Star News http://erstarnews.com The Star News covers community news, sports, current events and provides advertising and information for Elk River, Otsego, Rogers and Zimmerman, Minnesota and their surrounding areas. Wed, 04 Mar 2015 17:57:09 +0000 en-US hourly 1 Freedom Investing Success http://erstarnews.com/2015/03/04/freedom-investing-success/ http://erstarnews.com/2015/03/04/freedom-investing-success/#comments Wed, 04 Mar 2015 16:30:05 +0000 http://erstarnews.com/?guid=e2564c5a87d984734413314a86d9f3a0 The link between economic freedom and prosperity is a well-documented reality. This means that, when diversifying your portfolio with foreign holdings, you should look to the world’s freest economies.

Here is a simple thought experiment. Would you rather invest in South Korea, “a world leader in electronics, telecommunications, automobile production, and shipbuilding,” or in North Korea, where “corruption is endemic at every level of the state and economy”?

The Heritage Foundation, which ranks countries by economic freedom for the past 20 years, constantly shows that free markets produce better economies. They allocate resources more efficiently. A centralized planner cannot know and respond to all of the signals as quickly as the free markets.

For over a decade, we have advocated freedom investing, the idea that investing in countries rated high in economic freedom should produce better returns than in those with more controlled or repressed economies.

This investment strategy has proved to be successful. The freest six countries – we call them the “free six” – were Hong Kong, Singapore, Australia, New Zealand, Switzerland and Canada. The return of each of the free six indexes beat the return of the foreign developed markets index, MSCI EAFE.

You can’t invest directly in an index, but you can invest in a product that attempts to track an index. In 2014, the average net return of iShares MSCI funds that track the free six indexes (EWH, EWS, EWA, ENZL, EWL, EWC) was 2.88%, outperforming the EAFE fund (EFA), which was in the red, by 7.92 percentage points.

Net returns reflect what remains after the deduction of tax withholding at that country’s maximum appropriate rate. In some countries, such as New Zealand, companies pay their non-domestic shareholders a bonus to compensate for the tax credit that domestic shareholders can claim.

Additionally, the returns are translated into U.S. dollars. This year that conversion hurt foreign stocks as the U.S. dollar appreciated against most currencies. If everything is measured in local currencies, the average return of the free six was much higher, 10.44%.

One more reason that makes the free six great investments is these currencies hold their value better when the dollar strengthens. Over 2014, the dollar strengthened an average of 12.79%, according to the U.S. Dollar Index, but only an average of 6.52% against the currency of the free six.

The United States used to be economically free, but fell one tier to mostly free in 2010. Still, it is the 12th freest country in the world. Also, because currency exchange is not an issue, domestic investments remain a large share of our asset allocation. For the portion of foreign stocks, we weight those countries ranked free over those with lower scores.

Economic freedom matters. Even in 2014, a bad year for foreign investments, the free six boosted returns over the rest of the global market.

Follow AdviceIQ on Twitter at @adviceiq.

David John Marotta, CFP, AIF, is president of Marotta Wealth Management Inc. of Charlottesville, Va., providing fee-only financial planning and wealth management at www.emarotta.com and blogging at www.marottaonmoney.com. Both the author and clients he represents often invest in investments mentioned in these articles. Megan Russell is the firm’s system analyst. She is responsible for researching problems and challenges, and finding efficient solutions for them.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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The link between economic freedom and prosperity is a well-documented reality. This means that, when diversifying your portfolio with foreign holdings, you should look to the world’s freest economies.

Here is a simple thought experiment. Would you rather invest in South Korea, “a world leader in electronics, telecommunications, automobile production, and shipbuilding,” or in North Korea, where “corruption is endemic at every level of the state and economy”?

The Heritage Foundation, which ranks countries by economic freedom for the past 20 years, constantly shows that free markets produce better economies. They allocate resources more efficiently. A centralized planner cannot know and respond to all of the signals as quickly as the free markets.

For over a decade, we have advocated freedom investing, the idea that investing in countries rated high in economic freedom should produce better returns than in those with more controlled or repressed economies.

This investment strategy has proved to be successful. The freest six countries – we call them the “free six” – were Hong Kong, Singapore, Australia, New Zealand, Switzerland and Canada. The return of each of the free six indexes beat the return of the foreign developed markets index, MSCI EAFE.

