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Friday Financial Five – September 28th, 2012

Friday, September 28, 2012


The NFL is whole again . . .

GDP revised down in a big way

This is not a good thing. The 2nd Quarter GDP, which was expected to remain at 1.7%, was reduced drastically to 1.3% after further data was compiled. Personal consumption was down, exports were down and imports were up. Markets didn’t react negatively to the news, but it’s an alarming indication of another possible recession.

Protecting your capital gains

Last week saw Congress discussing the pending rise in the capital gains tax rates. This affects assets held outside of retirement accounts, and is currently set to increase from the top rate of 15 percent to 25 percent. There is agreement that the tax debate will look to balance income tax brackets and corporate taxes in a way that doesn’t sabotage the governmental revenue stream, but it’s hard to make the argument that a dramatic increase in the capital gains rate won’t hurt investment.

The biggest bang for your college buck

It’s good to see evaluations popping up on the rate of return on a college investment. As has been stated in this space before, it’s getting harder and harder to justify the overwhelming debt graduates are saddled with given their starting incomes. SmartMoney evaluated the “Payback Score” of 50 of the most expensive schools, and the results might surprise you. The number 1 school for generating income based on tuition is the Georgia Institute of Technology. No Ivy League college cracked the top 10, and Brown University placed 30th. Hopefully, metrics like this will become more prevalent so people are paying tuitions that justify incomes. See the results here: http://i.mktw.net/_newsimages/pdf/college-rankings-20120925.pdf

The streamlined refinance

If you have been receiving correspondence from your mortgage company, take a close look to see if the company will streamline a refinance. Many banks have the ability to refinance clients with no closing costs and minimal documentation. If you have an investment property that you haven’t been able to refinance due to income restrictions or loan to value issues, give the current mortgagee a call and see what they have to offer.

Keep looking out for bank fees

Regulations limiting bank overdraft and debit charges have once again led to a rise in the cost of checking accounts. No fee checking is going away, though many banks will waive fees if you direct deposit or hold a minimum balance. Also, review your bank’s ATM fee structure. Bankrate.com estimates that the average surcharge is up over 4 percent from last year. Some banks will reimburse ATM charges assuming you meet certain criteria. A little investigation will reveal what you’re paying in bank fees and help you determine if it’s time to make a switch.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected]


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