How to Prepare your Portfolio for the Unknown

Unless you’ve been living under a rock since New Year’s Day, you should be well aware of the

tumultuous events that have been taking place around the world – the disaster in Japan and the

uproar in the Middle East and North Africa are just a few global measures that are causing

economic changes around the globe. We’ve seen gas prices soar and a rise in food and beverage

commodities, but the place in which these changes are especially apparent is the stock market.

Inflation has caused investors to shift their assets and determine which of the world’s financial

markets are being hit the hardest with higher interest rates and a rise in inflation. If you have any

game pieces playing in the stock market you’ll surely want to know which markets are being

affected by the ever-changing economic fundamentals. Let’s discuss the possible risks that your

portfolio faces, and aim to strengthen any weak spots.First off, let’s discuss the risks you must

consider – inflation and interest rates. These are two of the biggest factors to put into perspective

when considering stock market choices. Currently, higher energy and commodity costs are

sticking it to both consumers and producers. However, the big question that investors need to

mull over is how much of these high prices are due to speculation. Instead of looking at

speculations in the stock market, it’s crucial to consider supply and demand realties, and how

they will subsequently affect inflation, and in turn interest rates. Possible solutions to market

volatility and the risk of rising inflation and interest rates starts with broadly and efficiently

diversifying your portfolio. Here are some suggestions of market choices to invest in during this

time: U.S. and international stocks, commodities, inflation-protected bonds, real-estate

investment trusts and cash, all of which have the ability to withstand inflationary bouts.

Next, let’s discuss the risks you must anticipate – war, disasters, political and economical

upheaval and social unrest. While the stock market is extraordinarily resilient, and has been

fighting against all the shocks in 2011 so far with great momentum, it’s hard to say whether it

will continue to stand firm against the current troubles in the Middle East and Japan that are

disrupting the technology, automobile, and oil industry. Possible suggestions for anticipating

these risks include adding gold and other precious metals to your portfolio, as well as

implementing hedge-fund-like long-short strategies, which attempt to generate stock-market

returns, but with lower risk. Essentially, you bet that some investments will rise while others

will fall.

Of course, we must discuss the risks that never go away – markets and companies. Yes, market

risk is inescapable, but don’t view your portfolio like betting at a horse race – because the

favored winner may inevitably lose horribly. The key to market strategy is diversification and

implementing a safety margin. Keep these three risks that all investors should understand in

mind: valuation risk – overpaying for an asset, fundamental risk – buying something that turns out

to be flawed, and financing risk – using leverage. Other suggestions include avoiding

concentration in similar stocks and mutual funds, as well as never overlapping markets or


Finally, a risk you must fear is that of playing it too safe. It’s a difficult balance to find – risk it

all and you could end up with too many losses, risk too little and you could be in danger of not

having enough money in later years, and of missing major market advances. Any suggestions

for not playing it safe simply revolve around going around your judgments and taking small risks

that yield small returns. Hopefully then you’ll start to feel more confident in your investing

strategy. Unless you can predict the future, it’s crucial to embark on a strategy that will preserve

capital in a period of heightened volatility. Simple steps like assessing risk, identifying

opportunities and looking past the present and into the future can shed light on how to handle the

markets twists and turns. And even though the future of the stock market can never be certain, at

least you can equip your portfolio with a nice safety net.

Key Investment Questions

Seven Questions to Ask Before Investing:

We have all heard of the seven deadly sins, things that you should never do or you risk the harshest

of punishments. But many people don’t know about the seven deadly questions, involving your

investments. There are seven questions that one must answer before dropping a dime on investments,

otherwise their money could be lost in the fiery pits of… well you know where. Making investment

decisions isn’t easy, especially if you are just entering the game. There are a lot of details that many

people don’t think about until it’s too late. So, if you want to avoid the eternal pain of poor investment

plans, ask yourself these seven questions.

1. “Why?” It’s a simple question, but it’s often the hardest one to answer. Why are you investing,

and what do you hope to gain from it? In other words, you must set specific goals. Maybe you want

to save for retirement, maybe you want to send your kids to college, or maybe you just want some

breathing room from everyday expenses. Whatever the reason, it’s important that you define why you

investing your money and what goals you wish to accomplish in doing so.