You can’t invest directly in an index, but you can invest in a product that attempts to track an index. In 2014, the average net return of iShares MSCI funds that track the free six indexes (EWH, EWS, EWA, ENZL, EWL, EWC) was 2.88%, outperforming the EAFE fund (EFA), which was in the red, by 7.92 percentage points.

Net returns reflect what remains after the deduction of tax withholding at that country’s maximum appropriate rate. In some countries, such as New Zealand, companies pay their non-domestic shareholders a bonus to compensate for the tax credit that domestic shareholders can claim.

Additionally, the returns are translated into U.S. dollars. This year that conversion hurt foreign stocks as the U.S. dollar appreciated against most currencies. If everything is measured in local currencies, the average return of the free six was much higher, 10.44%.

One more reason that makes the free six great investments is these currencies hold their value better when the dollar strengthens. Over 2014, the dollar strengthened an average of 12.79%, according to the U.S. Dollar Index, but only an average of 6.52% against the currency of the free six.

The United States used to be economically free, but fell one tier to mostly free in 2010. Still, it is the 12th freest country in the world. Also, because currency exchange is not an issue, domestic investments remain a large share of our asset allocation. For the portion of foreign stocks, we weight those countries ranked free over those with lower scores.

Economic freedom matters. Even in 2014, a bad year for foreign investments, the free six boosted returns over the rest of the global market.

Follow AdviceIQ on Twitter at @adviceiq.

David John Marotta, CFP, AIF, is president of Marotta Wealth Management Inc. of Charlottesville, Va., providing fee-only financial planning and wealth management at www.emarotta.com and blogging at www.marottaonmoney.com. Both the author and clients he represents often invest in investments mentioned in these articles. Megan Russell is the firm’s system analyst. She is responsible for researching problems and challenges, and finding efficient solutions for them.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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How Food and Oil Boost Jobs http://erstarnews.com/2015/03/04/how-food-and-oil-boost-jobs/ http://erstarnews.com/2015/03/04/how-food-and-oil-boost-jobs/#comments Wed, 04 Mar 2015 16:30:02 +0000 http://erstarnews.com/?guid=034ba58433a6dc9e67245feb16b06a82 Recent economy reports offer a few bright spots: lower unemployment, cheaper gas. Gas is fueling something beyond our cars – namely, a crucial and expanding jobs generator, the restaurant industry.

Last year, about 13.1 million Americans worked in the restaurant industry, according to the National Restaurant Association (NRA), which expects that number to increase to 14.4 million by 2023. Restaurants employ about 10% of the entire U.S. workforce – no surprise considering the industry enjoys a low barrier to entry and can be found just about everywhere. The restaurant industry weathered the Great Recession better than other sectors and rebounded to pre-recession job levels by 2010.

With restaurant employment steadily rising, it’s impossible to not give some credit to the industry for helping the U.S. finally reach weekly jobless claims of 313,000 for the week ending Feb. 21, worse than expected but still one of the lowest claims levels since 259,000 in April 2000. The U.S. Bureau of Labor Statistics also put January’s unemployment rate at 5.7%, one of the lowest rates in eight years.

The NRA claims that job growth in its industry outpaced the overall economy last year; in 2015, they estimate restaurants will again add more than 300,000 jobs. “The restaurant industry continues to be a driving force behind the nation’s recovery from the Great Recession,” the NRA adds. “Eating and drinking places … added jobs at a solid 3.5% rate in 2014, well above the 1.9% gain in total U.S. employment.”

Like all workers, most restaurant workers in this country drive to work. Nationwide, gas averages $2.44 a gallon, according to AAA. And lower gas prices may continue driving some of this employment expansion in the restaurant industry.

CNBC recently released a story showing exactly where people spend savings on gas. Among the top winners: restaurants, where spending is up pretty much across the board. But the restaurants with the most growth weren’t the fancy ones. Quick-service restaurants, aka fast food, pull in the most discretionary income.

But that’s not the whole story. The fast casual segment is a big moneymaker. This alternative usually doesn’t provide table service, and offers higher quality food with fewer frozen or processed ingredients than fast food.

