Main Kokomo Office: 765-455-1554|info@sycamoreweb.com
Craig Smith Sycamore Financial

About Sycamore Financial Group

This author has not yet filled in any details.
So far Sycamore Financial Group has created 54 blog entries.

Riding Out the Stock Market – Summer 2008

Hello from Sycamore,

We thought it may be prudent to give you information on the markets in general, and to pass onto you some of our thoughts on all this.

As you likely know by now, the market has declined significantly this year. The Dow recently suffered its biggest percentage drop in more than six years, and is now down about 25% from its record close just last year, Oct. 9, 2007 Markets do go up and do go down. You know this, but when the market goes down, especially when it drops appreciably, it is unsettling. The volatility in the market is a common and normal activity of the stock market and should be expected.

Declines are common, take the following: The stock market since 1900.

  • A routine decline of 5% or more happens about three times a year and lasts about 47 days.
  • A moderate decline of 10% or more happens about once a year and lasts about 113 days.
  • A severe decline of 15% or more happens about once every two years and lasts about 215 days.
  • A bear market of 20% or more happens about once every 3 ½ years and lasts about 329 days.

(Capital Research and Management Company is source, flyer Sept. 2008)

Realistic Expectations on Stock Returns: As of 12-31-2007.

  • Over the past 60 years, stocks averaged 11.8% per year.
  • Over the past 40 years, stocks averaged 10.6% per year.
  • Over the past 20 years, stocks averaged 11.8% per year.
  • Over the past 10 years, stocks averaged 6.4% per year.

(From Global Financial Data, Stocks are Wilshire 5000 Index)

Good news you do not hear much about in the media.
(They want you to tune in tomorrow or buy another paper).

  • Interest rates are relatively low.
  • Inflation is moderate.
  • Our dollar has declined against other countries currencies, allowing other countries to buy goods and services produced in America for less.
  • Unemployment is not low but not high either.
  • We have been at this down market for almost a year now (See above).
  • We believe there are many companies that are good bargains.

What to do? While we wish we could predict the future of the markets, we cannot. We are advising you the best we can, but remember that there are no guarantees when it comes to investments in stocks, bonds or other financial instruments.

1) Don’t panic-Stay invested. You should have your monies diversified enough so that your short term needs are in a safe-liquid account and your longer term investments are in a broad basket of stocks, bonds and CDs.

2) Buy low-Sell high. We are likely in the “Buy low” part of this saying. This could be a good time to look at purchasing-not selling. Trying to time the market is difficult as it requires two near-perfect actions-getting out at the right time and getting back in at the right time. If you wait to get back in when you feel “comfortable” you may have missed most of the upswing in the market.

3) Re-evaluate your risk assessment. What percentage of your portfolio should you have in stocks? We can help on this one. We can then make any necessary change upon market recovery.

4) Invest regularly. Investing on an ongoing basis will take the guesswork out of timing the market. You buy in both up and down markets.

5) Seek professional guidance and review annually. We think it prudent to take a thorough look at your assets and investments once each year, make adjustments based on your risk-reward profile and go forward.

Markets do go up and down. The down part is no fun but is part of the package. If we can assist you in reviewing your investments, assets and risk assessment, please contact us.

Thanks for your business and trust,

Craig
Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:19:19-04:00August 8th, 2008|Craig's Commentary 2008|0 Comments

Save Taxes with an IRA – Spring 2008

Hello from Sycamore,

There is Still Time to Save Taxes with an IRA!

Under the current tax law, there are two significant ways that you may be able to benefit today by contributing money to an IRA.

  1. If you qualify for a deductible IRA, you can likely deduct the amount of the contribution from your taxable income and reduce your current year tax bill. The following is a brief description of who qualifies for a deductible IRA
    a) If you did not have a qualified plan available to you through your employer in 2007 you can likely contribute to an IRA and deduct the contribution from your taxes.
    b) If you had a qualified plan available at work, but your adjusted gross income was below $103,000 (if married) or $62,000 (if single) then you may be able to deduct part or all of your IRA contribution. We suggest checking with us or your accountant for details about your particular situation.

