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Work to become a better investor

Scott-Johnson---Head  Next week, we observe Labor Day. A federal holiday since 1894, Labor Day celebrates the achievements of American workers — people, like yourself, who work hard for their money. But to make progress toward your long-term financial goals, you need to do more than just earn money — you have to invest it wisely. And that takes work, too.
  Fortunately, there’s no real mystery to the types of labor in which you’ll need to engage to become a good investor. Here are a few suggestions:
  • Work to make investing a priority. Many people delay investing until they “have a better handle” on their finances. But these good intentions frequently go unfulfilled because there will always be something else on which to spend one’s money. To work toward your important goals, such as a comfortable retirement or a child’s education, you need to put away some money regularly. If you’re just starting out in your career, you might not be able to afford much, but even a small amount can help. And when your salary increases, so can your investment contributions. To make it easier on yourself, consider arranging for your bank to automatically move money each month from your checking or savings account into an investment account.
  • Work to understand what’s in your portfolio. Some investors aren’t certain about what investments they own — and this uncertainty can lead to poor decision-making if it becomes necessary to make changes. So make sure you know what’s in your portfolio — and why.
  • Work to keep your portfolio current with your goals. Even if you know why you initially purchased certain investments and how they fit into your portfolio, you can’t put things on “autopilot.” Over time, your goals may evolve, which means you’ll need to be vigilant in working with your financial advisor to adjust your portfolio accordingly.
  • Work to diversify your holdings. No matter where you are in your life, you will still need to diversify your portfolio by owning a variety of investments — stocks, bonds, government securities and other vehicles. Consequently, you’ll need to review your portfolio regularly to ensure that it’s still properly diversified. Diversification is a strategy designed to help reduce the effects of volatility on your holdings, but keep in mind that even a diversified portfolio can’t guarantee profits or protect against loss.
  • Work to maintain a long-term perspective. No matter what you might hear from anyone else, there’s no “shortcut” to investment success. Many people hope they will “hit” on that one investment that will make them rich quickly — but that’s pretty much a fantasy. To help achieve your goals, you will need to invest for many years, through good markets and bad. And during those inevitable downturns, you’ll need to focus on your long-term objectives and follow a consistent investment strategy, making only those adjustments that make sense for your situation.
  As you can see, you’ll need to work on many aspects of investing to stay on the road toward success. But you don’t have to work alone: Investing can be complex, so you may want to get help from a financial professional — someone who knows both the investment world and your individual needs, goals and risk tolerance.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

What do new investors really need to know?

 

Scott-Johnson---Head  If you’re starting out as an investor, you might be feeling overwhelmed. After all, it seems like there’s just so much to know. How can you get enough of a handle on basic investment concepts so that you’re comfortable in making well-informed choices?
  Actually, you can get a good grip on the investment process by becoming familiar with a few basic concepts, such as these:

  • Stocks versus Bonds — When you buy stocks, or stock-based investments, you are buying ownership shares in companies. Generally speaking, it’s a good idea to buy shares of quality companies and to hold these shares for the long term. This strategy may help you eventually overcome short-term price declines, which may affect all stocks. Keep in mind, though, that when buying stocks, there are no guarantees you won’t lose some or all of your investment.
  By contrast, when you purchase bonds, you aren’t becoming an “owner” — rather, you are lending money to a company or a governmental unit. Barring default, you can expect to receive regular interest payments for as long as you own your bond, and when it matures, you can expect to get your principal back. However, bond prices do rise and fall, typically moving in the opposite direction of interest rates. So if you wanted to sell a bond before it matures, and interest rates have recently risen, you may have to offer your bond at a price lower than its face value.
  For the most part, stocks are purchased for their growth potential (although many stocks do offer income, in the form of dividends), while bonds are bought for the income stream provided by interest payments. Ideally, though, it is important to build a diversified portfolio containing stocks, bonds, certificates of deposit (CDs), government securities and other investments designed to meet your goals and risk tolerances. Diversification is a strategy designed to help reduce the effects of market volatility on your portfolio; keep in mind, however, that diversification, by itself, can’t guarantee a profit or protect against loss.
  • Risk versus Reward — All investments carry some type of risk: Stocks and bonds can decline in value, while investments such as CDs can lose purchasing power over time. One important thing to keep in mind is that, generally, the greater the potential reward, the higher the risk.
  • Setting goals — As an investor, you need to set goals for your investment portfolio, such as providing resources for retirement or helping pay for your children’s college educations.
  • Knowing your own investment personality — Everyone has different investment personalities — some people can accept more risk in the hopes of greater rewards, while others are not comfortable with risk at all. It’s essential that you know your investment personality when you begin investing, and throughout your years as an investor.
  • Investing is a long-term process —It generally takes decades of patience, perseverance and good decisions for investors to accumulate the substantial financial resources they’ll need for their long-tem goals.
  By keeping these concepts in mind as your begin your journey through the investment world, you’ll be better prepared for the twists and turns you’ll encounter along the way as you pursue your financial goals.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

 

Cystic Fibrosis receives donation from Standard Bank and Trust Co.

