July 2008 Capital Advantage Newsletter

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July 2008

In This Issue:

Your Retirement Funds >>
Investment Report >>
Newly Single Parents >>
To Retire or Un-Retire? >>
Market Watch >>

Your Retirement Funds

What’s the Correct Amount to Withdraw from Your Retirement Funds Each Year?

Rules of thumb and guidelines abound in every investment arena – you’ll always hear about specific percentages you should save, spend or invest based on where you are in life. They’re made to draw attention to specific investment needs everyone has, and for that reason, it’s good to have them.

A popular one is that no one should spend more than 4% annually of the value of their nest egg in any given year. Another is that retirees only need 70-80% of their last working year’s income to maintain their standard of living. The reality is that everyone’s retirement goals are different and should be planned based on specific needs, not general rules of thumb. This is why retirement plans should be made with the aid of experts in tax, estate and investment issues. A good starting point would be a meeting with a qualified Financial Advisor who can go over your personal situation and define particular percentages that can be withdrawn from your overall retirement nest egg while you continue to work or relax.

Learn More >>

Investment Report
by Rick McNamara

If the last three months of volatility and general turmoil has left you feeling anxious and uncomfortable, you are justified - this year is off to the worst start for the market since 1970. The markets cascading fall may seem reminiscent of the early 2000 technology stock decline that precipitated the last bear market. On the second to last day of this quarter, eight months after the Dow Jones and S&P 500 reached all-time highs, all major U.S. markets and global markets slipped into bear territory (down 20%), demonstrated by the triple whammy of rising oil prices (38% in 3 months), a worsening housing slump, and an unresolved crisis in credit markets.

However, this is not unusual - there have been nine similar drops in the market since 1960. The 10.2% decline in the Dow Jones makes this its worst June since 1930. During the roller coaster ride that characterized this past quarter, the market had exemplified remarkable resilience in the face of mounting worries, with the Dow Jones posting a 9% gain for the quarter on May 2nd. Unfortunately, the continuous rise in oil prices rekindled fears of inflation, sending all of the major indices down soon after. The Dow Jones decreased by 13.38%, the NASDAQ by 13.55%, and the S&P 500 by 11.91% - all in negative territory for the year. In a reversal from the past five years, almost all global markets (with the exception of Latin America) fared worse, as the broad based MSCI EAFE lost 17.35% in local currency (a loss of 10.96% in U.S. dollars).

Learn More >>

Market Watch

The Standard and Poors 500 (S&P 500) is an index made up of five hundred different stocks. Each is selected for liquidity, size, and industry. The index is weighted for market capitalization. The S&P 500 is the benchmark of the overall market, and frequently used as the standard of comparison in terms of investment performance.

Newly Single Parents

Financial Planning For Newly Single Parents

After a divorce or the sudden death of a spouse, single parents have the twin challenges of adjusting to a new life and getting their child adjusted to it as well. The third challenge – getting money issues in order – can be a threat to both. For a newly divorced or newly widowed parent, the right tax, estate and financial planning advice are crucial. Your Financial Advisor can advise their newly single man or woman clients on the right steps to take in setting up a new financial future that fits them.

Here are some general steps the newly single people should take:

Revise or make an estate plan: Single parents have to revisit the estate plans they made when they were married or set an estate plan for the first time. A will is essential, but it’s also important to make immediate plans for who will raise the children if something happens to the parent. In case of divorce, plans might have been set for the ex-spouse to take full-time custody in case of the other’s death, but if a parent has never been married, it’s particularly important to select the right custodian for the child and perhaps a separate person who can become custodian of the child’s finances to invest properly for their support and their future.

Learn More >>

To Retire or Un-Retire?

To Retire or Un-Retire? Ways to Consider the Question

Add retirement to the long list of things Baby Boomers are changing their minds about.

An April 2006 study by Zogby International and the MetLife Mature Market Institute found that a significant number of older Americans are revising their ideas about their post-career years. The study found that 78% of respondents aged 55-59 are working or looking for work, as are 60% of 60-65 year-olds and 37% of 66-70 year-olds. Across all three age groups, roughly 15% of workers have actually accepted retirement benefits from a previous employer, and then chose to return to work (or are seeking work). Called the “working retired”, these workers represent 11% of 55-59 year-olds, 16% of 60-65 year-olds and 19% of 66-70 year-olds.

A decision to return to work isn’t necessarily a negative. It’s not always a sign that older Americans are having trouble making ends meet. Some work simply because they want to change careers for a new challenge.

Yet delaying retirement or returning to the workforce from retirement is a decision that should be made after a thorough financial review.

Learn More >>

Did You Know?

Capital Advantage, Inc. can manage many 401(k) plans.

If your plan is held at Charles Schwab or Fidelity and has a “brokerage link option” (ask your benefits department), we can actively manage your company retirement account.

The benefits to you? 1) Relieves you of the burden of managing on your own; 2) You are no longer limited to the mutual fund choices your employer has chosen - the entire universe of fund choices are open to utilize; and 3) Allows us to coordinate your 401(k) plan with your existing portfolio for a comprehensive investment strategy.

Talk with your advisor if you have questions or are interested in learning more.

Contact Us
	John Hayman, CFP Founder and President Email John
	Donna Zinman Managing Director Senior Financial Advisor Email Donna
	Gary Clarke Director of Sales Senior Financial Advisor Email Gary
	Rick McNamara, CFMC Director of Investments Email Rick
	Dawnalizabeth Henke Compliance Officer Email Dawnalizabeth
	Aimee Schwartze Director of Client Service Email Aimee
	Robin Prosser Client Service Manager Email Robin
	Amy Montano Senior Administrator Email Amy (AJ)

Capital Advantage, Inc.

3708 Mount Diablo Blvd., Suite 200
Lafayette, California 94549
Telephone: (925) 299-1500
www.CapitalAdvantage.com

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