2) Depending on your adjusted taxable income, you may qualify for a tax credit of up to 50% of the contribution to your IRA. This credit would apply to contributions made to both Regular deductible IRA’s and Roth IRA’s.

For your convenience, we have attached more information about this tax credit. As you can see the credit applies only to lower income couples and individuals. We realize that most of you cannot benefit from this credit but you may know someone who is “just getting started’. Many of these individuals may be able to benefit from this tax credit. Feel free to pass this information along to them.

Don’t forget that there are additional benefits to investing into an IRA.

  1. The accounts grow without current taxes and in the case of a Roth IRA they grow tax-free.
  2. Roth IRA’s allow contributions with higher income limits.
    *You can contribute to a Roth if your adjusted gross income is below $166,000
    (for married couples) or $114.000 (for individuals).

This is a very brief overview of the benefits and rules regarding IRA’s. For information about your individual situation, we recommend you contact your accountant or give us a call.

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investment value, when sold, may be worth more or less than their original cost.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Uncle Sam Helps Pay for Your IRA or Pension Contribution…
Get Tax Money Back!

Tax Credit – Depending on your adjusted gross income, you may be able to receive a non-refundable tax credit of up to 50% on the first $2,000 of contributions made to a qualified retirement plan or IRA. These savings are in addition to any tax deferral that may already be available on the contribution. Please refer to the accompanying table to determine how you may benefit for tax year 2007.

WHAT TO DO

  1. Maximize contributions to your IRA(s) or retirement plan.
  2. Enroll in your Company’s plan if you are not currently enrolled.
  3. Increase your contribution.
  4. Keep this paper with your current year tax records for your tax person.
  5. Call Sycamore Financial Group for more information or with questions.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:19:39-04:00February 8th, 2008|2008 Newsletters|0 Comments

Beneficiary Decisions – Summer 2007

Hello from Sycamore,

Beneficiary Decisions

Many of you have IRA’s, pension plans or annuities with beneficiary designations. Some of you have basic accounts that are designated as TOD (transfer on death), and more than a few of you have all four. These designations are designed to transfer your assets to your beneficiaries quickly and efficiently (they generally are passed without probate costs).

Our purpose in this communication is simply to ask that you invest a few minutes of your time reflecting on these designations. Review them for any changes that may be necessary due to a marriage, divorce, birth, death, adoption etc. It’s not uncommon to make a quick decision about these designations when asked during an application process, but we’re not certain serious thought is always given to this very important decision.

Beneficiary designations have several benefits, but are not appropriate for everyone, so consider your individual circumstances to determine that they will accomplish your wishes.

Generally, if you have what you would consider a “regular family circumstance” these beneficiary designations are adequate and efficient. However, if you have special circumstances or concerns, you may want to check with your attorney to determine if transferring your assets through a will or trust would suit your situation better.

Many times we can help to guide you on this decision but we cannot replace legal counsel.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-20T15:23:30-04:00June 2nd, 2007|2007 Newsletters|0 Comments

529 College Savings Plans – Winter 2007

Hello from Sycamore,

Using 529’s and the Indiana Plan for College Expenses

Two important changes were made in 2006 that affect section 529 college savings plans and their use by Indiana residents . First the Federal government extended the tax free status of earnings withdrawn when used to pay secondary education expenses. Second, the state of Indiana offers a tax credit to taxpayers funding college expenses through it’s “CollegeChoice” 529 plan. This credit is available to taxpayers starting in 2007. We now believe that everyone saving for college expenses should take a serious look at 529’s and in particular the “CollegeChoice” plan offered by Indiana.

