Retirement & Financial Planning Report Issue Thursday, August 19, 2004 FEDweek is the largest information resource in the federal government with now over one million weekly readers.
*********************************************************** Valuable Information for the Federal Family 2004 Interactive Federal Leave Record at http://www.fedweek.com/Services/default.asp FEDweek Weekly Electronic Newsletter Go to http://www.fedweek.com to Sign Up-FREE! Brand New Federal Manager's Daily Report http://www.fedweek.com/subscribepopup.htm Job Bulletin Board Federal Job Search http://www.fedweek.com/Jobs/default.asp ********************************************************** In This Week's Issue: 1. Humdrum Half-Year 2. Plan For Your Federal Retirement Early http://fedweek.sparklist.com/t/294930880/821890/3/0/ 3. Scheduling Shelters 4. Higher Values 5. New Fares Every Week! http://fedweek.sparklist.com/t/294930880/821890/255/0/ 6. Graceful Exit 7. Staying In Focus 8. You Can Take It With You 9. The Complete Guide to Writing a Federal Resume Just Published-- Available for Immediate Shipment http://www.fedweek.com/Publications/default.asp *********************************************************** 1. Humdrum Half-Year The first half of 2004 was neither good nor bad for most investors, according to mutual fund research firm Morningstar Inc., Chicago: Domestic equity funds were up about 3.5 percent, on average. Among the major categories of stock funds, the best performance was turned in by those funds holding small-company value (bargain-priced) stocks. Taxable bond funds lost as much in principal as they paid out in interest. (Some interest rates rose, which drove down the price of bonds.) Net of these payouts and losses, the average bond fund broke even. Only a few sub-categories of funds were far from break-even. Japanese stock funds and domestic natural resources (energy) funds did the best, gaining 10-11 percent. The big loser was the category of precious metals (mainly gold) funds, which lost 19 percent after three straight years of sparkling returns. Going forward, it's impossible to know whether funds will move up, because of a surging economy, or topple after a spate of bad news. Your best bet is to start with a basic asset allocation, using different types of mutual funds. If you're relatively young and able to tolerate risks, you might hold 85 percent of your portfolio in stock funds and 15 percent in bond funds, which can provide income and reduce volatility. Investors who are more concerned about risks might want to own more bond funds while keeping, say, 35 percent in stock funds to maintain some growth potential. 2. Plan For Your Federal Retirement Early http://fedweek.sparklist.com/t/294930880/821890/3/0/ Over The Next 30 Years, the Baby-Boomers (YOU) Will Transfer to Your Heirs Over Thirty-Five Trillion Dollars! As you know, the baby-boomers are growing more mature every day and are planning for their retirement. Are you a baby-boomer? Are you prepared for your retirement and to transfer your estate to your loved ones? FEDweek has partnered with two of the most respected federal retirement and estate planning training organizations to provide federal employees with the highest quality of seminars related to your federal retirement, financial and estate planning. Below are the seminar locations through September 2004: *********************************************************** Date Aug 24-26,2004 (PBSC) Roseville MN--Radisson Hotel http://fedweek.sparklist.com/t/294930880/821890/3/0/ Date Sept 9-10 (PBSC) Oklahoma City, OK http://fedweek.sparklist.com/t/294930880/821890/3/0/ Date Sept 13-15 (NITP) Atlanta, Ga -Holiday Inn- Decatur http://fedweek.sparklist.com/t/294930880/821890/3/0/ Date Sept 28-30 (PBSC) Denver, Co. http://fedweek.sparklist.com/t/294930880/821890/3/0/ Date Sept 28-30 (NITP) Washington, DC - Washington Plaza Law Enforcement Only http://fedweek.sparklist.com/t/294930880/821890/3/0/ There are still a few seats available for these locations. *************************************************** For a complete list of seminar locations and dates through December, 2004, Go to http://fedweek.sparklist.com/t/294930880/821890/3/0/ We've also recently added additional seminars for 2004 (Even Hawaii and San Diego!!) dramatically expanding the coverage areas to include most cities throughout the entire country,with more to come. Go to http://fedweek.sparklist.com/t/294930880/821890/3/0/ to see the latest schedule. These comprehensive programs will provide the participant with valuable information about retirement planning and ways to ease the transition into retirement. The seminar speakers, all experts in their field, will challenge you to ask tough questions. These seminars are broken down into a number