Friday, April 30, 2010

Weigh Your Retirement Options and Plans

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

One casualty of the recent bear markets has been many people's faith in their ability to retire. Retirement plans based on what once seemed a reasonable 10% annual rate of appreciation have instead seen 10 years of minimal, if any, real appreciation in their equity investments. The question now is what should you do with respect to planning for retirement?

The first step is simply to spend less and save as much as you can.

If the market experiences an average return of 5.5% (which looks quite rosy at this point), building a nest egg of $1 million will take either hefty investments now, or a longer period until retirement. Each year you delay saving, the more you will need to set aside.

Source: Investopedia

Remember that risk is very real when you invest your savings.

Before working with a financial adviser or money manager, ask what they will do to protect your savings in the event of another market downturn, because there will be one. If they don't have a plan that you can buy into, don't invest.

Consider alternative retirement goals.
Work longer, which will increase your Social Security payments and give your retirement investments more time to grow. IRS regulations allow participants in a 401(k) and other workplace retirement plans to delay their required minimum distributions well beyond 70.5 as long as they continue to work

Phase in your retirement.
Gradually reduce your work hours until you can afford to fully retire.
Plan to work part-time in retirement. But be careful because this will impact the amount you receive from Social Security if you opt for early retirement.

Hit reset on your lifestyle.
A smaller house, renting a vacation home instead of owning, cutting back on club memberships... these are all ways to free up funds that you can use for retirement. Look for ways to minimize monthly expenses such as property maintenance, loan payments etc. Even when expenses seem small individually, added together they become real money. If you are assisting younger members of your family with their expenses, this may be the time to cut the strings.

Retirement is not beyond your reach. In fact, it may be much more feasible than you think. The important thing is to not wait until the last minute to start planning. The earlier you put a plan in place the greater your chances of succeeding. For help with achieving your retirement goals, let's talk.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC

Thursday, April 29, 2010

Gateway Community College talks green jobs

Gateway Community College’s Center for a Sustainable Future tonight will launch a series of forums related to building a “green” economy for the region.

The first event, which is free and open to the public, will be held at 5 p.m. in Room 160 at the college’s 60 Sargent Drive campus here in New Haven.

It was originally going to be held at the college’s North Haven campus. David N. Cooper, dean of corporate and continuing education at Gateway, said the “ReNew Haven” series continues local discussions sparked by the White House Jobs Forum in December. Gateway held a community discussion as part of that initiative and submitted a report and video to the White House.

Tonight’s featured speaker will be Jean Williams, founder and chief executive officer of, who worked with Cooper and other members of a think-tank that helped develop the Center for a Sustainable Future.

“Now, the company will continue to work with the center to develop online training programs and resources for the sustainable green economy,” Cooper said. Williams’ online network links people, jobs, training and other resources that could foster economic growth.

Other forums to be held are: May 26, “GREENandSAVE’s Home and Office Energy Efficiency Program: Calculate Your Return on Practical Energy Saving Improvements,” and June 17, “Food Cooperatives are Leading the Transition to the New Economy.”

Both will be held from 5 to 7 p.m. at the New Haven campus.

Wednesday, April 28, 2010

CT House passes bill banning dormancy fees

State Rep. Ryan Barry (D-Manchester), House Chairman of the legislature’s Banks Committee, says HB 5045 would prohibit a financial institution from imposing a dormancy fee on an inactive deposit account for which periodic statements are not provided if the primary account holder has another active account with them.

It now goes to the state Senate, where it died last year.

“This bill protects all consumers, and in particular senior citizens who have fixed incomes,” Barry said. “If a customer has at least one active account with a bank, the bank should not charge an inactive account fee on another account that the customer maintains with the bank. This is only fair to the customer and certainly not burdensome on a bank.”

It is not unusual for senior citizens to have two or more passbook accounts and be subject to dormancy fees of up to $25 for each of their accounts, he said.

To avoid dormancy fees, the customer must be the primary account holder on a second account maintained primarily for personal, family, or household purposes. The account must also be currently filed in the institution's records for tax reporting purposes.

If signed into law by the governor, the provisions would take effect Oct. 1.

Friday, April 23, 2010

Listen Up Congress. The Survey Says...

