June 2009
Issue: 70

Last night Bill and I had the pleasure of celebrating my former colleague and friend Rich's retirement from Deloitte. He and his wife Sue opened their lovely home to welcome colleagues who have worked with Rich over his 35 years in consulting.

We heard testimonials from his partners, colleagues and his two wonderful sons. Next, Rich did something so touching, he shared his thoughts about his career and something meaningful about each person in attendance.

It has been about 15 years since we worked together. The reflections Rich shared about our working relationship startled me. I knew he had a big impact on me personally, I had no idea that I had such an impact on him. What a wonderful gift he gave each of us all. It truly made my day!

Enjoy your 4th of July! We'll be celebrating the birth of our great nation while watching Duxbury's annual parade,  complete with bands, floats, politicians and tons of candy thrown at the spectators.


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One of our greatest pleasures each summer is attending the Summer Breakfast Series at the Major John Bradford Homestead in Kingston.  Come out and enjoy good food in the setting of their 17th-century homestead. Join the loyal followers for a relaxing, congenial Sunday breakfast under the trees, tent... or if weather requires, in the barn.  Proceeds benefit the Bradford Homestead the Jones River Village Historical Society headquarters.

20 freebies for your birthday

Dinner (or dessert or a small gift) is on the house, if you know where the deals are. And if you're planning a Disney visit, the parks' perks are cause for celebration.

Read on...

In This Issue
20 freebies for your birthday
401(k) fixes for every age
Stocks 103
11 businesses you can start in your pajamas in 2009
8 major benefits of new credit card law
15 ways to choose the road less traveled
What is a Build America Bond
About us
401(k) fixes for every age

No matter how close to retirement you are, there are ways to regrow -- or plant the seeds for -- your savings in the changing economic landscape.

Read on...

Stocks 103: Investing for the long run

In the lesson Stocks 102, we noticed that the difference of only a few percentage points in investment returns or interest rates can have a huge impact on your future wealth. Therefore, in the long run, the rewards of investing in stocks can outweigh the risks. We'll examine this risk/reward dynamic in this lesson.

Read on...

11 businesses you can start in your pajamas in 2009

For these entrepreneurs, wearing pajamas for a day at the office isn't far from reality. From pet care to virtual assistants and even online dating, we found entrepreneurs who are not just enjoying work from their living rooms and bedrooms, but they are also making a good living at it. Here's a look at the hottest industries for home-based entrepreneurs -- illustrated with some fun CEO self-portraits.

Read on...

8 major benefits of new credit card law

On May 22, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, Act of 2009 into law. The legislation will improve consumer disclosures and end some egregious practices in the credit card industry but stops short of capping interest rates and fees. Most of the provisions go into effect Feb. 22, 2010, unless otherwise stated.

Here's an overview of the major changes the law will enact.

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15 ways to choose the road less traveled

Just because everyone's visiting a famous attraction doesn't mean it's the best of its kind. These alternatives will help you steer clear of the tourist traps and avoid the crowds.

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What is a Build America Bond (BAB)?

Investors have a new mechanism for investing in municipal bonds, courtesy of the American Recovery and Reinvestment Act of 2009. As part of the Obama administration's economic stimulus program, the bill authorized a subsidy for local and state governments that issue what are known as Build America Bonds (BABs) to finance capital expenditures.

Unlike most municipal bonds issued by a state or local government, the interest payments on a Build America Bond are taxable on your federal income tax return. However, the federal government subsidizes 35% of the interest payments on a BAB, which typically have relatively long maturities and must be issued before January 1, 2011. Those subsidies enable state and local governments to offer a higher interest rate to attract investors while at the same time reducing the cost of borrowing money to fund construction and infrastructure projects. Because of the subsidies, many muni bonds issued over the next two years are expected to be BABs.

There are several types of BABs; the governmental body that issues one determines which it will be. A Tax Credit BAB offers the bondholder a 35% federal income tax credit on the net coupon interest. A Direct Payment BAB pays the 35% subsidy directly to the issuer. Still a third type, known as a Recovery Zone Economic Development Bond, is a Direct Payment BAB that provides a 45% refundable tax credit to the governmental issuer.

Why buy a Build America Bond?

A BAB may offer some advantages that ordinary taxable municipal bonds don't. The most obvious benefit comes from a Tax Credit BAB. Even though a BAB is a taxable bond, the 35% tax credit means that your after-tax return will be higher than the bond's stated coupon rate. Also, the 35% tax credit may be especially valuable to investors whose marginal tax bracket is less than 35%, for whom the tax benefits of muni bonds may not previously have been as valuable. In some cases, a BAB's net return may be as good or better than an equivalent corporate bond or an ordinary tax-free municipal bond. Your tax bracket will determine the extent to which you benefit from a Tax Credit BAB.

Even a BAB whose federal subsidy is paid to the issuer may provide benefits. The federal subsidy may enable an issuer to offer a higher coupon rate than it might otherwise have been able to afford. And though default is not impossible, munis have traditionally had a lower default rate than corporate bonds; the federal subsidies should enhance governments' ability to meet their financial obligations.

Factors to Consider

Before investing, make sure you understand whether a given BAB offers you the 35% tax credit and what that will mean given your tax bracket. Remember that the balance of those interest payments will be included as part of your taxable income, unlike most muni bonds. You may want to get assistance in determining whether a BAB makes sense for you.

New-issue BABs may be challenging for individuals to invest in. Some BAB auctions have focused on large institutional investors to the exclusion of individuals; it may be easier to find BABs being resold on the secondary market. As with any bond, BABs are affected by changes in interest rates. If interest rates rise, the value of an existing BAB with a lower coupon rate is likely to drop.
About us

WH Cornerstone Investments, LLC provides wealth management services to a select group of clients. Regardless of their background or future vision, all of our clients commit to a plan that targets their long-term financial growth and stability. While some of our clients concentrate on one part of their investment strategy, others opt for a more holistic approach.

WH Cornerstone clients demand customized objective, expert advice, which they know can come only from a firm that is truly independent-a firm not tied to financial institutions. As an independent Registered Investment Advisory firm, we are fee-only and therefore free from any outside institutional influence.


Paula Harris and Bill Harris, CFP
WH Cornerstone Investments

Sound, visionary stewardship