of components that discuss considerations necessary for planning for retirement,including: FEDERAL RETIREMENT BENEFITS THRIFT SAVINGS PLAN INSURANCE, MEDICARE AND SOCIAL SECURITY BENEFITS FINANCIAL AND TAX PLANNING ESTATE PLANNING LIFE AFTER RETIREMENT AND SECOND CAREERS For more info on these retirement planning seminars, go to http://fedweek.sparklist.com/t/294930880/821890/3/0/. Also, pass the word along to your colleagues that there will also be multi-seminar attendee discounts for employees attending from the same agency office location. Publisher's Note: All Seminar Attendees Who Register For Any Retirement Planning Seminar Will Two Valuable FEDweek Publications FREE! 3. Scheduling Shelters Which shelters should be first to get the dollars you have available for savings and investment, assuming you have children to educate? Roth IRAs. If you're eligible, put your first $3,000 per year into a Roth IRA. Once you reach age 50, the upper limit is $3,500 per year. (Your income must be less than $150,000, if you file a joint return, in order to make maximum contributions.) Funding your retirement should be a top priority. After all, you can borrow to fund expenses such as education and housing but borrowing to finance your retirement isn't easy. The more money you can keep in your Roth IRA the better because withdrawals may be tax-free. Coverdell Education Savings Accounts (ESAs). Your family can put $2,000 per student per year into these accounts and then take tax-free withdrawals to pay for schooling. 529 College Savings Plans. Any excess amounts you have to invest can go into these state-sponsored plans. Under current law, withdrawals are tax-free if they're used for higher education. When it comes time to tap these accounts, go in reverse. Tax-free withdrawals from 529 plans are scheduled to expire after 2010 so you might as well spend down those accounts, if you have kids in college by then.Tax-free withdrawals from ESAs aren't scheduled to disappear so those distributions can come after your 529 accounts are empty. After your ESAs and 529s are depleted, if you still have kids in school, should you tap the Roth IRA? Under the tax code, that's not a bad idea. You can pull out all the money you've contributed, tax-free. However, IRA withdrawals (including those from a Roth IRA) can reduce a student's eligibility for financial aid. Therefore, you might be better off borrowing money, perhaps using a home equity line of credit, to pay remaining college bills. Once your kids are winding up their college years, and financial aid no longer is an issue, you can withdraw Roth IRA contributions to pay off the loans you've taken out. 4. Higher Values Socially responsible investing (SRI) may be called opinionated investing: some individuals wish to invest in companies that share their views on what is important. SRI is a way for people to vote with their dollars. Defining SRI, though, is far from easy. From one person to another, visions of SRI will differ, perhaps dramatically. In some cases, a married couple won't agree on where their interests lie--and where their investment dollars should go. Some financial planners have clients fill out a "social questionnaire" so they can evaluate how to apply social screens. Some investors want to avoid tobacco or alcohol or gambling stocks, for example, while some don't want to invest in polluters. The degree of concern may have to be considered, too. Suppose, for example, that you are extremely concerned about nuclear power. In that case, you might avoid all stocks or bonds from utility companies that use nuclear power. On the other hand, if that issue is of weak importance to you, and you came across a potentially outstanding investment, you might consider it. Is there a cost to such feel-good financing? SRI advocates contend that SRI may actually enhance rather than diminish performance. They see economic dangers for companies caught in a scandal regarding human trafficking abuses overseas, for example, or for those not voluntarily complying with international agreements, if competitors are doing so. Although research does not provide conclusive evidence that social screens help or hurt returns, one way or the other, some investors think this a common-sense approach. If a company's management acts ethically and treats its employees fairly, it probably will have fewer fines and strikes than other companies. Over time, by this reasoning, the stock should be a better performer. SRI does not merely mean screening out unwanted investments. Beyond screening, shareholder advocacy can lead to greater transparency and more information for investors. At some companies, for example, shareholder activists have passed resolutions to replace staggered boards of directors with boards that are elected annually, for greater accountability. Ironically, this type of SRI requires that investors own rather than avoid shares of the company whose practices they desire to change. One way to get started in SRI is to visit www.idealswork.com. Visitors to that Web site identify the issues about which they feel most strongly, from "addictive products" to "women's issues." The IdealsWork search engine ranks product manufacturers relative to one another, on the selected issues. If you wish, you can change your shopping patterns (and your portfolio) accordingly. 