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

For the past few entries, I posted this link to a Very Short Survey asking your opinion on a number of “hot” topics. I’d like to focus this week’s contribution on those results and how they compare to the exact same survey I did for subscribers of my Street$marts report.

Before I begin, I received several emails questioning whether The Unsuccessful Investor (TUI) from last week's article was a real person or I just made it sound like it. TUI does, in fact, exist and it’s someone I have known for many, many, many years. Now, on to the results.

First, I am going to share the results from your answers and then I am going to share the responses from my newsletter. Growing up, I used to watch Family Feud with former Hogan's Heros star Richard Dawson. His famous line, after kissing all the women was,

"The survey says..."

The government’s TOP priority should be:

59% Job Creation
17% Healthcare Reform
16% Deficit Reduction
5% Wars

That compares to my list of:

61% Job Creation
24% Deficit Reduction
10% Healthcare Reform
6% Wars

In 2008, I voted for:

60% Obama
35% McCain

That compares to my list of:

34% Obama
59% McCain

Based in the past year, I would:

53% Reelect Obama
47% Elect someone else

That compares to my list of:

27% Reelect Obama
73% Elect someone else

Congress is doing a:

87% Poor job
13% Good job

That compares to my list of:

93% Poor job
7% Good job

My income level in 2009 was:

21% <$50,000
50% $50,000 - $125,000
28% $125,000 - $250,000 1% >$250,000

That compares to my list of:

11% <$50,000
26% $50,000 - $125,000
37% $125,000 - $250,000
26% >$250,000

Overall, you feel that job creation should be the government’s top priority and I imagine that holds true throughout the country. You voted for Barack Obama, pretty much in line with the rest of the state, which is in stark contrast to my newsletter readers who supported McCain by a sizable margin. Not surprising at all, more than half would reelect Obama, versus my newsletter readers who would elect someone else by an enormous margin. That’s expected since they didn’t vote for him in the first place.

It seems almost universal that the vast majority of folks do not think Congress is doing a good job, but do we ever? I wonder how high that’s been in the past 20 years. My guess is, not very. The total disdain and disapproval of Congress has to be at an all time low. Judging by the overwhelming number of comments, which I did not publish, there seems to be some serious venom for both parties and everyone is sick and tired of the partisan politics, lying and failure to do what their voters elected them to do.

Thank you for participating in the survey. It always interesting to see where people stand on the hot issues of the moment.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC

Tuesday, April 20, 2010

2010: Will Your Small Business Claim the Health Care Tax Credit?

The Internal Revenue Service this week started mailing out postcards to small businesses and tax-exempt organizations to raise awareness of benefits that were enacted with the federal Patient Protection and Affordable Care Act last month.

The IRS mailed approximately 54,000 postcards throughout Connecticut. More information about state-by-state distribution of the postcard may be viewed here.

The health care tax credit passed by Congress and signed by President Barack Obama is one of the first health care reform provisions to take effect and is designed to make it more affordable for small businesses and nonprofits to maintain existing coverage or begin offering coverage to their employees.

“We want to make sure small employers across the nation realize that, effective this tax year, they may be eligible for a valuable new tax credit. Our postcard mailing – which is targeted at small employers – is intended to get the attention of small employers and encourage them to find out more," IRS Commissioner Doug Shulman said in a statement Tuesday. “We urge every small employer to take advantage of this credit if they qualify.”

Eligible small businesses will be able to claim the credit as part of the general business credit starting with the 2010 income tax return filed in 2011. For tax-exempt organizations, the IRS will provide further information on how to claim the credit. Click here for an online guide.

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations, the IRS said.

The maximum credit goes to smaller employers – those with 10 or fewer full-time equivalent (FTE) employees – paying annual average wages of $25,000 or less. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.

The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.

Please comment below on whether your business offers health coverage and you plan to claim the credit or if you are unable to offer health insurance to your staff and the credit will not help. We want to hear from you...

Friday, April 16, 2010

CT Secretary of the State: Fewer businesses closing

Secretary of the State Susan Bysiewicz Friday said there was a nearly 17 percent decline in the number of businesses that closed in Connecticut during the first quarter of 2010, compared to the same period in 2009.

The number of new businesses starting up in CT was lower during the first quarter by 0.8 percent, compared to the first quarter a year ago. Bysiewicz's office releases quarterly reports based on monthly totals of business starts and stops around the state.

