Financial Advisory Briefs December, 2007 Presented by Legend Financial Advisors, Inc.^®
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“BRIEFS” identifies a number of current financial planning and investment market issues. For more information, you are invited to contact our Director of Marketing Christopher J. Kail at (412) 635-9210, Extension 230, to schedule a conference call with the advisor listed at the bottom of each brief. You may also reach us via E-mail at legend@legend-financial.com. For more information on Legend Financial Advisors, Inc.’s^® (Legend’s^®) award-winning financial advisory team, please view their Professional Biographies by going to http://www.legend-financial.com/f_biographies.htm.
TABLE OF CONTENTS 1. Mutual Fund Taxes 2. Now Easier To Help Others 3. Year-End Tax Planning: Pre-Season Income Tax Planning That Counts 4. Still Want to Invest in IPOs? 5. Thinking About Retirement – Plan For The Unexpected 6. The Seasoned Portfolio 7. Not Enough For Retirement? 8. Plan For The Future 9. Diversifying More Than Your Portfolio
MUTUAL FUND TAXES Mutual funds are fairly simple -- by placing their money into a diversified pool of investments focused on a particular objective, the shareholder benefits from liquidity and professional money management. However, what many people are unaware of is the fact that they are taxed on their regular distributions and also when a distribution results from their portfolio managers selling stocks within the fund. When buying these sorts of funds, timing is also crucial. If an investor buys into a mutual fund shortly before a distribution, they will end up being taxed on gains that they did not benefit from. For more information, contact Legend’s^® Lou Stanasolovich at (412) 635-9210, ext. 221.
NOW EASIER TO HELP OTHERS With the holidays approaching, do you feel compelled to share your wealth with the less fortunate? For generations, Americans have donated large sums of money to charity, and according to the Boston College Social Welfare Institute, this trend will continue into the upcoming decades. However, due to cheaper set-up and operating costs, people are beginning to establish their own private foundations. Any individual can create a foundation which can serve charitable, educational, religious, scientific, or literary purposes, as long as it follows the guidelines spelled out in Section 501 c(3) of the tax code. For more information, contact Legend’s^® Diane Pearson at (412) 635-9210, ext. 220.
YEAR-END TAX PLANNING: PRE-SEASON INCOME TAX PLANNING THAT COUNTS It’s that time again. Year-end tax planning is when a financial advisor can make important decisions that will have a considerable impact on clients’ tax returns on April 15th. If a client’s income is down, one’s financial advisor could choose income acceleration if the upcoming year looks to be more profitable. On the other hand, clients who prefer more earnings can ask for bonuses in December, selling restricted stock or other appreciated investments. For financial advisors, these end of the year moves are actually just the beginning of preparation for the upcoming year. For more information, contact Legend’s^® Jim Holtzman at (412) 635-9210, ext. 119.
STILL WANT TO INVEST IN IPOs? Initial investment public offerings (IPOs) are becoming more popular again. Because of the IPOs in 1999 and 2000 that posted huge first-day gains, many people are tempted to take a big risk and invest in IPOs. What most people don’t realize is that IPOs have not made the return that investors are looking for. Investing funds in an IPO requires putting money into a new and unaccredited company. Since the first day of IPO trading is reserved for major clients, the average investor doesn’t have a chance in making the big first-day gain. When the average investor has a chance to buy shares, the best days of the stock have come and gone. For more information, contact Legend’s^® Lou Stanasolovich at (412) 635-9210, ext. 221.
THINKING ABOUT RETIREMENT – PLAN FOR THE UNEXPECTED Many people try to plan their retirement based upon what they anticipate their retirement looking like. But what about unexpected events that occur before or during your retirement? Married couples sometimes fail to realize that their retirement earnings may not be just for them. A wedding, funeral or any other unpredictable event could really drain a couple’s retirement savings. For more information, contact Legend’s^® Diane Pearson at (412) 635-9210, ext. 120.
THE SEASONED PORTFOLIO The rollercoaster ride of U.S. investments is continuing into the 21st century. For most of the ‘60s, ‘70s, and ‘80s, international investments outperformed U.S. investments, with the opposite occurring in the ‘90s. Now, once again, international investments are surpassing U.S. investments, causing a flood of money to be invested in foreign invested vehicles, but should investors follow? For more information, contact Legend’s^® Lou Stanasolovich at (412) 635-9210, ext. 221.
NOT ENOUGH FOR RETIREMENT? With benefits of Medicare and Social Security shrinking and projections show them to shrinking further or even disappearing, many people are wondering what they are going to do about retirement. Studies show that many people are not saving enough, or at all, for retirement. People are more likely to simply change professions or cut back hours rather than stop working. More than a third of retirement age people say they simply cannot afford to retire. For more information, contact Legend’s^® Diane Pearson at (412) 635-9210, ext. 120.
PLAN FOR THE FUTURE For many business owners, concentration on company matters leads to a serious lack of personal financial planning. Although juggling both may be difficult, it is important to have sound finances within and outside of the corporate arena. Avoiding a few common mistakes made by business owners can be crucial in the event of retirement or sale of a business. Neglecting to diversify a personal investment portfolio, failing to properly fund a retirement plan, overlooking company structure, disregarding a firm succession plan, avoiding the distribution of shares and leadership, and leaving valuable assets unprotected are common mistakes made due to a lack of planning, which could leave business owners suffering. For more information, contact Legend’s^®Jim Holtzman at (412) 635-9210, ext. 119.
DIVERSIFYING MORE THAN YOUR PORTFOLIO How risky would it be to load up on a single stock of a company, especially one of personal employment? Just ask former employees of Enron, Lucent, and many of the dot-coms that have collapsed. It is now a common belief that it is not only important to diversify one’s portfolio, but also personal accounts and employment. In this case, investing in what is unfamiliar is not necessarily a bad thing. Diversifying one’s career retirement and employment can prevent a financial disaster. For more information, contact Legend’s^® Jim Holtzman at (412) 635-9210, ext. 119.