Fall 2009 Quarterly Newsletter

FALL 2009 Quarterly Newsletter
(view as pdf)

UPCOMING EVENTS

October 8, 2009
“Retirement and Wealth Planning workshop”
Worthington Hills Country Club 6:30 PM

Oct. 28 & 29, 2009
The Ohio Society of CPA’s Columbus Accounting Show
The Columbus Convention Center 9:00-5:00 PM

November 11, 2009
“Investment Management, Asset Allocation, and dealing with uncertainty in the Retirement Analysis”
Upper Arlington Main Library 7:00 PM

QUARTERLY ECONOMIC REVIEW

Once again, risk was rewarded this quarter. Confidence in the recovery showed along most major indices throughout the quarter, with a retrenchment occurring towards the end of September. The S&P 500 ended the 3rd quarter with a total return of 12.13%!

Consistent with the theme of risky assets outperforming, Small Cap equities have once again outpaced larger stocks and the broader market. However, the disparity for rewarding risk has lessened this quarter, and it appears that the markets are consolidating a bit.

The fixed income markets heavily favored junk bonds in the 2nd quarter. You can see below, by the 10 point spread, that junk bonds have once again revealed their strength in the 3rd quarter.

BarCap US Aggregate Bond: 3.96%
BarCap US Corporate High Yield: 14.2%

It’s encouraging to point out, that while being outpaced by junks bonds, the aggregate bond market performed quite favorably in the 3rd quarter when compared to the previous due to interest rates dropping.

Interest rates along all maturities shifted down slightly, benefiting long term bonds. We do not foresee this continuing in the long term, and continue to keep the duration (“interest rate sensitivity”) somewhat low for the majority of our portfolios.

We are taking this opportunity over the next several weeks to rebalance our portfolios (where prudent) and take a bit of risk off the table.
ROTH IRA CONVERSION: THE TIME IS COMING!

Pay less taxes?
Leave more to your heirs?

Too good to be true?
Not necessarily!

Why is now the time?

Conversions from Traditional IRAs to Roth IRAs have been allowed as long as your Modified Adjusted Gross Income (“MAGI”) has been below $100,000 for couples filing jointly. In 2010 only this restriction be lifted! In addition, taxes due on the amounts converted will be allowed to be spread over 2011 and 2012– effectively reducing your tax rate!

While limitations on conversions are lifted, the typical limitations on contributions to IRAs has not been waived. Therefore, because you can convert to a Roth does not mean you can contribute to it.

ROTH RULES OF THUMB

• If your tax rates will drop substantially during the withdrawal period (retirement), it likely does not make sense for you.
• If you believe your tax rate to stay constant or increase, it likely does make sense for you.
• If you do not have separate liquid assets to comfortably pay the taxes due upon conversion, it likely does not make sense for you.
• If you do not have a long time horizon (5-10 years) for the tax-free compounding to occur, it likely does not make sense.

WHY IS A ROTH CONVERSION BENEFICIAL?

Once you withdrawal from a Traditional IRA, it is all taken as taxable income. Roth IRA contributions, on the other hand are not deductible, when you contribute to a Roth, you pay taxes on that money immediately. The benefit, however, is that money can grow indefinitely and when withdrawn, there are no taxes owed.

Roth IRAs are more beneficial as:

Your future tax rate increases
Your length of time until you withdraw increases

Regular IRAs are more beneficial as:

Your current tax rate decreases
Your expectation of “game changing” events is lower.

In addition, Roth IRAs do not have the required minimum distributions that Traditional IRAs do and enjoy more liberal withdrawal rules.

SEEN IN THE PRESS 2009

“401(k) – When It Makes Sense to Rollover” by Mark Fissel,
Columbus Dispatch 10/4/09

“Roth vs. Traditional IRAs: You 2eed to Decide in 2009” by Clint Edgington,
Columbus Dispatch 10/4/09

“Bonds versus Bond Funds” by Roger Fillion,
Fidelity 9/23/09 (Clint Edgington)

“7 Ways to Boost Investment Income” by Roger Fillion,
Fidelity 7/17/09

“Small Business Owners– Ways you can embrace retirement in a bear market!” by Mark Fissel
AffluentMagazine.com 6/15/09

“Stable Value (funds): Stable, Valued.” by Louis Berney,
PlanSponsor Magazine April, 2009 Edition (Clint Edgington)

“The 2ew Retirement Realities: What to do and how to cope” by Tom Gray,
Achieve Solutions 1/15/09 (Clint Edgington)

WE ARE PROUD TO ANNOUNCE …
Clint Edgington Has Attained His CFA Charter!

Requirements to achieve the right to use the CFA Charter include passing three tests (administered only once per year) that have pass rates of approximately 35-45% each. In addition, one must have four years of experience working in portfolio management/analysis arenas.

Why Should My Investment Advisor Be a CFA Charterholder?


The CFA designation matters to your money. Your investment adviser has access to the most personal details of your finances, and the trust you place in your investment adviser must be unconditional. Although financial professionals may hold other professional designations, no other designation within the profession of investment management carries as much integrity as the CFA charter.

The CFA charter is awarded only to a very select group of investment specialists who have mastered a rigorous curriculum. CFA charterholders have professional experience applying this knowledge to the investment decision-making process, and CFA charterholders are held to the highest ethical standards. The CFA designation symbolizes the knowledge, professionalism, and integrity you should demand from any one you trust with your finances.”
-The CFA Institute

“The Gold Standard … whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA”
-The Economist Magazine

“There are a large number of certifications floating around the wealth management world, but the CFA is the one that requires the most effort to achieve and earns the highest degree of respect.”
-Allan Starkie, PhD and Partner, Knightsbridge Advisors

CAN WE BE OF ASSISTANCE?

Independence.   Diligence.   Transparency.

Our founding principals have helped our business grow! From not accepting the “pay to play” arrangements to legally acting as fiduciaries, these principals are not just words on paper.

We would love to show you how these principals can help your portfolio!

Is now not the right time for you?

If you have a friend or loved one going through a job change, divorce, or is concerned about their portfolio, we would love to help. We also help business owners improve the efficiency of their retirement plans.

Our Referral Principals:

We treat introductions with the respect that you would treat your friends and loved ones.

• All matters are handled professionally and confidentially.
• We respect their time and will not pursue them if not interested.
• Our first advisory meeting will be complimentary, with no obligation on their part.

Clint Edgington, CFA Partner Beacon Hill Investment Adivsory	Mark Fissel, RFC Partner Beacon Hill Investment Adivsory