Matthew North
Financial Advisor

If you look hard enough, you can find many obscure holidays, but few of them can instantly capture people’s interest as much as Be a Millionaire Day, which is “celebrated” on May 20. While amassing a million dollars may not be as significant a milestone as it used to be, most of us would still feel pleased if we could someday attain “millionaire” status. While there are no perfect formulas or guarantees, here are some steps to consider when working toward any investment goal:
Put time on your side. The earlier you begin saving and investing, the better your chances of reaching your financial goal. You can’t expect to “strike it rich” immediately with any single investment, but by investing year in and year out, and by choosing quality investment vehicles, you have the opportunity to achieve growth over time.
Pay yourself first. If you wait until you “have a little extra money lying around” before you invest, you may well never invest. Instead, try to “pay yourself first.” Each month, move some money automatically from a checking or savings account into an investment. When you’re first starting out in the working world, you might not be able to afford much, but as you advance in your career, you can increase your contributions.
Control your debts. It’s easier said than done, but if you can keep a lid on your debt payments, you’ll have more money with which to invest.
Take advantage of tax deferral. When you invest in tax-deferred vehicles, such as a traditional Individual Retirement Account (IRA) and your 401(k) or similar employer-sponsored retirement plan, your money has the opportunity to grow faster than it would if placed in an investment on which you paid taxes each year. Of course, when you start taking withdrawals, presumably at retirement, you’ll have to pay taxes, but by then, you may be in a lower tax bracket. And since you’ll have some control over your withdrawals, you can help control taxes, too.
Build share ownership. As an investor, one of the best things you can do to build your wealth is to increase the number of shares you own in your investments. So, look for buying opportunities, such as when prices are low. Also, consider reinvesting any dividends or distributions you may receive from your investments.
Don’t be overly cautious. For your money to grow, you need to put a portion of your investment dollars in growth-oriented vehicles, such as stocks. It is certainly true that stock prices will always fluctuate, sometimes quite sharply, and you may receive more or less than your original investment when sold. But if you avoid stocks entirely in favor of more stable vehicles, you run the risk of earning returns that may not keep you ahead of inflation. As you approach retirement, and even during retirement, your portfolio will probably still need some growth potential. Work with your financial advisor to determine the appropriate approach for you.
Think long term. By creating a long-term investment strategy and sticking to it, you’ll be less likely to take a “timeout” from investing in response to perceived negative news, such as market downturns and political crises.
Following these suggestions may someday allow you to reach the point when your financial goals become a reality for you.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

If you’re a mother, you’ll probably get some nice cards and flowers on Mother’s Day. But of course, your greatest gifts are your children themselves. And since you want to see them happy and financially secure, perhaps you can use this Mother’s Day as an opportunity to consider ways to help your children at various stages of their lives.
So, let’s take a look at steps you can take:

When Your Children Are Young
• Teach them to be savers — Encourage young children to put away part of their allowance, or any money they receive for household jobs, in a savings account. Offer to match their contributions dollar for dollar.
• Help them become investors — Consider giving your children a few shares of stock in companies with which they are familiar. By following the movements of their stocks with them, you can explain how the markets work and how increasing share ownership is one key to helping build wealth.
• Contribute to a college savings plan — One of the best things you can do to boost your children’s chances of success in life is to help them go to college. You’ve got several good college-savings vehicles available, such as a 529 plans, Coverdell Education Savings Accounts and custodial accounts. Your financial advisor can help you choose the vehicle that suits your needs and objectives.

When Your Children Enter the Working World
• Encourage IRA contributions — An Individual Retirement Account (IRA) is a great retirement savings vehicle. As long as your children have earned income, they can contribute to an IRA, so you may want to help them “max out” on their contributions each year. While you can’t directly contribute to a child’s IRA, you can write a check to your child and encourage him or her to use it for funding an IRA.
• Make long-term care arrangements — If you needed long-term care, such as an extended nursing home stay, and you had inadequate financial preparations, the burden could fall on your children. Now is the time to consult with your financial advisor to begin preparing for possible long-term care costs.