Over the last few years, as the economy continued to strengthen, we saw time-conscious diners move from fast food (think McDonald’s) to such fast casual outlets as Chipotle (CMG). Speculation abounds as to how McDonald’s (MCD) and other household names in fast food will handle the move from yummy to yoga (milkshakes to kale smoothies, hearty to healthy, fast to fresh) that Americans now seem to embrace. McDonald’s recently reported another bad quarter for sales and promptly announced a change in chief executive officers.

That’s for the eatery industry to handle. More broadly, it seems clear that what we save at the pump we partially funnel into higher quality restaurants in our communities. That in turn feeds an increasingly brighter employment picture.

Follow AdviceIQ on Twitter at @adviceiq

Wes Moss, CFP, is the chief investment strategist for Capital Investment Advisors and a partner at Wela, both in Atlanta. He hosts “Money Matters,” a live financial advice show on Atlanta’s News 95-5 and AM 750 WSB Radio. In 2014 Barron’s Magazine named him as one of America’s top 1,200 Financial Advisors. His newly released book, You Can Retire Sooner Than You Think published by McGraw Hill, is available on Amazon, iTunes and at your local bookstore.

Wes writes weekly about personal finance in the “Bargain Hunter Section” for AJC.com, the site of The Atlanta Journal-Constitution. Wes is also the editor and writer for About.com’s Personal Finance blog. Connect with Wes on Twitter at @WesMoss365 and on Facebook at Wes Moss Money Matters. You can also visit his website, WesMoss.com to learn more about Wes, and take his complimentary Money and Happiness Quiz.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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Recent economy reports offer a few bright spots: lower unemployment, cheaper gas. Gas is fueling something beyond our cars – namely, a crucial and expanding jobs generator, the restaurant industry.

Last year, about 13.1 million Americans worked in the restaurant industry, according to the National Restaurant Association (NRA), which expects that number to increase to 14.4 million by 2023. Restaurants employ about 10% of the entire U.S. workforce – no surprise considering the industry enjoys a low barrier to entry and can be found just about everywhere. The restaurant industry weathered the Great Recession better than other sectors and rebounded to pre-recession job levels by 2010.

With restaurant employment steadily rising, it’s impossible to not give some credit to the industry for helping the U.S. finally reach weekly jobless claims of 313,000 for the week ending Feb. 21, worse than expected but still one of the lowest claims levels since 259,000 in April 2000. The U.S. Bureau of Labor Statistics also put January’s unemployment rate at 5.7%, one of the lowest rates in eight years.

The NRA claims that job growth in its industry outpaced the overall economy last year; in 2015, they estimate restaurants will again add more than 300,000 jobs. “The restaurant industry continues to be a driving force behind the nation’s recovery from the Great Recession,” the NRA adds. “Eating and drinking places … added jobs at a solid 3.5% rate in 2014, well above the 1.9% gain in total U.S. employment.”

Like all workers, most restaurant workers in this country drive to work. Nationwide, gas averages $2.44 a gallon, according to AAA. And lower gas prices may continue driving some of this employment expansion in the restaurant industry.

CNBC recently released a story showing exactly where people spend savings on gas. Among the top winners: restaurants, where spending is up pretty much across the board. But the restaurants with the most growth weren’t the fancy ones. Quick-service restaurants, aka fast food, pull in the most discretionary income.

But that’s not the whole story. The fast casual segment is a big moneymaker. This alternative usually doesn’t provide table service, and offers higher quality food with fewer frozen or processed ingredients than fast food.

Over the last few years, as the economy continued to strengthen, we saw time-conscious diners move from fast food (think McDonald’s) to such fast casual outlets as Chipotle (CMG). Speculation abounds as to how McDonald’s (MCD) and other household names in fast food will handle the move from yummy to yoga (milkshakes to kale smoothies, hearty to healthy, fast to fresh) that Americans now seem to embrace. McDonald’s recently reported another bad quarter for sales and promptly announced a change in chief executive officers.

That’s for the eatery industry to handle. More broadly, it seems clear that what we save at the pump we partially funnel into higher quality restaurants in our communities. That in turn feeds an increasingly brighter employment picture.

Follow AdviceIQ on Twitter at @adviceiq

Wes Moss, CFP, is the chief investment strategist for Capital Investment Advisors and a partner at Wela, both in Atlanta. He hosts “Money Matters,” a live financial advice show on Atlanta’s News 95-5 and AM 750 WSB Radio. In 2014 Barron’s Magazine named him as one of America’s top 1,200 Financial Advisors. His newly released book, You Can Retire Sooner Than You Think published by McGraw Hill, is available on Amazon, iTunes and at your local bookstore.