Let’s take look at some of the basics of 529 plans:

  1. Contributions to the account are made with “after tax” dollars where the earnings grow tax deferred. When these earnings are withdrawn to pay for qualified* college expenses, they are tax free. Expenses that are paid by scholarships, Pell grants, Veterans’ educational assistance or other similar programs cannot be used.
  2. Anyone over the age of 18 can start a 529.
  3. Anyone of any age can be named as beneficiary of the account. The beneficiary can be changed as long as the new beneficiary is a member of the original beneficiary’s family. The definition of “family” goes out as far as first cousin.
  4. Almost any accredited secondary school qualifies.
  5. You can transfer assets from one 529 to another, and transfer assets from Education/Coverdale IRA’s into a 529. No tax is paid during this transfer.
  6. If the earnings are not used for qualified college expenses,they will be taxed as ordinary income and are subject to a 10% tax penalty when withdrawn from the account.
  7. Any individual taxpayer can contribute as much as $60,000 in any one year for each beneficiary without triggering gift tax consequences, provided they do not make additional gifts to that same beneficiary within a five year period. This essentially allows you to make five years of gifts “up front”. This may be helpful with your estate planning.
  8. The owner of the account maintains control over the account and has the option to change the beneficiary. This control does not negatively affect the estate planning or gifting.

Now for a quick look at Indiana’s “CollegeChoice” plan:

  1. Each individual filing a single return, or married couple filing a joint return, will receive a 20% credit on their Indiana income taxes on the first $5,000 contributed to the plan each year. This equals a tax savings of $1,000. To claim this credit, simply claim it on your Indiana state tax return. Of course, keep proof of your contributions.
  2. While the department of revenue does not define how long money has to remain invested to receive the credit, Senate bill 500 stipulates that the account remain open for at least 12 months. This requires maintaining a minimum account balance of $500 or having some activity such as a deposit or withdrawal during the proceeding calender year. Additionally, if withdrawals from the account are used for something other than qualified expenses, the account owner may be required to repay part or all of the credit previously received.
  3. Accounts can be started with as little as $50. Minimum additional contributions to an account can be as low as $25.for each portfolio. Maximum contributions per beneficiary are$298,770. You must maintain a $500 minimum balance per account or make a purchase or liquidation within the previous calender year to keep the account open.
  4. Fees: $10 per year for Indiana residents. This fee will be waived if the account balance exceeds $25,000 or if the owner has established periodic contributions.
  5. You will be limited to the investment options available within the plan. We have reviewed these investment options and feel they are adequate.
  6. You can invest directly into the program without paying any sales fees. If you elect to do this, you will be limited to the “Age-Based” investment option. To make other investment choices, you must use a broker.

All in all, we think that Indiana’s “CollegeChoice” plan is an excellent way to save for college expenses and recommend that you consider using this plan.

This overview has focused on what we feel are some of the more important aspects of 529’s and Indiana’s CollegeChoice plan, if you would like more information on Indiana’s CollegeChoice 529 go to www.collegechoiceplan.com, give us a call or set an appointment to stop by and see how this plan may benefit you. How much will you need to save? E-mail or call in your particular situation and we will send you an estimate. Kokomo 765-455-1554 Anderson 765-643-9333.

More information about 529’s can be found at http://www.irs.gov/publications/p970/ch08.html

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-20T15:14:17-04:00January 4th, 2007|2007 Newsletters|0 Comments

Elections and the Stock Market – Winter 2006

Hello from Sycamore,

There has been a lot of speculation recently about the affect the recent elections may have on the stock market, so I thought I’d do a little reading to see what the numbers say.

The White House: I came across an article written by Jeremy Siegal Ph. D., that compared the stock market performance starting in 1948 while Republicans or Democrats controlled the White House. This comparison falls heavily in favor of Democrats. Under Republican presidents for this period, the market gained just over 9.5% per year while under Democratic presidents it gained more than 15% annually. The article did not identify which index was used as a measure, but I’m assuming a broad index similar to the S&P 500.