2. “What is my time frame?” When can you expect to earn your money back? This all depends on

what kind of investments you make. Most of the forms of investments which you can cash out of at any

time, such as stocks, bonds, and mutual funds, often leave you with the risk of not getting back all that

you paid in. Many other investment options will limit or restrict the opportunities that you have to sell

your holdings. Make sure you are aware of these before you enter the game.

3. “What am I going to get out of it?” What can you realistically expect to earn on your

investments? Having an unrealistic idea of playing the stock market and striking it rich could leave

you simply striking out. Most earnings, as millions of people encountered in the past few years, are

dependent upon the market, and can rise or drop based on market changes. Other investments, such as

bonds, have fixed returns that aren’t as susceptible to market changes.

4. “What kind of earnings will you make?” Very few times when investing does a wad of cash

appear in your mailbox if you’re successful. Many times your success is paid to you in things like

potential for earnings growth, as in real estate purchases. Other times it can come through interest

or dividends. Knowing the details of your payback can help you make better decisions when you are

paying in.

5. “What’s my risk?” And here comes the basic balance in investing, risk versus reward. The higher

the risk, the higher the potential reward. Overall there is no guarantee that you will get your money

back or receive the earnings promised to you. Unless you have your money in a savings account or a

U.S. Treasury security, both of which are backed by the federal government, your money is essentially

unprotected. Make sure that the risk you take is worth the reward that you expect to achieve.

6. “Is my money diversified?” We can all remember our mothers as some point or another

saying, “Now, don’t put all your eggs in one basket.” Well your mother’s wise words ring true in terms

of investments as well. Certain types of investments do better in certain situations, so by diversifying

your investments, you are spreading your eggs across many baskets. That way if a certain industry tanks

or sector is struggling, you will have plenty of other baskets holding your money safe and sound.

7. “What is the effect of taxes on my investments?” It may seem like the nightmare of early April

Planning for the Retirement Dream

Many of us picture our retirement years spent enjoying life without working, but have you

planned for everything? Will you be able to live the golden years as you envision them? Here

are some unexpected and often underestimated expenses and tips to consider when planning

for the golden years.

1.  Medical expense:. How long do you plan to live? People are living longer and as we age

our health starts to decline which could mean an increase in your medical expenses. Planning

to live longer but not changing the way you save for retirement could deplete your savings

earlier than expected. In order to compensate for this you can increase your savings and start

making lifestyle changes now. Improving your health by exercising, eating right and dropping

unwanted weight could put you in a better position for a healthy and less expensive retirement.

If you are a smoker have you considered beginning a cessation program?

2.  Taxes: Do you plan on retiring where you live now or will you move to a tax-free state?

The idea that we have enough money saved in our retirement accounts to handle all of our

expenses is an old myth. Expenses are increasing for everyone and planning for them right

can include predicting your taxes. Taking into consideration where you will retire can help you

identify your annual state taxes as well as any taxes on your IRA contributions. Currently, there

are only a few states that do not allow IRA contributions to be deducted from taxable income.

There are benefits to relocating to a state with lower taxes, but the state you decide to retire in

will affect how long your retirement dollars will last. Planning for the city you want to retire in and

calculating your tax potential can help you project how much to save.

3.  Inflation: I know what you’re thinking – you’re earning interest on your accounts and

investments now, so why do you need to include inflation in my retirement plans? Thinking your

retirement money in high risk investments will be able to keep pace with price increases is a

common mistake. Strategies like this may leave you with less money, not more. Since your

major risk related to inflation is health and medical, you should establish an emergency fund for

such instances. What your money buys is just as important as how much you have. When is

the last time you made adjustments to your portfolio to compensate for inflation? Take a look at

your portfolio and consider making some adjustments this week.

4.  Plan: Having a plan and sticking to it will help manage your income goals as well as a

scheduled withdrawal rate from your accounts. Including unforeseen expenses in your long term

plan will help you make informed decisions about which accounts to withdraw from first. Review

your plan every year to ensure you are on the right track, especially after you retire. Creating a

strategy and sticking to it will help make your money last.

