Start Planning for Your Retirement Now

April 16, 2008 at 9:20 pm (Perspectives Newsletter)
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Start Planning for Your Retirement Now
Carol McBeth, CFS, APR, CRPS, AIF®, Director of Retirement Planning, 1st Global

Do you have a plan for your retirement?

Few financial goals elicit as strong a response as
planning for your own retirement. Television and
magazines constantly bombard you with images of
happy retirees enjoying an active lifestyle, traveling
on a whim and living without a care in the world. You
may look forward to retirement as a time to savor the
finer things in life, and as a reward for many years
of hard work.

But advertising paints a rosy picture that is seldom
in line with reality. Many baby boomers may have to
take care of parents or children even in retirement, and
others will have to think about long-term care options.
What’s more, many people have dreams for retirement
that don’t necessarily include a life of luxury. Some
have more modest goals, such as seeing a child or
grandchild through college, or simply living in comfort.
Retirement dreams can inspire you, but you need to set
goals if your retirement is to live up to your aspirations.
Here are some questions that can help you get started
thinking about your retirement:

 • What percentage of your current income level
   will you require in your retirement years?
 • Who will be financially dependent on you in your
   retirement years? Your parents? Your children?
 • At what age do you plan to retire?
 • How much do you currently contribute to your
   retirement plans?
 • How effective is the asset allocation model you
   are using for your retirement assets?
 • Where will retirement income come from if you
   or your spouse is alone (divorced, widowed)?
 • What legacy do you want to pass on to your
   loved ones?

As life expectancies increase and the burden of
retirement income shifts from employers to employees,
planning for your retirement becomes an essential
part of your wealth management program.

You should approach your retirement planning
from three fronts: your Social Security or other
government programs, any retirement plans
your employer sponsors, and any plans you
individually own. There are many options to
choose from and your financial advisor can
help you better understand the benefits and
limitations of each solution. The retirement
landscape is also one that changes quickly,
so your wealth management advisor is your
best source of information to help you
navigate the retirement waters.
Securities offered through 1st Global Capital Corp. Member NASD/SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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Are You an Emotional Investor?

April 16, 2008 at 9:17 pm (Perspectives Newsletter)
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Are You an Emotional Investor?
Scott Summerford, CPA, CFA, CFP®, Director of Investment Policy and Research, 1st Global

“Emotional investing” means making investment decisions based on emotional reactions,
and not discipline and reason. These behaviors hinder your ability to make sound
decisions and may cause you to make frequent changes to your investment program
or abandon it altogether. For example:

 • You make investment decisions based on a shortcut to information such as a rating:
   “This is a five-star fund, so it must be good.”
 • You believe that if a company is famous, popular, or you like its product, investing in it
   is a good idea. “Coke is my favorite drink; therefore, it’s a good investment for me.”
 • You cling to familiar experiences and investments, even when no longer appropriate:
   “Buying Investment A was profitable once; I’ll buy it again.”
 • You follow the social consensus in choosing investments, even if irrational:
   “Everybody owns XYZ Funds! They must be safe.”
 • You make buy and sell decisions influenced by fear and greed. You may sell winning
   investments too early (“I’d better take my profits!”) or hold losing investments too long
   (“If I wait long enough, I can make my money back”).
 • You respond to financial media without reasonable basis: “So-and-So on TV said the market
   was overvalued! We’d better sell.”
 • You assume that using many advisors or different funds or fund families in the same
   asset class means you are diversified: “I own four different U.S. Large Cap mutual
   funds, so I must be diversified.”
 • You select only U.S. investments, despite the fact that U.S. stocks represent only
   48 percent of the value of all the stocks in the world.
  
Investing can be an emotional activity, but it doesn’t have to be. Your wealth management advisor
can establish a customized IMS program to help you:

 • Identify the personal investor profile that reflects your unique needs and circumstances.
 • Adopt a written investment policy statement—a comprehensive blueprint for your
   investment program.
 • Determine an appropriate asset allocation. Asset allocation is the single most important
   determinant of portfolio returns and the basis to a disciplined investment program.
 • Set regular meetings to review your portfolio’s progress, discuss changes in your life
   situation, and explore additional wealth management issues affecting you.

With a trusted wealth management advisor as your coach, you have the expertise, discipline and
confidence to create a lasting plan for future success. Talk with your wealth management advisor
today and begin the work towards a disciplined investment program, IMS, that helps you avoid
the pitfalls of emotional investing.

