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Payroll Tax Increase and You
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Back To School Shopping and Making Wise Decisions
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The Facebook IPO
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Women And Investing
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Using Your Tax Refund Wisely
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Harrisburg Commercial Real Estate Review
"Market volatility in recent years has left many investors feeling somewhat seasick. Periods of smooth sailing and minor fluctuations have been interrupted by severe storms that have produced dread, doubt and perhaps even fear. Gone are the days of sitting back and enjoying a day of peaceful sailing. Today's investors and their advisors must be both strategic and tactical in managing investment portfolios." Read the full article
Barron's Magazine in an article on the Ivy Science and Technology Fund.
"Matthew Stout, of Stout Bowman & Associates, is among the loyalists. 'We have been investing in this fund for 15 years because of its diversity and its ability to hold cash, which minimizes the risk on the downside,' says the Camp Hill, Pa., money manager, who oversees $36 million in assets with his partner, Marc Bowman." Read the full article
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Interviewer: By now you will have noticed that your paychecks are a little bit smaller forcing you to find some ways to maybe stretch your dollar. Financial adviser, Matthew Stout is here from Stout Bowman and Associates with some ideas on how to offset this loss that we are all seeing. Came as a shock, really, to some people. Some people knew it was coming.
Interviewer: What can you say to everybody out there saying, "I don't know how we're going to make ends meet."
Matthew: Well, when you got your first paycheck this month, this week, you're going to notice, it's a little bit lighter.
Matthew: Why is that? Two percent more backend for the social security payroll tax. If you remember, this was a temporary cutback in 2011 to help stimulate the then-struggling economy.
Matthew: So it's not necessarily a new tax or a raise in tax. It's kind of setting back to what the original rate was.
Interviewer: So what can people do at home now?
Matthew: Well, there's a number of things you can do. First thing is take a look at the IRS themselves. And again, if you're getting a large refund, if you're one of these people that get a few thousand dollars in a refund, you have to realize that's an interest-free loan that you're giving to Uncle Sam throughout the course of the year. So how are you going be able to make up for that difference is what you want to be able to do is go back into your employer, ask for a new W4. At that point in time, you're going to up your exemptions a little bit. That's going to put more money into your paycheck immediately, help to offset some of that 2%. That's one of the quick things you can do, very easy if you're getting the tax refund.
Matthew: But let's say you're not getting a tax refund, you owe some dollars. So in some other ways, you can take a look at is to make sure that you held these auto drafts that you have coming out of your bank accounts.
Interviewer: Yes, those can be expensive.
Matthew: Are they absolutely necessary? Do you remember what some of those are?
Matthew: I mean you have some old accounts that are drafting $15, $20 a month, you forgot about them, they're still pulling money out of your account.
Matthew: If you're living paycheck to paycheck and some of those overdraft fees start to add up, make sure you know what you're spending. Banks can get pretty aggressive with some of those fees. Here's also a great time, if you haven't refinanced your home, you're able to do so. If you haven't done that in the last three or four years, rates are pretty much at an all-time low. They should start to be moving up. Sometimes, that's going to be an easy fix for people as well.
Interviewer: And can you actually negotiate with them?
Matthew: Oftentimes you can. I think the key you want to make sure is to let the banks know that you're shopping around. That you're looking for a better deal. If you're a good customer and you pay your mortgage regularly, they want to keep you. And they know what the rates are and if your rate is at 6%, 6 and a half percent and the going rate is between three and a half and four and a half, they know you're going to be looking around and they want to keep that business.
Matthew: Your biggest investment, an extra percent or two off paying interest on that, that's a huge dollar amount as well for people.
Interviewer: Of course, that's gonna depend on how long you want to stay in your home, right?
Matthew: Exactly. Rule of thumb is gonna be about three years. If you're gonna move within three years, I think some of the fees and expenses that could come with refinancing will be a wash for you.
Matthew: But if this is your home and you're gonna stay there for the next 5 years, 10 years, 15 years, and pay off this home, every interest rate percent you can cut now is a big saving as well.
Interviewer: All right, Matthew Stout from Stout Bowman and Associates, we appreciate your help.
Amy: Parents with kids in school are estimated to spend around $668 on back to school shopping this year. That's per child. It's a lot of cash. So to help save some money and to use his experience as a way to teach our kids about good financial habits, we're here with financial adviser Matthew Stout of Stout Bowman and Associates in Camp Hill. Matt, thanks so much for coming in.
