Archive for 'August 2014'

    Don't Expect Defense Stocks to Shoot Up

    August 25, 2014 4:35 PM by Lord Abbett Editorial Staff

    Missiles, bombs, and bullets may be flying in various parts of the world, but that doesn’t mean U.S. defense contractors are poised for explosive growth.

    A number of financial publications and wire services have suggested recently that war clouds might boost defense stocks.  Unfortunately, investors might get the wrong impression about the sector’s current fundamentals.

    One article, for example, waxed bullish about the sector, given a 24% increase in a certain exchange-traded fund (ETF) over the last 12 months.  The trouble with that comparison, though, was that the ETF covered both commercial aerospace and defense—not just defense.

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    Does Divesting Oil and Gas Companies Make Sense?

    August 25, 2014 4:29 PM by Lord Abbett Editorial Staff

    While a number of institutional investors have divested companies engaged in fossil fuels amid growing concerns about climate change, such decisions may compromise their fiduciary responsibility by sacrificing performance.

    Will the fossil fuel divestiture movement become as big as past avoidance of tobacco companies or companies doing business in South Africa during apartheid?  Don’t count on it.  Even with geopolitical tensions, oil and gas companies will likely remain an integral part of investors’ portfolios for many years to come.   

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    10 Top Tips about Roth IRAs

    August 22, 2014 10:15 AM by Brian Dobbis

    The flexibility of Roth IRAs makes them a popular retirement-savings vehicle for a growing number of individuals. Here are some quick guidelines to help advisors and their clients determine where a Roth fits into their savings portfolio.


    Roth IRAs, first allowed in 1998, are the second most frequently owned IRA behind traditional IRAs.  The Investment Company Institute estimates that 19.1 million, or 15.5% of all households, own at least one Roth IRA. This vehicle offers a way to save for retirement on a tax-deferred and potentially tax-free basis. Moreover, Roth IRAs are not subject to lifetime required minimum distributions (RMDs), or age restrictions, as are traditional IRAs.

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    Reality Check on IRAs

    August 14, 2014 4:00 PM by Brian Dobbis

    Misconceptions about eligibility may explain why only 15% of qualified individuals have IRAs. 


    Anyone who has compensation (i.e., earned income, as defined by the IRS) is eligible to fund a traditional IRA or a Roth IRA. The sole exception to the earned-income requirement is a spousal IRA, which is funded by a working spouse on behalf of a spouse who has little or no income. Spousal IRA rules permit a working spouse to fund an IRA in the name of the nonworking spouse.

    Although it is easy to become eligible to contribute, only an estimated 15% of eligible taxpayers made an IRA contribution in tax-year 2012, according to the Investment Company Institute. The low participation rate can partly be attributed to investors’ misconceptions about eligibility and compensation

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    Can Bankruptcy Break Your Nest Egg?

    August 11, 2014 4:34 PM by Brian Dobbis

    A federal law protects most retirement savings accounts from creditors in personal bankruptcy proceedings.


    An estimated $23 trillion has been squirrelled away in retirement funds, including 401(k)s and IRAs.1  Some people have diligently been accumulating assets for more than 30 years and have built up admirable nest eggs for their retirement. In fact, for some people, their 401(k) plans rival or even exceed the value of their homes, making it their single biggest asset—and, consequently, their biggest worry. 

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