In a society that grows more complex every day,
consumers are presented with the constant pressures of family, career,
and community responsibilities and personal enrichment. The financial
marketplace is ever-changing with new laws, regulations, economic
events, market changes, product offerings and conflicting media
messages. Making the right financial moves at the right time is
critical to achieving security and accomplishing personal objectives.
Lowcountry Investment Advisors, Inc. guides your financial planning
process: goal identification, data organization, analysis, problem
identification, recommendations, and most important - plan
implementation and results monitoring. LCIA will help you save, spend,
invest, insure and plan wisely for the future.
A Registered Financial Consultant has met the qualifications required
to serve the public effectively, and moreover, is committed to
essential professional continuing education. You can't delegate your
job, career, civic or family responsibilities - but you can obtain
qualified, professional financial advice and service.
What is the RFC Designation?
The Registered Financial Consultant (RFC) is a professional designation
awarded by the International Association of Registered Financial
Consultants to those financial advisors who can meet the high standards
of education, experience and integrity that are required of all its
members.
The IARFC is a non-profit professional credentialing organization of
proven financial professionals formed to foster public confidence in
the financial planning profession, to help financial advisors exchange
planning techniques, and to give deserved recognition to those
practitioners who are truly committed to ethical standards and
continuous professional education.
Because there are no consistent licensing requirements for the various
persons who call themselves "financial planners" the public has a
critical need for a method of distinquishing the qualified and
dedicated financial advisor.
What is the purpose of the IARFC?
The primary purpose of the IARFC is to provide the public with a
convenient access to a pool of well-qualified practitioners from which
to choose a personal financial advisor. It is the only professional
organization that requires all of its members to meet and document
seven stringent requirements of education, experience, examination,
integrity, licensing, ethics and a significant amount of continuing
professional education.
RFC Examination Process
The comprehensive RFC examination covers a wide range of subject
matter; Priciples of Personal Finance, Debt and Cash Flow Management,
Employee and Government Benefits, Annuities, Securities, Investments
and Asset Allocation, Life, Health and Casualty Insurance, Education
and Special Needs Funding, Estate Planning, Survivor Income Needs
Analysis, and Retirement Income.
Material discussed is meant for general
illustration and/or informational purposes only and it is not to be
construed as tax, legal, or investment advice. Although the
information has been gathered from sources believed to be reliable,
please note that individual situations can vary therefore, the
information should be relied upon when coordinated with individual
professional advice. Past performance is no guarantee of future
results. Diversification does not ensure against loss. Source: International Association of Registered Financial Consultants.
Asset allocation is the process of allocation
investment funds into different asset classes in a way that enables you
to maximize your expected return for a specific level of risk. We have
found that it is responsible for more than 90 percent of the variations
in portfolio performance -- so choosing the right asset allocation for
you is our top priority.
For instance, let's say you want to have 60% of your portfolio invested in stocks. If the market does really well and you are realizing higher than expected returns on your stock investments, after a couple of years you may find that you now have 80% of your portfolio invested in stocks, even though you haven't changed a thing. Without rebalancing to your target asset allocation, you might find yourself getting whipsawed by a volatile market, which happened to literally millions of investors in 2000 through 2002 and again in 2008-2009.
No matter what type of investor you are, it's crucial to keep your plan on track. Revisit your asset allocation periodically (every year or so, depending on market conditions) to determine whether it needs adjustment. You should also periodically re-examine your risk tolerance and investment profile, especially as you get closer to your goal. You may discover you need to tweak your portfolio's risk exposure over time.
Sitting down regularly to reassess your goals, time frame, and asset allocation allows you to fine-tune your strategy, keep your risk within acceptable levels, and make sure you're on track. Lowcountry Investment Advisors, Inc. can help you identify investments that not only achieve the greatest absolute return over the years, but also subject you to the lowest overall taxes along the way. We can properly allocate investments among your various accounts and work with you to integrate your investment and financial goals. At LCIA we will also help you stay abreast of developments in the financial marketplace as innovative new products and services become available.
Just as you see your doctor for checkups, your lawyer for legal advice, and your mechanic for tune-ups, consult Lowcountry Investment Advisors, Inc for financial planning.
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Past performance is no guarantee of future results. Diversification does not ensure against loss. Source: Financial Visions, Inc.
Stocks Tutorial
If you're completely new to investing, you might be wondering what, exactly, is a "stock"? Simply put, a share of common stock represents a tiny piece of ownership in a public company. If there are one million shares outstanding of Company X, and you own one share, you in effect own one-millionth of that company - its assets and the profits it is able to produce over time. The more shares you own, the more you benefit from a company's growth.
