Where is the Love?

At least for dividends, there doesn’t seem to be any love in the headlines.  From CNBC at the first of the year they wrote, “Market’s Flat 2011 Could Imply Rally This Year.  Following last year’s pancake-flat finish on the S&P 500…”  And there were many others like this.  If you didn’t investigate further you probably wouldn’t even realize that the S&P 500 was up last year.  The S&P finished positive 2.1% on a total return basis. 

How, you may ask, did this happen?

Many of the stocks in the S&P 500 index pay dividends.  The total yield on the S&P 500 was 2.3% as of 12/31/11 and these are payments made directly to the shareholder in cash, or one can choose to reinvest them.  This must also be counted in your return, but many seem to overlook this fact. 

Dividends can provide a potential source of income to help cushion portfolios in down markets and potentially bolster returns during up markets.

While 2% may seem like a pittance compared to fluctuations in stock values, between 1926 and 2009 these small payouts have generated about 40% of overall return in the S&P 500 (WSJ, A Time for Dividends, 10/5/11) and can be vital to achieving long term financial planning goals. 

* Investor’s cannot invest directly in an index.  Past performance is not indicative of future results.The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  Dividends are not guaranteed and must be declared by a company’s board of directors.

Summer Internship Opportunity

When:   May -August 2012 (Flexible)

Apply By:  February 28th, 2012

Description:

Intern(s) will work primarily with the Investment and Financial Planning Departments to complete research projects, mutual fund performance reporting, and database updates. Career development opportunities offered through education on basic financial planning concepts, self assessments, and staff shadowing. Looking for current college student(s) or recent graduate(s) seeking summer employment with a strong interest in investment research and financial planning. Applicants must have a strong desire to learn, be able to work independently, manage multiple tasks responsibly, and take initiative.

Part-Time & Paid: Yes  

If interested, please email your resume to:   

Jaclyn Jackson, Summer Internship Program Director 

Jaclyn.Jackson@CenterFinPlan.com

Phone: 248-948-7900 

Keep Score with Your Own Net Worth

In my January 4, 2012 post I shared nine steps to get a start on improving your financial health in the New Year.  At the top of the list was:

Take score: review your net worth as compared to one year ago

I must admit, I don’t find myself playing too much golf these days.  However, when I do, I keep score to see how I am doing. A net worth statement is your financial scorecard.  In its simplest form, your net worth statement lists what you own, subtracts what you owe, and the balance is called your Net Worth.  While there is no ideal Net Worth, it certainly is better to have a larger positive Net Worth – thus owning more than you owe.  Next to establishing personal financial objectives, an evaluation of what you own and owe is probably the most important ingredient in creating a plan your financial future. 

From the information contained on your Net Worth statement, you can measure whether or not you have sufficient liquidity, calculate your debt/equity ratio, review the nature and diversification of your assets, and determine the impact of federal estate taxes on your estate.  Your Net Worth statement is also used in your Financial Independence analysis and in evaluating your insurance needs.  With proper planning, discipline and careful monitoring, your Net Worth is likely to appreciate in value over time. 

Even in a year when investment returns are flat, your net worth can increase if you are saving money and/or paying down debt such as a mortgage, college loans, auto loans, or dreaded credit card debt.  There are many resources online to help you keep score.  Even better yet, you can work with your financial advisor to begin tracking your progress. 

Zingerman's Shares Leadership Philosophy

What do Zingerman’s and The Center have in common? 

Zingerman’s is, of course, the renowned Ann Arbor company noted for its great food and service.   The Center recently hosted a half-day presentation by Zingerman’s at its annual staff retreat, exploring a philosophy known as “servant leadership.”

Giving great service to staff is one of the important components of Zingerman’s great service to its customers.   At its Dec. 16 retreat The Center team learned about this leadership philosophy, and how it can supplement The Center’s long-standing commitment to client service.

An added bonus were all the tasty Zingerman’s  foods we all shared during breakfast!

Gregg Bloomfield, Matt Chope, Amanda Toia, Troy Wyman, Tim Wyman

Jaclyn Jackson, Melissa Cyrus 

M.L. King Holiday Market Closure

Financial markets close several times a year in the U.S., including on several national holidays.

The Jan. 16 Martin Luther King Day holiday is one such market closure; The Center will remain open on this holiday, but will be closed for the Presidents Day markets closure on Feb. 20.

Time to Declutter?

Do you ever feel like this when thinking of your portfolio?  Making investments without factoring in your investment process could end up adding more clutter to your portfolio without adding any value.

As you might recall the investment process starts with Strategic Asset Allocation, which is the establishment of your mix of stock, bonds and cash (see my post from 11/4/11).  Followed by layering in tactical allocation, overweighting or underweighting asset classes as the opportunity arises (see my post from 12/2/11).

Choosing the proper type of investment is vital to the continuation of your process.   There are many different types of investments that may be appropriate for you.  Individual company stock is usually the first that comes to mind for investors.  Common stock represents direct equity ownership in a corporation.  Returns can come from dividends paid or price appreciation.

One could also purchase bonds issued by many of these same companies, as well as governments or municipalities.  This means the entity owes you your principal at a specified date in the future and interest in the mean time in exchange for borrowing from you.  Many factors need to be considered when investing in a stock or bond and this can be overwhelming even for many investment professionals.  So many investors turn to professional money management.

Professional money managers can take two basic approaches to investing.  First, active management is simply an attempt to "beat" the market as measured by a particular benchmark or index.  Passive management is more commonly called indexing. Indexing is an investment management approach based on investing in exactly the same securities, in the same proportions, as an index.