Matthew: Thanks for having me. Glad to be here.
Amy: Okay, so we first tell people, "You need to budget for situations like this." If they haven't budgeted or if they did budget, what's your biggest advice when it comes to planning ahead?
Matthew: Planning ahead, obviously you wanna have some emergency reserves for the unexpected, but things like back to school, vacations, you know these things are coming. And so rather than trying to come up with a few hundred dollars or $1,000 very quickly, $50 a week, $50 a month over the course of the year, gets you there very, very quickly, and it's a lot less stressful to come up with $50 than $1,000.
Amy: Exactly. A lot of schools have already started, kids are going back next week. So if you're against the wall right now, it's something to think about next year. You have three kids. You've already started back to school shopping. They're pretty much wrapping up. They're gonna be heading to class soon. What are some of the tips that you have for parents out there?
Matthew: Parents, heading back to school, if you haven't done the shopping yet, obviously, you first want to plan. Get the school list of the supplies they're going to need, and then pull out the Sunday paper, look at the ads, see who has the best bargains out there for you as well. One thing you want do is make your list ahead of time, so you don't get caught up in the buying frenzy, and you end up with a lot of extra things that maybe aren't necessary, but end up in the cart by the time you get to the register, and you end up buying them anyhow.
Amy: And you were saying, it's almost good to take, if you have several children, take one at a time.
Matthew: Absolutely, that's what we did. I mean my wife Heather took all of our kids out individually so they could spend kind of their own money. We gave them a certain dollar amount and said, "Here are the things you need. Anything that's left, you can spend on things that you'd like to have." And it kind of teaches your kid responsibility for when they're making their own decisions, especially with smaller dollar amounts, they get very comfortable with that, and as they get to be adults, they continue to make good decisions with dollars.
Amy: And it's a good learning experience, especially when they say kids emulate what their parents do, so if they see mom and dad just swiping the plastic, that's not a good memory to have.
Matthew: Exactly. Anybody who has kids will tell you that kids are watching you all the time. Even when you think they're not watching, they're watching and they're learning. So when it comes down to using credit cards, or you use cash, one of the things we always kind of stress is, if you're using credit cards because you get points, you get miles, you get cash back, that's one thing. If you can pay that balance off every month, okay I understand how that works. If you're carrying a balance and you're paying on it, but you don't still remember what the initial purchase was, that's a sign you're using the credit card incorrectly and should probably just stop those.
Amy: All right. And a great conversation to have with your kids as well, get them in that learning mode before school starts.
Amy: All right, Matt, thanks so much. We appreciate it. We have all this information on our website, fox43.com, so you can find out more. It is 7:57. Here's a peek out...
Interviewer: So it's been one week since Facebook started publicly sharing its stock on Wall Street. There is a lot of hype but now there's been a lot of headaches. We're breaking out the details this morning with financial expert, Matthew Stout, president of Stout, Joyce, and Bowman Associates in Camp Hill. Thanks for coming in.
Matthew: Thanks for having me.
Interviewer: Okay, so let's talk about what happened. It's one week ago, Facebook entered the stock market. The initial public offering, what happened?
Matthew: You know, this was one of the biggest hypes IPO that have been in recent history. A lot of people were excited, waiting for this to come out, wanted to be a part of that. A couple of things happened almost at the 11th hour. Since there was so much interest, they decided to offer 25% more stock shares available, which now started to dilute the shares that they already had out there. That was one of the problems. That almost stifled the initial pop we see with big IPOs when they come out right away. We didn't see that big pop with Facebook when it came out.
The real problem started as soon as trading opened. The market opens at 9:30, IPOs usually start about an hour later to make sure there's no market glitches with the computers and lo and behold, with Facebook, there was a computer glitch. A lot of problems, almost about an hour, hour and a half, people were placing buys, sells, and they weren't getting confirmations. So they were changing those orders. A lot of people didn't find out until Monday whether or not their orders were executed and at what price they actually paid for the stock.
Interviewer: Okay, so a lot of people are upset. There's now some investors that are suing Morgan Stanley, suing Facebook. Is this a case? Does this case hold water?