When Your Children Reach Middle Age
• Communicate your financial situation and estate plans — Don’t leave adult children in the dark as to your financial information. Share everything you can about how much you own, where you keep your assets and how you plan to eventually distribute them. By clearly communicating your situation and wishes now, you can avoid major problems later.
• Create a durable power of attorney — By creating a durable power of attorney, you can appoint another person, such as an adult child, to conduct your business and financial affairs if you become physically or mentally incapacitated. Such a move can help reduce stress your children may be feeling, while allowing them to make moves that can help preserve your finances.
Mother’s Day commemorates the special bond that mothers have with their children. By following the above suggestions, you can help strengthen that bond throughout your lifetime.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

In the past, many people stayed at one job, or at least one company, for almost their entire working lives. When they retired, they could typically count on a pension, the value of which was based on their years of service and earnings. But today, workers can expect to hold several different jobs in their lifetime, and to a great extent, pensions have been replaced by 401(k) plans, which place much of the funding responsibility on employees. So, assuming you will change jobs at some point, and you do have a 401(k), what should you do with it?
Here are your basic choices:
• Cash out your plan. If you cash out your plan, your company will likely pay you 80% of your account value, withholding the rest for federal taxes. And if you’re younger than age 59½, you may well be slapped with a 10 percent IRS tax penalty. Even worse, you’ll have lost a key source of your retirement income. Still, if you are leaving your employer involuntarily, and you need the money, cashing out your 401(k) is an option you may need to consider.
• Keep the money in your company’s plan. When you leave a company, your employer may allow you to keep your money in your existing 401(k). You may want to choose this route if you like the investment choices available in your plan. However, you might be caught by surprise if the company decides to change investment options. Furthermore, some employers may charge former employees fees to maintain their 401(k) plans.
• Move the money into your new employer’s plan. If your new employer has a 401(k) and allows transfers, you could roll the money from your old plan into the new one. This might be an attractive option if you like the investment options in your new employer’s plan.
• Roll the money over to an IRA. You may find several advantages to rolling your 401(k) over to an Individual Retirement Account (IRA). First, your money will still have the potential to grow on a tax-deferred basis. Second, you can invest your funds in virtually any investment you choose — stocks, bonds, government securities, certificates of deposit (CDs), etc. Third, if you own more than one 401(k) account, you could find it advantageous to consolidate them into a single IRA, thereby making it easier to allocate and monitor your retirement assets. And fourth, IRAs may give you greater flexibility if you plan to pass money to your children. In fact, if your child inherits your IRA, he or she has the option of stretching withdrawals over the child’s entire lifetime, rather than taking the money as a lump sum. (If you do transfer funds from your old 401(k) to an IRA, be sure to use a “direct rollover” to avoid the possibility of triggering unwanted taxes.)
Before making any moves with your 401(k), consult with your tax and financial advisors. By looking closely at your options, and by getting professional guidance, you can make the choice that’s right for you.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