So if you find yourself buried in stacks of paper every month talk to your Investment Professional to de-clutter your portfolio and determine which types of investments may be appropriate for you.

Dividends are not guaranteed and must be authorized by a company’s board of directors.  Bond prices and yields are subject to change based upon market conditions and availability.  If bonds are sold prior to maturity, you may receive more or less than your initial investment.  Holding bonds to term allows redemption at par value.  The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

Welcome 2012. Nice to Meet You!

On behalf of our 19 team members, Happy New Year! The headlines thus far in 2012 trumpet the rhetoric of a contentious presidential election, difficult economic issues in Europe and beyond, and a rare Detroit Lions appearance in the playoffs. As advisors, we keep the world’s events in mind, but know that your personal milestones are our first priority.

In order to assist you in accomplishing your life goals and achieving financial confidence, we have been working on a variety of initiatives for you.

• In February we will present 2012 Financial Planning & Investment Opportunities at the Bloomfield Township Library. There will be a day and evening session, in addition, a recording for our clients residing across the nation (a few worldwide too!). We will cover a variety of topics, which include the potential income tax landscape as the Bush tax cuts are set to expire. We will also provide a snapshot of today’s investment landscape and share our view of the future. And as always, review our well-grounded investment principles designed to help you appropriately plan while taking into consideration taxes, inflation, and fees.

• Throughout the year we will offer a variety of educational workshops for you and guests. Topics include Social Security (maximizing benefits for those that have yet to begin receiving benefits), Medicare strategies, Social Media (with an emphasis on safe-guarding your privacy in a wired world), and an Investment Forum. These programs are intended to provide sound advice concerning today’s most relevant financial topics, so please feel free to invite your family and friends to share in these educational opportunities.

• As you may know, we have partnered with The Oakland Press and launched our Money Centered Blog that provides actionable advice surrounding many of today’s financial planning and investment opportunities. Under the leadership of Sandy Adams, CFP®, we have enjoyed the opportunity to communicate with you and our community more frequently. This blog is a great way to share our collective experience, judgment and commitment to your well-being with relevant financial planning and investment topics, and it continues to energize our internal conversations and stretch our leadership in the financial planning community. Look for a new post three times per week! We have also launched Center Connections, a blog that will keep you apprised of news, events, and announcements concerning our clients, our team, and The Center.

Since our firm's founding in 1985 our advice, tactics and strategies have changed, but the core tenets of financial planning have remained the same: helping you with your most important goals. Whether it’s a successful retirement, providing education funding for children and grandchildren, or planning the legacy of your estate, our highest satisfaction is not the dollars and cents of a rewarding investment but your accomplishments which our financial conversations can foster.

We look forward to our work together through 2012 and beyond.

Schedule a Check-Up with Your Credit Report

As the famous American Proverb goes, “The best things in life are free”.  If you’re thinking a vacation home in Key West or a new sports car, then the Proverb might not ring true for you.  However, if one of your resolutions for 2012 was to get financially healthy…I have great news for you!  The annual credit report offered by the U.S. Government is FREE.  

AnnualCreditReport.com is the official, and only really free credit report that each of us can access on an annual basis (any of those other “free” sites that ask you to enter a credit or debit card may not really be free; be careful to read the fine print on such offers).

Your credit score is one of the key factors in determining your qualification for loans such as mortgages and car loans.  Even more than that, these days your credit score can be considered when you apply for life insurance or apply for employment!  Now, more than ever, it is important to make sure that your credit report is accurate.

Here are a few simple tips for reviewing your credit report:

(1)    Review the accounts listed.  Since accounts will remain on your report for up to seven years after they are closed, you may have inactive accounts listed.  However, if there are accounts listed that you don’t remember opening, you should contact the vendors immediately to investigate.

(2)    Review account limits and balances.  If your outstanding balance is more than 25% of your available credit, this could hurt your credit score.  Remember that the balances and or limits appearing on your report could be up to 30 days behind.

(3)    Review late payments on the accounts listed.  If there are late payments listed that you believe to be incorrect, contact the creditor immediately to clear up the discrepancy.  Late payments can adversely affect your credit score.

(4)    Review the entire report, including former names and addresses.  Make sure that any incorrect information is corrected –  if your credit report was somehow associated with someone else with a less than stellar credit history, you could be getting penalized for someone else’s credit miscues.  Contact the appropriate credit reporting agency to correct any errors.

Start the year off right by getting a check-up on your credit report.  Visit AnnualCreditReport.com today.

My next post will provide strategies for tackling outstanding credit card debt.

The Genetics of Saving

For all of you that find saving money for future goals a challenge – don’t worry – its genetics!  At least that’s what a recent study seems to suggest.  Stephan Siegal, assistant professor at the University of Washington, Foster School of Business in Seattle, concludes that based on his research that “genetics is the single greatest determinate of an individual’s propensity to either save or spend.”   Professor Siegal’s research and conclusions are sure to draw interest from the many individuals and advisors that just might think his explanation is a bit too simplistic.                                                 

In working with individuals who have accumulated the necessary wealth to meet their goals, such as financing a college education or funding a successful retirement, I have found that saving money is more than just dollars and cents.  Becoming a good saver (and meeting future financial goals) requires discipline, perseverance and sound strategies such as systematic savings plans like 401k’s, 403bs, and other automatic investment plans.

So, the next time you buy the 52” HDTV instead of fully funding your 401k blame your genetic makeup!  And then make sure you schedule your annual meeting with your financial planner to make sure your on track to meet your short and long-term financial goals.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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