5. New Fares Every Week! FEDweek's Newest Alliance Brings FEDweek Readers Substantial Discounts on Travel Rates http://fedweek.sparklist.com/t/294930880/821890/255/0/ FEDweek is proud to announce its newest partnership with Trading Places International to offer Fedweek subscribers discounts on travel. Trading Places International, a leading edge vacation services company with more than 30 years of experience in vacation offerings. Committed to Quality, Service and Value for all your vacation needs, Trading Places International has set up a unique and state of the art search engine for all FEDweek readers to help you find the best rates available. Here's just a few examples of what you can save on: Airfare Hotel Accommodations Car Rentals Golf Packages Cruises Last Minute Getaways And more. Here Are Just A Few Examples: ******************************************************** MEXICO: HOTEL, AIRFARE AND CAR RENTAL AND TAX'S INCLUDED! ********************************************************* Charleston SC to Cancun 8 nights $1,944 Las Angeles CA to Mazatlan 4 nights $362 per person (no car) Dallas to Acapulco 5 nights $486 per person Family Getaway's: Hotel,Airfare & Tax's included! ****************************** Denver to San Diego 4 Star Hotel 3 Days $283 per person Washington DC to Portland ME 3 Days 3 Star Hotel $201 per person Phoenix AZ to Chicago Il 4 Star Hotel Downtown 3 days $334 per person San Antonio TX to Memphis TN 4 Star Hotel 3 Days $380 per person ** Above based on two adults and two children ** Cruise's ******** 7 night Glacier Bay Inside Passage From $789 per person 7 night Spain and Corsica From $1099 per person 7 Night Tahiti From $2500 per person * Prices are subject to change and availability * It's easy, to use. Just go to http://fedweek.sparklist.com/t/294930880/821890/255/0/ look under hot deals, select your dates and pack your bags! There are 1,000's of more deals at http://fedweek.sparklist.com/t/294930880/821890/255/0/ these are just a few--give yourself the vacation that you have been dreaming about! Please feel free to pass this information on to your fellow colleagues. 6. Graceful Exit If your estate plan includes a charitable gift, make the bequest from your IRA. With this strategy, the deferred income tax can be avoided, on that part of your IRA. There are four methods you can use to make charitable bequests from your retirement plan: * Leave your IRA directly to charity. * Leave your IRA to your spouse, who'll leave it to charity at his or her death. * Leave your IRA to a trust for your spouse, with the trust principal ultimately going to charity. * Leave your IRA to a charitable remainder trust (CRT), naming the charity as the recipient of the remainder interest. Generally, outright bequests are most suitable if you are not married or if the bequest is relatively small in relation to your entire estate. For example, you might say that 5 percent of your IRA will go to charity while 95 percent goes to your spouse. With a $500,000 IRA, that would mean a $25,000 charitable bequest. 7. Staying In Focus Most funds with "focus" in their names have 30 or fewer holdings: Neuberger Berman Focus Fund, for example, owned 27 stocks, at last report. Other funds are focused or concentrated in practice, if not in name: Oakmark Select, for examples, held 20 stocks recently. By comparison, the average number of equity holdings in mutual funds range from 87 (for funds emphasizing large-company growth stocks) to 181 (small-company value funds), according to mutual fund research firm Morningstar. So-called blend funds (growth and value stocks) have even more stocks because so many index funds fall into those categories. Focused funds make larger bets on fewer companies because they invest in a manager's top 20 or 30 picks. Some focused funds have outstanding records, if they're run by excellent stock pickers. Longleaf Partners, Marsico Focus, and TCW Galileo Select Equities are other examples. However, they tend to be extremely volatile because the performance of one or two stocks can affect the portfolio. Most financial planners say that focused funds should not make up more than 15 percent of your portfolio. 