So what do you think? Have you added these to your retirement strategy? Perhaps you have

considered some of these in your planning and that’s great, but when is the last time you’ve

made adjustments to diversify your portfolio? The bottom line is we are living longer and

planning for a healthy future starts now. Creating a plan that encompasses a healthy lifestyle

is the smart move for your retirement and financial future. Make sure to review your planning

strategy and be sure to account for inflation, taxes and an annual review of how your plan is

performing for you. Are you ready? Mark your calendar and take action annually to get ready to

live your retirement dreams, the way you intended.

The Tax Man Cometh: Ever Wonder How He Spends Your Money?


The Tax Man Cometh: Ever Wonder How He Spends Your Money?


Every year you repeat the same tired task. You collect all your receipts forms, and related tax

information and either settle in for a marathon self-preparation session, or you hand it all over (along

with a few hundred bucks, give or take) to your tax preparer. When all’s said and done, you’ll see

exactly how much money the federal government took from your paychecks, but you certainly don’t

see an itemized list of where that money will go.

However, in his 2011 State of the Union Address, President Obama pledged to develop a new online

tool that would allow every American to see precisely how the government spends his or her annual tax

payments. The resulting and first-of-its-kind public website, “My Federal Tax Receipt,” launched last

year and was just recently updated to reflect current spending. The tool is an online calculator, located

on the a site called Once there, you simply enter your income tax, Medicare

tax Social Security tax, and a detailed calculation of how your tax dollars are allocated pops up on the


But you don’t actually have to do anything at all to satisfy your general curiosity — after all, you could

just simply scan the numbers and learn how much of the collective federal income tax is allocated

where, as it’s all broken into categories and subcategories and measured by percentage. While the

information on the site is incredibly informative, intriguing, and perhaps even a bit surprising, I’d be

less than honest if I neglected the site’s democratic political bent, but the information is still interesting,

despite the occasional overt partisan prose.

Exploring the site is a fascinating way to see where your national priorities lie when compared to those

of the government. How much goes to job development and education compared to health care? How

does health care rank when it comes to foreign policy and even foreign aid? Most of us don’t have a

clue, let alone how much tax money is allocated to each different cause.


The programs and services funded by your income tax, as well as the percentage of your total


income-tax payment they receive, are as follows:


National Defense 24.9%

Health Care 23.7%

Job and Family Security 19.1%

Education and Job Training 3.6%

Veterans Benefits 4.5%

National Resources, Energy, and Environment 2.0%

International Affairs 1.6%

Science, Space, and Technology Programs 1.0%

Immigration, Law Enforcement, and Administration of Justice 2.0%

Agriculture 0.7%

Community, Area, and Regional Development 0.5%

Response to Natural Development 0.4%

Additional Government Programs 7.9%

Net Interest 8.1%

In addition to these statistics, the site offers a great deal of interesting content. Curious about foreign

policy issues, for instance? You’ll easily find your way to a cache of information including everything

from the National Security Strategy, Obama’s National Strategy for Counter Terrorism, and short

pieces describing things such as “Refocusing on the Threat from al Qaeda in Afghanistan and

Pakistan,” to other stories that tout presidential achievements such as “Stopping a Massacre and

Supporting the Libyan People” or “Promoting Peace and Security in Israel and in the Middle East.”

In addition to these 12 major categories, there are an additional 34 subcategories to break the spending

down further into segments such as “Ongoing operations, equipment, and supplies,” which consumes

10.3 percent of the total slice of pie that goes toward National Defense, or “Child care, foster care, and

adoption support,” a subset of the Jobs and Family security category that sees only 0.6 percent of its

share of your tax dollars.

The site certainly warrants a visit, regardless of your political affiliation. Having a better understanding

of what we pay for and how makes us stronger citizens, and let’s face it, it’s information we deserve to



Could An IRA, 401(k), Or Any Other Qualified Plan Be Your Only Retirement Savings Solution?

Absolutely not, here is the problem…

The money in your IRA/401(k) or other qualified plans is not all yours!  As much as 40% of it (maybe more) belongs to the government because your invested money is ONLY tax-DEFERRED, not tax-EXEMPT.  And you eventually have to pay tax on every dollar in your account even if you leave it all to your family.

When it comes to retirement planning, simply starting is often the hardest part.  We can help you find the best retirement planning tools but also the motivation to begin.  We can help you determine how much to save and the best way to do so including IRAs, Roth IRAs, 401(k)s, 403(b)s, 457s, and Non-Qualified Plans.

