November 24, 2015

Tax Savings Tips to Consider Before Year-End

While most people think April 15 is the key deadline for taxes, December 31 is the most important date to minimize your tax liabilities. Here are some timely tips for you to take advantage of before 2016.

  1. Evaluate your investment accounts for unrealized gains and losses: If you investment accounts have realized gains, current or projected capital gain distributions you may be able to sell some of the lesser performing investments to offset any taxable gains.
  2. Contribute to a traditional IRA or 401(k): For 2015, the max contribution to a traditional IRA is $5,500 or $6,500 if you are over 50. For employer-sponsored defined contribution plans like a 401(k) or 403(b) the contribution limits have increased to $18,000 or $24,000 if you are 50 or over. 401(k) plan contributions must be made by December 31, but IRA contributions can be made up to the April 15, 2016 tax return filing deadline.
  3. Contribute to charities: Charitable contributions are a popular tax-reducing strategy. Remember to get a written receipt for every contribution you make worth $250 or more and retain records for all contributions you have made.
  4. Pay estimated taxes: If you have any income over the year that has no taxes withheld, you can avoid underpayment and late filing penalties by paying estimated taxes to the IRS and your state and local governments as well. State estimated taxes paid before December 31, 2015 is typically deductible on your 2015 Federal tax return thereby by lowering your potential tax bill.
  5. Pay property taxes: The IRS allows a deduction for property taxes paid during the year. Paying property taxes before December 31, 2015 may provide further tax savings on your 2015 Federal tax return.
  6. Review Required Minimum Distributions (RMD) Requirements: Taxpayers who turn 70 ½ during 2015 are typically required to take a prescribed amount from their qualified retirement accounts such as an IRA or 401(k). There are potential planning opportunities as well as stiff penalties for taking too little.

These are just some of the ways you can reduce your 2015 tax liability before the end of the year. If you have any questions or would like to explore more tax saving solutions, please call us at (203) 967-2231.

All Eyes on the Fed

Financial markets were remarkably calm last week.

Many stock markets in the United States, Europe, and Asia moved higher as investors chose to focus their attention on the minutes of the October 27-28, 2015 Federal Open Market Committee (FOMC) meeting, which were released on Wednesday, rather than recent terrorist attacks in Paris, Lebanon, Mali, and against Russia.

The FOMC minutes captured attention because they suggested even if the Federal Reserve does begin to tighten monetary policy in December, rate increases may be incremental and the target rate may not be as high as many imagined. Bloomberg reported:

"Fed officials received a staff briefing on the equilibrium real interest rate, or the policy rate that would keep the economy running at full employment with stable prices, according to the minutes. Fed officials discussed the possibility that the short-run equilibrium rate "would likely remain below levels that were normal during previous business cycle expansions," the minutes said."

Former Federal Reserve Chairman Ben Bernanke has written about the equilibrium real interest rate on his blog. The point he makes is the equilibrium rate - not the Fed - determines interest rates. The Fed uses its influence to move interest rates toward levels that are consistent with its estimate of the equilibrium rate. If the Fed pushes for rates that are too high, the economy may slow. If it pushes for rates that are too low, the economy may overheat. Not everyone agrees on this point, and that has led to debate between Mr. Bernanke and Former Treasury Secretary Lawrence Summers.

While the Fed is expected to begin tightening U.S. monetary policy, the European Central Bank (ECB) is expected to further loosen monetary policy in December. The Wall Street Journal reported the ECB is "prepared to deploy its full range of stimulus measures to fight low inflation..." The news was welcome. CNBC reported European markets closed the week at three-month highs.

Data as of 11/20/15 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.3% 1.5% 1.8% 14.6% 11.8% 5.2%
Dow Jones Global ex-U.S. 2.5 -3.9 -6.4 3.1 0.2 1.5
10-year Treasury Note (Yield Only) 2.3 NA 2.3 1.7 2.8 4.5
Gold (per ounce) 0.0 -9.8 -9.1 -14.5 -4.4 8.3
Bloomberg Commodity Index -1.2 -22.0 -31.0 -17.1 -10.9 -6.8
DJ Equity All REIT Total Return Index 3.8 1.3 5.2 11.8 12.4 7.3

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's,, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

What's Next for Emerging Markets?

If there were a "Page Six" for finance and economics, emerging markets would be splashed across it.

Remember the saying, "Buy low and sell high?" Well, emerging markets have not performed well for quite a long time, and that has a lot of people speculating about what may happen in the next few years.

Analysts at BlackRock opined, "Emerging-market (EM) equities are fighting an uphill battle, held back by an appreciating U.S. dollar, falling commodity prices, and flagging exports. These only add to their other medium-term struggles, such as dwindling corporate profits, declining productivity, and a dispirited investor base. With valuations of EM equities trading at the largest discount to their developed-market peers in 12 years, some opportunities are beginning to emerge."

In fact, several economists and asset managers have begun to compare and contrast the attributes of various emerging markets. Some say China is a better bet than Latin America. Others like the opportunities in Southeast Asia. A Goldman Sachs analyst cited by Bloomberg cautioned, "...Colombia, South Africa, Turkey, and Malaysia still need to tackle their current-account imbalances; Russia, India, and Poland are among nations that have improved enough for their assets to rally..."

The point is there is a buzz building around emerging markets. Sometimes, when analysts begin to emphasize the potential of an asset class, investors are tempted to pile in. While emerging markets investments can be a valuable part of a well allocated and diversified portfolio, it's a good idea to remember there are distinct risks which are not suitable for all investors associated with investing in emerging markets.

Weekly Focus - Think About It

"All you need in this life is ignorance and confidence, and then success is sure."

—Mark Twain

Best regards,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
  • Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
  • These views are those of Peak Advisor Alliance, and not the presenting Representative or the Representative's Broker/Dealer, and should not be construed as investment advice.
  • This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
  • The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
  • The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
  • The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
  • Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • Past performance does not guarantee future results. Investing involves risk, including loss of principal.
  • You cannot invest directly in an index.
  • Consult your financial professional before making any investment decision.
  • Stock investing involves risk including loss of principal.

Sources: (Click on "U.S. & Intl Recaps," "Fed funds rate increase - on the horizon," then scroll down to the chart) (or go to (or go to (or go to

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