8. You Can Take It With You When leaving a job one of the most important (and overlooked) issues is what to do with the money in your retirement plan. In most instances, your previous employer's retirement plan provider will be willing to let you roll your account balance into an IRA with that same provider. If you leave your funds in the old plan instead, you typically can no longer make contributions or avail yourself of on-site education and service. Rolling to an IRA has advantages. Most retirement plan providers are institutional players so they'll charge fees that may be a fraction of those of retail brokers. The investment options they offer (which are often not open to individual investors) generally have lower expense ratios. This means that less of your money will be lost to such costs. Moreover, the plan provider can oversee the performance and investment style of each fund manager so you need not worry about "style drift": finding out too late that your "value manager" has been chasing overpriced growth stocks. In addition, sticking with the same provider means that you won't have to learn a new system of tracking an account, making transfers, changing allocations, and accessing educational resources. 9. The Complete Guide to Writing a Federal Resume Just Published-- Available for Immediate Shipment Order Yours at http://www.fedweek.com/Publications/default.asp >From the Publishers of FEDweek, the federal government's largest information resource... We are proud to announce the launch of The Complete Guide to Writing a Federal Resume. This book was written specifically for you and is designed to help you meet the requirements for written materials in seeking a new federal job or advancement within the federal government. There is no longer a single, required method of applying for federal employment. In fact, most federal agencies are moving toward the resume (either paper or electronic) as the preferred method of applying for jobs. That's why we've just published The Complete Guide to Writing a Federal Resume and all current federal employees, retirees, military members and private sector professionals who are looking for a federal job need this all-inclusive guide. Note to Military Members: Many of the federal job openings at this time require security clearances. As a military member, a large percentage of you have the security clearance and the qualifications needed to fill these positions. This all-new guide will show you how to compose your resume to accentuate your strengths and experiences. Here's a partial list of the table of contents: Finding a Federal Job Should I Apply Using a Resume or an Application Form? The Federal Resume Preparing to Draft Your Resume What to Cover (and not cover) in a Resume The Designing of Your Federal Resume Your Accomplishments (including a worksheet) What if You Use an OF-612? Knowledges, Skills and Abilities (KSAs) Cover Letters and Thank You Letters Interactive Worksheets The Do's and Don't's for Federal Resume Cover Letters Contains Many Sample Federal Resumes and Cover Letters And Much More! This book is a "must have" for: All federal employees Military personnel interested in civil service careers Federal managers and supervisors Human resources professionals and federal libraries Military retirees beginning their second career with the federal government All private sector workers that wish to apply for federal government positions. Simply put, designing and writing your resume is not an easy task. You must highlight your accomplishments, qualifications, experience, etc. all while keeping it brief and easy to follow. The Complete Guide to Writing a Federal Resume will show you how to do this. It also gives a complete list of "result and action" words to use in your cover letter and resume as well as a list a frequently misspelled or misused words or phrases. "In today's competitive job market, especially the federal job market, this new interactive resume book is a must have and is guaranteed to help you, whether you are writing a new resume from scratch, making minor changes depending on the position you are applying for or just fine tuning and error checking it." Don Mace, Publisher FEDweek *********************************************************** Order it Today and Have it Shipped to You Tomorrow! Go to http://www.fedweek.com/Publications/default.asp to order online or see below for other ways to order. The Cost of The Complete Guide to Writing a Federal Resume is only $9.95 (plus s&h) and here are the ways to order it: Place Your Secure Order Online With Credit Card http://www.fedweek.com/Publications/default.asp Call or toll-free order line (888) 333-9335. We have representatives ready to take your order 24 hours per day. 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