Matthew: You know, it's hard to say. I have heard that NASDAQ market has come out and said that they are willing to reimburse some expenses based on the trading glitches. I think the lawsuits that we're seeing have to do with some of the material effects that may have been disseminated to the bigger banks right before the IPO came out that wasn't necessarily common knowledge to the average investor.
Interviewer: Okay, so somebody like me, I wouldn't have known about that change?
Matthew: You would not have, you would not. You would have thought Facebook was rolling along, doing exactly what it's supposed to do that everything was good and happy. However, they started decreasing their earnings forecast moving forward, sharing the information with the big investors ahead of time.
Interviewer: Is it still a good stock even though it has dropped off?
Matthew: It's hard to say. You know, I think you can make a case either side for that. When you take a look at P/E ratios and that's how much a company earns versus what it’s actually trading for, their P/E ratios are in the 800s. You see a lot of tech stocks in the 20s and the 40s.
Interviewer: Got you. Well, let's talk about first-time investors because a lot of people were saying, "Hey, I am on Facebook all day long, maybe I should start investing in it." What are some good tips for a first-time investor?
Matthew: Best tip I have is number one, never make an emotional decision. Just because you want something to happen, doesn't necessarily mean that it will. The other thing is don't get so attached to your choices that you're not willing to admit you made a mistake which means you buy a stock, it starts to go down, you feel good about it, and you watch it ride the whole way down. I always ask people to set a goal about the low side and the high side when you buy a stock. If it drops 10%, I'm willing to cut my losses and move to something else. On the same side, if something starts to run and get really profitable for you, you have this feeling that it's never gonna end. And you wake up one day, and all of a sudden, it's in the other direction. So don't get greedy, don't get emotional, begin with the end in mind when you purchase stocks in the first place.
Interviewer: And should we talk to a professional?
Matthew: Absolutely. Absolutely. Yeah, it never hurts.
Interviewer: Never hurts.
Matthew: Just to kind of bounce your ideas off of them. Let's say, "Here's what I'm thinking, tell me if you're agreeing with that. Maybe you have some different alternatives as well."
Interviewer: And quickly, is it good to invest in things that we like? You know, I love a good jacket from Banana Republic, should I invest in Banana Republic?
Matthew: Here's the good news. There are tens of thousands of investments you could make. So in order to make the short list, number one, it should be a company that if you're investing for the first time, you have some understanding of what they do, what product do they provide, what service do they provide. Do they actually make money and are they good at what they do? So that can start to shorten your list very quickly, to maybe give you 5 to 10 items to start to do your research, technical analysis, fundamental analysis, earnings, how they're positioned in the marketplace. A lot of research goes in but if you start with something that you know what they sell and what they provide, you're a step ahead of the game.
Interviewer: All right, Matthew Stout, thank you so much. We have more information on our website, fox43.com, just click on the Morning News tab. More to come on Fox43 Morning News at 7.
Interviewer: All right, we have all been feeling the effects of the recent financial crisis over the past few years, but women have been hit especially hard. A recent survey says the majority of ladies are stressed about their money, and they don't know how to fix the problem. We're talking about it this morning with Matthew Stout from Stout, Joyce, and Associates this morning. How are you?
Matthew: I'm very great this morning. How are you?
Interviewer: Good. Well we're talking about women and money. First, why are women not really involved in the household finances?
Matthew: You know, I think traditionally, it's been the role of the man, it was supposed to take care of. I will tell you that has changed significantly over the years. In our experience, women are becoming more and more involved in this process, and I think if the man takes the lead on this, a lot of times, it's through default that no one really steps up and says, “Hey, I want to have that responsibility.” It kind of falls and somebody has to do that.
Interviewer: Regardless, the women should at least know what's going on, right?
Matthew: Absolutely, studies have shown that 78% of women will handle the family finances or their own finances at some point in their life. The time to learn that and get comfortable with it is now before you have to make those really hard decisions, because making decisions very quickly sometimes causes problems when you're not sure what you want to do.
Interviewer: Okay, we'll talk about some of those problems because if women aren't up to date on their finances, how much money I have in the account, how much money I have saved, what problems do you see from that?
