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Financially illiterate? It sounds grim. For a generation without the safety net of corporate pensions, and tasked with making critical investment decisions for themselves and their families, insufficient financial education can lead to poor financial and investment choices. These bad choices have implications that last a lifetime. The national scope of this problem led the U.S. Senate to recognize the importance of financial literacy for all Americans and pass Resolution 316, officially designating this month as National Financial Literacy Month.

steven_mugThis past year turned out to be a year marked and paced by the political process, beginning with hotly contested primaries, two emotional conventions, three cliffhanger debates, and now, the aftermath of the election and a lame duck Congress.  Once again, the United States has proven a shining example to the world of how the democratic process works, even in a sharply divided nation.  Over the last eleven months financial markets have had to contend with the infamous Facebook IPO, weather-related market closings, the East Coast economy savaged by Superstorm Sandy, the Fed’s “Operation Twist” and “QE3,” multiple flareups of the European debt crisis, and a generational changeover of leadership in China. We reveled in a strong market rally from January until May, suffered through a summer slump, saw gains return through the end of October, only to retreat in November.  The real estate market, so far a no show in the recovery, finally began to show signs of life.  2012 has been in turn a challenging, maddening, frustrating deflating, turbulent and triumphant year. Now, with 2013 just over the horizon, here are a few things to prepare for, and some things to attend to, before the year ends.

stevenweberAs investors contend with low yields and the possibility of higher taxes, investments that are tax-free have particular appeal.  Despite some recent high-profile defaults, municipal bonds have an exemplary track record of safety, and bonds issued within the state of South Carolina offer returns that are free from both federal and state taxes. Let’s look at some basic background on these investments, as well as a few tips on getting started.

The state of South Carolina, as well as our cities, counties, and improvement and utility districts, all issue bonds to finance operations, capital expenditures, and development. These bonds have a stated interest rate and a promise of repayment at a specific time in the future, known as the maturity date. The safety of these bonds, both investment income and principal, is determined by the source of the funds designated for repayment. The two major categories of Municipal bonds are general obligation, or G.O. bonds, and revenue bonds. General obligation bonds are backed by the taxing power of the issuer, which could mean income taxes, in the case of state of South Carolina, or property taxes, for bonds issued by a county. Revenue bonds, on the other hand, are backed by revenue from the particular project for which the bonds are issued. For example, bonds issued to pay for the Cross Island Expressway would be backed and repaid by toll revenue from drivers who use the expressway.


stevenweberThe future can be a murky place. And let’s face it, anyone in the investment business is always on the lookout for that crystal ball. When investors take a flight of fancy and start mining data for arcane and offbeat ways to predict the economy and the markets, there’s no telling where they will end up. With our attention focused on the Olympics, we thought we would explore what impact the summer games might have for stock investors. It’s not so farfetched to think that a swelling of national pride after a stellar Olympic performance might translate to greater confidence, optimism and positive expectations, expanding P/E ratios and attractive investment returns. But the Olympics are far from the only televised entertainment that can teach us a thing or two about the market.

stevenweberLast month we discussed some aspects of what the “new retirement” looks like, including the role of working longer past traditional retirement age, as well as properly structuring Social Security benefits. In the second part of our article we’ll talk about why a written investment and income plan is such a critical tool when planning your income and investment strategy in retirement.

Why in writing? The very process of articulating your goals and objectives on paper or screen can give an individual the grounding to stay focused in an unsteady investment environment. A good plan can provide continuity and coherence to investment strategy and activity. It should include a target asset allocation as well as restrictions based upon the investor’s age, need for income and growth, and tolerance for risk. It should also outline an investment strategy that can be pursued in a variety of market and economic conditions.

Most investors understand that the companies they put their money in may have business plans and market objectives they may not totally agree with, or sell products they don’t use or approve of.

moralcompassStill, they are generally willing to overlook this if the company is profitable and produces a good return. Mutual funds have specific investment objectives and limitations as well; in the past we have written about funds that include environmental, religious, or moral constraints in what they buy. So, what should you pursue for investment survival — vice or virtue? Here are two funds; both are highly rated, but with very different objectives.

stevenweberLast month we examined the case for international diversification in stock and bond portfolios, and reviewed currency risk, which can have a dramatic impact on the returns U.S. investors receive from international investments. This month in part two we focus on regulatory and political risks, and conclude by looking at investments you can use to effectively implement global diversification.

It’s easy to take it for granted, but the accounting and regulatory environment we enjoy in the U.S. provides investors with audited information, a system of financial oversight, and a (mostly) level playing field.  While accounting and reporting standards in some other developed markets are comparable, they are by no means identical. Moreover, many capital markets, especially in developing counties, lack stringent regulation, consistent reporting standards, market liquidity and shareholder rights legislation.  In some markets, loose or unconventional accounting standards make it very difficult to compare results among companies and industries; investment decisions made in these less-than-ideal environments can be very challenging.


Valentine’s Day is a day for candy, special events and quiet candlelit dinners. For some, it’s a time to express love and gratitude to their partner; for others, an opportunity to renew and rekindle a relationship. It may seem an awkward time to talk about money. That conversation can often cause words of love to decay into uncomfortable and angst-filled silence. While a meaningful dialogue on this day might seem unromantic, Valentine’s Day can present an opportunity for a fresh start.

Many marriage counselors place finances and money second only to sex as a significant cause of marital stress. Most frequently identified are differing attitudes toward spending and saving, lack of communication about financial status, and secrecy. Couples tend to discuss their dreams and goals pretty openly but learn each others’ attitudes towards money gradually. Can a saver and planner ever be happily married to a spender and dreamer?

A volatile year in the stock and bond markets means many investors are looking at losses on stocks or mutual funds they have purchased.  As we approach the end of 2011 it makes sense to review how you might make these losers pay, or at least use some tax strategy to ease the pain.


Many investors tend to underestimate their life expectancy, and in doing so miss a critical element in the calculation of future income. To avoid running out of income or assets, you need to know what you have to start, how much you spend and how long it needs to last.

A recent study by Actuarial Consultants based on 2013 mortality rates for people who do not hold annuities showed that half of all 65-year-old men will live to 86 years, and half of all 65-year-old women will live to nearly 88. A quarter of 65-year-old men and women will survive to over 90 years old.

There is no rule of thumb as to how much can be withdrawn safely from a portfolio. How could there be?  It depends on your age, your portfolio value, your life expectancy and the performance of your particular mix of investments.