Why Do Companies Issue Stock?
Businesses need money, or "capital," to grow and thrive. A company will typically issue stock to raise money for financing operations, acquiring new equipment or other companies, fund research and development, and other such uses.
Another term for raising money through stock issuance is "equity financing," and the capital produced through this method is referred to as equity capital. Companies might
also issue bonds to finance various activities; this is referred to as "debt issuance."
What Categories of Stock Exist?
Also called "equities," stock can be categorized several ways.
The first is by size, or "market capitalization": A company's net market capitalization is measured by its share price multiplied by the number of shares on the market. To use the example above, if Company X's share price is $10, its market capitalization (or "cap" for short) would be $10,000,000 - one million shares outstanding multiplied by $10 per share. Generally, companies with $1 to $1.5 billion in market capitalization are considered "small cap" stocks, those with between $1-1.5 billion and $5 billion are considered "mid cap" stocks, and those with market caps above $5 billion are considered "large cap" stocks.
Another way to categorize stocks is by style. "Growth" stocks are those considered to have the potential to expand their sales, revenue, and profitability quickly. "Value" stocks are those believed to be undervalued by investors and thus selling for less than their intrinsic value.
A third way to divide stocks is by geography. Stocks of U.S. companies are considered "domestic" stocks, while those of companies outside the U.S. are considered "international" stocks. Typically, international equities are further divided into "developed" (such as Europe or Japan) or "emerging" (China, Southeast Asia, Latin America) markets. Foreign investing involves additional risks, such as currency fluctuations and political uncertainty. Investment return and principal uncertainty. Investment return and principal value will fluctuate so shares, when redeemed, may be worth more or less than their original costs.
Finally, stocks can be categorized by sector and industry. Common categories include technology, communication, healthcare, energy, financial services, consumer goods and basic materials, which may respond differently to economic changes.
How Can I Buy Stocks?
Typically, investors purchase stocks through entities known as exchanges. These marketplaces include the New York Stock Exchange, the American Stock Exchange, and the NASDAQ Stock Market. The exchanges are merely a way to connect those who want to buy shares with those willing to sell them. How do you know what a stock is selling for? Stock prices, or "quotes," can be located in newspapers, on certain television programs, and through the Internet. Another way to own stocks is through mutual funds.
Why Should Individuals Own Stocks?
Over time, stocks have proven themselves to be the most powerful way to accumulate wealth, outpacing bonds, government securities, and inflation. Stocks provide individuals with the opportunity to benefit from growth in the U.S. economy as companies expand their sales and profits.
Stockholders can benefit from owning stocks in two ways: First, through price appreciation, as the price of their shares goes up; and second, through dividends, which many companies pay on a regular basis. Together, these factors make up your stock's total return.
What About the Risk?
Many people have heard of or experienced events such as "Black Tuesday," in October 1929, when the Dow Jones Industrial Average nosedived 12.8%, and, more recently, "Black Monday" in October 1987, when the Dow lost 22.6% of its value (still the worst single trading day on record). More recently, we saw stomach-churning drops in 1997 and 1998, and endured a long bear market from 2000 through 2002.
And it is true that, in the short term, investing in the stock market can be risky. Markets tend to be volatile, responding quickly and forcefully to events and news such as the 9/11 terrorist attacks, rumors of economic changes, presidential elections, and geopolitical happenings. Individual stocks face risks as well. A company, because of poor business conditions or poor management, could become unable to make dividend payments. Or it could fail completely, leaving your stock essentially worthless.
Over the long term, however, stocks have earned higher and more positive returns than any other financial investment. These higher returns help offset the risks of investing in stocks.
Diversification Can Reduce Risk
Among the risks you face in the stock market is the risk that you will have to sell an investment for less than you paid for it. If you buy stock in many different companies, in many different sectors of the market, you can minimize your risk. After all, it is highly unlikely that every company in which you have invested will suffer at the same time. However diversification does not protect against loss.
You can also minimize your risk by investing some money in international stocks. Historically, when the U.S. stock market has dropped, markets in Europe and Asia have dropped less, or even risen in value. Although we live in an increasingly global economy where economic events have an impact everywhere, global diversification should still be a part of your plan.
What Role Should Stocks Play In Your Portfolio?
In general, your stock market investments should represent money you won't need for at least 10 years. That time frame allows enough time for your investments to ride out the inevitable growth/recession economic cycles and bull/bear market cycles. Certainly younger people investing for their retirement should consider putting a substantial portion of their funds in stocks. One very general rule of thumb is that the percentage of your invested assets should be at least 100 minus your age - 70% for a 30-year-old.