Not long ago, the Federal Reserve (Fed) announced that it plans to keep short-term interest rates near zero until late 2014. The Fed initially pushed rates to that level in 2008, in an effort to stimulate economic growth. Clearly, low interest rates have a wide-ranging impact — but what effect will they have on you, as an individual investor?
If you need income from your investments, then the continuation of ultra-low interest rates may be a matter of some concern, particularly if you own certain types of fixed-income investments, such as certificates of deposit. While CDs are insured, offer return of principal at maturity and provide regular interest payments, they are not risk-free. With low interest rates, you risk losing purchasing power.
Still, fixed-rate vehicles may well have a place in your portfolio. If you’re even somewhat dependent on your investments for income, you may need to broaden your search. Here are a few ideas to consider:
Build a bond ladder. Long-term bonds, by their nature, are more subject to interest rate risk than shorter-term vehicles. In other words, interest rates are more likely to rise during the life span of a longer-term bond — and when rates go up, the prices of existing bonds will fall. To help lower this risk, you may want to build a “ladder” of bonds of varying maturities. Then, if market interest rates are low, you’ll still have your long-term bonds earning higher rates, but if rates rise, you can take advantage of them by reinvesting the proceeds of your maturing short-term bonds. But remember to work with your financial advisor to evaluate whether a bond ladder and the securities held within it are consistent with your investment objectives, risk tolerance and financial circumstances.
Dividend-paying stocks. You can find companies that have paid dividends for many consecutive years — and in some cases, increased their dividend payout each year. In 2012, companies listed in the S&P 500 are on track to pay out more than $252 billion in dividends, a record amount, according to data compiled from Standard & Poor’s. (Keep in mind that the S&P 500 is an unmanaged index and is not available for direct investment.) Of course, stock prices will fluctuate in value, and you may receive more or less than your original investment when you sell. Historically, dividend-paying stocks have been less volatile than non-dividend-paying stocks. Be aware, though, that companies can lower or discontinue dividend payments at any time without notice. Past performance is not a guarantee of future results.
Refinance your mortgage. Today’s low rates are good news for borrowers. With tougher standards in place, it may not be as easy to refinance a mortgage as it once was, but if you qualify, you may want to think about refinancing. You may be able to save quite a bit of money on your monthly payments — and lower payments can translate into a greater cash flow. Plus, if you don’t need all the savings, you can put some of the money into an Individual Retirement Account (IRA) or another retirement savings vehicles.
Ultimately, an extended period of low interest rates is just one more factor to consider in creating and adjusting your investment strategy. Work with your financial advisor to help ensure low rates won’t affect your income needs.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor
If you’re relatively young, and you’ve been investing only a few years, you possess an asset that is invaluable and cannot be replaced: time. And the more time you spend contributing to tax-advantaged investments, the better off you may be.
As an investor, time is your ally for two reasons. First, the more time you give to your growth-oriented investments, the greater their growth potential. And second, the effects of market volatility have tended to decrease over time, though as you no doubt have heard, past performance is not a guarantee of future results.
Clearly, it pays to put time on your side. And when you’re investing in tax-advantaged vehicles, time becomes an even more critical component of investment success, especially when you are young and have several decades ahead of you before you retire.
Suppose, for example, that you put $200 per month into an investment on which you paid taxes every year. If you earned a hypothetical 7% return on this investment, you’d end up with about $324,000 after 40 years. But if you put that same $200 per month into a tax-deferred investment, such as a traditional Individual Retirement Account (IRA), and you earned that same 7% return, you’d wind up with about $513,000 after 40 years. Of course, once you starting taking withdrawals, presumably when you’re retired, you’ll have to pay taxes on your earnings, so your after-tax accumulation would be about $385,000, assuming you took your IRA in a lump sum (which most people don’t) and also assuming you were in the 25% tax bracket. However, by the time you retire, you may be in a lower bracket. Plus, you have some control over how much you withdraw each year, so you may be able to affect the taxes you’ll pay. Furthermore, depending on your income level, your contributions to a traditional IRA may be tax-deductible in the years in which you make the contributions. (Keep in mind that this hypothetical example is for illustrative purposes only and does not represent a specific investment or investment strategy.)
While tax deferral is obviously a nice feature for an investment, tax-free may be even better. If you meet the income requirements, you might want to consider investing in a Roth IRA, which provides tax-free earnings withdrawals, provided you’ve held your account for at least five years and you don’t start taking withdrawals until you’re at least age 59½. This means that, in the above example, you’d have accumulated that same $513,000 — but you won’t have to pay taxes on your withdrawals. Generally speaking, the Roth IRA may make more financial sense for those who are eligible, but if you think you’ll be in a lower tax bracket when you retire, and your income level permits you to deduct some of your contributions, you may want to consider a traditional IRA. Consult with your tax advisor for guidance on the most appropriate approach for your situation.
When it comes to building resources for retirement, it’s almost impossible to save and invest “too much.” So take full advantage of both time and tax-advantaged investments. By putting these investments to work for you, and by keeping them at work, you’ll be putting time on your side as you work toward your financial goals.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