 

Securities offered through 1st Global Capital Corp. Member NASD/SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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Help Your Employees. Help Your Business. Help Yourself.

April 16, 2008 at 9:03 pm (Perspectives Newsletter)
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Help Your Employees. Help Your Business. Help Yourself.
Set Up a 2007 Business Retirement Plan Now!
Carol McBeth, CFS, APR, CRPS, AIF®, Director of Retirement Planning, 1st Global

Did you know…

 • That retirement can last for 30 years or more?
 • That a common rule to follow is that retirees will
    need up to 80 percent of their annual income today to retire comfortably?
 • That the average amount paid monthly by the
    Social Security Administration in the form of a benefit is $962.701?

There is still time to establish a retirement plan before2007 ends. A retirement plan allows you to invest for
the future while providing many benefits for you, yourbusiness and your employees. As a bonus, you and your
employees may receive significant tax advantages andother incentives.

Benefits for Your Business:

 • Employer contributions made on behalf of eligible
   employees are tax-deductible.
 • Businesses may receive a tax credit of 50 percent on the
   first $1,000 in administrative and/or education costs.
 • Assets in the plan grow tax-deferred.
 • A retirement plan can attract and help retain good
   employees, consequently reducing your cost of training new employees.

Employee Benefits:

 • Federal income tax on contributions in the retirement
   plan is deferred until distributed.
 • Investment earnings that accumulate in the plan are
   not taxed until distributed.
 • Retirement assets are eligible for rollover to other
   employer plans.
 • Contributions can be made automatically through
   payroll deductions.
 • A tax savers credit up to 50 percent is available to
   individuals within certain income limits.
 • In many cases, long-term retirement goals are more
   likely to be met through early and full participationin a retirement plan.  
 • Qualified contributions reduce employees’ taxable
   earned income.

U.S. Social Security Administration Office of Policy, Monthly Statistical Snapshot, August 2007

Establishing a Retirement Plan:

Depending on the type of plan that is right for your business,
the range of administrative steps to establish a retirementplan varies.

 • First, talk to your wealth management professional todiscuss the appropriate retirement plan for your business
   before the end of the year.
 • After the type of retirement plan is determined, youand your wealth management professional will selectthe investment vehicle to house plan assets.
 • Your company will then adopt a written retirement
   plan before the end of the year.
 • Lastly, you will notify all eligible employees about
   the details of their retirement plan.

How can you get started setting up a retirement plan beforethe end of the year?

Call your wealth management advisor today. He or she
can gather the census data for your business and craft a
retirement proposal that is designed to fit your unique
needs and goals.

 

 

Securities offered through 1st Global Capital Corp. Member FINRA/SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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Life Insurance: Own it or Rent it

April 16, 2008 at 8:51 pm (Perspectives Newsletter)
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Life Insurance: Own it or Rent it                                                                                                              Ed Bowen, CLU, ChFC, CIMA®, Manager, Advanced Case Design

We understand that people are often confused about the different types of life insurance. To illustrate the
various approaches to life insurance, think of a housing analogy. Term insurance is like renting a house.
You get the protection you need guaranteed for a fixed number of years (like a lease), but the premium (rent) will escalate over time. Even when you lock in a level premium for a definite period of time, there will comea day, 10 or 20 years from now, when that term and your insurance coverage run out. When you attempt to renew your coverage at that point, you must re-qualify medically. Since you are older, you can reasonably expect a hefty increase in your premiums. You also must assume (and hope) that you are still in good health and insurable.

So, what solution is right for you? No single answer is correct, as the right life insurance solution depends on why you need the insurance. If you are addressing a temporary need, you should choose term life, which pays a death benefit only when the insured dies during the term of the policy. A good example of a temporary need would be a
future defined expense, like a child’s or grandchild’s college tuition. Because you can estimate both the cost and the dates of college expenses, term insurance can work well to ensure the money is available exactly when it is needed.

However, term insurance carries no additional benefits and term policies have very limited flexibility. Term insurance becomes increasingly expensive in later years. If you let the policy lapse, you may end up with no life insurance. So while term insurance is useful when used correctly, it may be an inadequate solution when the defined need is more permanent in nature.

For most people, especially those attempting to address ongoing family and business needs, a good choice may be some form of permanent life insurance, such as whole life or universal life. Permanent insurance is like owning a home. As long as you pay the premiums (like mortgage payments), your insurance coverage remains in force. In addition, you have the potential to build up significant cash value in the policy (like home equity). You have access to the cash value in case of an emergency or you can use it for supplemental retirement income needs.