Now, to the recent mid-term elections where we saw a shift of power; So far, the most recent election seems to be having no significant effect (negative or positive) on the market. It’s continuing to roll along at a good clip. In the past we’ve seen similar results. An article by Dirk Hofschire posted on Fidelity’s investment website, states that for the one year period following the last five mid term elections, the Democrats are followed by slightly better stock market performance (24% to 20%). But what really struck me in this article, was the amount of the one year return immediately following these mid-term elections regardless of the winner. Large and small cap stocks since 1950, averaged 17.2% for the year immediatly following the election. For the years when the election of congress coincided with a presidential election, the return averaged 13.3%. When the congressional election was not a presidential election year, (such as just passed) stocks averaged 32.9% for the 12 months following the election….interesting!! Lets hope for average this year!

While this type of information can be entertaining and fuel for banter, I personally think that the Democratic vs Republican differences are merely coincidence. Additionally, it’s important for you to know that we do not use this type of information when investing your money. We stay focused on fundamental information, such as earnings and dividends. We pay no attention to the man behind the curtain!

As always, feel free to contact us with any question or request. Kokomo 765-455-1554 Anderson 765-643-9333.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:05:45-04:00December 20th, 2006|2006 Newsletters|0 Comments

Investment Rates – Fall 2006

Hello from Sycamore,

Money Market Accounts, Free Checking and CD’s

Over the last year or so interest rates have risen to more normal levels. We thought this would be a good time to remind you of some of the “cash” type of investments that are available to you through your account with Sycamore Financial Group.

Money Market: All of our accounts come with a money market* attached automatically. Currently this account earns interest at the rate of about 4.4% You may already know that a money market account works essentially the same as a savings account. You can elect to have checks issued on this same money market account if you would prefer to use it as a savings/checking. There are no limitations on the checking privilege which is free.

  • There is a $100 minimum balance required to earn any interest.
  • You may elect to have a “stand alone” money market account with free checking. This can be a good way to earn more on business checking accounts.

Certificates of Deposit: Each week we receive CD** offers from about 50 or so banks. We simply buy the one that suits the client best. Three months to five years and most everything in between.

Most of us keep a little “mad money” available in these types of accounts. Chances are we can help you earn a better rate of interest.

As always, feel free to contact us with any question or request. Kokomo 765-455-1554 Anderson 765-643-9333.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:12:24-04:00September 29th, 2006|2006 Newsletters|0 Comments

Tax Increase Prevention – Summer 2006

Hello from Sycamore,

Tax Increase Prevention and Reconciliation Act of 2005

We all received some good news on the tax front recently when president Bush signed the Tax Increase Prevention and Reconciliation Act of 2005 into law. This tax law basically extends the current tax advantages given to stock dividends and realized capital gains for two additional years through December 31st 2010.

As you are likely already aware, stock dividends and capital gains are taxed at a reduced rate from ordinary income. If you are in the 10% or 15% marginal tax bracket, your dividends and capital gains are currently taxed at 5%. This is a substantial savings (66% less) from the tax rate on your ordinary income. If you are in the 25% marginal bracket or higher your dividends and capital gains are taxed at 15% a savings of 10% to 20% depending on your bracket. The new law extends these lower rates for dividends and realized capital gains through 12/31/2010.

Additionally, if your dividends and capital gains would ordinarily be taxed in the 15% bracket (the 5% tax rate as described above), they will be tax free for the years 2008, 2009 and 2010.

These reduced tax rates do not apply to fixed investments such as Corporate Bonds,CD’s or Savings Accounts.

As interest rates rise and start to compete with stock returns, this tax advantage should continue to give equity investors a significant tax advantage. This could help support stock prices relative to other investment options.

If you have been wanting to convert your regular IRA to a ROTH but your taxable income is too high, there is some (deferred) good news for you in this new law. Starting in 2010 the $100,000 modified AGI limitation no longer applies. Additionally, income created by the Roth conversion can be spread over tax years 2011 and 2012.