  Standard Bank & Trust Co. raised biz-or-health-3-col-DRShown are Erica Oganovich, Branch Manager Standard Bank and Trust Co. (from left); David Oshinski, Cystic Fibrosis Foundation; Carrie Upchurch, Branch Manager Standard Bank and Trust Co. and Debbie Grad, Branch Manager Standard Bank and Trust Co.$3,635 for the Cystic Fibrosis Foundation in a recent pin-up program where its customers and employees made donations to the Foundation.
  Standard Bank employees also participated in the Foundation’s Great Strides Walks in Orland Park, Joliet and Naperville.
  “This is truly a team effort and could not be a success without everyone’s motivation and commitment,” said Erica Oganovich, Branch Manager at Standard Bank. “We connected with neighbors who are affected by this disease at the Great Strides Walks. Those local heroes and their families were the true inspiration for us to help raise funds for the Cystic Fibrosis Foundation.”
  Cystic Fibrosis is an inherited chronic disease that affects the lungs and digestive system of about 30,000 children and adults in the United States. Since 1955, the Cystic Fibrosis Foundation has been in pursuit of finding a cure. Nearly 90 cents of every dollar it receives goes to research, care and educational programs.
  Standard Bank and Trust Co., a subsidiary of Standard Bancshares, Inc., delivers a wide range of retail, commercial and wealth management services to a diverse and growing client base. With more than $2.2 billion in assets, it is a locally managed neighborhood bank operating over 40 banking locations throughout the Chicago area and Northwest Indiana. Founded in 1947, Standard Bank has been supporting local organizations and remains committed to investing in the communities they serve for more than 65 years. Standard Bank and Trust Co. is an Equal Opportunity Employer, Equal Housing Lender and Member FDIC.
  For more information, visit standardbanks.com.

  If you have children, you’re keenly aware that it’s getting close to back-to-school time. Today, that might mean you need to go shopping for notebooks and pencils. But in the future, when “back to school” means “off to college,” your expenditures are li

  If you have children, you’re keenly aware that it’s getting close to back-to-school time. Today, that might mean you need to go shopping for notebooks and pencils. But in the future, when “back to school” means “off to college,” your expenditures are likely to be significantly greater. Will you be financially prepared for that day?
  It could be expensive. The average cost for one year at an in-state public school is $22,261, while the comparable expense for a private school is $43,289, according to the College Board’s figures for the 2012–2013 academic year. And these costs will probably continue to rise.
  Still, there’s no need to panic. Your child could receive grants or scholarships to college, which would lower the “sticker price.” But it’s still a good idea for you to save early and often.
  To illustrate the importance of getting an early jump on college funding, let’s look at two examples of how you might fund a college education. A 529 plan is one way — but not the only way — to save for college. (The following examples are hypothetical in nature and don’t reflect the performance of an actual investment or investment strategy.)
  Example 1: Suppose you started saving for your child’s college education when she was 3 years old. If you contributed $200 a month, for 15 years, to a 529 plan that earned 7% a year, you’d accumulate about $64,000 by the time your daughter turned 18. With a 529 plan, your earnings grow tax free, provided all withdrawals are used for qualified higher education purposes. (Keep in mind, though, that 529 plan distributions not used for qualified expenses may be subject to federal and state income tax and a 10% IRS penalty.)
  Example 2: Instead of starting to save when your child was 3, you wait 10 years, until she turns 13. You put in the same $200 per month to a 529 plan that earns the same 7% a year. After five years, when your daughter has turned 18, you will have accumulated slightly less than $15,000.
  Clearly, there’s a big disparity between $64,000 and $15,000. So, if you don’t want to be in a position where you have to start putting away huge sums of money each month to “catch up” on your college savings, you’ll be well advised to start saving as early as possible — specifically, during the first few years of your child’s life.
  Of course, given all your other expenses, you may find it challenging to begin putting away money for college. And with so many years to go until you actually need the money, it’s tempting to put off your savings for another day. But those “other days” can add up — and before you know it, college may be looming.
  Consequently, you may want to put your savings on “autopilot” by setting up a bank authorization to move money each month into a college savings account. And, as your income rises, you may be able to increase your monthly contributions.
  Save early, save often: It’s a good strategy for just about any investment goal — and it can make an especially big difference when it comes to paying for the high costs of higher education.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