Consider the following possible needs for life insurance:

• To provide financial security for your family in case of premature death
• To create liquidity for covering expenses incurred at death
• For business purposes, such as succession planning
• To transfer wealth to heirs or leave an inheritance
• To address potential estate tax exposure
• As a means of funding a charitable gift

The most valuable feature of permanent life insurance is that the death benefit will be there when your loved ones need it.

If you think you may need life insurance or would like an audit of your present insurance coverage, please contactyour financial advisor. Your financial advisor can help you design a life insurance program customized to the unique needs you and your family have—today and in the future.

Securities offered through 1st Global Capital Corp. Member FINRA/SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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What is your IRA Game Plan?

April 15, 2008 at 8:29 pm (Perspectives Newsletter)
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What is Your IRA Game Plan?
Tim Mezhlumov, Assistant Director, Advanced Case Design, 1st Global

The Individual Retirement Account (IRA) has been around
since 1954 and today many Americans, especially those who are
close to retirement, regularly contribute to one. Now is a good
time to take a closer look at the new IRA contribution limits for
2008 and how your IRA can bolster your investment portfolio.

2008 Contribution Limits

The attached table details key contribution limit increases.
For 2008, there are three key changes:

 • The contribution limit for Traditional and Roth IRAs increased
to a $5,000 maximum for individuals under age 50. An
additional $1,000 catch-up contribution, for a $6,000
maximum, is available to those who are age 50 and older.

 • The income ranges used to determine Traditional IRA
deductions have increased as well. For example, for
a married couple filing a joint tax return, the phase-out
limit is now $85,000 to $105,000.

 • The income limit used to determine eligibility to contribute
to a Roth IRA has also increased.

Consolidating Multiple IRA Accounts

Many IRA owners have more than one IRA. If you own multiple
IRAs, you should consider consolidating these accounts.
Advantages to consolidating multiple accounts include lower
custodial fees, fewer account statements, and consolidated
asset allocation strategy and reporting. You should discuss
consolidating your accounts with your wealth management
advisor, especially if any of the following apply to you:

 • You hold multiple IRAs

 • You hold IRAs at more than one financial institution

 • You have a 401(k) balance with a previous employer

Beneficiary Designations

Most IRA owners name a beneficiary on their account. This
feature allows beneficiaries to gain access to the money
relatively quickly and without the additional hassles and
expenses associated with probate. Beneficiary designations
should be reviewed periodically, especially when one of the
following events takes place:

 • A change in marital status

 • A child or grandchild is born

 • A named beneficiary precedes the IRA owner in death

It’s not too late to make your 2007 IRA contribution!
Call your wealth management professional today to
review your IRA game plan. The deadline for making
a 2007 IRA contribution is April 15, 2008.

Contribution Limits:           2008                             2007

IRA and Roth IRA
Maximum Contribution         $5,000                           $4,000

IRA and Roth IRA
Maximum Contribution if      $6,000                           $5,000
age 50 or older                                   

AGI phase-out ranges for     Single                              Single
determining Traditional      $53,000 to $63,000          $52,000 to $62,000
IRA deductions for active
participants covered by a    Married filing jointly         Married filing jointly
retirement plan                    $85,000 to $105,000       $83,000 to $103,000

                                           Married filing                    Married filing
                                           separately                         separately                              
                                           $0 to $10,000                   $0 to $10,000

 

Non-covered spouse                  
Traditional IRA limit
(one spouse covered by      $159,000 to $169,000      $156,000 to $166,000
retirement plan, other
spouse not covered by plan)

 

Coverdell Education IRA      Single                                Single
(CESA) limit                         $95,000 to $110,00          $95,000 to $110,000

                                           Mar ried filing jointly         Married filing jointly
                                           $190,000 to $220,000       $190,000 to $220,000

                                           Married filing                     Married filing 
                                           separately                          separately        
                                           $0                                      $0

 

AGI phase-out ranges for     Single                               Single           
determining regular Roth     $101,000 to $116,000      $99,000 to $114,000
IRA contribution:
                                            Married filing jointly          Married filing jointly
                                            $159,000 to $169,000       $156,000 to $166,000

                                           Married filing                      Married filing
                                           separately                           separately
                                           $0 to $10,000                     $0 to $10,000

 

 

 

 
Securities offered through 1st Global Capital Corp. Member FINRA, SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

 

 

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Invest in the Global Economy Through U.S. Companies

April 15, 2008 at 8:19 pm (Perspectives Newsletter)
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Invest in the Global Economy Through U.S. Companies
Scott Summerford, CPA, CFA, Director of Investment Policy & Research, 1st Global

Rapid global economic growth in places like China, Russia,
Brazil and India has caused a rush to invest in international
companies. However, the economic boom overseas has positive
benefits for U.S. companies that do business in these fast-growing
areas. This factor alone reinforces the place for U.S. large cap
equities in every investment portfolio.