Investing in stocks may also be appropriate for retirees who don't need all of their money and are trying to maximize what they will pass onto their heirs. Your best bet is to work with a financial advisor to determine the optimal amount you should allocate to stocks.
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Past performance is no guarantee of future results. Diversification does not ensure against loss. Source: Financial Visions, Inc.
Unlocking the Mystery of Mutual Funds
With more than 10,000 mutual funds now available, and most working Americans contributing to them via their employer-sponsored plans, mutual funds are no longer the mystery they once were. Instead, they're the mainstay of many family's investment portfolios.
But if you're new to investing, you may have some questions. What is a mutual fund? And how do they work? This article is designed to answer these and other important questions.
Designed for the Smaller-Net-Worth Investor
So you want to invest in, say, the stock or bond market. But you don't have enough cash to diversify your investments. Mutual funds may be the answer. At its most basic, a mutual fund is a financial intermediary that manages a pool of money from investors who share the same investment objectives. By pooling their money together, the investors can purchase stocks, bonds, cash, and other assets as far lower trading costs than they could on their own. What's more, rather than trying to manage their assets themselves - a daunting challenge even for experienced investors - a mutual fund is overseen by professional asset managers. These experienced managers are responsible for identifying and investing in the securities they believe will best help the fund pursue its investment objective.
A Range of Investment Objectives
When you invest in a mutual fund, you are essentially buying shares in the pooled assets and you become a shareholder in the fund. One of the reasons for the popularity of mutual funds is that not only are they extremely cost efficient and easy to invest in, but you can choose from a wide range of investment options. Some mutual funds, such as money market funds and short-term bond funds, are quite conservative and offer a degree of stability and preservation of your principal. Others, such as aggressive growth funds, pursue above-average returns, generally with the volatility and risk that go along with them. And there are options all along the risk/reward spectrum.
The Added Benefit of Diversification
Earlier in this article, the topic of diversification was mentioned. Diversification is the concept of spreading out your money across many different types of investments to reduce the affect of any one investment on your overall returns. When growth stocks are declining, value stocks may be rising. When U.S. stocks are appreciating, international stocks may be falling. Diversifying your investment holdings across asset classes (stocks, bonds, and cash), sectors and industries, and geographic regions can significantly reduce your risk. However diversification does not protect against risk.
The most basic level of diversification is to buy multiple stocks rather than just one stock. A stock mutual funds generally holds many stocks, often between 50 and 100 but frequently many more. Achieving a similarly diversified portfolio on your own by purchasing individual stocks would not only be exponentially more difficult, but also more expensive as the trading costs for buying and selling stocks can quickly eat away a smaller portfolio's value.
Reading A Mutual Fund Prospectus
Before investing in any mutual fund, you should read its prospectus. This is a legally mandated document that provides specific information about the fund's investment objectives, managers, the types of securities it may buy, fees and costs, and other pertinent information. Recent legislation mandates that a prospectus must be written in clear, common-sense language that the general public can easily understand.
A mutual fund prospectus should outline these six factors that allow you to evaluate the fund and its potential place in your plan.
1. Investment objective. Is the fund seeking to make money over the long term or to provide investors with cash each month? You'll find the answers in this section of the prospectus.
2. Strategy. This section should spell out the types of stocks, bonds or other securities in which the fund plans to invest. It may look for small, fast-growing firms or large, well-established companies. If it's a bond fund, it may hold corporate bonds or foreign debt. This section may also mention any restrictions on securities in which the fund can invest.
3. Risks. The prospectus should explain the risks associated with the fund. For instance, a fund that invests in emerging markets will be riskier than one investing in the United States or other developed countries. A bond fund should also discuss the credit quality of the bonds it holds and how a change in interest rates may affect those holdings.
4. Expenses. Different funds have different sales charges and other fees. The prospectus will spell out those fees so you can compare them with the fees of other funds. It should also explain the percentage of the fund's return that is deducted each year to pay for management fees and operation costs.
5. Past performance. Although you shouldn't judge a fund solely by its past performance, this can show how consistently the fund has performed and give some indication of how it may fare in the future. This section of the prospectus will also show you the fund's income distributions and its total return.
6. Management. This section may do nothing more than list the fund manager or managers, or it may give specific information about the management team's experience. If the prospectus doesn't contain enough detail, you may be able to find this information in the fund's annual report.
Mutual funds provide investors with a convenient, effective tool for investing in the stock, bond, and cash-equivalent markets. Let us show you how they can apply in your specific situation.
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Past performance is no guarantee of future results. Diversification does not ensure against loss. Source: Financial Visions, Inc.