Another change in the new law is an increase in the exemption amounts for AMT (Alternative Minimum Tax). In 2006 (only in 2006) the exemption amounts are $62,550 for Married Filing Jointly,$42,500 for Single filers and Head of Household and $31,275 for Married Filing Separate.

Finally, more than a few of you will be interested to know that the “Kiddie Tax Law” now applies to children under the age of 18. The previous law applied only to children under 14 years old.

If you have any questions about the new tax law or it’s effect on you, feel free to drop us an e-mail or give us a call. Kokomo 765-455-1554 Anderson 765-643-9333.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:26:52-04:00July 22nd, 2006|2006 Newsletters|0 Comments

E-mail Delivery of Annual Reports – Spring 2006

Hello from Sycamore,

E-mail delivery of annual reports & proxy information

Many of you enjoy and benefit from the reports that arrive each year from the companies in which you own shares. Others are not interested and would prefer that we not send them. We are required to send the reports. However whether you enjoy the reports or not, you can change these mailings from your regular mailbox to your e-mail “in box”. Then it’s simply a matter of deciding if you want to keep and review, or delete. This is a good way to save a few trees, some money for the company your invested in and get back into the good graces of your postal carrier.

If you have received a mailing and would like to receive future mailings via e-mail do the following.

  • Go to www.investordelivery.com
  • Enter the control number from your facing page. This number generally has an arrow pointing to it and will likely be in a box.
  • Select the submit button on the left for initial enrollment.
  • Enter your e-mail address and a PIN (any PIN you would like to create should be okay).
  • Next check the box at item five.
  • Click the “submit” button.
  • Your finished!

This is not a global authorization, you must do this for each company that you own.
________________________________________________________________________________

If you have received a proxy to vote and want to vote your shares electronically, then sign up for e-mail delivery of future proxies and other mailings, simply follow the instructions below.

  • When you receive a proxy, go to www.proxyvote.com
  • Enter the control number from your facing page. This number generally has an arrow pointing to it and will likely be in a box.
  • Next select the option to vote. Since you received your proxy by regular mail, select the vote button on the left.
  • At the next page you can make voting selections if you wish, or simply vote the “directors recommendations”.
  • On the following page, click on “final submission”.
  • On the next page, click on “Click here to sign up for electronic delivery”.
  • The last page asks you to enter your e-mail address and provide a PIN (any PIN you would like to create should be okay).
  • Next check the box at item five.
  • Click the “submit” button.
  • You’re finished!

Remember, these authorizations are not global and must be completed for each company that you own. Feel free to call us if you have any difficulty.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:06:16-04:00April 8th, 2006|2006 Newsletters|0 Comments

Looking at Some Economic Indicators – Fall 2005

Better Than It Seems

As we’re meeting with our clients this fall, many are pleasantly surprised with the performance of their investment accounts. We frequently hear something like “ That’s great. With the market and economy being in so much trouble we were concerned that our investments may be as well” It seems that today more than at any other time, the perception of both the economy and the markets (mostly from the media) is very much different from the reality (the actual performance numbers).

The perception: crippling hurricanes, high gas prices, increasing interest rates and, so far this year, a quietly sagging stock market. Ouch!

The reality: Hurricanes? Nothing new there. Gas prices? Adjusted for inflation, the’re in the same neighborhood as 1982*. Interest rates? It could be that the rising interest rates are a positive indicator about the strength and the expansion of our economy. A quietly sagging stock market? Truth be known we’ve come to appreciate quiet markets.

Let’s take a look at some economic indicators.

  1. The Department of Commerce reported that second quarter 2005 Gross Domestic Product grew at a 3.3% annualized rate. A good rate.
  2. Housing starts rose 3.4% for September 2005 to an annual rate of 2.11 million units**. This is the fastest pace since Feburary and one of the highest rates ever.
  3. The Bureau of Labor and Statistics reported that the September 2005 unemployment rate was 5.1% (not the best we’ve ever seen, but certainly not the worst). Over the last twelve months ending in August 2005, payroll employment grew by an average of 194,000 a month and the unemployment rate has trended downward during that year.