One significant feature of U.S. large caps is their high exposure
to global markets. In times of a weak U.S. dollar, U.S. companies
have a pricing advantage in foreign markets, and thus, can
generate a higher level of sales. These U.S. companies can also
offset any slowdowns in the U.S. economy with international
business. The main benefits of U.S. large cap stocks in a multi-
asset class portfolio are in their potential for return enhancement
(total return) and their role as a hedge against long-term inflationary
trends. Historically, corporate management’s ability to react and
price goods and services to their current price level has made
U.S. large cap stocks one of the most powerful long-term inflation
hedges for U.S. investors.

U.S. large cap stocks are represented by the most widely reported
market benchmarks, the S&P 500 Index and the Dow Jones
Industrial Average. These large cap companies are perhaps
the easiest equity asset class to include in portfolios for U.S.
investors, as companies like General Electric, Boeing and
ExxonMobil are leaders in their industries and familiar household
names. Since these large companies derive their returns from
the same underlying economic factors as U.S. small cap stocks,
U.S. large and small caps exhibit a high positive correlation of
returns. However, U.S. large caps do differ from their smaller peers.
Large U.S. companies typically have a lower cost of capital,
offer investors lower expected returns and, most importantly,
exhibit lower volatility than U.S. small caps.

The main objective of building an investment portfolio with
defined structure is to help you attain your investment goals
through various economic environments. A properly diversified
portfolio may better withstand unexpected inflation, deflation,
and other economic and political shocks to the financial system.
In order to attain this resiliency, the asset classes selected
for a portfolio should derive their returns from fundamentally
different economic factors.

With asset allocation as a guide, you can build a properly
diversified investment portfolio and have the confidence to stay
the course over the long term, regardless of short-term market
behavior and economic and political swings. Investment discipline
and investor confidence are your most powerful assets to help
protect your lifestyle – both for today and in the future.

International investing presents certain risks not associated with investing
solely in the United States. These include, for instance, risks relating to
fluctuations in the value of the U.S. dollar relative to the values of other
currencies, custody arrangements made for foreign holdings, political
risks, differences in accounting procedures and the lesser degree of
public information required to be provided by non-U.S. companies.

The Dow Jones Industrial Average and the S&P 500 are unmanaged
weighted indexes of common stocks. An investment cannot be made
directly in an index.

Past performance is not an indicator of future results.

 

Securities offered through 1st Global Capital Corp. Member FINRA, SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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Inheritance: More Than Just Money

April 15, 2008 at 4:10 pm (Perspectives Newsletter)
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Inheritance: More Than Just Money                                                                                                         Ed Bowen, CLU, ChFC, CIMA®, Manager, Advanced Case Design

For many people, receiving an inheritance can be a difficult
emotional and financial event. While this newfound wealth is
welcome because of the many financial burdens it may help
to eliminate, it also raises a number of issues that now require
serious attention. Prior to receiving an inheritance, there may
not have been a need for you to consider sophisticated investment
planning, income and estate tax planning strategies, or the
need to develop a wealth transfer program for the benefit of
your children and grandchildren. However, you are now faced
with the daunting task of growing, protecting and ultimately
transferring these assets to the next generation in the most
tax-efficient manner possible. Both tax and non-tax issues must
be considered and many viable solutions can be quite technical
and complex in nature. It doesn’t take long for the entire process
to become overwhelming!