For the quarter, 2,961 businesses filed paperwork to dissolve their companies, 17.4 percent lower than the 3,477 that filed during the first quarter of 2009.

There were 6,894 new business starts during the first quarter, compared to 6,941 in the same period last year.

The numbers are far from ideal, she said, but they do show "signs of hope that the recession has eased" and the business climate may be improving.

"The numbers recorded for the first quarter of 2010 are encouraging and show that more Connecticut businesses have been able to prosper and avoid shutting down," said Bysiewicz, who serves as the state's chief business registrar. "We are still not seeing the number of new business start-ups we want to see but that, too, is improving. It is my sincere hope that the sharp decline in business closures will also be reflected in a reduction in Connecticut's unemployment rate in the coming months."

Anatomy of the Unsuccessful Investor

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Last week, I posted the link to a Very Short Survey asking your opinion on a number of “hot” topics. So far, the answers are very interesting, but I’d like more responses before I share the results and offer some comments. If you haven’t clicked on the link above, please do so and I will use next week’s piece to discuss the results.

Turning to this week’s topic, I have often been asked what makes one investor more successful than another investor. Is it education? Is it street smarts? Is it luck? Is it just part of one’s personality? The short and easy answer is that it’s probably all of the above. But after 22 years in the business, I’ve noticed that personality definitely is a significant element in the equation.

When I first began trading and investing my own money in the 1980s, I made the same mistake that most people commonly make. That is, I tended to buy what was already known to be hot and sold what was already depressed and cold. In very strongly trending markets, which don’t happen very often, that works great. 2009, 2003, 1999 and 1995 are a few textbook examples.

But after a few “lean” periods, I realized that there had to be a better way to make money. Over the years, I’ve found that once you find a successful, time-tested strategy that works well in different market climates, the best time to invest or add money is during one of those periods when it hits a pothole. Please note that just because a strategy works well in all environments doesn’t mean it will be profitable in all environments!

Of the 9 investment programs we now run at Heritage Capital, I’ve learned that the most successful clients are the ones who either fund a new strategy when that program is losing money or add money during that time. It’s easy to watch a program have a great month or quarter or year and then plow into it. But it’s much more difficult to write a big check when something that’s been a stellar performer suddenly hits a pocket of weakness.

Changing gears a bit, I have a lifelong friend (true story), The Unsuccessful Investor (TUI). Many years ago after reconnecting, he mentioned how he oversees a number of trust accounts as well as invests his own family’s money and wanted to learn more about what we were doing. We met and spent a few hours going over each investment program’s nut and bolts along with daily, weekly, monthly and annual performance.

TUI was convinced he wanted to engage us to manage the majority of his assets since he was unhappy with what he was currently doing. At that time (2006-2007), he chose the two strategies that had just seen their best performance period ever. After sending the necessary paperwork, TUI called to say that while he was still planning on hiring us, he wanted to wait a little while until his current holdings “caught up with the market” and he made “some good money”.

As 2007 was ending, I contacted TUI for an update on his plans, at which time he explained that he finally made some “good money” in September and October 2007 and wanted to give the portfolios some more time to make money. In mid 2008, we spoke again after stocks saw corrections in January and again in March (Bear Stearns collapse). TUI said his portfolios got “hit pretty hard” and he really needed to get us involved before any more damage was done.

By the time we met again during the fall of 2008, TUI despondently moped that all the portfolios were “on life support” and it didn’t make much sense to move them now. He told me that we should talk again after they “bounce a little”. In May of 2009, TUI and I had lunch. The stock market finished March strongly and soared in April and May. I told TUI that it was as good a time as any to make the move, especially since he had wanted to engage us years ago and his procrastination cost him an enormous amount of money.

As I am sure you can predict, TUI said he was “oh so close” to signing the papers and taking the portfolios in a new direction. Finally, towards the end of 2009, I called TUI to say “enough is enough”. It’s been three years and it’s decision time. Let’s either move ahead as planned or stop pretending and wasting each other’s time. In true TUI fashion, he said that the portfolios were now making a lot of money and there was no need to make any changes.

People like TUI will never be good investors. They are paralyzed by nature and terrified to actually execute. I can spot them the minute they sit down in my office for the initial consultation.