Those of you who have been investors over the last ten,twenty, thirty or more years know that there is always an abundance of negative news. You also know how well the markets overall, and in particular your individual investments, have performed over those same periods.

We’re not saying that everything is rosy; we know that there is room for improvement. We are however, recommending that the next time you feel a little uneasy because of the current dose of bad news, call us for a closer look at reality.

Thanks for your business,
Sycamore Financial Group

*The Big Picture. Posted 8/17/05
** U.S. Department of Commerce report dated 10/19/05

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:13:34-04:00August 20th, 2005|2005 Newsletters|0 Comments

Changing Interest Rates – Spring 2005

Hello from Sycamore,

Corporate Bonds and Changing Interest Rates

Many of you own corporate bonds and recently, after receiving your monthly statements, a few of you have called to see what’s wrong with you your “fixed” investments. Sooo….we thought this may be a good time to review how most corporate bonds work and discuss how future interest rate changes may effect your bond investments in the future.

Generally speaking, bonds and other fixed rate investments guarantee the interest that you will receive and the return of your principal at some future date known as “the maturity date”. This means that if you invest $1,000 into a $1,000 bond that pays 3% interest and matures in three years, you will earn $30 per year in interest ($90 total). When the three years have passed the entity guaranteeing the return of your principal will pay to you the original $1,000 that you invested. It’s important to note here that the guarantee of the return of your investment is only as good as the entity that is making the guarantee. During the time between your purchase and the maturity date, the market value of your investment can, and most likely will, fluctuate.

Here’s an example of how that may work and why. Let’s suppose that interest rates were at 3% when you bought the above hypothetical bond. Then, during the next year, interest rates rose to 4%. Compared to the current interest rate of 4% your investment (which is still earning 3% because the interest rate is guaranteed) looks a bit puney. Because another investor buying a bond today knows that they can receive 4% by purchasing other bonds, they will not want to pay you the full maturity value ($1,000) for your bond because it pays less interest (3%). So, in our hypothetical, if you decided to sell your investment after holding it one year instead of keeping it untill the maturity date, (something that you can do with most fixed investments) you would be forced to reduce the sale price to a level that would allow the new buyer to attain a yield of 4% on their investment.

All bond purchase or sale transactions are published, so at the time that you buy or sell, your transaction would determine the current market price of your 3% bond. If your sale had taken place at a price of $850 for example, then all other investors who hold this same 3% bond would see their bond valued at $850 also. This would give them a good idea of the amount that they would receive today if they would sell their bond, but have virtuall no effect on them if they are going to keep their bond until maturity. Remember, at the maturity date, investors get the full $1,000 principal amount returned, regardless of current interest rates.

So how does this affect you? If you own bonds, or other fixed interest rate investments, in todays rising interest rate environment, your monthly statements will likely show a decline in the market value of your investments. Remember, this market value is important only if you are actually going to sell your investment prior to the maturity date. If you intend to keep your bonds untill the final maturity date, this “current market valuation” is simply FYI and when the final maturity date arrives you will realize the rate of return that you locked in when you originally purchased your bond.

If interest rates continue to rise (we think that is likely in the near future) your “market values” will probably decline some more. If interest rates reverse direction and start to decline, then you will see your “market values” begin to rise. Generally speaking, bonds with longer maturity dates will fluctuate more that shorter term bonds. Because of this and our current rising interest rate enviroment, we have been recommending that investors purchase bonds that have short (three to five years) maturity dates. Also, since your principal return is guaranteed by the company that you are investing in, we recommend that you buy only “investment quality” bonds.

We realize that these concepts are somewhat confusing, so if you have questions or would like more information give us a call or drop an e-mail.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-20T15:33:27-04:00April 28th, 2005|2005 Newsletters|0 Comments
Go to Top