Here is the Solution…

Take some time to get a Retirement Planning Analysis.  This will solve two problems (1) determine which retirement investments are the best for you, and (2) how much you need to save to reach your retirement goals.

Contact us at to set an appointment or call us at 800-332-8327.

2012: New Year, Same Advice

We have all been conditioned by the financial services industry to ask the question, “What will the markets do in the new year?”  There is always someone in the financial services industry who will attempt to answer that question with some prediction.  Sometimes they guess right, but more often than not they guess wrong.  Our answer to that question remains the same:  WE DON’T KNOW WHAT THE MARKETS WILL DO THIS YEAR!

We are not fortunetellers.  We do not own and do not want to own a crystal ball.  The financial markets are controlled by over six billion people making daily buying and selling decisions.  One of our basic views is that no one knows whether the markets will go up, down, or remain unchanged over the short or long-term.  What we do is properly position our clients with well-diversified, efficient portfolios to take advantage of market conditions.  Our goal is to obtain market returns.

One of our most important responsibilities to our clients is to provide the coaching to keep you disciplined.  We can help you to stay focused on your long-term goals and not panic when markets go lower and not to become greedy when the markets rise.  Investing this way is not necessarily glamorous or sexy, but very prudent.  Fear and greed are the two most powerful emotions that destroy investors’ peace of mind and their investment returns.

As we enter 2012, we hope you have peace of mind on your investments and retirement goals.  This is accomplished by attending our Coaching classes where we teach you more about our Free Market Investment Philosophy, our Free Market Efficient Portfolios, and our Free Market Strategy for capturing Market Returns with lower volatility.

Our advice remains the same:  turn off the hype on TV, don’t listen to the talking heads and recognize that they have no idea what is going on in the future with the markets.  Finally, as a believer in our investment philosophy, invite a friend or relative who is not taking advantage our coaching to come to one of our seminars.  We truly want to “save the world one investor at a time!”

Five Basic Tips for Creating a Solid Retirement Plan

We all know what the retirement picture is supposed to look like.  We spend our whole life working toward that magical retirement age when your golden years begin–the hobbies, the travel, spending time with your grandchildren.  However, with a rocky economy and volatility in the markets your picture might not be so clear.

Consider these basic tips to see to it that your retirement is spent doing what you love.

  1. Set your retirement goals:  Think about what you want your retirement picture to look like.  Does it involve living in a paid-off home, buying a motor home, or relocating to a house on the beach?  Do you want to donate to charities, or provide for your children and grandchildren?  What will it take to make it all come together?
  2. Start Planning now:  Whether you are just beginning or looking to retire in five years, start taking the steps to prepare now.  Establish IRA’s or participate in your employer-sponsored 403b or 401k plan and fund them with as much as you can.  One goal would also be to increase your contribution each year to help insure that you have enough money to retire.
  3. Reevaluate your life expectancy:  It is no secret that with medical technology and living a good healthy life we are living longer than ever.  According to the Society of Actuaries, a 65-year-old man has a 41% chance of living to age 85, and a 20% chance of surviving to age 90.  A 65-year-old woman has even better odds.  She has a 53% chance of living to age 85, and an impressive 32% chance of reaching age 90.  With these statistics in mind, ramping up your savings is more crucial than ever.
  4. Determine your Social Security benefits:  Did you know the longer you delay retirement, the larger your Social Security checks grow?  While you can officially start drawing funds at age 62, if you hold off until age 70, you’ll double your benefit amount.  Even if you wait until age 66, your Social Security checks will grow by one-third.  While working past age 65 might not appeal to you, the higher payout amount certainly should.  There are many more strategies to get the most from Social Security, especially if you are married.  To explore your options and determine when you will begin to draw Social Security benefits, visit  They even have an online retirement estimator to help guide your decision.
  5. Work with a trusted Financial Coach:  If you really want to get the best out of your retirement plan, it’s best to place it in the hands of a capable retirement specialist who will coach you through the process, recommend appropriate investment tools, offer practical advice on savings, and keep an eye on your retirement portfolio.  For more information on working with a coach versus an planner click on the tab at the top of this page called Why You Need a Financial Coach.

We hope this has been helpful to you.  If you would like more information click on the contact button and we will send you more information or set up a time to meet with you.

By Jim Hancock