  If you have children, you’re keenly aware that it’s getting close to back-to-school time. Today, that might mean you need to go shopping for notebooks and pencils. But in the future, when “back to school” means “off to college,” your expenditures are likely to be significantly greater. Will you be financially prepared for that day?
  It could be expensive. The average cost for one year at an in-state public school is $22,261, while the comparable expense for a private school is $43,289, according to the College Board’s figures for the 2012–2013 academic year. And these costs will probably continue to rise.
  Still, there’s no need to panic. Your child could receive grants or scholarships to college, which would lower the “sticker price.” But it’s still a good idea for you to save early and often.
  To illustrate the importance of getting an early jump on college funding, let’s look at two examples of how you might fund a college education. A 529 plan is one way — but not the only way — to save for college. (The following examples are hypothetical in nature and don’t reflect the performance of an actual investment or investment strategy.)
  Example 1: Suppose you started saving for your child’s college education when she was 3 years old. If you contributed $200 a month, for 15 years, to a 529 plan that earned 7% a year, you’d accumulate about $64,000 by the time your daughter turned 18. With a 529 plan, your earnings grow tax free, provided all withdrawals are used for qualified higher education purposes. (Keep in mind, though, that 529 plan distributions not used for qualified expenses may be subject to federal and state income tax and a 10% IRS penalty.)
  Example 2: Instead of starting to save when your child was 3, you wait 10 years, until she turns 13. You put in the same $200 per month to a 529 plan that earns the same 7% a year. After five years, when your daughter has turned 18, you will have accumulated slightly less than $15,000.
  Clearly, there’s a big disparity between $64,000 and $15,000. So, if you don’t want to be in a position where you have to start putting away huge sums of money each month to “catch up” on your college savings, you’ll be well advised to start saving as early as possible — specifically, during the first few years of your child’s life.
  Of course, given all your other expenses, you may find it challenging to begin putting away money for college. And with so many years to go until you actually need the money, it’s tempting to put off your savings for another day. But those “other days” can add up — and before you know it, college may be looming.
  Consequently, you may want to put your savings on “autopilot” by setting up a bank authorization to move money each month into a college savings account. And, as your income rises, you may be able to increase your monthly contributions.
  Save early, save often: It’s a good strategy for just about any investment goal — and it can make an especially big difference when it comes to paying for the high costs of higher education.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

Tips for setting — and pursuing — financial goals

  You can get lucky by finding a parking meter with time left on it. You can “luck out” by having nice weather on your vacation. You can even be lucky at love. But when it comes to financial matters, you’re better off not counting on Lady Luck — and focusing instead on setting and pursuing goals.
  Here are some suggestions for establishing and pursuing your financial objectives:
  • Be specific. You probably have a lot of ideas about what you want to do, but if you’re going to turn these wishes into reality, you need to get specific. So, for example, instead of telling yourself that you want to retire early, set a goal of retiring at, say, 62. You can then use this target number to help guide your overall investment strategy. To illustrate: You can determine that you need to invest a certain amount of money each year, and earn a certain rate of return, to be able to retire at 62. You can also estimate about how much money you can afford to withdraw from your investment accounts each year to sustain a retirement that begins at 62.
  • Prioritize your goals. Of course, you want to achieve all your financial goals —and you can have a better chance of doing so if you rank these goals in terms of both importance and timing. For example, you may want to send your kids to college, purchase a vacation home and still be able to retire at age 62. How should you allocate your resources to each of these goals? Should you invest more at any given time for a specific goal? What types of investments are best for each of these goals? Prioritizing your goals can help you answer these and other questions — and help direct your overall investment strategy.
  • Be prepared to change your goals. Over time, your family and financial circumstances can change considerably — which means you shouldn’t be surprised, or alarmed, if you have to change your goals accordingly. And you’ll find it easier to maintain this flexibility if you’ve worked diligently to create an investment portfolio with sufficient resources to allow you to change direction, as needed.
  • Review your progress regularly. If you’re going to eventually achieve your goals, you absolutely need to measure your progress along the way. Are your investments performing the way you had anticipated? Are your goals becoming more expensive than you had initially envisioned? To achieve these goals, are you taking on too much — or too little — risk? To answer these types of questions, it’s a good idea to review your overall progress at least once a year and then make whatever adjustments may be necessary.
  As you can see, it will take considerable effort to set, review and (hopefully) achieve your goals. And it can be somewhat complex, too, so you may want to work with a financial professional — someone who takes time to talk with you about your goals, understands your risk tolerance and family situation, and has the training and experience necessary to help you work toward your objectives.
  But in any case, think hard about your goals and how you might accomplish them. And don’t delay in taking action — because goals are generally easier to attain if you have time on your side.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.