By: Edward Leone Jr. DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
It appears that in many business environments the concept of independent contractor as opposed to status as an employee is becoming more and more popular since the business owner has less administrative and cost issues depending on services performed. The W-2 employee may receive some fringe benefits from the employer as a result of job status and the employer is responsible for payroll tax and other tax withholding functions while the 1099 independent contractor accepts all of these responsibilities relieving the business owner of many burdens. Before a business owner engages an independent contractor, the 20 factor test must be met. Google this subject to learn what represents safe territory in the eyes of the IRS. Other work place issues which are presenting have to do with the generation mix in the work environment. It is not unusual to find Baby Boomers who are maintaining a position in the work place due to economic issues resulting in a delay of retirement performing with Generation X and Y employees. The challenge in creating inter-generational harmony revolves around establishing an environment of mutual respect for skills, talents and knowledge regardless of the workers’ ages.
A strategy being employed to enhance portfolio returns is the investment in dividend yielding stocks. A corner-stone of traditional value investing discipline, this can be accomplished in an effective and low-cost way by using dividend ETFs. Wisdom Tree, Power Shares, First Trust and I Shares are some ETF fund families which can provide such investments.
There is much concern over creating a steady flow of adequate income from the fixed income side of a retiree’s portfolio. Given the obvious trend for interest rates to increase at some point in the future resulting in a decline in the market value of fixed income holdings, it may be wise to hedge against this potential with a portion of the fixed income mix dedicated to floating rate funds. These funds invest in short duration variable rate vehicles which float when market conditions change. There is definitely some credit risk associated with investing in these funds so do your home work first.
Since my comments in the February Blog, I have done some reading which further encourages me to believe that our economy will improve in the future. Information Technology and Energy resource development and extraction are going to be the drivers which will increase production, manufacturing and exports for the US. Once again, there is a pressing need for government at all levels to come to consensus on the variety of issues surrounding this dynamic to promote activity rather than inhibit progress. We will have to wait and see how long this will take to happen. The revelations of the sequester are coming our way right now. The rhetoric generated over this action depending on your prospective can be threatening or laughable. Time will tell us the out comes and force remedies I suspect.
For the Record:
DJIA 14089.66
NASDAQ 3169.74
S&P 500 1518.20
Suggested Reading: “The ETF Book” by Richard Ferri CFA
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