Invest

Investments can play a key role in any financial plan. For individuals, a mix of investment products, income and pension plans can help achieve short- and long-term goals.

For employers, I can offer advice on savings and pension plans.

401 (k) retirement plans and 401 (k) Roth Retirement Plans
Individual Retirement Accounts
529 qualified tuition plans or college education trust plans
Annuities
Individual Retirement Savings Plans
Mutual funds
U.S. Treasuries Securities
Group retirement and savings plans

401 (k) Retirement Plans and 401 (k) Roth Retirement Plans

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Everyone looks forward to retirement, but not everyone looks forward to planning for it. A strong financial plan can take the hassle out of this process and secure a balance of investment products that may yield the retirement lifestyle everyone dreams of.

While most working Americans will receive Social Security benefits, in most cases, they will not be sufficient to provide a comfortable retirement income. Depending on personal circumstances, either a 401(k) retirement plan or an Individual Retirement Plan can help in accumulating a sizeable retirement account.

Employer-sponsored 401(k) retirement plans offer several benefits, including potential employer contributions. Enjoy tax savings by setting aside a portion of pre-tax salary in a tax-deferred investment account, which can also generate compound interest. Depending on the type of plan selected, 401(k) plans can also offer yields from a variety of investment options.

Working together with a financial planner, decide the amount and frequency of 401(k) contributions while taking into consideration contribution limits and employer requirements. Some advantages include:

Employer contributions in most cases (always get the free money)
Contributions taken from pre-tax salary allow for a reduced tax rate
Tax deferral of compounding income and growth
The opportunity to select from a variety of investment products
401 (k) Roth option for tax free retirement

Individual Retirement Accounts

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Another option for retirement planning is to contribute to an Individual Retirement Accounts(IRA). IRAs allow a variety of investment options, including variable annuities, stocks, and government securities. There are several types of IRAs, including the Traditional IRA, Non-Deductible IRA, or Roth IRA.

A traditional IRA is funded through after-tax dollars, and can be contributed to even if a client holds another retirement plan, such as a 401(k). A traditional IRA has several tax advantages: all income tax is deferred until money is withdrawn, and the growth of contributions and earnings is generally tax-deferred. The non-deductible IRA is similar to the traditional IRA except that contributions are made with after-tax dollars, and there is no income tax deduction allowed. Be aware of the IRS "coffee/cream rule". In contrast to those two options, contributions to a Roth IRA include income tax payments, but when money is withdrawn, it is distributed tax-free.

529 Qualified Tuition Plans or College Education Trust Plans

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A college education is expensive – and prices for tuition and living expenses are only getting higher. Families with children might consider planning how to finance an education as early as possible, so as to take advantage of tax and investment opportunities and contribute to pre-paid tuition rates.

Many states and educational institutions offer a 529 Qualified Tuition Plan (529) to help finance a college education. The specifics vary between states and institutions: some guarantee a minimum rate of return, while others offer tax incentives. Even if your state does not offer a 529 plan, many allow non-residents to contribute to their plans, and private plans are available.

There are two main types of 529 plan: a pre-paid tuition plan, and a college savings plan. Pre-paid tuition plans involve purchasing units or credits at participating educational institutions that can applied to tuition and, in some cases, living expenses. Most are sponsored by state governments and have residency requirements. College savings plans establish an account for a student that can be used to pay eligible college expenses, and allow contributors to choose among several investment options.

It is important to carefully consider how to invest in a 529 plan, since it can impact a student’s eligibility to participate in need-based financial aid programs. A financial planner can help balance assets held in college savings plans against financial aid requirements.

Some of the advantages of 529 Plans include:

Depending on the state, the ability to deduct 529 contributions from state income tax returns
Federal and state tax deferral of compounding income and growth, if contributions are used for eligible college expenses
Matching grants in many states
Some pre-paid 529 qualified tuition plans sponsored by a state government are guaranteed
College savings plans allow the option to invest in a variety of investment products
When money is withdrawn from a 529 plan, the student typically pays little tax, due to a low income tax rate

Working together, we can examine college investment options to build a customized portfolio that takes into consideration your financial goals, tolerance to risk and timeline. Contact us today to find out more.

Annuities

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Annuities are available through insurance companies. Some offer add-on provisions, called riders that help minimize market risk by guaranteeing all or part of the principle amount invested. Since they are designed for retirement, compound earnings are tax-deferred until withdrawn, and contributors can choose to make contributions and receive returns in either a single lump-sum amount, or through a regular stream of payments. With proper structuring, some annuity strategies can dramatically decrease taxable income at distribution.

There are several types of annuities. A non-qualified annuity is bought individually with post-tax dollars, while a qualified annuity is part of an employer-sponsored retirement plan and is funded with pre-tax dollars. The two types have differences in limits of withdrawals and contributions.

