Oppenheimer & Co. Inc.The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624dan.israelite@opco.com

July 2015What's New in the Housing Market for 2015?

Five Steps to Tame Financial Stress

Prepaid Funeral Arrangements Can HaveGrave Consequences

Should I be worried about a Federal Reserveinterest rate hike?

The Israelite Group Monthly NewsletterWhat's New in the Housing Market for 2015?

See disclaimer on final page

Summer is here and change is in the air.

In these last few weeks there have beensweeping changes in a variety of areas. Attheir most recent meeting FOMC (FederalOpen Market Committee) governors sharedan almost unanimous optimistic toneregarding their views of the US economy andhinted at the real possibility of an increase inshort term interest rates before year’s end.This is all very dependent on the continuedimprovement of the US economic recoverywhich will hopefully endure with the help of anumber of recently positive economicindicators and the passing of fast trackauthorization for the Pacific Trade Agreement.This agreement, along with a pickup in homepurchases and an increase in the number ofyounger buyers, sounds very promising.

We hope that in the midst of all of these andother various changes you and your lovedones are managing to find time to relax andenjoy the best that the summer has to offer.

The Israelite Group

Home buyers and sellersfinally have reason tocelebrate in 2015. Afteralmost a decade oflimping along towardrecovery, it seems asthough the housingmarket has finally hit amore comfortable stride.

According to the S&P/Case-Shiller Home PriceIndices, well-known gauges of the U.S. housingmarket, real estate is finally showing healthysigns of improvement.

Data released by Case-Shiller at the end ofApril indicates that home prices have continuedto rise across the United States. (Source:S&P/Case-Shiller Home Price Indices, April2015) And as it turns out, no one factor isresponsible for the trend. Rather, a variety offactors are being credited for the recovery.

Low mortgage interest ratesThis year, mortgage rates have remained atall-time lows. (Source: Freddie Mac U.S.Economic & Housing Market Outlook, April2015) A slower-than-expected economicrecovery may be partly responsible, with theFederal Reserve holding off on raising interestrates until the economy is on more solidground. And while interest rates are expectedto go up at some point (possibly later this year),home buyers are taking advantage of thehistorically low rates while they can.

Less-stringent mortgage lendingObtaining a mortgage has gotten easier thisyear thanks to less-stringent lendingrequirements. (Source: Mortgage CreditAvailability Index, March 2015) A number ofchanges are being credited for makingmortgage lending more readily available.

Fannie Mae and Freddie Mac lowered theirdown payment thresholds this past Decemberto as little as 3% of a home's purchase price, aboon for first-time home buyers and buyers withlow down payment funds available.

In addition, the Federal Housing Administration(FHA) announced this past January that it willlower what it charges for annual mortgageinsurance premiums. The 0.5% decrease, from1.35% to 0.85%, is expected to reduce an FHAborrower's annual mortgage payment by $900per year, on average. (Source: U.S.Department of Housing and UrbanDevelopment, HUD No. 15-001)

Low housing inventoryA low housing inventory frequently gives homesellers the advantage, since it often leads to anincrease in housing prices. While inventorydoes vary by location, total unsold inventorywas on the lower end, with a 4.6-monthavailable supply. (Source: National Associationof Realtors, News Release, April 2015)

Buying a home is more affordable thanrentingAccording to Trulia's Rent vs. Buy Index, it wascheaper to buy a home than to rent one in all ofthe nation's largest 100 cities in late 2014. Andnationwide, owning was 38% less expensivethan renting, although the gap varied widely bylocation. (Source: Trulia.com, Rent vs. BuyIndex, October 2014)

Millennials are entering the marketDespite living with high student debt and a tepidjob market, millennials are finally entering thereal estate market. In fact, adults age 34 andyounger made up the largest percentage ofhome buyers in 2014, accounting for 32% of allhome purchases nationwide. (Source: NationalAssociation of Realtors, Home Buyer and SellerGenerational Trends study, 2015)

Of course, this doesn't mean that all millennialsare buying homes. Those with the higheststudent loan debt may have trouble meeting thedebt-to-income ratios required by lenders for amortgage. Others are postponing starting afamily, which affects their urgency to purchasea home.