Fortunately, your 1st Global Financial Advisor can help you
put it all in perspective. His or her extensive experience with
tax, investment and estate planning allows you to develop
a coordinated plan to address the many issues you now face.
Three of the more immediate issues that require attention are:

 • Investment Planning: Determine which investment options
are most suitable for your lifestyle and risk tolerance.
Focus on developing a plan that provides for maximum
diversification with minimum volatility and that offers low
costs combined with tax efficiency.
• Asset Protection: Consider products that will protect family
assets from the risks associated with dying too soon or
exceeding your life expectancy. Life insurance and annuities
are specifically designed to address these contingencies.
Depending on your state of residence, life insurance and
annuity contracts may be totally exempt from the claims
of creditors. Trusts are another great way to pass assets
to heirs in a creditor-protected environment.
• Wealth Transfer: Develop wealth transfer strategies that
reduce the size of your estate and promote the transfer of
assets to the next generation and beyond. Many wealth
transfer techniques can discount the value of transferred
assets as well as minimize the gift tax exposure. Achieving
such benefits is possible through the use of a grantor trust
arrangement or family limited partnership, or by simply
making annual exclusion gifts to family members.

 In addition to these immediate issues, there are a number of
other issues that should be addressed as well. These include
estate liquidity needs, arrangements for charitable gifts,
end-of-life considerations, and the appointment of an executor,
trustee or guardian. One thing for certain is that the entire
process is about more than just money.

There is one estate planning action step that is essential and
should be a priority. You should update your estate planning
documents to incorporate the latest techniques that will provide
maximum flexibility in the future. It will allow you to achieve
peace of mind and avoid many unnecessary problems for your
heirs. Common estate planning documents include:

• Revocable Living Trust
• Pour-Over Will
• Credit Shelter Trust
• Durable Power of Attorney
(for both health care and businesses)

 • Medical Directives to Physicians
• Declaration of Guardian
The financial and estate planning process should be taken
seriously and initiated as soon as possible. To ensure that
the vital promises you make to your family will be honored,
you can rely on your 1st Global Financial Advisor to coordinate
the activities of all the other professionals that may be required
throughout the wealth transfer process. Please do not delay;
your family’s future is far too important. Call your advisor
and schedule an appointment today.

 
Securities offered through 1st Global Capital Corp. Member FINRA, SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

 

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What is the Definition of Risk?

April 15, 2008 at 4:08 pm (Perspectives Newsletter)
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What is the Definition of Risk?                                                                                                            Scott Summerford, CPA, CFA, Director of Investment Policy & Research,1st Global

The main objective of portfolio structure is to help you obtain
your investment goals in a variety of economic environments. A
properly diversified portfolio may better withstand unexpected
inflation, deflation, and other economic and political shocks to
the global financial system. Remember that diversification of
your overall investment portfolio does not assure a profit or
protect against a loss in declining markets. In order to properly
diversify your portfolio, a proper definition of risk and a strategy
to help balance that risk are crucial.

Many investors associate “risk” with the volatility of their investment
accounts over a given period of time. Volatility is an important
measure of risk because it reminds investors of uncertainty in
global capital markets. However, short-term volatile account
movements get far too much attention. The central issue all
investors should remember is: Will these assets accumulate
enough money to accomplish their intended purpose?

Longer life expectancy and the threat of inflation can demand
investment returns far in excess of the returns on a 30-day
Treasury Bill (T-Bill), which is considered to be a “risk-free” rate
of return because the timely return of principal and interest
is guaranteed by the US Government and the short term duration
of T-Bills leaves less exposure to interest rate risk when compared
to other fixed-rate bonds. By placing all assets in a 30-day T-Bill,
an investor could forgo account volatility for the short term.
However, this decision could be risky as the returns may not
keep up with inflation and could potentially not be high enough
to meet the spending needs of the account owner. Additionally,
concentration in a single equity position or class of assets
could lead to large losses that cannot be recovered.

A strategy that balances short-term market risk (volatility) with
long-term growth potential is achieved by combining asset
classes that derive their returns over time from different underlying
economic factors. Each category of selected assets should
serve a particular purpose in a properly diversified portfolio.
Asset classes should be selected to provide potential long-term

growth, income, inflation and deflation protection, and mitigate
downside risk from shocks to the global financial system. By
doing so, the utilization of multiple asset classes provides
an effective way to balance the various financial risks most
investors face.

It is important to remember that global financial markets fluctuate.
A sensible investment strategy can help protect your investments
from the brunt of these fluctuations. Having an asset allocation
strategy and a properly diversified portfolio will help you stay
the course over the long term, regardless of short-term market
behavior and economic and political swings. Investment discipline
and proper portfolio structure are key tools to help protect your
current and future lifestyle. For more information, ask your financial
advisor for a copy of the white paper on asset allocation.

 

Securities offered through 1st Global Capital Corp. Member FINRA, SIPC
Investment advisory services offered through 1st Global Advisors, Inc.

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