Wes writes weekly about personal finance in the “Bargain Hunter Section” for AJC.com, the site of The Atlanta Journal-Constitution. Wes is also the editor and writer for About.com’s Personal Finance blog. Connect with Wes on Twitter at @WesMoss365 and on Facebook at Wes Moss Money Matters. You can also visit his website, WesMoss.com to learn more about Wes, and take his complimentary Money and Happiness Quiz.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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Deb “Debbie” Kupka http://erstarnews.com/2015/03/04/deb-debbie-kupka/ http://erstarnews.com/2015/03/04/deb-debbie-kupka/#comments Wed, 04 Mar 2015 12:13:16 +0000 http://erstarnews.com/?p=786619 Deb

Loving Wife, Mother, Grandmother, Daughter, Sister

Deb “Debbie” Kupka, age 55 of Zimmerman, passed away on March 1, 2015.
She is survived by loving husband of 35 years, Tom; children, Katie (Jeff) Johnson, Jacob (Abby), Eric; grandchildren, Ellie, Brennan, Mackenzie; mother, Pat Netland; brothers, Tim Netland and Tony (Therese) Netland; many other relatives and friends.
Funeral service 11:30 a.m. Monday March 9, 2015 at Riverside Church, 20314 County Road 14 NW, Big Lake. Visitation Sunday 2 to 5 p.m. and 1 hour prior to the service at the church.
Kapala Glodek Malone 763-535-4112
www.kapalaglodekmalone.com

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http://erstarnews.com/2015/03/03/786615/ http://erstarnews.com/2015/03/03/786615/#comments Wed, 04 Mar 2015 03:57:21 +0000 http://erstarnews.com/?p=786615 St. Michael cinema to reopen in May or June

By Aaron Brom

This was the former Cinemagic Theater site in St. Michael shortly before it closed several years ago. The new owners intend to reopen the site as a movie theater this summer. (Photo by Aaron Brom)

Mere months after a church was planning to move there, the owners of the St. Michael cinema have now announced they are planning to reopen the site that has been closed for years.

Cinemasota announced via a Facebook page that it intends to open the theater for movies in May or June.

“We’ve gotten calls seeing electricians, plumbers, contractors at the site. People have been wondering what’s going on,” St. Michael Community Development Director Marc Weigle said.

On the “St. Michael Cinema” Facebook site, the owners had the following announcement: “We are proud to announce that the St. Michael Cinema will proudly re-open under new local management in May or June of this year! Please share this page with your friends and subscribe to updates so that you do not miss any exciting news and information! We cannot wait to be your #1 choice for movie-going entertainment in the St. Michael area.”

The page was so popular that Weigle said it had gone above 2,000 “likes” in just days.

“We’re ecstatic to see the building reopening and generating commercial activity again,” Weigle said. “It’s encouraging they are trying to get feedback and make improvements. Based on response we hope they are very successful.”

The site at Interstate 94 and Hwy. 241 was the center of a recent proposal by Riverside Church to move into the building and host services there. The church’s application was denied by the city council, which cited traffic safety concerns since the church would have hundreds of cars there during its services.

“The site is already permitted as a theater,” Weigle said. “They have a few things they’re working on. My understanding is they do plan on applying for a liquor license. But we haven’t received anything yet.”

He said the owners would most likely apply for a liquor license, as the former Cinemagic Theater had a bar inside.

The St. Michael Cinema page also sought feedback from area residents.

“We are very interested in hearing opinions from patrons who attended the St. Michael Cinema when it was known as the ‘Metropolitan 15’ operated by Cinemagic,” the site said. “What was your experience? Please tell us what you liked and/or did not like about the facility at that time. We appreciate you taking the time to respond to this post!”

 

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Hockey: Jaremko named all-metro first team, Kiersted second team, by Star-Tribune http://erstarnews.com/2015/03/03/hockey-jaremko-named-all-metro-first-team-kiersted-second-team-by-star-tribune/ http://erstarnews.com/2015/03/03/hockey-jaremko-named-all-metro-first-team-kiersted-second-team-by-star-tribune/#comments Wed, 04 Mar 2015 00:05:51 +0000 http://erstarnews.com/?p=786601  

Jake Jaremko

Jake Jaremko

Jake Jaremko was named to the Star-Tribune’s all-metro hockey first team on Monday, the second big honor for the Elk River senior forward.

