Wondering how current events will impact the economy, the markets, and your money? Here is a quick insight for 2011 from Terry Savage.
 Savage Truth:  New Year, New Opportunities
Let’s raise our glasses in a toast to the New Year — and all the opportunities it brings.
First, let’s toast to good health — for ourselves and our family and friends.  That’s something money can’t buy, and therefore it is priceless!
And let’s drink to peace on earth — for without that we must expend our resources and our energies in ways that could be put to use to improve our planet.
And, let’s drink to WEALTH — and to prosperity in the New Year!  Let’s drink to political cooperation that will provide the opportunities for economic growth.  For it is only that growth that can provide jobs, and opportunities in the New Year.
So,let’s raise a glass of champagne – or bottled water – and toast to Wealth in the New Year!   Let’s root for the rich – and for having more of them.  Let’s hope for more Facebook or Google or Groupon-type billionaires.  They are living proof that America is still the land of opportunity.
They’ve not only created wealth, but they created thousands of jobs — even in the midst of a terrible recession.
And they pay taxes!   That’s the real reason we need more wealthy people; they’re the ones who pay all the taxes.  Here are the facts on that, according to the Tax Foundation: 
In 2008, the last year for which hard data is available, the top 1 percent of the nation’s adjusted gross income earners earned 20% of the total national income.  And, they paid 38% of the nation’s taxes.
The top 10 percent of the nation’s AGI earners earned 45.77% of the income, but they paid in 69.64% of the total taxes paid that year.
In fact, the top 50 percent of the nation’s AGI earners, earned 87.25% of the total income but they paid in 97.30% of the total income taxes. 
As for the bottom 50 percent, they get  a pretty good deal.  In fact, many of those who pay no income taxes, even get refunds from the government.  According to the Tax Foundation, more than 23 million returns received refundable credits in excess of the employee’s share of payroll taxes.  Not only are they getting money back – but they are effectively not paying for the Social Security and Medicare benefits they will eventually receive! 
So, for the New Year, let’s get our economy growing again, and create incentives for investment and success!
Get Organized in the New Year
This is the perfect week to get organized for the New Year.  As subscribers, you’ve all received the link to my Personal Financial Organizer.  It`s time to update it — with the latest information on your investment accounts, and even the list of credit cards you carry in your wallet (with account numbers and toll-free numbers to report loss).  Here`s a link to the organizer, so you can print out a fresh copy — and unlimited copies for your family members and friends. 
 This is the weekend to start a new Quicken file for the year ahead, and back up last year`s file to a disc you can give to your tax preparer next month.  If you want to keep track of your finances on your personal handheld device, set up your accounts securely at Mint.com.  There`s no cost, and this company is now owned by Intuit, parent of Quicken.  And if you`re still in the paper era, then simply start a new check register for the year ahead.
Clean out your desk drawer or files and put everything you`ll need for taxes in one special box.  You`ll save aggravation, and accountant`s fees, if all your deductible receipts (think travel, entertainment, charitable contributions, state taxes, property taxes) are in one place.  If you sold stocks or funds this year in a taxable account, this is the moment to list your gains and losses.
If you want to keep all that information stored safely on your computer, or in `the cloud` — here`s a website that might interest you.  I`ll be writing a full column about www.InfoSafe.com — a way to digitally store all your information.  (More in Website of the Week at the bottom of this page.)
ReThink Investments
We`re starting the year with stocks at a 2-year high, gold at an all-time high ($1418 per ounce) and interest rates still fairly low.  As I recommended last year at this time, both stocks and gold are the antidote to Inflation — now renamed `Quantitative Easing`!! 
The Fed has promised to keep printing– so you need to keep your investments structured to hedge against the potential impact on the buying power of your retirement savings in dollars.
This is the moment to reevaluate your allocations in a 40l(k) plan or other retirement account — and to increase your contributions.  To find out if you`re saving enough go to www.choosetosave.org — and click on the `ballpark estimate`green logo.  You can change your assumptions about saving and investing and inflation– to see if you are likely to maintain your lifestyle in retirement.
You`re about to get a 2 percent cut in FICA — Social Security taxes, leaving more money in your paycheck.  It will be quite an economic stimulus — but you don`t have to spend it!  You can ask the HR department to simply add that to your 40l(k) contribution. You won`t miss the money, since it was taken out of your paycheck last year.  But it will now be going toward a real retirement plan!
(In a recent column, posted on my website, I calculated that a worker making $65,000 a year would have an extra $1300 because of this tax cut.  And if the employer gave a 50 cent match, and if the money grew at the market`s historic rate of 10% for 30 years, then the money not spent this year would be worth more than $32,000 at retirement!)
The Economic Outlook
Don`t let yourself get so buried in gloom about the political process that you overlook the opportunities in 2011.  The latest employment figures look promising –as do other signs of economic growth.  Home prices may not soar again for years. As we learned from tech stocks, markets that become far over-extended take time to recover.  But there will be new ways to prosper.
Don`t look back.  Last year is behind us.  Look up.  Look ahead. There are new investment opportunities that will revolve around energy technologies, commodities, and the global demand that grows during an economic recovery.  Seek them out.  And, I`ll keep sending my thoughts along the way.
My best wishes to you for a Happy, Healthy –and Prosperous — New Year!

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