Corliss Group Online Financial Mag

If you're like most Americans, you probably didn't make a new year's resolution to get started with long-term financial planning.

A staggering 84 percent of respondents to a New Year's Resolution Survey from Allianz Life Insurance said that financial planning was not among their 2014 resolutions at all—the highest percentage ever to reveal that in the survey's history.

What held them back? Well, 30 percent said they don't believe they make enough money to "worry" about financial planning. That's bizarre. Shouldn't having less money increase your need to manage what you have effectively?

Regardless of your situation, I hope you'll engage in the planning process this year—and the sooner you get started, the better.

The advice my firm is giving our clients in 2014 features many themes often repeated over our 25-year history, along with some new information reflecting what's happening now. Here are eight key elements:

• Maintain a well-diversified investment portfolio. Although the economy is improving, the stock market is at an all-time high and corporate profits are setting records, much weakness and uncertainty remain. Therefore, this is no time to make big bets. For that reason, we continue to advocate extensive global diversification. Stocks should include U.S. and foreign companies of all sorts: large-cap, mid-cap and small-cap; growth and value; and emerging markets. Your portfolio should also include real estate (diversified by type and geography) and bonds (government and corporate, U.S. and foreign—more on duration later), as well as natural resources, including precious metals, oil and gas. One of the most cost-effective ways to accomplish this is through exchange traded funds

• Rebalance the portfolio as needed. Most people never rebalance their portfolios, which can cause their risks to rise and profits to fall. And many who do rebalance do so on a calendar basis. We eschew that method as inefficient—who's to say you need to issue buys/sells/trades just because it's June 30? That's why we rebalance our clients' accounts on a percentage basis. When a portfolio drifts beyond preset limits, we rebalance—as often or as seldom as necessary. This requires a daily review of each portfolio, a chore our clients happily delegate to us. But you can do it, too, if you are willing to take the time.

• Avoid long-term bonds. The strengthening economy will eventually cause the Federal Reserve to raise interest rates—and when that happens, bond prices will fall. For that reason, we are placing almost all of our clients' bond positions in short- and intermediate-duration bond funds. This will help reduce interest-rate risk while maintaining diversification.

• Contribute the maximum to your retirement plan at work. If you can't put in the full amount now, increase your contribution each year until you can. And commit to placing half of future pay raises in the plan.

• Avoid Initial Public Offerings. IPOs got a lot of attention last year, largely thanks to Twitter, but it seems Facebook's IPO has been forgotten. Instead of trying to grab the latest hot stock, remember that your diversified ETFs probably will obtain the stock for you—meaning, you don't have to try to succeed by "getting rich quick."

• Review your estate plan. Look at your will, trust documents, powers of attorney and beneficiaries on your retirement accounts, annuities and life insurance policies. People may have died or been born since you signed the documents, or you might not still feel as you once did about heirs. Reading the documents will give you the opportunity to update them.

• Save for college with 529 plans. They let your money grow tax-free and are flexible enough to cover all expenses—including tuition, room and board and books—at any accredited college, public or private, anywhere.

• And here's what not to do. We do not recommend variable life insurance policies, nontraded real estate investment trusts, hedge funds, "alternative" funds, master limited partnerships investing in oil and gas, fixed or equity-indexed annuities, actively managed retail mutual funds, inverse funds, commodities trading, derivatives, short-selling, buying on margin, lottery tickets or viatical settlements (purchases of life insurance policies from the terminally ill).

If you don't have a comprehensive long-term financial plan for yourself and your family, get one from an independent, objective, fee-based financial planner. I can't think of a better new year's resolution.

Elsewhere, small, formerly socialist economies – Armenia, Belarus, Moldova, Georgia, Lithuania, and Kosovo – have grown very rapidly since the early 2000's. But look at their average current-account deficits from 2000 to 2013 – which range from a low of 5.5 per cent of GDP in Lithuania to a high of 13.4 per cent in Kosovo – and it becomes evident that these are not countries to emulate.

The story is similar in Africa. The continent's fastest-growing economies are those that have been willing and able to allow yawning external gaps from 2000 to 2013: 26 per cent of GDP, on average, in Liberia, 17 per cent in Mozambique, 14 per cent in Chad, 11 per cent in Sierra Leone, and 7 per cent in Ghana. Rwanda's current account has deteriorated steadily, with the deficit now exceeding 10 per cent of GDP.

The world's current-account balances must ultimately sum up to zero. In an optimal world, the surpluses of countries pursuing export-led growth would be willingly matched by the deficits of those pursuing debt-led growth. In the real world, there is no mechanism to ensure such an equilibrium on a continuous basis; national economic policies can be (and often are) mutually incompatible.

When some countries want to run smaller deficits without a corresponding desire by others to reduce surpluses, the result is the exportation of unemployment and a bias toward deflation (as is the case now). As external imbalances grow larger, each phase of this cycle becomes more painful..

Source: Corliss Online Financial Group

http://www.skynews.com.au/businessnews/article.aspx?id=912230

Tokyo investors will stay focused on the US government shutdown next week, as fears grow it could lead to a devastating debt default and strike a huge blow to the global economy.

The Nikkei's 0.94 per cent slip on Friday to a one-month low ended a week that saw the benchmark index lose 4.98 per cent, or 735.76 points, to 14,024.31, as the political deadlock in Washington dominated headlines.