Meanwhile, Elk junior defenseman Matt Kiersted was named to the all-metro second team.

Jaremko, who notched 25 goals and 54 assists this year for the 22-5-1 Elks, is also one of 10 finalists for the state Mr. Hockey award.

The Minnesota State-Mankato recruit logged 73 goals and 120 assists in his career for a total of 193 points in four seasons.

The all-metro first team includes Jaremko, Edina’s Dylan Malmquist, Seamus Donohue of St. Thomas Academy, and three Lakeville North players, Nick Poehling, Ryan Edquist and Jack McNeely. Malmquist was named metro player of the year.

Kiersted was cited by the Star-Tribune as a talented offensive defenseman with nine goals and 32 assists. He has committed to North Dakota.

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Woman caught on tape picking up man’s money http://erstarnews.com/2015/03/03/woman-caught-on-tape-picking-up-mans-money/ http://erstarnews.com/2015/03/03/woman-caught-on-tape-picking-up-mans-money/#comments Wed, 04 Mar 2015 00:00:45 +0000 http://erstarnews.com/?p=786613 A 67-year-old Elk River man lost $40 after taking out $300 on March 1 from an ATM machine at an Elk River Walmart.

Police are hopeful they can figure out who took the money, because they have a copy of surveillance video that shows a woman picking up money off the floor and putting it into her wallet while the victim was checking out at one of the store’s registers.

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New secretary of state wants you to vote http://erstarnews.com/2015/03/03/new-secretary-of-state-wants-you-to-vote/ http://erstarnews.com/2015/03/03/new-secretary-of-state-wants-you-to-vote/#comments Wed, 04 Mar 2015 00:00:21 +0000 http://erstarnews.com/?p=786611 Did you vote in the last general election?

If your answer is yes, congratulations.

If it is no, your new Secretary of State Steve Simon has some ideas to make voting easier for you.

It’s true that Minnesota usually is among the top voter-turnout states for the general elections, but the turnout for last year’s primary election was 10 percent.

Simon figures the turnout would be much greater if the primary election date were pushed back from August to June.

As a former 10-year legislator, he knows that changing the date won’t be easy. He says the turnout is low in August because “Minnesotans try to squeeze every drop out of summer, when there isn’t much interest in an election campaign.”

Legislators, particularly outstate, worry if the election were in June, they’d miss out on campaigning for re-election. Simon says those legislators get a lot of press and attention from would-be voters when they are in session

Simon said he intends to introduce legislation to move the primary date to June this session. He says the idea has the support of new House Speaker Kurt Daudt and Gov. Mark Dayton.

The new secretary of state also wants to change the law to have earlier voting two weeks before the election.

Last fall when there was early, no-excuse absentee voting two weeks before the election, there was a 55 percent increase in absentee voting. The next step could be earlier voting.

Earlier-voting bills have been introduced in both the Minnesota House and Senate. Simon points out that 32 states, including the neighboring ones, have earlier voting.

Another initiative the new secretary favors is ability to register to vote when getting a driver’s license. In Delaware, for example, the law requires the registrant be asked directly if they wish to register to vote when applying for a driver’s license.

On the matter of recounts, Simon believes Minnesota is better prepared for recounts than any state.

His election to secretary of state continues his political climb that started in Hopkins High School, where he was a member of the high school debate team and a state champion in extemporaneous speaking.

The teacher in Hopkins who gave him valuable advice and encouragement was Phil Abalan. Another teacher who remembers him is Ken Wedding, a social studies teacher, now retired in Northfield. Wedding predicted that Simon would be successful in politics because political ideas excited him and the students respected him.

Simon wants Minnesotans to know he will work with anyone of any political affiliation, from any part of the state, to protect, defend and strengthen the right to vote in Minnesota. — Don Heinzman (Editor’s note: Heinzman is a columnist for ECM Publishers.)

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Daddy O’s crowned best chili in cook-off http://erstarnews.com/2015/03/03/daddy-os-crowned-best-chili-in-cook-off/ http://erstarnews.com/2015/03/03/daddy-os-crowned-best-chili-in-cook-off/#comments Tue, 03 Mar 2015 22:29:00 +0000 http://erstarnews.com/?p=786586 by Joni Astrup

Associate Editor

Daddy O’s chili has been voted “The Best Chili” in a contest at the Elk River Activity Center.

