuming the account is seasoned), you are never required to take distributions, and if need be contributions can be withdrawn without taxes or penalty at any time.  None of these benefits are offered with the Traditional IRA.  Let’s just hope Congress doesn’t spoil the party with adverse, new rules anytime in the future.

4.   Poor Car Sales:  Yes, the “Big 3” are on the verge of collapse and the economy could slide deeper into a recession if they fail.  On the bright side Toyota is offering a 0% financing on 12 different models.  When was the last time Toyota offered 0% financing on that many models?  Additionally, GM is offering aggressive pricing through their Red Tag Event on Chevy, Buick, Pontiac, GMC, Saturn, Saab, Cadillac, and HUMMER.

5.   The Compounding Power of Interest:  Put $25,000 into an investment that returns 7% a year and forget about it.  After 40 years it would have grown to $350,000!

6.   Cheaper Gas Prices:  Admittedly it feels like we’ve all been gouged at the pump for the past year.  That said, gas at less than $2.00 a gallon is salve on our wounds. 

7.   Cheaper Homes:  If you’re looking to buy a home, now may be a very good time.  The collapse of the housing market and the high volume of foreclosures have caused housing prices to recede.  That $250,000 3 bedroom/ 2.5 bath that you thought was out of your price range a year ago may not be anymore.

8.   Having a Job:  The unemployment rate is rising and Americans are having more difficulty making ends meet.  If you’ve managed to avoid layoffs or cutbacks, thus far, you certainly have reason to be thankful. 

     Are there any other financial things you are thankful for?  Please add your comments below!  Happy Thanksgiving!