Great Opportunity to Use a DAF

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What is a DAF you ask?

Donor Advised Funds, or DAFs, have been around for a while. The first ones were set up in the 1930s and Congress gave them formal standing in 1969. And they may be one of the most advantageous tax strategies you’ve never heard of.

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The structure is pretty simple. You set up an account with a qualified record-keeper and you fund the account with cash or securities. Like regular donations to charity, you get to take a tax deduction for the amount contributed. Then, once the account is funded, you make disbursements over time out of the fund to federally recognized charities. You can research which charities spend their money wisely on Charity Navigator.

And it's that ability, the ability to disburse funds over time and spontaneously, that really differentiate DAFs from other forms of giving.

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This has been a difficult hurricane season. Add in the recent earthquakes and other global calamities and there is a great need for donations both here in the U.S. and internationally. This is exactly the situation where DAFs can play a critical role in getting help to those who need it.

Imagine you got a big bonus two years ago and wanted to donate a large sum of money to those in need. You could have made one big gift to an organization like the Red Cross two years ago, but if you had a DAF you could make that one big gift into a DAF and then over time, give proportionally out of your fund as the need arises. You could have given a portion to an organization helping Harvey victims, then another portion to organization helping with the aftermath of hurricanes Irma, Marie and Jose and then another portion to the victims of the earthquake in Mexico, and then maybe some to your local church. You decide how and when to give.

Here's an simple example of how a DAF can work and be beneficial both from a tax and giving perspective:

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Say you bought 400 shares of a tech stock for $10 a share and it ends up going way up in value to $50 a share and you determine that it’s time to sell. Guess who’s coming for capital gains taxes? You know who. So one option is to gift some or all of the appreciated shares directly into the DAF. When you do that, you completely avoid the capital gains tax and you now have the ability to invest the money in a diversified portfolio, allow it to grow and disburse it over time. In this case let’s say you sold ½ for $10,000 and gave the other $10,000 to the DAF. Great, now you’ve got your next several years of giving all lined up and you only paid $1,600 in capital gains taxes vs. $3,200.

Everyone has a unique financial and charitable giving strategy and these accounts aren’t for everyone. Furthermore, there are state tax laws and restrictions that may make them inappropriate for your situation, so best to discuss your specific tax situation with your tax advisor or accountant, but if you would like to learn more about DAF accounts or the investment aspects of the DAF account, we’d be happy to help. 603-438-1874 or Schedule a time to chat that's convenient.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

A Funny Thing Happened After We Crushed Our Fundraising Goal!

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If there is one piece of universally accepted business advice, it may be to set goals. Not far behind would be to be sure that your goals are written, specific and measurable. And then we’d probably get to the advice about setting them high and building stretch goals -- goals that are achievable, but will be difficult to pull off.

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Personally I’m a big believer in goals and stretch goals but as an investment manager and financial adviser, I am frequently talking about managing risk, setting realistic expectations and being a prudent investor. Don’t go for the home run. Take reasonable risks, earn an appropriate return for taking those risks and generally go for slow and steady returns in a diversified portfolio.

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Perhaps true for investments, but perhaps not for charitable fundraising! Through the efforts of many great friends and our family members, we were able to raise over $7,300 for cancer research. For us and our event, it was a record haul. The annual fundraising event has grown from a few hundred dollars, to $1,000, to over $3,000 last year and then we more than doubled our donation from last year! It was a smashing success by every measure. Last week, we delivered our check, took our pictures, delivered all the thank yous and as we were talking about next year, I went into expectation setting mode and started to say things like it would still be great if we do the $3,000 again next year, just in case we can’t repeat the performance, yada, yada, yada.

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Well, the good friend who runs the event would have none of it. “Absolutely not, we have to get bigger and raise more every year! Next year, WE WILL BE BIGGER". And you know what? A funny thing happened on the way to the parking lot. Instead of talking about how to repeat the $7,000 we immediately started talking about ways to grow the event even bigger and raise even more. Stretch goals are as much about attitude as they are about execution. We started to think about how to grow rather than just protect and repeat what we had done. After a bit, it almost resembled a plan! (We'll talk about planning and execution another day) But that is exactly what happens when you set any goal, you start trying to figure out how you are going to achieve that specific goal. As we brainstormed about it more, the ideas started flowing, the excitement grew and we now believe that next year will be bigger and better than ever. Attitude started it all.

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Everyone should certainly have investing goals and a plan to achieve them, but if you haven't revisited your personal, professional, civic or charitable goals in a while, give it a try and don't be afraid to stretch, you might be surprised how achievable they really are.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Total Eclipse of Your Investments?

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Unless you are living under a rock, literally, you probably know that there is an eclipse across a wide swath of the United States today. It’s a biggie. We haven’t had one so clearly visible in the United States in a while and it looks like it will be 2024 until we’ll see another one. Solar eclipses, along with lunar and planetary eclipses are actually fairly common across the planet, with an eclipse of some celestial body or a partial eclipse generally happening a couple of times every year.

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So, cosmically speaking, we have a fair amount of astronomical obstruction and you need special glasses to see it. Similarly, there may be a total eclipse obscuring the fees in your investment portfolio and you may need the investing equivalent of eclipse glasses with a solar filter to see those high and onerous fees!

It shouldn’t be difficult to understand how much you are paying for investment management and financial advising services, but with many providers, it can be. If you feel confident that all of your fees are on your statement, you may be surprised to learn that in many cases, they aren’t.

Many fees do make it onto statements, but with some, such as deferred sales loads, you may not realize that you are paying them until after you’ve made a decision to sell. Or, you may not remember an unusually high sales load that you paid up front. On top of that, most fees in mutual funds and ETFs aren’t usually explicitly called out on statements. To understand what you are really paying, you have to go research the fees on a site like Morningstar and then add in those management fees to determine your full fee picture. You’ll also have to dig pretty deep to determine if your broker is getting any sort of kick-back or commission on the products that they invested in on your behalf.

To help you got to the bottom of your fees, here are 5 questions to ask the person or firm helping you with your investments:

1) Are you a fiduciary and do you have to act in my best interest when making investments? If not, why not?

2) When you make an investment in my account, do you receive a commission, compensation or kick-back of any kind, if so, how much and how does it work.

3) What are the management fees of the products that I’m invested in and how do those fees compare to index funds and ETF or other similar products?

4) Did I pay any up front sales loads and are there any back end sales charges if I sell something? (Ouch if they get you both coming and going...)

5) When you add all the fees that I pay (or have paid) to you and to any other investment company or product that I am invested in, are my total fees under 1%? If not, why not.

Working with a fee only advisor and a company that generally uses low cost products and individual securities, such as J. Bradford Investment Management, can help you achieve a more transparent fee structure into your portfolio.

If you’d like a free evaluation of the fees you are currently paying, we provide free portfolio reviews so everyone can understand and evaluate the fees paid to their advisor or manager. With your solar filter glasses and your portfolio review, you’ll be glad neither your retina nor your portfolio get burned.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

3 Tall Ships Takeaways

If you’ve never been to a Tall Ships event, you should endeavor to do so -- seeing these magnificent ships is quite a site to behold.

I was able to observe a couple of these ancient and also “made to look ancient” beauties sailing into Boston Harbor for a event, and a couple of things really struck me.

First, in this particular case, the Tall Ships were sailing into the Harbor against a pretty strong headwind. Many of the ships have large, square sails and as many skippers will tell you, it’s nearly impossible so sail into the wind with those sails, so they were heading in under motor power. Sailing is faster and cheaper – so whenever possible, get behind a business tailwind! Every industry has headwinds and tailwinds. We should look for those trends in our industry and get behind them. In financial services, those tailwinds are probably fiduciary advice, low cost products and transparent fees. I for one am glad that I’m not sailing into those headwinds.

Second, I was struck by the diversity of ships and the many different ports of origin that were all coming together for this event. Sure, people like to visit one amazing ship like the U.S.S. Constitution, but when ships from all over the world arrive, well, that really turns people out. Diversity is good in many business contexts, but it is especially valuable in long-term investing. Helping you build a high quality, diversified portfolio is one of the most impactful services that working with an Registered Investment Advisory firm can provide.

Lastly, it’s great to see something with such a long history endure. Sure, we sail with carbon-fiber sails and GPS technology, but many of the tools and techniques that were used to sail ships hundreds of years ago are still practical today. “Sailing by feel” is as relevant today as it was hundreds of years ago. That ability comes from years of experience and in many ways, expertise was, and still is, the coin of the realm. In whatever you do, become an expert.

If you would like to meet with an advisor to discuss where your financial ship is sailing, we would love to talk to you and help you captain your way to financial security.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Confused by the “Covfefe” Tweet? Try understanding the Fiduciary Rule.

Maybe it was spell check gone wrong, maybe he was just too quick to hit send or maybe it was just another idea on how to stoke the flames of the buzz machine. Whatever the reason, yet another POTUS Tweet has captured the attention of the nonstop media and news cycle. It almost certainly won’t be the last.

We may never know what he intended, but there are actually many things coming out of Washington that do merit some paying attention to.

One such item worthy of a few brain cells is the Fiduciary Rule, which is now scheduled to go into effect on June 9th, 2017. It’s quite possible that there may be twists and turns along the way, but holding financial advisors to the fiduciary standard is likely a long term trend that is here to stay.

Most simply, someone acting to the fiduciary standard must give advice and take action solely in your best interest. Practically speaking that means that I cannot recommend products and services to you so that I can draw a high commission, win a sales contest, meet a corporate profit directive or enjoy a lavish perk. Fiduciary advice has to be in your best interest.

It is surprising to many people to learn that the person giving them advice or selling them a product does not necessarily need to meet the fiduciary standard. Which to many, seems crazy. Why shouldn’t the person who you have entrusted with your life savings, do everything in your best interest? They should right?

And many in our Federal Government regulatory agencies also believe that financial advisors should act and be held to the Fiduciary standard. So on June 9th, a set of rules and guidelines will go into place for advisors helping individuals with retirement accounts, such as 401(k)s , ROTHs and IRAs. Those areas will have some amount of fiduciary protection.

Over time, many believe that all financial advice will eventually need to be given at, and held to, the fiduciary standard. In the meantime, you can ask your advisor if some or all of their business operates to the fiduciary standard, and if not, why not. You may be satisfied with the answer, you may not.

As you may have guessed, J. Bradford Investment Management embraces and operates to the fiduciary standard. We are a fee only practice and we do not sell any products on commission. Our recommendations are an unbiased view of our professional judgment.

If you would like help unpacking the meaning of “Covfefe”, try Buzzfeed. If you would like help unpacking the commissions, hidden fees and other potential pitfalls in your portfolio, please schedule time with us, we would be happy to conduct a free portfolio review.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

 

Your Retirement Budget is Going to be OK, Probably.

That doesn't sound like a very good answer, but it isn’t as bad of an answer as you might think.

Many couples and individuals preparing for retirement understand and appreciate that they have to build a budget for retirement. But with so many different variables, it can be hard to predict if your money will really last and if you will be able to afford the budget that you built for yourself. So even if the answer is “probably”, that can help establish some peace of mind.

The process of budgeting for retirement and planning how to spend down retirement savings can be daunting. So, here are a few suggestions to help you take control of the process, maintain the lifestyle that you’ll establish for yourself and enjoy financial security.

First, I strongly recommend to my clients that they spend a year “practicing” or “test driving” various budgets and lifestyles to ensure that they really know what they are signing up for. Many retirement planning tools use 70% or even 60% of pre-retirement income as the planned level of spending in retirement. That might be realistic for some, but maybe not. And while using such a low number in the planning process will help ensure your retirement assets last longer, it may not be sufficient to support other goals and ambitions you have for retirement. The longer you can sustain and feel comfortable with lower levels of spending, the more confident you can be using them in retirement planning tools.

Second, speaking of planning, as you sit down with an advisor or endeavor to plan out your retirement finances on your own, be sure that the tool you are using is enabled for Monte Carlo simulations. Rather than giving you a point estimate, Monte Carlo gives you a range of outcomes and will give you the probability that your retirement assets will last. Be sure the tool uses your level of spending and risk in your portfolio as inputs. No one knows exactly what’s going to happen in the investment markets. But what if today starts the worst 15-year stock market stretch in history? Will your assets last? Monte Carlo can help answer that question, and less dire scenarios too.

Third, once you have a comfortable level of spending and have found a great tool to analyze everything, take a big step back and make sure that those budget expectations are reasonable.

Two areas in particular: Many couples find that they have underestimated their medical expenses and medical insurance costs. Fidelity Investments estimates that a couple aged 65, retiring today will need $260,000 to cover health care costs in retirement. Is that what you’ve budgeted?

The other big area that is sometimes overlooked is inflation. The cost of everything you buy is going to go up over time and your income may not keep pace. It’s important to account for and factor in some level of increasing costs so you can maintain your lifestyle.

Fourth and lastly, consider the potential role of annuities in your portfolio. As a fee only, fiduciary advisor, we do not sell or promote any products on commission, including annuities. We always work in the best interests of our clients. Given the low assumed interest rate most annuity providers use and the ability to achieve similar results at a lower cost, we generally don’t recommend annuities. However, what happens if you go through all this planning and budgeting and build a fantastic plan that shows a high likelihood of your assets not running out based on the life expectancy of you and your spouse? Well, that’s a great start, but if you are given the gift of a long life? Don’t you want to make sure you have enough money to last as long as you live? If you plan for a normal life expectancy and live longer than expected, you may be exposed to some risk. A longevity annuity that kicks in after say age 85 is a good way to help protect your lifestyle in those very golden years.

Those four pre-retirement focus areas certainly aren’t comprehensive and every individual has circumstances that are unique to their situation that need to be planned around and accounted for. From Social Security claiming strategies to Long Term Care insurance, to Donor Advised Funds for charitable giving, there is a lot to consider. There are also so many different tools and calculators on-line out there that trying to sort it all out can be overwhelming. So take it slow and tackle on issue at and time.

If you have questions on any aspect of your retirement budget or pre-retirement financial planning or would like suggestions on the tools we use and recommend, just reach out, we’d be happy to help.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

Make Your IRA Contribution or Get Forcibly Dragged Out of Our Office!

Pretty outrageous right?

By just about any measure, the United handling of their displaced crew and a seated passenger was an unmitigated disaster. I was torqued off enough about the situation to write letters to my senators asking for a better airline passenger bill of rights. What's in place now barely qualifies as “rights” in any respect, but I'll leave it to the airline travel warriors to blog about those changes. I have three observations that we can all learn from.

It’s true that businesses generally run well with predictable, structured routines with clear rules for every employee to follow. But every business should occasionally take a big step back and look at the path that they are on and what they are doing and how they are operating.

Businesses should ask, “Why are we operating this way” and “does it really makes sense for us to continue to operate this way”? Just because you have been displacing passengers for decades to accommodate your operations and just because you have a very clear corporate policy on how to do it and just because there are federal rules that support what you are doing, doesn't mean that you should. It's amazing how far away from normal, reasonable even humane treatment businesses can stray. Business can avoid that problem by periodically doing a strategic review and having more junior associates, or even better, customers, give the feedback and assessment.

Many companies in the financial services industry are adopting the fiduciary standard for their business even though they might not be required to do so. I suspect many of those companies that are did just what I described above. They took a big step back and said something like – you know what, people are trusting us with their hard earned money and we have a genuine interest to help them – why wouldn't we want to embrace a standard that says we need to put our clients' best interest above ours? It is so clear and so simple, yet the current routines and enabling regulations can obscure even the most common sense approaches.

Next, a truly customer centric company would never have a problem even remotely close to the United disaster. If you truly have your customers at the center of all that you do, they will guide you to successful business strategies.

A genuine engagement with your customers will help prevent a company from going so far off the rails, as happened here. An activity as simple as listening more can be very enlightening. Have you ever read an airline contract of carriage? Imagine a focus group of customers gathering to discuss your equivalent of a contract of carriage?  Are they going to be delighted and amazed at how fairly and reasonably they are being treated? Customer centric organizations would embrace that feedback and make substantive change.

And you know what else they would do? Rather than give passengers some standard peace offering of a free flight or refund, they would ask each passenger individually what they could do to regain their trust and compensate them for their inconvenience. And then do it.

Lastly, organizations that don’t empower their lowest level employees to stop a disaster like this should expect more disasters. What is your equivalent of the red cord on the assembly line that any employee can pull and stop the whole assembly line process?

Constantly managing with top down directives and fostering a culture of “shut up and row” is great for the military, and terrible for just about every customer facing business. 

I’m not sure what’s worse -- that poor doctor getting pulled off that flight in such a disturbing manner OR that no one involved in the incident said to themselves, wait a minute, this is crazy, let’s pause for a second and work this out. It appears that they did a phenomenal job at following orders from above and following established procedures. Which of those two axes does your organization excel at?

In addition to being great business lessons, these are great personal lessons too. We should all take a big step back from what we are doing and ask ourselves in our personal or family life, if what we are doing feels right and makes sense. We should all listen more and we should all give up just a bit of the command and control life we’ve built and see what happens when we empower those around us.

At J. Bradford Investment Management we take investments and financial planning very seriously, but we also strive to learn about our customers as people. We want to know what drives you. We want to understand your values. We want to help you get your money working as hard for you as you work to earn it. Let’s collaborate and I promise I won’t have you dragged out of our office if you don't make your IRA contribution this year.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

Go Look for This Information on Your Corporate Website

Somewhere on your corporate website, there is likely a page or section that lists of all the benefits that your employer provides – everything from medical coverage options to paid time off to matching policies for non profit donations. April 3rd was National Employee Benefits Day and if you missed the opportunity on the 3rd, today is the perfect day to review all those benefits and make sure that you are maximizing their impact to you, your family and your community.

Of course, all of your benefits may not all be listed in one convenient place, and even if they are, it can be difficult and frustrating to understand how they work, how to choose the best option, and how to get the most out of them. Still, I encourage everyone I work with to spend some time exploring and researching their benefits and bring any questions, issues or concerns to me. I've found that it's definitely worth the time to review them. Why not be sure you are taking full advantage of all your employer is offering you?

Maybe your HSA medical plan is a better deal that it seems? Maybe there specific benefits available to you after certain years' of service or a certain age? You might even find that you have benefits, like maybe a free gym membership or a deal with a local vendor, that might be worth taking advantage of. You've probably been so busy with your job that you may be surprised to learn what your company actually offers. So just take the time now and do it.

Benefits can be a complicated beast, and despite many efforts to simplify and streamline benefit plans so that employees aren't overwhelmed, many benefits departments come up short. Two professional organizations that are trying to help employers stay on the forefront of benefit plan design are the International Foundation of Employee Benefit Plans and their sister organization the International Society of Certified Employee Benefits Specialists. Individuals with the CEBS designation have completed a rigorous course of study and many have specialties that can help ensure that any benefit plans, from the simple to the complex, are implemented in a thoughtful, strategic, compliant way. Individuals with the CEBS designation may also be in a position to help individuals understand their benefits from the perspective of the plan sponsor which can sometimes be helpful to individuals in deciding which plans to choose and how to get the most out of the choices.

At J. Bradford Investment Management, our primary focus is on financial wellness, but we also look at our clients' situations holistically and that often means some assessment of employee benefits or working with employers on seminars to help employees make good choices in their 401(k)s and 403(b)s.

If you have money questions, benefits questions or are simply interested in hearing more about the CEBS designation, just give us a call or reach out via Contact Us.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

This is Probably Why You Shouldn’t Ask Your Friend for 401(k) Advice.

Most of us have great friends and co-workers who we rely on for help, advice and insight.

Elle Mills recently asked her tattoo artist friend Tavian to give her a great first tattoo. He ended up giving her a tattoo of a heart with his Twitter handle?!?

Rather unfortunate. 10 minutes of fame can’t be worth that price.

In any event, just as it was a marginal decision for Elle to turn over the entire process of her first tattoo to her friend, it would be just as bad of an idea to ask Tavian how she should invest her 401(k). And not just because he probably shouldn’t be trusted.

If you are picking your 401(k) or 403(b) investment choices by asking your friends and co-workers, you’re not alone. It is a very common strategy and clients report to me all the time that they simply “asked an older person in the office”.

Here are three reasons why that isn’t a great approach:

1)    Even though it may seem like many aspects of your situation are the same – you both work in the same department and for the same employer, you are both saving for retirement and you both don’t pay a ton of attention to the stock market, your situations are probably more different than you think. Understanding your unique circumstances and risk tolerance is a critical step in understanding how you should invest your 401(k) or any assets.

2)    It’s hard to measure, validate and substantiate any claims that “my portfolio has done pretty awesome”. It very well may have had a great one or two year run, but that could actually have been due to luck. We also have to consider “great” compared to what. A great bond fund will look very different than a great international equity fund. And just because a fund has done great in the past, doesn’t mean it will be great in the future.

Making choices where you don’t end up with a diversified portfolio aligned to your level of risk will generally mean poorer long-term outcomes.

3)    Many of us are influenced by the forces of behavioral economics:

> We like to have the comfort of knowing that we are doing what others are doing – a group mentality.

> We have the illusion of spreading risk by deciding to invest 10% in each of the 10 fund choices available.

> Being overconfident in our company stock.

> Just procrastinating and leaving all our investments in cash.

> Knowing you shouldn’t ask your friends, but picking your funds the way you pick your NCAA basketball bracket.

All of these forces, and many others, conspire against us and our attempts at making good financial decisions. You really have to have a thoughtful and disciplined plan to achieve the best long-term outcomes.

We have some step-by-step tips in our 5 Ways to pick your 401(k) or 403(b) differently than your basketball bracket, or, if you would like professional management of your 401(k) or 403(b), please schedule a free consultation or give us a call.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Really?!? TurboTax Says I can’t take my IRA deduction because...

Here we are folks! It’s tax season and tax preparers, financial professionals and individual tax warriors across the country are furiously gathering and entering data into their computers and answering questions in TurboTax to get everything wrapped up by the tax deadline.

Thanks to the usual tax day falling on a weekend and Emancipation Day in Washington DC, this year’s deadline is Tuesday April 18th 2017. If you enter your data correctly, TurboTax is generally pretty good about making the correct tax calculations and explaining the various options and implications of your tax situation.

One area where TurboTax can come back with answers that taxpayers aren’t expecting is in regard to IRAs, and it is often to tell you that your IRA deduction isn’t allowed or isn’t deductible. That's typically bad news! There are many rules to keep track of for IRAs but two of the most basic rules can trip you up at tax time.

First, to take a deduction, you must have earned income (at least the amount of the deduction). That means that if your income comes from savings, dividends and investments, your income doesn’t qualify. This can happen to individuals who may have retired on the early side and no longer have wage income, but aren’t 70 1/2 yet and would still like to make contributions to take advantage of the favorable tax treatment.

If you find yourself in this “ineligible to contribute” situation, your tax software should trigger a warning and you’ll have to take action. You’ll have to take the money that you contributed out of the IRA by the tax deadline and you’ll owe a small penalty on the earnings. And if you don’t get it out by the deadline the penalty rises pretty quickly, so best to just try and avoid the situation altogether. So if you don’t have earned income, or a very unique situation where there is an exception, you’ll have to forgo the contribution.