The broader Topix index of all first-section shares fell 4.41 per cent, or 53.70 points, over the week to 1,163.82.

'Players will keep an eye on the US budget stand-off next week,' said Kenzaburo Suwa, strategist with Okasan Securities.

'But we may see an early end to the impasse as (President Barack) Obama appears serious by cancelling key conferences overseas,' Suwa added.

Obama axed plans to attend the Asia Pacific Economic Cooperation (APEC) summit in Bali and the East Asia Summit in Brunei next week, blaming political paralysis in Washington for the cancellation.

While the shutdown has fuelled jitters among investors, analysts have generally expressed even deeper concerns about the October 17 deadline to raise the US debt ceiling.

International Monetary Fund chief Christine Lagarde warned on Thursday that a US failure to raise the borrowing limit could wreak havoc on the global economy, while the Treasury Department said a default could have a 'catastrophic' effect.

On Wall Street, the Dow ended 0.90 per cent lower on Thursday.

'The deleterious effects of the US government shutdown are already being felt,' SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires.

'The deadlock looks as intractable as ever, and investors are continuing to pull funds out of the dollar and risk assets as a precaution,' he said.

Japanese Finance Minister Taro Aso on Friday urged Washington to resolve the budget crisis, warning it could seriously damage the global economy.

'My feeling is ... the debt limit will have an internationally significant impact. Unless it is resolved swiftly, we will see various consequences,' he told reporters in Tokyo.

The situation was likely to stoke more buying of the safe-haven yen, Aso added, pushing up the unit's value. A strong yen is bad for Japanese exporters as it makes them less competitive overseas and shrinks the value of their repatriated overseas income.

On Friday, the US dollar was at Y97.12, down from Y97.27 in New York, where the greenback temporarily fell below the Y97 mark on Thursday.

'Market players will also focus on foreign exchange rates next week as the current risk-averse sentiment is likely to shift fund flows to the yen,' said Suwa at Okasan Securities.

In Tokyo share trading on Friday, Toyota fell 1.12 per cent to Y6,180 from the previous day, while Sony lost 1.75 per cent to Y2,017.

Tokyo Electric Power dropped 4.34 per cent to Y528 after Japan's atomic watchdog summoned its boss for a public dressing down over sloppy standards at its crippled Fukushima plant.

Mobile carrier SoftBank was down 3.45 per cent at Y7,270 on profit-taking after a 15 per cent rally in the past week.

http://www.cnbc.com/id/101079373

Singaporean corporations are more naive in their approach to anti-fraud and corruption practices in comparison to the Asia-Pacific average, a survey from global accountancy firm Ernst & Young has found.

According to the "Building a more ethical business environment survey," only 17 percent of Singaporean respondents acknowledged that planned investments in new markets will expose the company to new risks, compared to an average of around 35 percent for the Asia-Pacific region.

"Companies in Singapore don't necessarily lag behind in terms of anti-fraud and corruption practices; what we found is a disconnect between policies that companies already have in place and the enforcement of those policies," said John Tudorovic, fraud investigation and dispute services partner at Ernst & Young.

According to E&Y, nearly two thirds of Singaporean executives surveyed said their companies' anti-bribery and anti-corruption practices did not work well in practice, compared with an average of 48 percent for the Asia-Pacific region.

Furthermore, E&Y said their survey findings showed that a lack of regular training and management commitment to anti-bribery and anti-corruption policies was a cause for concern in Singapore.

Only 18 percent of Singaporean respondents said their management had strongly communicated their commitment to their anti-bribery and anti-corruption measures, compared with an average of 35 percent for the Asia-Pacific region.

Common procedures used to tackle fraud and corruption, such as whistle blowing and technology like forensic due diligence, were also not common practice in Singapore, the survey found.

While 71 percent of Singaporean companies said they would be prepared to advocate whistle blowing, whereby employees can report insider knowledge of fraud or corruption through a protected procedure, only 17 percent actually operate such schemes.

"Whistleblowers may inherently be concerned about the exposure of their identities and the potential repercussions, and to that end, employee education and management communication on whistle blowing schemes, is important in ensuring that these concerns are addressed for the schemes to be truly effective in practice," said Tudorovic.

Just over half of the Singaporean companies profiled use technology, like transaction monitoring or forensic data analytics, as a method for tackling bribery and corruption risk. Only 7 percent of Singaporean respondents said they viewed technology as the best way to tackle fraud.

"IT investments in most Asian countries are still seen as a cost and burden rather than a tool that can create valuable insights into the company's operations," said Tudorovic.

However, where Singapore did come up trumps was in its ability not to let volatile and challenging market conditions alter existing efforts to enforce anti-bribery and corruption measures.

An average of 27 percent of Asia-Pacific respondents said management was likely to take shortcuts to meet targets in harsh economic conditions. But only 11 percent of Singaporean respondents said this was the case in their companies.

Singapore was home to one of the most infamous insider trading scandals in the 1990s, when rogue trader Nick Leeson's speculative trading racked up over 800 million pounds ($1.29 billion at today's exchange rate) in losses and led to the collapse of Barings Bank.

A KPMG survey conducted in 2011 investigating attitudes to fraud in Singapore found that more than one in five companies in Singapore experienced some kind of fraud between 2008 and 2011.