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Five Steps to Tame Financial StressDo you sometimes lie awake at night thinkingabout bills that need to be paid? Does it feel asthough you're drowning in debt? If thisdescribes you, you might take solace in the factthat you're not alone. A recent report releasedby the American Psychological Association(APA) showed that 72% of adults feel stressedabout money at least some of the time, and22% said the amount of stress theyexperienced was extreme.1

The bad news is that stress can be responsiblefor multiple health problems, including fatigue,headaches, and depression. And, over time,stress can contribute to more significant healthissues, including high blood pressure and heartdisease.2 The good news is that there aresome simple steps you can take to reduce oreliminate some of the financial stress in yourlife.

1. Stop and assessThe first step in reducing financial stress is tolook at your situation objectively, creating asnapshot of your current financial condition. Sitdown and list all of your financial obligations.Start with the items that are causing you themost stress. For debts, include the principaldue, the applicable interest rate, and theminimum payment amount. If you're not alreadydoing so, review your bank account andcredit-card statements to track where yourmoney is going. The goal here is not to solvethe problem; it's to determine and document thescope of the problem. You might find that thisstep alone significantly helps alleviate yourstress level (think of it as facing your fears).

2. Talk to your spouseIf you're married, talk to your spouse. It'simportant to communicate with your spouse forseveral reasons. First, you and your spouseneed to be on the same financial page; anysteps you take to improve your situation aregoing to be most effective if pursued jointly.Second, not being on the same page as yourspouse is only going to lead to additionalstress. In fact, the APA report showed that 31%of spouses and partners say that money is amajor source of conflict or tension in theirrelationship.3 Additionally, your spouse orpartner can be a valuable source of emotionalsupport, and this emotional support alone canlower stress levels.4 If you're not married,family or friends might fill this role.

3. Take controlFirst, go back and take a look at where yourmoney is going. Are there changes you canmake that will free up funds you can save orapply elsewhere? Even small changes canmake a difference. And exerting control overyour situation to any degree can help reduceyour overall stress level. Start building a cashreserve, or emergency fund, by saving a littlebit each paycheck. Think of the emergencyfund as a safety net; just knowing it's there willhelp reduce your ongoing level of stress. Workup to a full spending plan (yes, that's anotherway of saying a budget) where you prioritizeyour expenses, set spending goals, and thenstick to them going forward.

4. Think longer termLook for ways to reduce debt long term. Youmight pay more toward balances that have thehighest interest rates. Or you might considerrefinancing or consolidation options as well.Beyond that, though, you really want to startthinking about your long-term financial goals,identifying and prioritizing your goals,calculating how much you might need to fundthose goals, and implementing a plan thataccounts for those goals. Having a plan inplace can help you with your stress levels, bothnow and in the future.

5. Get helpAlways remember that you don't need to handlethis alone. If the emotional support of a spouse,friends, or family isn't enough, or the level ofstress that you're feeling is just too much, knowthat there is help available. Consider talking toyour primary-care physician, a mental healthprofessional, or an employee assistanceresource, for example.

A financial professional can also be a valuableresource in helping you work through some ofthe steps discussed here, and can help directyou to other sources of assistance, like credit ordebt counseling services, depending on yourneeds.

The most important thing to keep in mind is thatyou have the ability to control the amount offinancial stress in your life.1,3,4 American Psychological Association,"Stress in America™: Paying with Our Health,"www.stressinamerica.org, February 4, 20152 Mayo Clinic Staff, "Stress Symptoms: Effectson Your Body and Behavior,"www.mayoclinic.org, July 19, 2013

Seventy-two percent ofadults report feelingstressed about money atleast some of the time, and22% say that the amount ofstress they experience isextreme.

Source: AmericanPsychological Association

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Prepaid Funeral Arrangements Can Have Grave ConsequencesAn important part of estate planning involvesconsideration of funeral or memorialarrangements, including paying for some or allof the costs in advance. Planning ahead notonly spares your survivors from the stress ofmaking these decisions, but prepaying for yourservices relieves your survivors from theburden of worrying about money during anotherwise difficult time.

Prepaid agreementOne way to prepay your funeral is by enteringinto a pre-need agreement with a funeral homeof your choice. The funeral home may agree to"lock in" costs for future funeral or burialservices at an agreed-upon price. This is oftendone through a trust or other arrangement thatyou can fund with cash, bonds, or lifeinsurance. At your death, the funds aredisbursed to pay for your funeral according tothe terms of the agreement.

