CREDIT CARD--TRANSFER OF BALANCE

Q. How do I transfer a balance?
Before you transfer your credit card balance to a card with a super-low introductory rate, read the fine print and ask questions. Otherwise, you may end-up paying fees and a much higher interest rate than you expected.

First, ask these questions:

1. How long does the introductory rate last?
2. What is the card's annual percentage rate after that teaser rate expires?
3. Does the teaser rate apply to transferred balances or new purchases or both?
4. Does that card have an annual fee?
5. What about late fees and over-the-limit fees?
6. Ask if there are balance-transfer fees (Some issuers charge transaction fees as high as 4 percent. A 4 percent fee on a $5,000 balance would cost $200).
Read through the credit card offer a few times. A lot of the information is hard to decipher. For example, some offers waive fees for "initial balance transfers" only. These are the transfers that are authorized when the customer accepts the card and completes the balance transfer form.

In such cases, every other balance transfer is treated as a cash advance and is subject to cash advance fees.

Keep in mind not everyone who gets an offer qualifies for the super-low rate. While an offer may boast a 3.9 percent teaser rate that bumps up to 17 percent after six months, a person may qualify for a card with 7.9 percent teaser and a regular annual percentage rate of 21 percent.

Also, realize it may only take one slip-up for that super-low rate to disappear. For example, a Platinum MasterCard from Fleet with a 9.99 APR jumps to 21.99 percent after one tardy payment. And if you fall behind on payments on another card, your new card may raise your rate.

Once comfortable with the terms of the offer, be sure to fill out the balance transfer form carefully. Incomplete information may halt or delay a transfer.
It is a good idea to make the minimum payment on the old card while waiting for the balance transfer to take effect -- which may take anywhere from two to four weeks.
The last thing a person who is trying to minimize their credit card costs needs is a $29 late fee and a penalty rate.

The new card company may send a notice saying the balance transfer is complete. Be sure to call the old card company and verify this. Write down the name of the person you talked to, the date, the time and what was said.
To avoid any mix-ups, experts urge people to wait until the old credit card company sends them a billing statement with a zero balance. If the company doesn't send one, request it.

After receipt of your zero balance statement, cancel the old card - you don't need it.

Estate Planning Checklist

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937-748-4504



o Find a qualified attorney. (Wealthy friends, your bank trust department, and the state bar association can provide referrals.)

o Decide who will be your co- trustee or successor trustee for your revocable living trust.

o Decide who will act as guardian for your minor children if you and your spouse died together in an accident.

o Decide who will act for you in the health-care power of attorney.

o Decide who will make the decision to enact your living will (pull the plug).

o Contact each IRA, 401 (k) or 403 (b) plan provider and asked to check the name of the beneficiary you have designated. ( Hint: Do this after your estate planning session, which might lead you to reconsider who gets what.)

o Evaluate the ownership and but the beneficiaries of your life insurance policies. If you have minor children, make sure you have established the proper trust relationship if they are life insurance beneficiaries.


o Consider carefully the issue of who gets what. Remember, dividing an estate equally might not be “fair”, but dividing an estate unequally is asking for discord.

o Make a last of where all important documents can be found, in case of emergency. List the name and phone number of your professional advisers: attorney, physicians, accountant, insurance agent, and financial planner. Give location of your cemetery deed and funeral instructions. Be sure to include the name and number of the estate planning attorney who has a copy of your Revocable Living Trust. Then leave the basic information not necessarily the details of your assets or bequests in a location where your spouse, child, or successor trustee can be easily access it if you are incapacitated.

401 (K) PLANS

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What Is a 401(k) Plan?
A 401(k) plan (named after a section of the tax code) is an employer plan established by your employer. A 401(k) plan lets you set aside a percentage of your pay before taxes are taken out. A 401(k) plan is generally funded with your before-tax salary contributions and often matching contributions from your employer. Both the employer contributions (if any) and any growth in the 401(k) is tax-deferred until withdrawn. Similar to an Individual Retirement Account (IRA), a 401(k) is designed primarily as a retirement savings plan. Once money is in your 401(k), you generally cannot make withdrawals before age 591/2, except for special circumstances. Many employers, however, include loan provisions in 401 (k) plans. Today 401(k) plans are offered by many employers in place of a traditional pension.
With a 401(k) plan, employees can choose to defer some of their salary. Instead of receiving that amount in their paycheck, the employee defers, or delays, getting that money. In this case, their deferred money is going into a 401(k) plan sponsored by their employer. This deferred money generally does not get taxed by the federal government or by most state governments until it is distributed.
Note: Many 401(k)’s invest in the company's own stock; if the company has a bad enough year you could lose both your job and your retirement savings. You need to diversify your retirement account, if you take advantage of a 401(k).

How Does a 401(k) Plan Work?

Like other qualified retirement plans, a 401(k) allows your money to grow tax deferred. This enables you to build capital significantly faster than similar investments outside the shelter of an employer-sponsored plan. Distributions from a 401(k) plan prior to age 59 ½ may be subject to a 10 percent federal tax penalty and are included in gross income.

A 401(k) plan offers some additional benefits that make it particularly attractive.

First, since the employee is allowed to contribute to his/her 401(k) with pre-tax money, it reduces the amount of tax paid out of each pay check.
Second, all employer contributions and any growth in the capital grow tax-free until withdrawal. The compounding effect of consistent periodic contributions over the period of 20 or 30 years is quite dramatic.

Third, a 401(k) plan can provide a great deal of flexibility. Most 401(k) plans offer a number of investment options. This means you’re able to choose how your retirement fund will be invested. Most plans offer a stock fund, a bond fund, a money market fund, a guaranteed investment account, and company stock. You can be as aggressive or conservative as you wish. The employee can decide where to direct future contributions and/or current savings, giving much control over the investments to the employee.
Fourth--many employers offering 401(k) plans to their employees match contributions. For example, your employer may add an amount for each dollar you contribute, up to a certain percentage of your salary. That’s an automatic return on your investment.

Over the long term, matching contributions enable you to accumulate more retirement assets than plans based solely on employee contributions.

Fifth, unlike a pension, all contributions can be moved from one company's plan to the next company's plan (or to an IRA) if a participant changes jobs.
Sixth, because the program is a personal investment program for your retirement, it is protected by pension (ERISA) laws. This includes the additional protection of the funds from garnishment or attachment by creditors or assigned to anyone else, except in the case of domestic relations court cases dealing with divorce decree or child support orders (QDROs; i.e., qualified domestic relations orders).
Seventh, the 401(k) is similar in nature to an IRA, an IRA won't enjoy any matching company contributions, and personal IRA contributions are subject to much lower limits.
Eighth, a 401(k) plan is portable. Unlike some other employer-sponsored retirement plans, you can take your 401(k) plan with you when you change employers.

Within certain limits, the accumulated funds in your 401(k) plan can be rolled over into your new employer’s retirement plan without penalty. If your new employer’s retirement plan doesn’t allow such transfers, you can roll over your funds into a traditional individual retirement account.

Considering that the average worker changes jobs five to seven times during his or her career, this can be an important advantage.

Ninth, special "catch-up" contributions are available as a provision of 401(k) plans. This enables those nearing retirement to save at an accelerated rate. Those aged 50 and older before the end of the tax year will be eligible to contribute more than the regular limits. Eligible 401(k) plan participants may contribute an additional $3,000 in 2004, with that amount increasing by $1,000 per year until it reaches $5,000 in 2006. Currently, this “catch-up” contributions option is not available for IRA plans.

Disadvantages associated with 401(k) plans.
First, it is difficult (or at least expensive) to access your 401(k) savings before age 59 ½.
Second, 401(k) plans don't have the luxury of being insured by the Pension Benefit Guaranty Corporation (PBGC). (But then again, some pensions don't enjoy this luxury either.)
Third, employer matching contributions are usually not vested (i.e., do not become the property of the employee) until a number of years have passed. The rules say that employer matching contributions must vest according to one of two schedules, either a 3-year "cliff" plan (100% after 3 years) or a 6-year "graded" plan (20% per year in years 2 through 6).
Investment Options
Participants in a 401(k) plan generally have several investment options. Nearly all 401(k) plans offer a variety of mutual funds. These funds usually include a money market fund, bond funds of varying maturities (short, intermediate, long term), and various stock funds. Some plans may allow investments in company stock, US Series EE Savings Bonds, etc. The employee chooses how to invest the savings and is normally allowed to change where current savings are invested and/or where future contributions will go. The employee is also typically allowed to stop contributions at any time.
With respect to the participant's choice of investments, expert (sic) opinions from financial advisors typically say that the average 401(k) participant is not aggressive enough with their investment options. Historically, stocks have outperformed all other forms of investment and will probably continue to do so. Since the investment period of 401(k) savings is relatively long - 20 to 40 years - this will minimize the daily fluctuations of the market and allow a "buy and hold" strategy to pay off. As you near retirement, you might want to switch your investments to more conservative funds to preserve their value.
Determining the rules and regulations for 401(k) plans is difficult simply because every company's plan is different. The law requires that if low compensated employees do not contribute enough by the end of the plan year, then the limit is changed for highly compensated employees. Practically, this means that the employer sets a maximum percentage of gross salary in order to prevent highly compensated employees from reaching the limits. In any event, the employer chooses how much to match, how much employees may contribute, etc.

Of course, the IRS has the final say, so there are certain regulations that apply to all 401(k) plans.
Let's begin with contributions. Employees have the option of making all or part of their contributions from pre-tax (gross) income. This has the added benefit of reducing the amount of tax paid by the employee from each check now and deferring it until the person takes the pre-tax money out of the plan. The employer contribution (if any) and any growth of the fund are compound tax-free. According to the Department of Labor regulations, these contributions must be deposited quite rapidly. Normally, deposits are required seven (7) business days after the end of the month in which the contributions were made.


Rules govern what happens to before-tax and after-tax contributions.
The IRS limits pre-tax deductions to a fixed dollar figure that changes annually. In other words, an employee in any 401(k) plan can reduce his or her gross pay by a maximum of some fixed dollar amount via contributions to a 401(k) plan. An employer's plan may place restrictions on the employees. Employer restrictions may be stricter than the IRS limit.
After-tax contributions are quite different from pre-tax contributions. If an employee elects to make after-tax contributions, the money comes out of net pay (i.e., after taxes have been deducted). While it doesn't help the employee's current tax situation, funds that were contributed on an after-tax basis may be easier to withdraw since they are not subject to the strict IRS rules which apply to pre-tax contributions. When distributions are begun (see below), the employee pays no tax on the portion of the distribution attributed to after-tax contributions, but does have to pay tax on any gains.
Let's discuss the current IRS limits. First, a person's maximum before-tax contribution (i.e., 401(k) limit) for 2005 is $14,000. It's important to understand this limit. This figure indicates only the maximum amount that the employee can contribute from his/her pre-tax earnings to all of his/her 401(k) accounts. It does not include any matching funds that the employer might graciously throw in. Further, this figure is not reduced by monies contributed towards many other plans (e.g., an IRA). If you work for two or more employers during the year, then you have the responsibility to make sure you contribute no more than the year's limit. If the employee "accidentally" contributes more than the pre-tax limit towards his or her 401(k) account, the employee must contact the employer. The excess might be refunded, or might be reclassified as an after-tax contribution.
The maximum before-tax contribution limit is subject to the catch-up provision, which is available to employees who are over 50 years old. This provision allows these employees to contribute extra amounts over and above the limit in effect for that year. The additional contribution amount is $4,000 in 2005 and $5,000 in 2006; thereafter, it increases by $500 annually.
There are regulations for highly compensated employees. What this means is that employees who are defined as "highly compensated" within the company (as guided by the regulations) may not be allowed to save at the maximum rates. As of 2005, the IRC defines "highly compensated" as income in excess of $95,000; alternately, the company can make a determination that only the top 20% of employees are considered highly compensated. Therefore, the implementation of the "highly compensated employee" regulations varies with the company, and only your benefits department can tell you if you are affected.
Unlike IRA or other retirement-saving accounts, 401(k) plans allow limited, penalty-free access to savings before age 59 1/2. One option is taking a loan from yourself! It is legal to take a loan from your 401(k) before age 59 1/2. The tax code does not specify exactly what loans are permitted, just that loans must be made reasonably available to all participants. The employer can restrict loans for purposes such as covering unreimbursed medical expenses, buying a house, or paying for education. When a loan is obtained, you must pay the loan back with regular payments (these can be set up as payroll deductions) but you are, in effect, paying yourself back both the principal and the interest, not a bank. If you take a withdrawal from your 401(k) as money other than a loan, not only must you pay tax on any pre-tax contributions and on the growth, you must also pay an additional 10% penalty to the government. There are other special conditions that permit withdrawals at various ages without penalty. You should consult an expert for more details prior to making a withdrawl from your 401 (k).
Should you ever take a loan from your 401(k) plan?
Here's a brief discussion of pros and cons. The pros are that it's convenient (no credit check or lengthy approval process), the interest rate is relatively low (a few points over the prime rate), and you pay the interest to yourself (not a bank or credit card). The cons are that your money is not growing for you while it is out of your account, there may be fees involved, the loan must be paid back immediately if you change jobs, and a loan default is treated as an early withdrawal (with taxes and penalties due). Given the total lack of job security that most workers have in 2005, there are considerable risks to this type of loan.

Access to your 401 (k)
Participants who are vested in 401(k) plans can begin to access their savings without withdrawal penalties at various ages, depending on the plan and on their circumstances. If the participant who separates from service is age 55 or more during the year of separation, the participant can draw any amount from the 401(k) without any calculated minimums and without any 5-year rules. Depending on the plan, a participant may be able to draw funds without penalty at or after age 59 1/2 regardless of whether he or she has separated from service (i.e., the participant might still be working; check with the plan administrator to be sure). The minimum withdrawal rules for a participant who has separated from service are required at age 70 1/2. Being able to draw any amount and for any length of time without penalty starting at age 55 (provided the person has separated from service) is one of the least understood differences between 401ks and IRAs. Note that this paragraph doesn't mention "retire" because the person's status after leaving service with the company holding the 401(k) isn’t relevant.
Anyone who has separated service from the company holding their 401(k), and is entitled to withdraw funds without penalty, may take a lump sum withdrawal of their 401(k) into a taxable account. Until 1999, the tax laws allowed people to use an income averaging method to spread that lump sum over five years for tax purposes. However, that option is no longer available; the entire withdrawal must be reported to the IRS as income in the year of the withdrawal. Alternately, an entire account can be transferred directly from the 401(k) custodian to an IRA custodian, and the account will continue to grow tax deferred.
Note: 401(k) distributions are separate from pension funds. Like IRAs, participants in 401(k) plans must begin taking distributions by age 70 1/2. Also, the IRS imposes a minimum annual distribution on 401(k)'s at age 70 ½. However, there's an exception to the minimum and required distribution rules: if you continue to work at that same company and the 401(k) is still there, you do not have to start withdrawing from the 401(k).
A 401(k) is a company-administered plan, and every plan is different, changing jobs will affect your 401(k) plan significantly. Different companies handle this situation in different ways (of course). Some will allow you to keep your savings in the program until age 59 1/2. This is the simplest idea. Other companies will require you to take the money out. Things get more complicated here, but not unmanageable. Your new company may allow you to make a "rollover" contribution to its 401(k) which would allow you to take all the 401(k) savings from your old job and put them into your new company's plan. If this is not a possibility, you may roll over the funds into an IRA. However, as discussed earlier, a 401(k) plan has numerous advantages over an IRA, If possible, rolling 401(k) money into another 401(k), if at all possible, is usually the best choice.

Rollovers
Whatever you do regarding rollovers, BE EXTREMELY CAREFUL!! This can not be emphasized enough. Legislation passed in 1992 by Congress added a twist to the rollover procedures. Previously you could receive the rollover money in the form of a check made out to you and you had 60 days to roll this cash into a new retirement account (either 401(k) or IRA). Now, however, employees taking a withdrawal have the opportunity to make a "direct rollover" of the taxable amount of a 401(k) to a new plan. This means the check goes directly from your old company to your new company (or new plan). If this is done (ie. you never "touch" the money), no tax is withheld or owed on the direct rollover amount.
If the direct rollover option is not chosen, i.e., a check goes through your “grubby little hands”, the withdrawal is immediately subject to a mandatory tax withholding of 20% of the taxable portion, which the old company is required to ship off to the IRS. The remaining 80% must be rolled over within 60 days to a new retirement account or else is subject to the 10% tax mentioned above. The 20% mandatory withholding is supposed to cover possible taxes on your withdrawal, and can be recovered using a special form filed with your next tax return to the IRS. If you forget to file that form, however, the 20% is lost. Naturally, there is a catch. The 20% withheld must also be rolled into a new retirement account within 60 days, out of your own pocket, or it will be considered withdrawn and subject to the 10% tax. Check with your benefits department if you choose to do any type of rollover of your 401(k) funds.
Here's an example to clarify an indirect rollover. Suppose that you have $10,000 in a 401k, and that you withdraw the money with the intention of rolling it over - no direct transfer. Under current law you will receive $8,000 and the IRS will receive $2,000 against possible taxes on your withdrawal. To maintain tax-exempt status on the money, $10,000 has to be put into a new retirement plan within 60 days. The immediate problem is that you only have $8,000 in hand, and can't get the $2,000 until you file your taxes next year. What you can do is:
1. Find $2,000 from another source and include that amount in your rollover.
OR
2. Roll over $8,000. The $2,000 withheld will lose the favorable tax status and you will owe income tax and the 10% tax on that amount.

Note: If you have been in an employee contributed retirement plan since before 1986, some of the rules may be different on those funds invested pre-1986. Consult your benefits department for more details,
The rules changed at the end of 1999 to disallow income averaging of lump-sum withdrawals over five years.


Final Analysis-----ACT NOW----DON’T PROCRASTINATE

If your employer offers a 401(k) plan, you should carefully weigh the benefits in light of your financial situation. A 401(k) plan can form the basis of a sound retirement planning strategy.

Today many Americans, even when they intellectually know better, typically make mistakes concerning their company’s 401(k) plan.

We all know we ought to save for retirement, but something always seems to get in the way. If we do join a 401(k) plan contributing a minimal amount, we tend to stay at that contribution level even after we get raises and can more easily afford to contribute more.

Some individuals may be overwhelmed and confused by the many choices. Some don’t contribute at all, or at best settle for the company default option. That option typically is a low-yielding money market fund that safeguards their principal but is unlikely to deliver the return they need.

Some common scenarios:

Not understanding the investment choices, individuals may split their contributions among the choices, but fail to consider asset allocation.

Some individuals, perhaps due to a misguided sense of loyalty or because they believe the company where they work is a “safe” investment, load up on company stock. “People erroneously believe their company’s stock is safer than a diversified fund.”

Diversification is a cardinal rule of prudent investing. Workers who save in a 401(k) plan differ greatly in their investment knowledge and planning skills. Many are simply not interested in investing, so naturally they consider managing their 401(k) an unpleasant if not dreaded chore.

Many psychological factors contribute to the mismanagement of employee 401(k) plans. Among these psychological factors are procrastination and inertia.

Studies have shown that 1/3 of American workers today fail to join their company 401(k) plan. Many know the benefits of joining, but they just don’t get around to it.

All workers should be encouraged to join their company 401(k) plan and contribute at least as much as it takes to get the employer match. Another approach would be start contributing at least 5 percent of your pay, than increase contributions by one percentage point per year until you have reached the maximum allowable contribution level.

Stock Splits

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Ordinary splits occur when a publicly held company distributes more stock to holders of existing stock. A stock split, say 2-for-1, results when a company simply issues one additional share for every one outstanding. After the split, there will be two shares for every one pre-split share. (So it is called a "2-for-1 split.") If the stock was at $50 per share, after the split, each share is worth $25, because the company's net assets didn't increase, only the number of outstanding shares.
Sometimes an ordinary split is referred to as a percent. A 2:1 split is a 100% stock split (or 100% stock dividend). A 50% split would be a 3:2 split (or 50% stock dividend). Each stock holder will get 1 more share of stock for every 2 shares owned.
Reverse splits occur when a company wants to raise the price of their stock, so it no longer looks like a "penny stock". Or they might want to conduct a massive reverse split to eliminate small holders. If a $1 stock is split 1:10 the new shares will be worth $10. Holders will need to trade in their 10 Old Shares to receive 1 New Share.
Theoretically a stock split is a non-event. The fraction of the company that each share represents is reduced, but each stockholder is given enough shares so that his or her total fraction of the company owned remains the same. On the day of the split, the value of the stock is also adjusted, keeping the total capitalization of the company the same.
In practice, an ordinary split often drives the new price per share up, as more of the public is attracted by the lower price. A company might split when it feels its per-share price has risen beyond what an individual investor is willing to pay, particularly since they are usually bought and sold in 100's. They may wish to attract individuals to stabilize the price, as institutional investors buy and sell more often than individuals.
After a split, shareholders should recalculate their cost basis for the newly split shares. (Actually, this is only required for tax purposes after the shares have been sold, but in the interest of good record-keeping and understanding your profit or loss position this should be done soon after the split occurs.) Recalculating the cost basis is usually trivial. The shareholder's cost has not changed at all; it's the same amount of money paid for the original block of shares, including commissions. The new cost per share is simply the total cost divided by the new share count.

Recalculating the cost basis only becomes complicated when a fractional number of shares is involved. For example, an investor who had 33 shares would have 49.5 shares following a 3:2 split. The short answer for calculating cost basis when a fractional share enters the picture is “it depends”. If the shares are in some sort of dividend reinvestment plan, the plan will credit the account holder with 49 1/2 shares. Fractional shares are very common in these accounts. The company could do any of the following:
• Issue fractional certificates (extremely unusual).
• Round up, and give the shareholder 50 shares (rare).
• Round down, and give the shareholder 49 shares. This happens among penny stocks from time to time.
• Sell the fractional share and send the shareholder a check for its value (perhaps taking a small fee, perhaps not). This is far and away the most common method for handling fractional shares following a split.
Accounting for the cost basis of the first three methods is trivial. However, accounting for the most common case, the last one, is the most complicated of the options.
Let's continue with the example from above: 33 shares that split 3:2. The original 33 shares and the post-split 49.5 shares have exactly the same cost basis. To make it easy, assume the 33 shares cost a total of $495. So the 49.5 post-split shares have a cost basis of $10 per share, or $5 for the half share that is sold. The cash received "in lieu of" the fractional share is the sales price of that fractional share. Say the company sent along $8 for it.
The capital gain (long term or short, depending on the holding period of the original shares) is $8 - $5 = $3. To account for this properly, the following would be required.
• File a schedule D listing 0.5 shares XYZ Corp and use the original acquisition date and date it was converted to cash and sold; usually the distribution date of the split but the company will tell you. Use $5 as cost basis and $8 as sales price and voila, there is a $3 gain to declare.
• Reduce the cost basis of the remaining 49 shares by the cost of the fractional share sold. ($5)
• The cost basis of the $49 shares becomes $495 - $5 = $490 (still $10 per share).
The preceding discussion will help with recalculating the cost basis of shares following a split.

The average investor doesn't need to be concerned about any of this, because the exchanges have splits covered - there is absolutely no danger of an investor missing out on the split shares, no matter when he or she buys shares that will split. The rest of this article is meant for those people who want to understand every detail.
Often a split is announced long before the effective date of the split, along with the "record date." Shareholders of record on the record date will receive the split shares on the effective date (distribution date). Sometimes the split stock begins trading as "when issued" on or about the record date. The newspaper listing will show both the pre- split stock as well as the when-issued split stock with the suffix "wi." (Stock dividends of 10% or less will generally not trade wi.)
Some companies distribute split shares just before the market opens on the distribution date, and others distribute at close of business that day, so there's not one single rule about the date on which the price is adjusted. It can be the day of distribution if done before the market opens or could be the next day.
For people who really are interested, here is what happens when a person buys between the day after the T-3 date to be holder of record, and the distribution date. (Aside: after a stock is traded on some date "T", the trade takes 3 days to settle. So to become a share holder of record on a certain date, you have to trade (i.e., buy) the shares 3 days before that date. That's what the shorthand notation "T-3" above means.) Remember that the holder of record on the record date will get the stock dividend. And of course the price doesn't get adjusted until the distribution date. So let's cover the case where a trade occurs in between these dates.
1. The buyer pays the pre-split price, and the trade has a "Due Bill" atttached. The due bill means the buyer is due the split shares when they are issued. Sometimes the buyer's confirmation slip will have "due bill" information on it.
2. In theory, on the distribution date, the split shares go to the holder of record, but that person has sold the shares to the buyer, and a due bill is attached to the sale.
3. So in theory, on the distribution date, the company delivers the split shares to the holder of record. But because of the due bill, the seller's broker delivers on the due bill, and delivers the seller's newly received split shares to the buyer's broker, who ultimately delivers them to the buyer.
No one really sees any of these (3) steps take place.

In some cases, the company may request it’s stock be traded at the post split price during this interval, or the market itself might decide to list the post-split stock for trading. In such cases, the due bills themselves are traded, and are called "when issued", or "when distributed" stock. The stock symbol in the financial columns will show this with a "-wi" or "-wd" suffix. But in most cases it isn't worthwhile to do this.

Commandments of Investing

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COMMANDMENTS OF INVESTING


Investing is a lifelong journey. The following “commandments” will enable you to achieve your goals regardless of your situation and your objectives. The following investment related commandments are the basis for planning, goal setting, and discipline necessary to achieve your goals.

These commandments can keep you focused and enable the achievement of your financial goals.

1. SAVE----Saving is the basic requirement of a successful investment program. However, it is a step many Americans find difficult to take. For some people saving is a natural inclination, but most have to work at it. Once the habit has been established in your mind saving can be relatively painless.

2. PLAN----An investment program cannot be successful unless you have investment plan. The plan need not be complex. With time and experience your plan can be refined to include guidelines about targeted rates of return, asset allocation, investments selection, estate planning, etc. A successful plan will also give you a sense of purpose and ensure greater confidence in your ability to accomplish your financial goals.

3. LEARN---Successful investing requires an individual to understand the basic principles of investing.
These basics can be acquired through a combination of study and experience.

An investor may choose to work with a trusted professional or become a “do-it-yourself” investor.
Regardless of the path you choose, your chances of becoming a successful investor are enhanced if you have the basic skills and understanding of investing.

4. DIVERSIFY---Investors greatest disappointments have resulted from failure to diversify their portfolio. A concentrated investment can make you wealthy. Of course, the more likely outcome is an investor may lose all or a substantial portion of their original investment.

The most accepted asset allocation is a mix of stocks,
bonds, and cash.

The mix of stocks, bonds, and cash determines both the
returns you earn and the risk you experience.

Successful investing means finding the right balance of risk and return.

5. KEEP EMOTIONS IN CHECK ----Fear and greed are the culprits behind many of the worst investment decisions. The markets often provoke strong emotional responses that can undermine a sensible long-term investment plan. Investors also may be distracted by media commentary and news about financial markets.

To be successful, investors must keep their emotions out of their investment decisions.

6. MONITOR YOUR INVESTMENT ----You don’t need to obsess about your portfolio. For many, that kind of intense focus is usually not considered to be a productive means of increasing your portfolio.

However, it is sensible to assess the progress of your investment program and rebalance your holdings to match your targeted asset allocation. There are both simple and complex methods for monitoring your holdings, depending on the investment you have selected.

7. KEEP COSTS DOWN----Low cost is the most reliable predictor of high returns. Everyone wants higher returns. Fewer people pay attention to cost. Cost and return on your investments are directly linked. The best strategy for maximizing your investment returns are keeping costs to a minimum.


8. BECOME TAX EFFICIENT----Your goal should be to maximize your after tax returns, and not to minimize your taxes. No investment decision should be made based only on the tax consequences. However, the current favorable tax treatment of dividends and long-term capital gains can be a valuable asset to investors.

Also, prudent investors should be aware of the advantages of using loss to offset capital gains as well as the benefits of “ capital loss carryovers”.

Cash Flow Management

GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504



Clients may seek cash flow management services to obtain more effective control of their financial situation. For many, that means learning to manage their monthly cash flow better. Often, clients would like to save a larger portion of their income while maintaining their lifestyle. Some have critical cash flow problems, such as excessive debt, little or no savings, or significant fluctuations in cash and flow. Others are concerned about having sufficient resources to fund retirement and seek to control their spending in order to avoid consuming assets too fast. Therefore, these clients have financial objectives that relate specifically to cash flow management.

Cash Flow Management has two chief purposes:

• Management of income and expenditures, including establishing and maintaining a reserve of cash or near-cash equivalents to meet unanticipated or emergency needs, such as those caused by illness, injury, death, or sudden loss of employment.

• Systematic creation and maintenance of surplus of cash for capital investment.

Occasionally, some planners underestimate the importance of cash flow management as a service to be provided to the client. Of course, this can be a major mistake solving problems in this area can play a significant role in the client’s ability to reach a wide range of financial goals.

The primary components of cash flow management are budgeting, cash flow planning, and determination of net worth.

At Gollihugh Financial Services, we place emphasis on assisting clients in achieving their overall objectives. We fully understand all clients do not have the same goals, objectives, or financial resources. It is also understood, clients have a variety of abilities, financial backgrounds, time and/or desire to focus on financial issues. Our focus is to assist clients with the details of goal setting, budgeting and record keeping.

Investment Diversification

GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504




How many times have you heard someone say, “don’t put all your eggs in one basket?” When it comes to investing, that old saying is very good advice. Successful investors know that diversifying their investments can help reduce the impact of a single poorly performing investment.

Diversification means more than having different kinds of investments, such as stocks, bonds and mutual funds. It means having a mix of investments in different sectors and industries. A well-diversified portfolio might include bonds, money market funds, stocks, and real estate. Investors in securities should consider small, medium, and large companies in a variety of industries and countries. Mutual funds which offer different levels of risk are another consideration. Even if your risk tolerance is low, you can still consider diversifying into riskier investments as long as you keep the overall risk of your portfolio low.

The right diversification strategy for you depends on how much wealth you have, your age range, your risk profile and many other factors. Although I can’t recommend specific strategies for diversification, I can offer some simplified guidelines:

Guidelines for Your Diversification

Diversify across the following categories: real estate, stocks, savings or money market accounts, bonds, other investments.

Diversify within each category above.

If you invest in stocks, try not to let any one stock account for more than 5-10% of your portfolio.

Use mutual funds to diversify stock risk. Buy different mutual funds from different fund companies.

Keep 3-6 months of income in liquid assets including cash, savings or money market accounts. As you approach retirement, increase this amount dramatically.
Although bonds are often a staple to a well-diversified portfolio, I wouldn’t recommend investing in them unless your portfolio is large (over $200k) or unless you are close to retirement (within 5-15 years). To invest in bonds despite these circumstances, you can buy mutual funds that specialize in bonds, also known as bond funds.

If all of your wealth is in the value of your home (real estate) and you can afford a higher mortgage payment, you may want to diversify by taking a home equity loan (when interest rates are low) and investing it in another asset class. Only do this if you are comfortable taking on added financial responsibility, but doing so can sometimes increase your diversification and add to your long-term returns.

Review your portfolio regularly to insure it is achieving the desired results and reflects any changes in your circumstances.

Determining Your Investment Mix

An important first step in building a well-diversified investment portfolio is deciding how to divide your money among various investments. These types of investments can include individual stocks and bonds, mutual funds that invest in stocks or bonds, bank accounts and money market mutual funds.

Financial professionals such as stockbrokers, financial planners and insurance agents can help you analyze your financial needs and objectives. In addition, mutual fund organizations may use their own sales forces or outside professionals to help potential investors. If you prefer to do it yourself, researching stocks and mutual funds and buying shares can be accomplished through the mail, over the telephone, or on the Internet. It’s not as complicated as you might think.

To help you determine the mix of investment options that may be appropriate for your investment goals, ask yourself the following questions:

• What are my investment goals?

• What is my time frame to reach these goals?

• Can I afford to invest regularly?

• What growth rate do I need to reach my goals?

• What is my risk tolerance to reach my investment goals?

Diversification is essential for successful investors who have multiple goals with different time horizons. For example, if you were saving for both a car and retirement, you would likely consider different types of investments for each goal. Similarly, a 30-year-old unmarried investor is likely to need a different investment mix than a 50-year-old with two children heading off to college in the next few years. If you are retired, protecting your principal becomes increasingly important as opposed to growing the investment.

Maintaining a Diversified Portfolio

It’s a good idea to periodically review your investment plan. Because different investments grow at different rates, your current distribution of money among stock, bonds, and money market funds may no longer correspond with your original distribution. If this happens with your investments, you will probably need to redistribute some money to bring your investment mix back in line with your original plan.

In addition to the annual review, whenever you make a major life change, it’s time to reassess your overall financial situation. Some common examples of such changes include switching careers, retiring, getting married or divorced, having a child, starting your own business, taking care of an elderly parent, and entering college or paying tuition for a child. Most of these events are likely to affect your ability to invest, your time horizon, and your overall financial picture, both short-term and long-term.

It’s never easy to find the time to review your investment plan when you’re in the midst of any of these life changes. But it’s worth making the effort. You don’t want to enter a new phase of your life with a financial plan that was designed for different circumstances.

In the end, staying on course with a diversified investment mix will help make sure that the performance and risk levels of your overall portfolio reflect your goals and expectations.

Budgeting and Budget Analysis

GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504




Budgeting is a time consuming and yet essential task. It requires a comprehensive analysis of how money is being spent and at what rate investing is being made to achieve short and long range goals. To manage money effectively, clients need to learn how to plan their budgets.

It is necessary to project income, document how money is spent and invested, and compare projected to actual figures. This can only be accomplished if accurate detailed accounts of income and spending patterns are maintained. This sounds more difficult than it is. Related data can be retrieved from income tax returns, home improvement records, bank and credit card statements, and various other statements such as a balance sheet, and income statement, insurance policies, retirement and social security information, pension benefits and checkbook records.

Preparing personal budgets and performing an effective analysis require three steps.

• Establishing reasonable goals and objectives

• Determining the clients current financial situation

• Forecasting future expenses and income

The first step is to classify goals and objectives based on a time horizon. For example, short term goals may be defined as goals to be achieved in a period from six months to one year. Intermediate term goals could be defined as goals to be accomplished within one to five years. Long-term goals may be defined as goals that do not fall within the first two classifications.

The second step is to determine the client’s current financial situation. This must be a two step process. The first step is to analyze expenses and incomes over the last six months to one year. This process is necessary to determine what regular and lump sum costs have been incurred. During this exercise is a perfect time to determine if a client has adequate life, health, homeowners, auto, and other appropriate insurances. Also, expenses should be organized by category, divided by month, and segregated as to fixed or variable. Many expenses by their very nature are both fixed and variable. These expenses should be categorized as fixed expenses, but with emphasis on controlling the variable portion of that expenditure. Some expenses that are normally incurred have tax consequences. Examples of these would be mortgage interest, real estate taxes, and charitable contributions. Recording all expenses may also have the positive result of discouraging clients from unnecessary spending.

The third step in budgeting and analyzing expenditures is to realistically forecast future monthly revenue from salary, business income, interest, dividends, or any other appropriate source. In this process, we must also identify and determine realistic amounts for all expenses. Usually, this process is best completed on a monthly basis. However, depending on circumstances it may be necessary to complete the process using other time periods. Regardless of the time period used, all income and expenses must be analyzed for a period of not less than one year. It is imperative that all expenses be considered including vacations, holiday gifts, and taxes.

The goal of this entire process is not simply to balance income with expense. This exercise must enable us to accomplish the client’s goals and create a reserve for savings.

Once a savings goal has been established, it is the responsibility of all concerned to maximize the return on accumulated savings. This may be accomplished in several fashions, but consideration of the client’s goals and risk tolerance are mandatory.
Care should be taken to achieve proper diversification and safety, while maximizing returns. Additionally, any plan which is implemented must be reviewed regularly to assure goals are being met.

Investment Philosophy

GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504



How an investment performs hinges on many factors. Some can't be controlled—the returns of the markets, for example. But others can be—such as how you approach investing, the factors you deem important in developing portfolios and keeping them on track, the cost of the investments, and what you look for when choosing investments. I believe focusing on the factors that can be controlled is the most effective way to ensure investment success over the long term.

Building and maintaining a portfolio

• Investing is a long-term proposition. An approach based solely on short-term trends or performance is not an "investment philosophy." The risk of price declines—and investors' inability to successfully time the markets consistently—is too significant to hazard money needed for short-term goals.

• Asset allocation and diversification are musts. Research suggests that the most important investment decision is not the specific investments you select, it's asset allocation—that is, the mix of stocks, bonds, and cash you recommend. Being broadly diversified, with exposure to all parts of the stock and bond markets, reduces the amount of risk.

• Costs matter. All else being equal, investments with consistently low fees and transaction costs can give you a head start in achieving competitive returns. Fees create a drag on returns that can make it more difficult to add value, and high turnover can drive up costs and lower tax efficiency.

• Experience counts. A history of successful investing, through good markets and bad and through numerous market cycles, is a tremendous asset for financial planners, and investors.

• Continuity promotes success. Excessive turnover of assets within a portfolio, can reduce overall account performance.

Generally Accepted Investment Principles

GOLLIHUGH FINANCIAL SERVICES
4 DUNNINGTON COURT
SPRINGBORO OHIO 45066
937-748-4504


Investors can turn to many sources for investment advice—such as books, magazines, newspapers, mutual fund companies, and web sites.

Regardless of their choice to follow all, or none of the advice offered by these sources, a personal style of investing will be established.

Investors should establish an emergency fund in short-term safe assets and not held in retirement accounts.

• Retirement funds should be invested primarily in stocks and long-term fixed-income securities.

• The percentage of assets invested in stocks should decline as an investor ages. A popular rule of thumb is to subtract a person’s age from 100 and invest that percentage of total assets in stocks.

• The percentage of assets invested in stocks should increase with wealth because wealthy individuals can generally tolerate greater risk.

• In general, tax-advantaged assets (municipal bonds) should be held outside of retirement accounts and only by investors in high tax brackets, while assets that are taxed more heavily should be held in retirement accounts.

• All Investors should diversify their total portfolios across asset classes, and the equity portion should be well-diversified across industries and companies.
Most sources of investment advice recognize the optimal asset mix for a particular household might differ from the general mix they recommend.

This difference is primarily because of the special circumstances or risk preferences of the given household. Time horizon, risk tolerance, income stability, and other factors influence asset allocation.

People who on average are better educated and more experienced at managing self-directed retirement accounts than the general U.S. population, do appear to invest according to generally accepted investment principles.