Volunteers Linda Larson, (left) Pat Johnson and Loiusette Guimont handed out samples of chili during a chili cook-off at the Elk River Activity Center.

Volunteers Linda Larson, (left) Pat Johnson and Loiusette Guimont handed out samples of chili during a chili cook-off at the Elk River Activity Center.

More than 50 people tasted chili from seven restaurants in Elk River, before choosing Daddy O’s as the winner.

Jeff Krueger, owner of Daddy O’s, said the recipe came from an old boss.

“It’s just basic ingredients,” he said, adding that he includes celery to add texture and crunch.

Daddy O’s is in its 49th year in business. It was in Brooklyn Center for 32 years and has been in Elk River for 17. The restaurant is located at 709 Main St.

One of the ballots in the chili cook-off.

One of the ballots in the chili cook-off.

Daddy O’s won the activity center chili cook-off with 34 percent of the vote. Culver’s came in second.

Annette Bonin, senior citizen coordinator at the activity center, thanked the businesses for participating. Besides Daddy O’s and Culver’s, chili was sampled from Applebee’s, Elk River Senior Dining, McCoy’s, Olde Main Eatery and Panera Bread.

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401(k) Vs. Roth IRA http://erstarnews.com/2015/03/03/401k-vs-roth-ira/ http://erstarnews.com/2015/03/03/401k-vs-roth-ira/#comments Tue, 03 Mar 2015 20:30:03 +0000 http://erstarnews.com/?guid=3c6c80dd17d98c9ac82c4c687d5eb7b5 Most Gen-Yers don’t know what types of retirement accounts to start with. I break down the pros and cons of two most popular ones - 401(k) and the Roth individual retirement account - to help you decide which is right for you.

With the decline of company pensions and uncertainty about the future of Social Security, young adults’ retirement plans will look different than those of their parents and grandparents. Your own saving and investing options determine your financial security when you stop actively earning an income.

What is the right place to set aside and invest your money for retirement? Both the 401(k) and Roth IRA are useful, popular retirement vehicles. Each has its advantages and disadvantages.

A 401(k) is an employer-sponsored plan that allows savers to defer taxes to a later date. If your employer offers one, it works like this:

You sign up for it and choose your investments from the options available. Then, your employer redirects money from your paycheck to your 401(k) before paying federal income tax on the money. The money is tax-deferred, meaning it does not count as your taxable income for the year. For 2015, you can put up to $18,000 of pre-tax money into your 401(k).

Also, employers often match your contribution up to a certain percentage of your total salary. This percentage usually ranges from 3% to 6%, and the full match can vary. This is like getting free money from your employer. Contribute at least enough to secure that match.

Because you didn’t pay income tax when you contributed, you pay when you withdraw. If you take out the money permanently before you turn 59½, you pay a 10% penalty in addition to the income tax on the withdrawals.

A Roth IRA lets you withdraw funds at retirement age without any additional taxes, because unlike with the 402(k), you pay them upfront. Here’s how it work:

You set up a Roth IRA with an investment manager of your choice. You take your after-tax money from your bank account and deposit it in the plan on your own. Your employer has no connection with your IRA.

In 2015, you can contribute $5,500 to your Roth IRA. However, there are income limits. If you make more than $116,000 as an individual or $183,000 as a married couple, you can’t contribute as much – or at all.

Because you paid taxes on the contributions already, you can withdraw them without taxes or penalties at any time. This gives you flexibility if you’re in a cash crunch. When you reach 59½ (and you have the account for five years), you can withdraw all the money, including years of gains, tax-free.

A 401(k) is great if:

  • Your employer matches your savings.
  • You want to lower your taxable income now.
  • You make too much money to contribute to a Roth IRA.
  • You struggle to save without automatic payroll deductions.
  • Your retirement income will be less than your current income. If you think this is case, you pay less in taxes by deferring them until retirement.

A Roth IRA is for you if:

  • Your employer doesn’t offer a 401(k).
  • You want more investment options than your 401(k) provides.
  • You want your savings to grow tax-free.
  • You want more flexibility in accessing your own contributions.
  • Your retirement income will be more than your current income. If you believe that will happen, you pay less in taxes by paying them now rather than in retirement.