You’ve got until April 17 to contribute to your Individual Retirement Account (IRA) for the 2011 tax year. That’s not a lot of time, but if you have some money available, and you haven’t completely funded your IRA for 2011, consider doing so before the deadline. And once you’ve “maxed out” on your IRA for last year, why not get a jump on 2012?
Actually, you could have started contributing to your 2012 IRA as early as Jan. 2. In fact, if you can get into the habit of fully funding your IRA each January, you’ll give your money 15 extra months of growth potential, as opposed to waiting until mid-April of the following year. If you factor in all the years you’ll be contributing to your IRA before you retire, those extra months of growth opportunities, repeated over decades, could end up providing you with a fair amount of extra cash when you start tapping into your IRA at retirement.
Of course, you may not find it all that easy to come up with the full IRA contribution amount at one time. (In 2012, you can put up to $5,000 into a Roth or traditional IRA, or $6,000 if you’re 50 or older.) But if you look at your entire financial picture, you may be able to think of some resources. Here are a few suggestions:
Put your tax refund to work. In 2011, the average tax refund was about $3,000, according to the IRS. If you received that amount in 2012, and you applied it toward your IRA, you would already have met half the contribution limit (if you are 50 or older) or more than half (if you’re younger than 50).
Take advantage of interest payments or dividends. If you own income-producing investments, you may find that they can help you fund your IRA early. For example, if you own dividend-paying stocks, and you don’t typically reinvest the dividends, consider putting some of these funds into your IRA. (Keep in mind, though, that stocks can reduce or discontinue dividends at any time). And you can do the same thing with any interest payments you receive from bonds.
Put other “windfalls” into your IRA. If you receive a windfall, such as a bonus from your employer or a gift of cash, think about putting it into your IRA.
If none of these options present themselves, and you can’t afford to write out a big check to fund your IRA very early in the year, do the best you can to reach the contribution limit as soon as possible. To make this happen, consider setting up a monthly automatic transfer from your checking or savings account into your IRA. Even if you were to divide these transfers into 15 equal payments totaling $5,000 (or $6,000 if you’re 50 or older), you would still be funding your IRA more quickly than if you would have scrambled to contribute in the last few months before the tax filing deadline.

No matter when you do it, fully funding your IRA is a great way to help build resources for retirement. But the earlier, the better — so do whatever you can to beat that tax deadline each year.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

Like everyone else, you hope to remain physically and financially independent your entire life. And you may well achieve this goal. Nonetheless, the future is not ours to see, so you’ll want to prepare yourself for as many contingencies as possible — one of which is the high cost of long-term care.
As you may know, long-term care primarily refers to nursing home expenses, but it also includes services provided in your own home. In either case, though, it could be expensive.
The national average rate for a private room in a nursing home was more than $87,000 per year in 2011, according to the 2011 MetLife Market Survey of Long-Term Care Costs. The same survey found that the average private-pay hourly rates for home health aides and homemaker companion services were $21 and $19, respectively.
With luck, of course, you won’t need to worry about these types of expenses. But consider this: People who reach age 65 have a 40% chance of entering a nursing home, according to a study by the U.S. Department of Health and Human Services. And about 10% of those who enter a nursing home will stay there five or more years.
Clearly, if you take no steps to prepare yourself for the potentially devastating costs of an extended nursing home stay, you could be jeopardizing the assets you’ve worked so hard to accumulate. Even worse, if you run through your money, you might end up creating a financial and emotional burden for your grown children.
Unfortunately, many people assume that a federal or state government program will help them pay for their long-term care expenses. However, Medicare pays only a small portion of nursing home costs, and to be eligible for Medicaid, you would likely have to divest yourself of most of your financial assets. Consequently, you’ll probably need to find another way to pay for long-term care.
Fortunately, there are investment or protection vehicles designed specifically to help you meet long-term care expenses. Your financial advisor can help you pick the option that’s most appropriate for your individual situation.
Having the ability to pay for long-term care is obviously important. But other issues may also enter the picture. For example, if you need to enter a nursing home, you may be suffering from a physical or mental disability that might prevent you from handling your own affairs. This impairment could prove disastrous to your finances — which is why you can’t afford to take that type of chance. Instead, consult with your legal advisor to determine if you can benefit from a durable power of attorney — a document that lets you delegate your financial decisions to a relative, close friend or anyone else you might choose.
None of us like to think about spending time in a nursing home or needing round-the-clock care in our own homes. However, life is unpredictable. But even if you can’t avoid the need for long-term care, you can take steps to help reduce the financial strain it can cause you and your family.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