Matthew: Well I think the biggest problem that people have is unrealistic expectations. That there's a lot of times if you're not living within your means, then you need to lean on some credit cards, and a lot of times that is a problem that's going to exponentially increase itself over time. You need to understand what's important to you, what the income is, what the fixed expenses are, and what discretionary funds you really do have left over to accomplish some things that you have set goals for.
Interviewer: So some of the ladies out there, especially the single ladies, if they're sitting at home thinking, “You know what, I'm overwhelmed, I don't know what's going on. I don't know how much money I'm bringing in, how much money I'm taking out,” what's your first step of advice?
Matthew: I think the first step is to sit down, get a piece of paper and write down all of your income sources on one side, all of your debt on the other side. At that point in time, it's not difficult to say, “I'm spending more that I'm bringing in, where can I start to trim this budget, and cut some things out here as well?” The good thing that women have on their side is they are planners. They want to know. They want to educate. They want to understand exactly where they are, and they understand that if they need some professional help, they're willing to seek that.
Interviewer: That helps too when they want to start investing, when they have that money to invest.
Matthew: Absolutely. Absolutely.
Interviewer: Which is always good because we have to plan for the future as well.
Matthew: You do, absolutely.
Interviewer: All right, well we have more information on our website fox43.com. Matt, thank you so much, we appreciate it.
Interviewer: So while you're waiting for your refund check from Uncle Sammy, maybe dreaming of a new pair of shoes or maybe new floors for your kitchen, but we're talking about how that money can actually help you make more money. We're chatting live with financial expert Matthew Stout, President and CEO of Stout Joyce out of Camp Hill. Good morning. How are you?
Matthew: Doing very well, thank you.
Interviewer: Well, thanks so much for coming in. Let's start first. Lots of us are gonna be getting those checks in the mail if you haven't gotten them already from the IRS, what should we do with that tax refund?
Matthew: That's a great question, and I think the first question should be is if you're consistently getting that refund, maybe you want to talk with a tax professional and have your withholding changed so that you get more in your paycheck every week. Everybody can kind of use that for their budget. But I think a lot of people are looking forward to having this refund, and one of the initial reactions is, "I'm going to get something nice for myself, going to reward myself."
There's still other people who say, "Hey, let's save this for a rainy day. There may be some emergencies." I think there's a healthy mix between the two of them. Take a small portion of that and buy something nice for yourself now to kind of treat yourself, but the bulk of that, let's make wise financial decisions to help yourself and your family, not just now but for years down the road.
Interviewer: Okay, so we should invest this money, or it's worth thinking about investing it.
Matthew: I think we should, number one, make sure we have an appropriate amount of emergency reserves, a rainy day fund, if you will. Aside from that, let's take a look at some of the debts we have, high interest credit card debts. If you can retire some of those, put more cash into your pocket on a weekly basis, then you set yourself up for a long-term investment plan, which makes a lot of sense.
Interviewer: Okay, so when we're getting those checks back, how much money would we need in order to invest, to make it worth our while?
Matthew: You know, not much. You could start a lot of investments with as low as $500, and then be committed to putting another $25 to $50 a month automatically into that investment and allow it to build over time.
Interviewer: Now, when we are talking about maybe credit card loans or, you know, if we have to pay off any other debt, should that take priority over investing?
Matthew: I think it depends on the amount of interest you're paying. If the amount of interest is significantly high and your opportunity to invest a return is not as great, then you want to pay off the higher credit card debt. If you have some very low interest loans that are also tax deductible, maybe making an investment is wise at that point in time. I think you can also do both.
Interviewer: Well, and as we know, the stock market is always a risk, and it's up, it's down. You can't predict it. Why is it worth it for us right now to invest and to take that risk?
Matthew: Well, I think that's the reason why it's important is that we don't know what the future is going to hold. And if you can do it systematically over time, you're lessening the risk you have by automatically investing into the market on a regular basis. Some days will be up, some days will be lower, but over time, you will build a very significant asset for yourself by consistently doing the right thing for yourself.
Interviewer: And hey, if we have $500 now, if we can make more, that'd be pretty nice, right?
Matthew: That's a start, absolutely. Absolutely.
Interviewer: All right. Great. Well, we have more information on our website, fox43.com. Just click on the ads seen on tab, and also you have a great Facebook page as well, and a website. So we have links to all of that if you want to get more information. Matthew, thank you so much. We appreciate it.
Matthew: Very welcome to be here. Thank you.
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