Personality is very powerful in determining your ability to succeeding in investing. The faster you can figure out what type of investor you are, the better off you will be over the long-term.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC

Thursday, April 15, 2010

1Q earnings fall for People's United Bank, but dividend jumps

People's United Bank, based in Bridgeport, Conn., Thursday announced net income of $13.6million - or 4 cents per share - for the first quarter of 2010, compared to $24.2 million - or 7 cents per share - for the first quarter of 2009.

The bank's parent company is People's United Financial Inc. and trades under the symbol PBCT on the Nasdaq.

Net interest income totaled $159.6 million.

Included in the results for the quarter are $23.4 million in merger-related and computer system conversion expenses. Senior Vice President of Investor Relations Jared Shaw said computer system upgrades will continue throughout the year but are considered non-operational expenses or non-recurring expenses.

People's completed its acquisition of Financial Federal Corp. - a company that provides financing for equipment purchases - in February. "As anticipated, the transaction was immediately accretive to earnings, though our results will not reflect a full quarter's benefit until the second quarter," said Philip R. Sherringham, president and chief executive officer.

The bank's board of directors voted to increase the annual common stock dividend by 1 penny per share for a quarterly dividend of 15 cents per share payable May 15 to shareholders of record on May 1.

Shaw said People's has capital to deploy and continues to look for additional acquisition opportunities.

Average commercial banking loans increased by $66 million to $8.8 billion since the fourth quarter of 2009, while average residential mortgage loans totaled $2.5 billion, a $103 million decrease during the same period.

People's reported $22 billion in total assets Thursday and its stock closed at $16.65 per share, up 9 cents on the Nasdaq.

Wednesday, April 14, 2010

Mortgage Industry Re-do

The Obama administration Wednesday beckoned the public's input on how it should reform the nation's housing finance system.

The Treasury department and the U.S. Department of Housing and Urban Development (HUD) took the lead in presenting 7 questions to a variety of audiences including housing market professionals, industry groups, academic experts and consumer and community organizations.

The mortgage industry was dealt a severe blow with the near-collapse in 2008 of quasi-public mortgage finance companies Fannie Mae and Freddie Mac. The government-backed entities got into trouble by buying mortgages originated by lenders and then packaging them into bonds that were sold in the bond market.

National investment banks took severe losses as well by bundling mortgages and selling them in a secondary market. In both scenarios many loans were toxic, meaning they were approved for borrowers who did not truthfully represent their ability to pay or were misled about the terms of mortgages they really could not afford. Some loans had interest rates that spiked up after a certain number of months, making the payments unaffordable for those borrowers.

The questions posed by the Obama administration seek public comment on the future of the
housing finance system, including Fannie Mae and Freddie Mac, and the overall role of the federal government in housing policy.

"A well-functioning housing finance system is critical to the long term stability of the housing market," Treasury Secretary Timothy Geithner said in a statement. "Hearing from a wide variety of perspectives as we embark on this process is an important part of establishing a more stable and sound housing finance system for the American people."

Input will be sought both by written responses submitted online in the Federal Register at and through a series of public forums around the country.

"This open process will help shape the future of our housing finance system," HUD Secretary Shaun Donovan said. "The Obama administration is committed to engaging the public as we consider proposals for reforming the housing finance system in the context of our broader housing policy goals, and the best steps to get from where we are today to a stronger housing finance system."

Here are the 7 questions:

1. How should federal housing finance objectives be prioritized in the context of the broader objectives of housing policy?

2. What role should the federal government play in supporting a stable, well-functioning housing finance system and what risks, if any, should the federal government bear in meeting its housing finance objectives?

3. Should the government approach differ across different segments of the market, and if so, how?

4. How should the current organization of the housing finance system be improved?

5. How should the housing finance system support sound market practices?

6. What is the best way for the housing finance system to help ensure consumers are protected from unfair, abusive or deceptive practices?

7. Do housing finance systems in other countries offer insights that can help inform US reform choices?

Tell me what you think of this approach and whether you will participate?

Friday, April 9, 2010

Let's Hear From YOU!

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

I am going to do something a bit different this week. Rather than a regular contribution, I am asking you for a favor. In my Street$marts newsletter, I often poll my readers on a variety of hot topics and discuss the results in an upcoming issue. I’d like to do the same with you, using the same survey I did from my newsletter and share and compare the results either next week or the week after.