Both plans offer great tax advantages for saving for retirement. Evaluate your personal situation to determine which is the best for you. Better yet, save a bit in each to take advantage of both types of accounts.

Follow AdviceIQ on Twitter at @adviceiq.

Mary Beth Storjohann, CFP, is the founder of Workable Wealth, an RIA in San Diego. She is a writer, speaker and financial coach who is passionate about working with individuals and couples in their 20s and 30s to help them organize and gain confidence in their financial lives. She has been quoted or featured in various industry publications on the local and national level. You can find her on Twitter at @marybstorj.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Most Gen-Yers don’t know what types of retirement accounts to start with. I break down the pros and cons of two most popular ones - 401(k) and the Roth individual retirement account - to help you decide which is right for you.

With the decline of company pensions and uncertainty about the future of Social Security, young adults’ retirement plans will look different than those of their parents and grandparents. Your own saving and investing options determine your financial security when you stop actively earning an income.

What is the right place to set aside and invest your money for retirement? Both the 401(k) and Roth IRA are useful, popular retirement vehicles. Each has its advantages and disadvantages.

A 401(k) is an employer-sponsored plan that allows savers to defer taxes to a later date. If your employer offers one, it works like this:

You sign up for it and choose your investments from the options available. Then, your employer redirects money from your paycheck to your 401(k) before paying federal income tax on the money. The money is tax-deferred, meaning it does not count as your taxable income for the year. For 2015, you can put up to $18,000 of pre-tax money into your 401(k).

Also, employers often match your contribution up to a certain percentage of your total salary. This percentage usually ranges from 3% to 6%, and the full match can vary. This is like getting free money from your employer. Contribute at least enough to secure that match.

Because you didn’t pay income tax when you contributed, you pay when you withdraw. If you take out the money permanently before you turn 59½, you pay a 10% penalty in addition to the income tax on the withdrawals.

A Roth IRA lets you withdraw funds at retirement age without any additional taxes, because unlike with the 402(k), you pay them upfront. Here’s how it work:

You set up a Roth IRA with an investment manager of your choice. You take your after-tax money from your bank account and deposit it in the plan on your own. Your employer has no connection with your IRA.

In 2015, you can contribute $5,500 to your Roth IRA. However, there are income limits. If you make more than $116,000 as an individual or $183,000 as a married couple, you can’t contribute as much – or at all.

Because you paid taxes on the contributions already, you can withdraw them without taxes or penalties at any time. This gives you flexibility if you’re in a cash crunch. When you reach 59½ (and you have the account for five years), you can withdraw all the money, including years of gains, tax-free.

A 401(k) is great if:

  • Your employer matches your savings.
  • You want to lower your taxable income now.
  • You make too much money to contribute to a Roth IRA.
  • You struggle to save without automatic payroll deductions.
  • Your retirement income will be less than your current income. If you think this is case, you pay less in taxes by deferring them until retirement.

A Roth IRA is for you if:

  • Your employer doesn’t offer a 401(k).
  • You want more investment options than your 401(k) provides.
  • You want your savings to grow tax-free.
  • You want more flexibility in accessing your own contributions.
  • Your retirement income will be more than your current income. If you believe that will happen, you pay less in taxes by paying them now rather than in retirement.

Both plans offer great tax advantages for saving for retirement. Evaluate your personal situation to determine which is the best for you. Better yet, save a bit in each to take advantage of both types of accounts.

Follow AdviceIQ on Twitter at @adviceiq.

Mary Beth Storjohann, CFP, is the founder of Workable Wealth, an RIA in San Diego. She is a writer, speaker and financial coach who is passionate about working with individuals and couples in their 20s and 30s to help them organize and gain confidence in their financial lives. She has been quoted or featured in various industry publications on the local and national level. You can find her on Twitter at @marybstorj.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Dennis Leo Groshens http://erstarnews.com/2015/03/03/dennis-leo-groshens/ http://erstarnews.com/2015/03/03/dennis-leo-groshens/#comments Tue, 03 Mar 2015 19:04:13 +0000 http://erstarnews.com/?p=786582 Dennis Leo Groshens, age 63, of Elk River, passed away Feb. 22, 2015. Arrangements by Dares Funeral Home, (763)441-1212. www.daresfuneralservice.com

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