But before entering into a prepaid arrangement,you may want to get answers to the followingquestions:

• What happens to the funds you've prepaid?How are they held? Do they earn interest?Are they safe?

• What happens if the funeral home goes out ofbusiness? What protections, if any, do youhave that your funds will be available whenneeded?

• Can you cancel the agreement and, if so, areyou able to receive a refund?

• If you move, can your funds be transferred toanother funeral home? Will the same termsapply? Is there a fee or cost to transfer yourfunds to another funeral home?

The Funeral RuleThere are some legal protections available toconsumers of funeral home services. TheFuneral Rule, enforced by the Federal TradeCommission (FTC), requires funeral providersto give consumers accurate, itemized priceinformation and other disclosures about funeralgoods and services. The Rule also prohibitsfuneral providers from misrepresentingservice-related requirements and fromengaging in unfair or deceptive practices.

The key feature of the Funeral Rule is theGeneral Price List, which entitles consumers toreceive itemized prices for the various goodsand services offered, allowing them tocomparison shop and to purchase goods andservices on an itemized basis, and not solely aspart of a package. For more information onshopping for funeral services, the Funeral Rule,and prepaying for some or all of the expenses

involved, visit the FTC consumer websitewww.consumer.ftc.gov.

State law protectionsThe Funeral Rule generally governs funeralproviders. It does not offer specific remedies orcauses of action for consumers who are victimsof funeral providers that do not comply with theRule. Laws in individual states regulate funeralproviders and help ensure that advancepayments are available when they're needed.However, protections vary widely from state tostate, sometimes providing a window ofopportunity for unscrupulous operators.

What can you do?Before entering into a prepaid agreement, hereare some steps you can take to safeguard yourfunds and ensure you'll get the services you'vepayed for:

• Find out what kind of consumer protectionyour state provides and whether it regulatesthe payment methods.

• Be sure that your funds or insurance policyare held in a trust at a reputable bank or otherfinancial institution that you can check on tobe sure your money or policy is safe. Youmay even be entitled to an annual statement.

• If you're funding some or all of the pre-needarrangements with life insurance purchasedthrough the funeral services provider, be surethe policy is permanent insurance, such aswhole life, and not term insurance (if yououtlive the term of the policy, there will be noinsurance proceeds to pay for your funeral).

• The agreement should address whathappens to any excess funds that may beavailable after paying for your services. Somepre-need contracts allow you to designatehow excess funds are to be disposed (e.g.,surviving family members, your church orother charity).

• Along those same lines, if you cancel thecontract, you may be entitled to a partial orfull refund, although some states allow thefuneral provider to retain a portion of thefunds, often depending on how long thecontract has been in existence.

Ultimately, be sure to tell your family about theplans you've made and where you'll keepimportant documents, such as your last will andtestament and any documentation you'veretained concerning your pre-need funeralarrangements.

Possible long-term carebenefit

Irrevocable funeral trusts mayalso help you qualify forlong-term care benefits throughMedicaid. These trusts may befunded with assets that wouldotherwise be countableresources for Medicaid. Trustassets, including life insurancedeath benefits, are notcountable resources whentrying to qualify for long-termcare benefits through Medicaid.And you can fund the funeraltrust right before applying forbenefits--there's no "look-back"period for these transfers. Thelegal expense to create anirrevocable funeral trust (IFT) istypically paid by the insurancecompany, which acts as theTrustee. There is typically noexpense to the insured party tocreate the IFT other than theone-time cost of the insurance.Almost all states impose a limiton the amount of money thatcan be placed in a funeral trust.Not all funeral trusts areconsidered to beMedicaid-exempt assets.Consult with your estateplanning attorney for help withyour individual circumstances.