Annuities are also different in the ways they generate earnings. A Fixed Annuity is designed around regular fixed interest rates, while a Variable Annuity, an investment product with insurance features, is managed by a professional money manager, who invests in a portfolio that generally includes mutual funds invested in stocks, bonds or other instruments. Depending on the performance of the investments selected within the variable annuity's sub accounts, an investment’s unit values will increase or decrease.

Depending on the specific annuity chosen, benefits can include:

Tax-deferred growth
Access to professional money managers
Lump-sum or periodic payments
A guaranteed income or death benefit, subject to the issuer's claims-paying ability
Lack of liquidity withdrawals made prior to age 59 1/2 are subject to 10% IRS penalty tax and surrender charges may apply.
Variable Annuities have fees and charges, including mortality and expense risk charges, administrative fees, and contract fees.

Note that any amount allocated to a variable annuity may increase or decrease in value, and is invested at the risk of the policyholder.

Individual Retirement Savings Plans

Depending on the nature of your employment, you may be eligible for other kinds of retirement planning options. For example, 457 plans are designed for independent contractors or employees of a state or local government or a tax-exempt organization. These plans allow participants to exclude certain specified types of salary from their gross income. Other options may include Deferred Compensation Plans and 403(b) plans, which are designed for employees of non-profit corporations.

Mutual funds

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Mutual funds can be a key component of a diversified investment portfolio. Managed by professional money managers, mutual funds allow individual investors with common objectives and risk profiles to pool their savings in a portfolio of investments. This allows for an investment portfolio that is diversified among different companies and industries in the United States and around the world. Advantages of this strategy include:

Liquidity
Diversification
Potential for increased returns
Professional Management
Increased purchasing power from pooled savings
There are also specific risks involved with mutual funds, such as: Loss of principal Fees and Expenses Funds may have sales charges and do have annual operating expenses

Here is an overview of some of the types of mutual funds available:

Money Market Funds

Money market funds invest only in low-risk, highly liquid short-term investments. They generally pay dividends that reflect short-term interest rates, and so returns are historically lower than those for bond or stock mutual funds.

Bond Funds

Bond funds carry higher risks than money market funds. A bond fund is a fund invested primarily in bonds and other debt instruments. The exact type of debt the fund invests in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities.

Stock Funds

A stock fund is a mutual fund that invests in the common stock of numerous publicly traded companies. Common stock funds provide investment diversification and offer time savings over researching, buying and selling individual stocks. There are several different types of stock funds available, including growth funds, income funds, and index funds.

Growth funds have the potential for large capital appreciation, but with higher risk and usually do not pay a regular dividend
Income funds invest in securities that pay regular dividends such as government, municipal and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks. Because they emphasize current income, their is typically less potential for capital appreciation. The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.
Index funds invest in all or some companies included in a market index to pursue the same level of return as that index

Learn more about how mutual funds can potentially fit into your financial plan—contact us today.

Always remember the importance of careful decision-making when choosing investments. Investors should consider the investment objectives, risk, charges and expenses of the mutual fund, variable annuity contract and the variable annuity sub-accounts carefully before investing. The prospectuses and, if available, the summary prospectuses contain this and other important information about the mutual fund, variable annuity contract and variable annuity sub-accounts. You can obtain prospectuses and summary prospectuses from your financial representative. Read carefully before investing.

U.S. Treasuries Securities

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In today’s uncertain investment environment, U.S. Treasuries Securities offer a safe, secure, government-guaranteed option for investors worried about the impact of the recent economic downturn on their savings.

The federal government issues U.S. Treasury securities to raise funds and help pay off its debt. The U.S. government guarantees that interest and principal payments will be paid on time, making securities a source of dependable cash flow.

There are several different kinds of Treasuries Securities, which range from short- to long-term investments. Securities are sold at Treasury auctions, and include treasury bills, notes, bonds, TIPS, and U.S. Savings Bonds.

Treasury Bills mature in a year or less, and are sold at below par (face) value. When matured, owners can sell them and receive their par value.
Treasury Notes and Bonds pay a fixed rate of interest on a semi-annual basis until they mature. Treasury notes mature between two to 10 years, while longer-term bonds mature in 30 years.
Treasury Inflation-Protected Securities (TIPS) pay interest on a semi-annual basis, and their principal value is adjusted twice a year to reflect inflation rates.

Group retirement and savings plans

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Business owners can use group retirement and savings plans to help attract and retain quality employees.

Both business owners and their dedicated employees are working towards a safe, secure future. Either provided independently or paired with group benefits, a group savings plan is a convenient, flexible and affordable way for employers to help employees reach their long-term financial goals.

Employees gain instant tax savings for their retirement plan contributions, since they are usually made using pre-tax payroll deductions. They also receive the peace of mind that comes from knowing every month they are building towards retirement.

A financial planner can help business owners and their valued employees choose group retirement and savings products. Choose from products like:

401(k) Plans
Simplified Employee Pension Plans
Qualified Retirement Plans
Other retirement savings plans designed specifically for employee groups

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