Friday Financial Five – July 31, 2015

Friday, July 31, 2015

Dan Forbes, GoLocalPDX Contributor

GDP disappoints, rate hike anticipated

The initial estimate on the second quarter’s Gross Domestic Product, the main measure of economic productivity, came in lower than expected at 2.3%. Residential investment and consumer spending remained strong, while business spending fell. Estimates for the 2nd quarter ranged anywhere from 2.5% to 3%, so lower productivity may mean a drag on the third quarter number as well. The Fed met this week and left rates unchanged but cited optimism for economic conditions, setting the stage for an impending rate hike.

Millennials love the Roth IRA

The flexibility offered by the Roth IRA has made it increasingly popular with the younger generation, according to the Investment Company Institute. Roth users tend to be younger than traditional IRA investors and fund their accounts through contributions as opposed to rollovers. The Roth is popular with good reason. The most attractive feature is the absence of Required Minimum Distributions, but it’s also gaining steam as an education funding tool. The account isn’t included in the EFC (Expected Family Contribution) for financial aid purposes and contributions can be withdrawn without tax or penalty. This also applies to Roth conversions that have aged for five years.

President Obama pushes state 401(k)s

President Obama tried to build on the myRA premise, pushing the Department of Labor to work with individual states to create retirement savings programs. At this point, Washington and Illinois have state-run automatic savings programs in place. The president would like to see nationwide expansion to offer retirement savings for those without an option at work. Labor Department Secretary Tom Perez will be tasked with creating the set of rules for states to follow to create these programs.

Comparing auto insurance premiums more frequently

One of the easiest parts of the budget to review are basic insurance costs, including auto premiums. Despite the ease of looking into savings on this cost, the number of people that fail to review auto insurance expense is pretty startling, according to a survey from Insurancequotes.com. Almost 25% of respondents had been with the same insurer for more than 16 years. Over one-third of those responding have never compared pricing. Loyalty to a company is great and many people like the service their company provides, particularly during the claims process. But there needs to be a periodic assessment of all costs, especially for those living on a fixed retirement income.

Football player Freeney has BOA lawsuit dismissed

Dwight Freeney’s $20 million lawsuit against Bank of America was dismissed, primarily due to problems with how the complaint was filed. The original complaint stemmed from advisors who allegedly defrauded Freeney and stole $8.5 million starting in 2010. The basis for the dismissal, which Freeney’s team hopes to correct and refile, is that the complaint should have been filed against Merrill Lynch instead of Bank of America. The sad irony is that Freeney came to Bank of America after bad prior financial experiences and was seeking a larger, more established firm.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Slideshow: Oregon Receives Average Ranking for Business Climate

The state of Oregon is neither the best nor worst state to run a company, according to data pulled from nationwide business publications and testimonies from Oregon business owners.

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Thumbtack/Kauffman

Oregon receives a C+ grade for its overall friendliness to small businesses, according to a new survey conducted by Thumbtack.com and the Kauffman Foundation.

The study, drawing upon over 12,000 pieces of data, provides new insights about the nation’s business climate using a state by state approach. Click here to read the full article.

Photo Credit: GoLocalProv.com

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CNBC

Top States for Business 2014

Oregon Ranking: 22

The survey notes Oregon’s “idyllic quality of life [and] healthy economy” but also its “struggling education system and high cost of living.” Read more here.

By Jim.henderson (Own work) [CC0], via Wikimedia Commons

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Forbes

Best States for Business and Careers

Oregon Ranking: 19

Over the past 5 years, Oregon's economy has grown steadily, up 2.8% annually, which is the second best growth in the U.S. The state’s outlook is just as strong, with a forecasted 3.2% expansion per year. Read more here.

Photo Credit: Jim Larrison via Compfight cc

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Chief Executive

Best States for Doing Business

Oregon Ranking: 38

Notable Quote: “Oregon is going to kill the small business owner’s incentives to remain in the state if the 13.6% maximum state income tax passes in November of 2014. Many of the successful small business owners will relocate to Washington state (0% income tax) or other states.” Read more here.

Photo Credit: GoLocalProv.com

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Tax Foundation

Tax Climate

Oregon Ranking: 12

High income and corporate tax rates are balanced out by low sales and property tax figures, putting Oregon in the #12 spot according to the Tax Foundation’s State Business Tax Climate Index system.

"The Tax Foundation’s 2014 edition of the State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare." Read more here.

Photo Credit: GoLocalProv.com

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WalletHub

Best States to be a Taxpayer

WalletHub analyzed how state and local tax rates compare to the national median in all 50 years. . Eight different types of taxation were compared to determine the following:

"1) Which states have the highest and lowest tax rates; 2) how those rates compare to the national median; 3) which states offer the best tax rates when adjusted by the cost-of-living index."

Oregon Rank: 40

0% sales tax and the nation’s lowest alcohol tax are overcome by high income and gasoline taxes. Read more here.

Photo Credit: GoLocalProv.com

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ALEC

Economic Outlook for 2014

Oregon Ranking: 42

The 2014 economic outlook ranking helps determine how each state can expect to perform economically based on 15 policy areas that are proven determinants of economic success. Read more here.

Photo Credit: GoLocalProv.com

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US Chamber of Commerce Fo

This report goes state by state, addressing individual topics like Business Climate, Innovation and Entrepreneurship, Infrastructure, and Talent Pipeline.

Oregon receives an above average ranking, including a top-spot ranking in Productivity Growth, which indicates a state's shift toward higher-value jobs and industries. Read more here.

Photo Credit: GoLocalProv.com

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PEW Charitable Trusts

Oregon is among ten states to have the highest growth rates, according to Moody’s analytics.

Fast Job Growth Outlook Ranking: 7th

Job outlook is particularly strong out West, including Oregon. Categories like steady home construction, increasing levels of investment in high tech and the aerospace industry, and trade with Asia all are strong contributors to the positive forecast. Read more here.

Photo Credit: GoLocalProv.com