WH Cornerstone Newsletter
Independent solutions for life's financial opportunities April 2005

in this issue

Your Retirement and Your Business

The High Cost of Credit

Interest Rates Back in the Limelight

Understanding IRA Distribution Rules

Don't Go Light on Liability

Mutual Approach to Retirement

Five things to do with your tax refund check


Your Retirement and Your Business

It's estimated that more than 500,000, or 10 percent, of small businesses close their doors each year. Though the reasons for closing vary, for business owners it may mean the difference between a comfortable retirement and just getting by.

Allocating too much of your retirement investments to one company - even your own - is a risky proposition. If your business has not performed as well as expected by the time you are ready to sell or leave, you may not be able to retire in the manner in which you had hoped.

One way to help reduce the level of risk in your retirement portfolio is to diversify your retirement assets. Mutual funds offer an easy and efficient way to invest, and they offer many benefits.

Diversification When you invest in a mutual fund, you become part owner of a large investment portfolio made up of dozens or even hundreds of securities that is invested to meet a specific objective. By pooling shareholders' money, a mutual fund can invest in a more diversified portfolio than investors would be able to achieve on their own.

Professional Management A professional money manager (or a team of managers) conducts research and performs extensive analysis on various investment options to decide how to invest the mutual fund portfolio. These investment professionals constantly monitor their fund's investments and performance to ensure that they continue to seek their stated objectives.

Variety There are more than 8,000 mutual funds to choose from, with investment objectives ranging from safety of principal to fixed income to aggressive growth. Some mutual funds also let you choose among a variety of share classes.

Liquidity and Convenience Mutual funds are liquid investments that typically can be bought and sold on any business day. Most fund companies also offer such services as automatic investment plans and automatic reinvestment of dividends.

The investment return and principal value of mutual fund shares fluctuate with market conditions. Shares, when sold, may be worth more or less than the original amount invested. Mutual funds are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. If you want to diversify your retirement assets, mutual funds may be an option worth exploring. Call for more information on investing for retirement.

Read on...


Spring has sprung and the mailboxes have been full of credit card solicitations. But before you shred these offers (and I do mean shred-identity theft is widespread these days) take a careful look at what is actually there. In the past two weeks we have been notified by two of our credit card companies that the terms have changed and not in our favor. Here is just a few of the changes we have seen: international charges will now carry a 3% fee on each transaction, grace periods have shortened and interest rates have risen. It really pays to read the fine print!

Time to Share. Create a Buzz. South Shore Habitat for Humanity: Neighbors Helping Neighbors. South Shore Habitat was founded in 1986 and has complete 37 homes for low-income families, totaling 67 adults and 133 children. This spring, houses will be built in Duxbury and Brockton. The 12th Annual Birdhouse Show will be April 29-May 1 ,held at the South Shore Plaza, will surely delight. The Annual Gala & Auction will be held Saturday, May 7, at the Reebok Headquarters in Canton, will be an unforgettable evening of food, entertainment, and amazing auction items. Visit their website to learn how you can get involved.

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  • The High Cost of Credit
  • If you are like many Americans, you may be carrying more credit cards in your wallet than dollar bills. Overall credit-card debt has reached around $785 billion, which translates into $7,500 for the average household.

    Some forms of debt, such as auto and home loans, can be invaluable because they help people purchase expensive assets that would be difficult to obtain otherwise. Alternative forms of debt, such as credit- card debt, can give people a false sense of financial security.

    Read on...
  • Interest Rates Back in the Limelight
  • In March, the Federal Reserve raised key short-term interest rates for the seventh time in nine months. As with other rate increases, policymakers said the decision was based on attempts to contain inflation.

    The Fed raised the two key rates by 25 basis points (one-quarter percent) each, as it has done at each of its past six meetings. The increases came as no surprise, but they were couched in stronger language than the Fed has used since it began a rate-raising cycle in June 2004.

    Read on...
  • Understanding IRA Distribution Rules
  • According to a recent study, 83 percent of people started working with a financial professional to build a retirement fund. Given the complexity of the rules surrounding IRAs and employer-sponsored retirement plans, it's easy to understand why.

    Consider the distribution rules. After age 59, you can begin withdrawing funds from tax-deferred retirement plans and avoid the 10 percent early- withdrawal penalty. If you decide to wait, you generally must begin taking required minimum distributions (RMDs) from these plans once you reach age 70 (Roth IRAs and annuities are exceptions). In succeeding years, minimum annual distributions must be taken no later than December 31. Failure to take the required annual distribution could result in a 50 percent income tax penalty on the amount that should have been withdrawn.

    Read on...
  • Don't Go Light on Liability
  • Personal injury lawsuits seem to be America's latest craze. As a result, litigation is often the unintended outcome of many common accidents and misunderstandings. Not only are more individuals being sued, but juries are becoming less sympathetic to defendants. Between 1996 and 2002 (the latest year for which data is available), the dollar value of jury awards increased by 112 percent!

    In this type of environment, even the maximum coverage on your homeowners and auto insurance policies may not be enough to fully protect your assets against a potential lawsuit. Umbrella liability insurance can provide an extra layer of protection to safeguard your assets.

    Read on...
  • Mutual Approach to Retirement
  • A 2004 Investment Company Institute study confirmed the popularity of mutual funds among middle-income Americans who are planning for retirement. In line with popular wisdom, these investors typically adopt a buy-and-hold strategy, waiting out periods of market decline in the hope of reaping long-term gains.

    Considering the large number of investment options available to working Americans, why do so many people continue to hold mutual funds? The answer may lie in the potential benefits.

    Read on...
  • Five things to do with your tax refund check
  • It seems like "snail mail" these days only yields bills and catalogs, but many of us look forward to one certain piece of mail each spring - our tax refund.

    Read on...
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