If you are contributing the maximum amount to your 401(k) or other employer-sponsored retirement plan each year, that’s good. And if you’re also “maxing out” on your Individual Retirement Account (IRA) annually, that’s even better. But what then? If you’re already fully funding your 401(k) and IRA, can you put away even more for retirement? Should you?
The answer to this last question is almost certainly “yes” — because you could spend a long time in retirement. How long? Consider these statistics from the Society of Actuaries:
A man who’s reached age 65 in good health has a 50% chance of living 20 more years and a 25% chance of living to age 92.
A 65-year-old woman has a 50% chance of living to age 88 and a 25% chance of living to 94.
There’s a 50% chance that at least one member of a 65-year-old couple will live to 92 — and there’s a 25% chance at least one of them will reach age 97.
Because you have a reasonably good chance of spending two, or even three, decades in retirement, you clearly need to accumulate substantial financial resources before you retire. So, if you consistently reach the contribution limits on your 401(k) and IRA, you’re making a smart move, as both these vehicles offer the potential for tax-deferred earnings and a variety of investment choices. But if you can still afford to put away more money, or if your income level prevents you from contributing to a Roth IRA, you may want to look at these possibilities:
Life Insurance Retirement Plan — A Life Insurance Retirement Plan (LIRP) is essentially a life insurance policy that can potentially help you generate tax-advantaged income during your retirement years. Until you begin taking withdrawals, the cash value of your policy has the potential to grow tax deferred. Then, when you retire, you can take tax-free payouts from your principal. (After the entire principal is paid, payouts are treated as loans against the contract.) And your beneficiaries will receive the balance of the death benefit income tax free, minus any loans or loan interest.
Annuities — You might find that a fixed annuity can be an appropriate way to supplement your retirement income. Like a LIRP, a fixed annuity’s earnings have the potential to grow on a tax-deferred basis. Also, fixed annuities generally offer some type of guaranteed rate of return over the life of the annuity contract. And perhaps most importantly, you can structure your annuity to provide you with an income stream you can’t outlive. (Keep in mind, though, that annuities are generally more appropriate for investors who are at least 45 years old.)
While you can certainly get some key benefits from a LIRP and a fixed annuity, you need to fully understand all aspects of these investment vehicles and make sure they are suitable for your situation and individual needs. Consequently, before investing, consult with a financial professional.
But don’t wait too long. By preparing for your retirement well ahead of time, you can boost your chances of enjoying the type of “golden years” lifestyle that you’ve envisioned.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor
Springtime is almost here. If you’re like many people, the arrival of spring means it’s time to spruce up your home. But why stop there? This year, consider applying some of those same spring-cleaning techniques to your investment portfolio.
Here are some ideas you may want to put to work:
• Get rid of clutter. You probably don’t have to look too far around your home to find things that are broken or simply no longer useful to you. If you poke around your portfolio, you might make similar discoveries: an investment that has chronically underperformed, duplicates another investment or met your needs in the past but is less relevant to your current situation and goals. Once you identify these types of investments, you may decide to sell them and use the proceeds to take advantage of opportunities that may prove more valuable to you.
• Consolidate. Over the years, you may have accumulated multiple versions of common household items — brooms, mops, hammers — which pop up mysteriously in various parts of your home. You might find it more efficient, and even less expensive, if you consolidated all these things in one centralized location. As an investor, you also might find that consolidation can offer you some benefits. Do you have one Individual Retirement Account (IRA) with one financial services provider and a second IRA with another? Do you have a couple of old 401(k) accounts with former employers? And have you scattered investments here, there and everywhere? By consolidating all these accounts in one place, you can cut down on paperwork, reduce fees and, most importantly, unite your investment dollars so that it’s easier for you to see what you have and then follow a single, coherent investment strategy.
• Prepare for turbulent weather. As you know, springtime can bring heavy rains, hail, strong winds and other threats to your home. As part of your overall spring cleaning, you may want to check the condition of your roof, clear branches away from your house, clean your gutters and downspouts, and take other steps to protect your property from the ravages of Mother Nature. And just as you need to safeguard your home, you’ll want to protect the lifestyles of those who live in that home — namely, your family. You can help accomplish this by reviewing your life and disability insurance to make sure it’s still sufficient for your needs.
• Get professional help. You may find that you can’t do all your spring cleaning by yourself. For example, if your carpets and rugs are heavily soiled, you may need to call in a professional cleaner. Or if your tree branches have grown out of control, you might need to bring in a tree trimmer. Similarly, when you decide to “tidy up” your portfolio, you’ll need some assistance from a financial professional — someone who can study your current mix of investments and recommend changes, as needed, to help ensure your holdings are suitable for your risk tolerance, time horizon and short- and long-term goals.
Spring cleaning can reinvigorate your home and your overall outlook. And by tidying up your investment portfolio, you can help gain some of that same optimism — for your future.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Matthew North
Financial Advisor