The survey is online and will take all of 1-2 minutes. Just click on the link below to begin. Thank you for participating!

Very Short Survey

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC

Thursday, April 8, 2010

SBA Recovery Act Lending Extended

President Barack Obama Friday signed legislation extending through April the U.S. Small Business Administration’s ability to provide enhancements in its two largest small business loan programs.

The enhancements, first made available under the American Recovery and Reinvestment Act (enacted Feb. 17, 2009) , include a higher guarantee on some SBA-backed loans and fee relief.

The SBA estimates the $40 million extension will support about $1.4 billion in small business lending.

"Thousands of small businesses across the country have taken advantage of these Recovery loan enhancements to get the capital they need during these tough economic times," SBA Administrator Karen Mills said in a statement. "The increased guarantee and reduced fees on SBA loans helped put more than $23 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs. As a result, average weekly loan approvals by SBA have climbed by 86% compared to the weekly average before passage of the Recovery Act. These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer extension of the increased guarantee and reduced fees. "

As part of the Recovery Act, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans.

The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February, 2010, and an additional $60 million was provided subsequently. That funding was exhausted late Friday.
Under the new extension SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April, 30, 2010, or until the funds provided under the bill are exhausted.

This extension does not affect other SBA Recovery Act programs, including the America’s Recovery Capital (ARC) loan program or the agency’s microloans. Recovery Act funding still remains available for both of those programs.

Friday, April 2, 2010

Economy Approaching Fork in the Road

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

It's been no secret that I have been a huge skeptic of the so-called economic recovery. To me, the world has been and is being held together with duct tape (may all time favorite product) and band-aids. Without the tsunami of cheap and easy money along with all the other government rescues and bailouts, there would be no "recovery".

The long-term problem is not that the government has intervened like no time before in our history, although I do not totally agree with all of it. The issues are that:

  • The only real employment growth is in government.

  • The economy cannot live without the massive stimulus.

  • Private capital is not lining up to replace the government.

  • Entrepreneurship is just about dead.

  • Taxes are set to go up, up, up at precisely the wrong time.

  • Washington is broken.

There are two ways to look at those comments. It's often darkest before dawn and the almost always resilient U.S. economy is about to surge higher. OR, we've been given an 18 month reprieve and trouble lies ahead. Until proven otherwise, and maybe the stock market is telling me I am a dummy, I have to stay on the troubled side.

The recession was not your run-of-the-mill variety with inventory correction and inflationary pressures that's easily recovered from. It was credit contraction (deflation) based and the only two modern day precedents, Japan 1989-present and the U.S. in the 1930s, didn't work out so well!

It took us until the end of WWII, some 10 years later before the economy turned for good. And Japan STILL hasn't figured out how to divorce itself from the death grip of deflation with all of their demographic issues. But opening their borders would be a start!

I came across the following piece from John Mauldin, who quoted former Merrill Lynch Chief Economist David Rosenberg (currently at Gluskin, Sheff), that I wanted to share regarding issues with the nascent recovery.

More than five million homeowners are behind on their mortgages.There are over six million Americans who have been unemployed for at least six months, a record 40% of the ranks of the jobless.
The private capital stock is growing at its slowest rate in nearly two decades.
Roughly 30% of manufacturing capacity is sitting idle.
Nearly 19 million residential housing units, or about 15% of the stock, is vacant.
One in six Americans is either unemployed or underemployed.
Commercial real estate values are down 30% over the past year.
The average American worker has seen his/her level of wealth plunge $100,000 over the last two years, even with the recovery in equity markets this past year.
Bank credit is contracting at an unprecedented 15% annual rate so far this year as lenders sit on a record $1.3 trillion of cash.
Unit labor costs are down an unprecedented 4.7% over the past year, and what has replenished household coffers has been the federal government, as transfer payments from Uncle Sam now make up a record 18% of personal income (and the Senate just passed yet another jobless benefit extension bill!)."

All things considered, I find it hard to fathom that any type of “real” historical economic recovery is close at hand. The best case continues to be a slow plodding through that lasts several years and allows our problems to heal over time with good policy, assuming we begin to control our budget deficits.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC