investments – general info

03/8/10 | alexah strongheart | general information, investments

Investments are sometimes known as “wealth accumulation vehicles” and are used to accumulate capital for future needs and to help overcome the effects of long-term inflation.

The trick is to find investments that have the logical potential to meet your goals as well as the desired level of safety you require.

Before investing, you need to decide what you would like your money to do for you. There are four general investment objectives: growth of principal, high current income, tax savings, and safety of principal. No investment or savings vehicle can give all of these. Choices must be made.

If you want growth, there may be little or no current income, and the value of your principal may fluctuate.

If you desire high current income, you reduce the potential for growth and expose yourselves to possible loss of value of principal.

If tax savings is the objective, you will have to give up some current income and some safety of principal.

If you want safety of principal, growth and high current income will be given up.

Some combinations are possible such as modest income plus potential for growth of principal.

There are many forms of investments, and once you have determined your investment objective, it is time to look at the options available.

Certificates of Deposit and Money Market Mutual Funds are considered savings vehicles. They offer a low risk way to generate a cash reserve, generally at an interest rate higher than a passbook savings account.

Bonds are generally considered income vehicles. US Treasury Bonds are the more secure, followed by Municipal Bonds and then Corporate Bonds.

  • Treasuries are backed by the US Government.
  • Municipal Bonds offer some tax benefit and are backed by a city, state or local government, and the interest on these are generally exempt from federal taxes.
  • Corporate Bonds are issued by corporations, and tend to be riskier than either Treasury or Municipal Bonds, but they also, generally, provide a higher interest rate. These may be “investment grade” or “junk” depending upon the risk ratings.


Common Stocks are units of ownership of corporations. Most corporations pay out a portion of their net income each year as dividends. The value of the shares will tend to go up as the earnings of the firm increase. This combination of dividends and growth of the price of the shares often gives a “total return” greater than you can get with fixed income investments such as CD’s or bonds.

Mutual Funds offer investors a wide array of investment opportunities. There are literally thousands to choose from. Mutual funds are a way for an investor to own a diversified portfolio of government, corporate or municipal bonds, common stocks, or combinations of stocks and bonds. Mutual funds can be used to generate current income, or a combination of current income and growth, or long-term growth of principal. Mutual funds are sold by prospectus – a document that investors read before investing.

If you have questions about your current investments – contact me about an investment review.

financial planning – general info

03/3/10 | alexah strongheart | financial planning, general information

The primary objective of a financial plan should be to help you identify and meet your personal financial needs and goals.

• Cash Management: This addresses how your actual after-tax earned income is allocated for cost of living, debts, savings and investments. This initial step often involves budgeting, debt management, setting up a funding plan for major expenditures (like automobiles) and cash accumulation (savings) for emergencies and opportunities.

• Risk Management (Insurance): Life, Health, Disability, Nursing Home and Personal Property. Reviews of insurance programs frequently reveal excesses in some areas, gaps in others, and often too high a price.

• Taxes: Are you paying too much? Are you giving the government interest-free loans? Are you utilizing those provisions the government gives to reduce, defer, or even avoid some taxes? A good financial adviser will work closely with you and your tax professional, and will suggest that you seek the advice of a qualified tax professional when it comes to tax issues.

• Retirement Planning: Once retirement age is reached, if you have not yet provided adequately for retirement with dignity, it is simply too late to go back and do it right! How much income you will really need? What sources of income will you have? What will the future rates of inflation be? What rate of return can you expect to achieve? What will taxes be? Will Social Security be around when you retire?

• College Planning: For those who have children, discovering what it will cost for their child to attend college can be a traumatic experience — too often the information comes when there is very little time left to acquire the funds required.

• Investments: This is sometimes known as “wealth accumulation”. Investments are used to accumulate capital for future needs and to help overcome the effects of long-term inflation.

• Estate Planning: On the assumption that medical science cannot alter the aging process, some thought should be given to handling your affairs after death. If dependents are left behind, provisions should be made for their care. This includes plans for management of affairs in the event of mental incapacitation before death.

Contact me to create a customized financial plan for you. I can put you on the road to achieving your long-term financial goals.

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