St Louis stock index

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Did you know that there is an index designed to measure the St. Louis economy?  You may have heard of the S&P 500 index which is a list of the largest 500 companies in the United States, and that watching the performance of this group of 500 companies will give you an idea of the direction of the overall large company market in the United States.  There is a similar list of companies that attempts to represent the St. Louis economy; the Bloomberg St. Louis Index.

Bloomberg St. Louis Index Members 

As of this date, there are 47 companies on the Bloomberg St. Louis Index.  You will notice that while most of the companies are headquartered here, not all of them are headquartered in St. Louis, but they must have a large presence here.  They also must have a minimum market capitalization of $15 million.  Market capitalization means the number of outstanding shares times the share price.

Who is Bloomberg?

When I first started in the investment business, more than 20 years ago, Bloomberg was a company that provided news and research to investment professionals through a “Bloomberg Machine”.  They were very expensive and only a few people in the firm had them.  In the places where I worked, it was usually the bond traders, because the Bloomberg Machine was also the way to find out the bond prices and one way for bond traders to communicate with other firms.  But the bond traders could also use the Bloomberg Machines to pull up news and the most amazing charts for me.  Please remember, this was before internet and e-mail.  My firms always gave me a computer with a subscription to another news and charting service called Reuters, but the Bloomberg Machines really had the good stuff back then.  But now, because of the internet, Bloomberg is so much more.  Everyone can get news and research from Bloomberg, which is the way it should be!  And, Bloomberg still has Bloomberg Machines for the bond traders and they still charge investment firms for premium research.

What does the St. Louis Index tell us?

Looking at the St. Louis index can tell you if the St. Louis market is moving in the same or different direction as the rest of the US markets.   The St. Louis Index has small and large companies on the list so it would make sense to look at the performance vs. a small cap index such as Russell 2000 and a large cap index such as S&P 500.  It would also give you a sense of the cycles of the publically traded St. Louis companies by tracking the performance over time.  With as diverse of an economy as St. Louis has, I would not draw too many conclusions about the overall St. Louis economy based on these 47 publicly traded companies.  Remember as you drive around town, that many of the businesses that you see are privately held and not part of an index like this.  However, it is another interesting perspective to add to your research.

Retiring Early: One way to avoid the 10% early withdrawal penalty tax

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You might have heard that you need to keep your money in your retirement accounts until you are 59½ in order to avoid the 10% early withdrawal penalty tax, but did you know that if your money is in a work retirement plan, like a 401(k), that the you can take it out earlier and still avoid the penalty?

Exception to the rule

To quote directly from the IRS website explaining this exception to the 10% early withdrawal penalty tax:

“Distributions made to you after you separated from service with your employer if the separation occurred in or after the year you reached age 55, or distributions made from a qualified governmental defined benefit plan if you were a qualified public safety employee (State or local government) who separated from service on or after you reached age 50”

55 and separation from service

If you wait until the year you turn 55, then leave your employer, you can take money out of your 401(k) or 403(b) without the 10% early withdrawal penalty tax.  You will still pay income taxes of course; Uncle Sam wants that part of your retirement account.  And be careful, depending on the other income you have, the amount of income taxes you owe could be even more than has been withheld, so be sure to calculate quarterly estimated taxes so that you are not caught by surprise.

If you roll your 401(k) over to an IRA rollover account, you lose this “age 55 separation from service” exception, because it only pertains to employer plans, not IRA rollovers.

50 if you are a fireman or policeman

If you are a qualified public safety employee of the state or local government, such as a police or fireman, the age is even lower – 50 years old.

Retire early?

In general most folks need to work and continue saving their money until their mid to late 60s so that they can save enough to retire.  But for those that have been strong savers and have learned to live well beneath their means, an early retirement is a possibility.

For a lot of folks who retire as early as 55, they have resources besides retirement accounts that they tap into, for example; from the sale of a business or money they have put into regular brokerage accounts over the years after they put the maximum contributions into their retirement accounts.  If you don’t have money in non-retirement accounts that can get you through to age 59 ½, then the “age 55 separation from service” exception might be the solution for you.

Run the numbers

Only in a few situations would it make sense to tap into the retirement accounts as early as 55 years old.  One situation that comes to mind, is in the case of someone who has maxed out their contributions in their work plan since the time they started working, and they have a balance in their current employer’s retirement plan that is large enough to live off of for a four or more years.  They have run the numbers and have enough retirement assets to live off of, however they do not have enough in non-retirement accounts to live off of until they turn 59 ½, perhaps due to putting kids through college or paying off the mortgage.

Really check your numbers to make sure that you can afford to retire at 55, taking the impact of inflation into account.  Inflation has a significant impact on retirement planning.  Consider that starting to spend down your portfolio at such a young age, when you could easily live another 35 or 45 more years could jeopardize your financial future.   However, if once you have done the analysis you can afford to retire early, then you deserve to enjoy what you have worked so hard for and this “age 55 separation from service” exception to the 10% early withdrawal penalty tax is one way to help you do that.   