As an investor, what are your goals? You can probably think of quite a few — but over the course of your lifetime, your objectives typically will fall into five key categories. And once you’re familiar with these areas, you can start thinking of what they’ll mean to you in terms of your financial and investment strategies.
So, let’s take a look at each of these areas and see what they might entail for you:
• Preparing for retirement — With advances in health care and a greater awareness of healthy living practices, many of us can expect to live two or three decades in an active retirement. To pay for all those years, you’ll need to save and invest early and often. So, while you’re working, take full advantage of your 401(k) or other employer-sponsored retirement plan, as well as contribute to a traditional or Roth IRA. After understanding your desired retirement lifestyle, your financial advisor can help you determine how, and how much, to save to provide for your income in retirement.
• Planning for the unexpected — You can’t see into the future, so you’ll need to prepare for anything that comes your way. By building an emergency fund containing six to 12 months’ worth of living expenses, you can possibly avoid dipping into your long-term investments to pay for things such as a new furnace or a major car repair. And planning for the unexpected also means having sufficient life insurance to provide for your family in case anything happens to you.
• Educating your children — College is already expensive — and college expenses have been rising faster than the overall rate of inflation. If you want to help your children, or grandchildren, pay for school, you may want to invest in a college savings vehicle, such as the 529 plan. You can contribute large amounts to a 529 plan, and earnings have the opportunity to grow tax-free, provided withdrawals are used for higher education. (Withdrawals not used for education are subject to income taxes and a 10 percent penalty.)
• Living in retirement — Once you reach retirement, your investment emphasis will shift somewhat, from accumulating resources to making them last. By working with a financial advisor, you can develop a withdrawal strategy that can help make sure you don’t outlive the income you receive from your 401(k), IRA and other sources. At the same time, given the possible length of your retirement, you can’t ignore the need to invest for growth, so you may need to consider some growth-oriented vehicles in your portfolio to help your income keep pace with inflation.
• Transferring your wealth — When you’ve worked hard your whole life, you want to be able to leave a legacy — one that allows you to provide financial resources to the next generation and to those charitable organizations you may wish to support. So, when it’s time to think about transferring your wealth, you’ll want to consult with your financial and legal advisors to create an estate plan that’s appropriate for your needs. And because these plans can take significant time to create, you won’t want to wait too long to start.
So, there you have them: five key financial areas on which to focus as you travel through life. By doing your homework, planning ahead and getting the help you need, you can make the journey a pleasant and productive one.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.