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Oppenheimer & Co. Inc.The Israelite Group ofOppenheimer & Co. Inc.500 W Madison Suite 4000Chicago, IL 60661312-360-5624dan.israelite@opco.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015

The content herein should not beconstrued as an offer to sell or thesolicitation of an offer to buy anysecurity. The information enclosedherewith has been obtained fromoutside sources and is not theproduct of Oppenheimer & Co. Inc.("Oppenheimer") or its affiliates.Oppenheimer has not verified theinformation and does notguarantee its accuracy orcompleteness. Additionalinformation is available uponrequest. Oppenheimer, nor any ofits employees or affiliates, does notprovide legal or tax advice.However, your OppenheimerFinancial Advisor will work withclients, their attorneys and their taxprofessionals to help ensure all oftheir needs are met and properlyexecuted. Oppenheimer & Co. Inc.Transacts Business on all PrincipalExchanges and is a member ofSIPC.

What is the Roth IRA five-year rule?Actually, there are twofive-year rules you need toknow about. The first five-yearrule determines when you canbegin receiving tax-free

qualified distributions from your Roth IRA.Withdrawals from your Roth IRA--including bothyour contributions and any investmentearnings--are completely tax and penalty free ifyou satisfy a five-year holding period and oneof the following also applies:

• You've reached age 59½ by the time of thewithdrawal

• The withdrawal is made due to a qualifyingdisability

• The withdrawal is made for first-timehomebuyer expenses ($10,000 lifetime limit)

• The withdrawal is made by your beneficiaryor estate after your death

This five-year holding period begins on January1 of the tax year for which you made your firstcontribution (regular or rollover) to any RothIRA you own. For example, if you make yourfirst Roth IRA contribution in March 2015 anddesignate it as a 2014 contribution, your

five-year holding period begins on January 1,2014 (and ends on December 31, 2018). Youhave only one five-year holding period fordetermining whether distributions from anyRoth IRA you own are tax-free qualifieddistributions. (Roth IRAs you inherit are subjectto different rules.)

The second five-year rule is a little morecomplicated. When you convert a traditionalIRA to a Roth IRA, the amount you convert(except for any after-tax contributions you'vemade) is subject to income tax at the time ofconversion. However, your conversion isn'tsubject to the 10% early distribution penalty,even if you haven't yet reached age 59½.

But what the IRS giveth it can also taketh away.If you withdraw any portion of your taxableconversion within five years, you'll have to paythe 10% early distribution penalty on thosefunds that you previously avoided--unlessyou've reached age 59½ or qualify for anotherexemption from the penalty tax. This five-yearholding period starts on January 1 of the yearyou convert your traditional IRA to a Roth IRA.And if you have more than one conversion,each will have its own separate five-yearholding period for this purpose.

Should I be worried about a Federal Reserve interestrate hike?After years of record-lowinterest rates, at some pointthis year the Federal Reserveis expected to begin raising its

target federal funds interest rate (the rate atwhich banks lend to one another funds they'vedeposited at the Fed). Because bond pricestypically fall when interest rates rise, any ratehike is likely to affect the value of bondinvestments.

However, higher rates aren't all bad news. Forthose who have been diligent about savingand/or have kept a substantial portion of theirportfolios in cash alternatives, higher ratescould be a boon. For example, higher ratescould mean that savings accounts and CDs arelikely to do better at providing income than theyhave in recent years.

Also, bonds don't respond uniformly to interestrate changes. The differences, or spreads,between the yields of various types of debt canmean that some bonds may be under- orovervalued compared to others. Depending onyour risk tolerance and time horizon, there aremany ways to adjust a bond portfolio to helpcope with rising interest rates. However, don't

forget that a bond's total return is a combinationof its yield and any changes in its price; bondsseeking to achieve higher yields typicallyinvolve a higher degree of risk.

Finally, some troubled economies overseashave been forced to lower interest rates on theirsovereign bonds in an attempt to provideeconomic stimulus. Lower rates abroad havethe potential to make U.S. debt, particularlyTreasury securities (whose timely payment ofinterest and principal is backed by the full faithand credit of the U.S. Treasury), even moreattractive to foreign investors. Though pastperformance is no guarantee of future results,that's what happened during much of 2014.Increased demand abroad might help providesome support for bonds denominated in U.S.dollars.

Remember that bonds are subject not only tointerest rate risk but also to inflation risk, marketrisk, and credit risk; a bond sold prior tomaturity may be worth more or less than itsoriginal value. All investing involves risk,including the potential loss of principal, andthere can be no guarantee that any investingstrategy will be successful.

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