Financial Doing: Because if it’s just Financial Planning, it will never happen!

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I have a theory that just about everyone has important financial To-Do items sitting on their To-Do list.  However, those financial To-Dos often just sit there because there isn’t a looming deadline to make them seem urgent (“Save for college and retirement?  Oh that’s so far away!”).  You can read more about my philosophy in      It’s on your To-Do. Let’s get it To-Done!

Let’s say you decide to address those To-Do items so you create a financial plan.  Well a plan will not help you if you do not implement it!  So let’s take you from Financial Planning to Financial Doing!  For those of you who have taken the step of creating a plan, I would like to give you some easy things to do so that you can get some momentum going on your path to Financial Doing!

Here are some quick things you can do and knock off of your To-Do list…

Social Security

If you are under 60 years old, the government does not mail you a Social Security Benefits statement any more.  Learn how easy it is to pull up a copy of your statement online in my blog post Full Social Security Statements Now Available Online.

Annual Credit Report

You know you should get your free copy of your credit report each year, but with so many advertisements you aren’t sure where to go.  I clear up the confusion in my blog post Annual Credit Report: Where to go to get your free credit report.

Lost Money

This one is just a “no brainer”; it takes only a few seconds to check to see if you have lost money.  One in ten Missouri residents does.  Are you one of them?  Missouri Unclaimed Property: Are you due some money?

Take the first step today to change your Financial Planning to Financial Doing, I promise, it will feel great to finally start attacking the To-Dos!

Missouri Unclaimed Property: Are you due some money?

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Did you know that if you don’t stay in contact with your financial institution that you can “lose” your money?  Where does it go?  To the state in which you last lived as far as the financial institution is aware.  That state holds it as Unclaimed Property.  They would really like people to come claim it, and ideally spend it, putting it back into the economy.

How do I find out if I have Unclaimed Property in Missouri?

It is easy and just takes a few seconds, really!  Go to www.showmemoney.com type in your last name leave a space then a few letters of your first name.  Did your name pop up?  Then you have Unclaimed Property!   Be sure to check other names you have had such as maiden names or other married names.

How do I get my Missouri Unclaimed Property? 

If your name popped up then click on the word “Select” next to your name then click on the “File a Claim” button under your name.  Most people can file a paperless claim this way.  If not, you can mail in a request, just follow the instructions online.

How much does it cost?

Do not pay anyone to find or get you your Unclaimed Property.  Just go to the Missouri Treasurer’s website.

What if I have lived in other states too?

Go to www.unclaimed.org to check the websites of other states in which you have lived.  They also have a great page with links to other types of lost money, like undeliverable federal tax refund checks, veterans benenfits you may be due, and lost money in overseas accounts.

What kind of items can become Unclaimed Property?   

The property comes from bank and brokerage accounts, stock dividends from certificated shares, unclaimed insurance proceeds, among other items.

How much money does Missouri have in Unclaimed Property right now?

There is 700 million dollars in Unclaimed Property in Missouri right now in 4.3 million accounts.  Since one in ten residents has unclaimed property be sure to tell your family and friends to look too.

How long does the money sit in Unclaimed Property in Missouri?

The money does not ever go to Missouri, it just sits there waiting to be claimed by you or your heirs.  So go get your money, the state wants you to spend it!  But you know what I would tell you… spend some, share some, invest some.

Annual Credit Report: Where to go to get your free credit report

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If you own a television, you have probably seen one of the many versions of commercials touting the free credit reports.  Or as you have browsed the internet, you surely have seen the banner ads with enticing “click here for your free credit report” messages.

The problem is, with so many companies saying that they offer the free reports; I have found that many people don’t know where they are actually supposed to go to get their free reports.  But they do know that if they go to those places that are advertising, they are going to be offered something to buy.

The website to use is www.annualcreditreport.com  or call 1-877-322-8228.

Equifax, TransUnion, Experion

Well, I hate to break it to you, but when you go to the official website, the three credit bureaus are going to try to sell you something too.  They are going to ask you if you want to buy your scores.  Do not buy them.  They are not the FICO scores that banks use so the score is not very helpful.  Getting the reports; now that is tremendously helpful, so definitely do that once a year.

What to look for on your reports

Make sure that there are no duplicate accounts, errors in information reported, or activity that isn’t yours.  For information about identity theft refer to the FTC identity theft website.

Which one to get first

This is my personal preference; I like the summary that Equifax provides at the beginning of the report.  If you have not printed your free credit reports before, I suggest printing the Equifax report first and looking over the summary, it is educational as well as informational.

How often to get your Free Annual Credit Reports

You can pull all three at once and be done with it until next year.  Or spread it out and get one every four months as a way to monitor your information on an ongoing basis.  Just keep in mind that, surprisingly, information can vary from credit bureau to credit bureau so spreading it out does not guarantee that errors will be caught in a timely manner.   But if you consistently pull them, any errors will be caught once a year.

For further information see the Federal Trade Commission website for the Free Annual Credit Report.