A second surprise that some taxpayers encounter is that there is an income limit to be eligible to make a contribution to a ROTH IRA and an income limit to be eligible to take a tax deduction for a Traditional IRA. The charts here show the income thresholds and phase outs for the different account types and filing status for 2017.

With income limits, it can be difficult to predict if your income will be over or under the cap until the year is over. Which is why it’s a nice benefit to be able make a contribution for the prior year (e.g. 2016) up and until the tax deadline of the current year (e.g. 2017). That way you can evaluate the options, see where your income ends up, and make the choice that best suits your situation and goals.

That still leaves you with the age-old question, which is better, a ROTH IRA or a Traditional IRA and should you consider a strategy such as making a non-deductible traditional IRA contribution?

The general rule of thumb is that if you have a longer time horizon for the investment and you expect to be in a lower tax bracket when you retire, ROTH is better. But time horizons and tax brackets over long periods of time can be very hard to predict, so going with a hybrid strategy – some invested in each type of account – is also a viable strategy.

If you have investment or tax investment related questions or would like to discuss your specific situation and get some help determining what is the best option for you, we’d be happy to help. Give us a call or use the big blue button at the top of the page to schedule an appointment.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Wondering about a strong vs. weak dollar at 3am?


In the interest of not spreading fake news and unsubstantiated claims, let’s just imagine for a moment that as reported by some sources, President Trump was in fact pondering various economic issues facing the country at 3am and was actually curious – Is a strong dollar good or bad for the U.S. economy? Actually Mr. President, that’s a great question.

Forget that it’s 3am, forget that he called his National Security Advisor, not an economist or a Charted Financial Analyst, and forget that in a discussion with the Wall Street Journal he made mention of the impact of the strong dollar on our ability to compete internationally. Let’s forget all of the politics and just look at the question posed through an economic lens.

Is a strong dollar good or bad for the U.S. economy?


First, let’s work through an example of a strong dollar using wine as an example.

Imagine that you had a great bottle of French Bordeaux wine on your honeymoon in Paris and you’d like a bottle of it to celebrate an anniversary back in the States. Let’s say that that bottle of French Bordeaux wine costs €50 Euro

In the summer of 2008 on your one year anniversary the exchange rate was:

 $1 Dollar for €.667 Euro

So, that €50 Euro bottle of wine cost $75 (€50 * $1 / € .667)

Now here we are in February of 2017 and on your ten year anniversary the exchange rate is:

$1 Dollar for €.940 Euro.

The dollar is stronger, it has appreciated, your dollar buys more Euros than it used to.

So, say you want to celebrate with that same lovely bottle of French Bordeaux.

OK, that €50 Euro bottle of wine now cost $53.19 (€50 * $1/€ .94)

This is what it means for the dollar to strengthen. A strong dollar makes imports cheaper.

Did the Bordeaux maker get less money somehow? No, he still got his €50 Euro in each case, but the American consumer who bought it paid far less money for the exact same product because of the exchange rate difference.


So one thing that we can say definitively is that when the dollar strengthens, imported products, like French wine, electronics from Asia and cars from Germany are cheaper for American consumers. That’s good for consumers of imports and it makes our dollar go farther. Similarly, American businesses that use imports as inputs to their manufacturing process have lower costs when the dollar strengthens.

But, on the flip side, the opposite is true. That Frenchmen who is tired of his local Bordeaux and wants a California Cabernet isn’t as happy. His $50 bottle of California Cabernet went from Euro €25 to Euro €47. And again there was no impact to the producer, our winemaker in California got the same $50 in both cases.

Similarly, other goods and services foreigners buy that are imported from America from Levi’s to Air Jordan’s to John Deere tractors to Boeing planes are all more expensive. So as the President correctly pointed out, a strong dollar makes our products more expensive in foreign markets and that in turn generally makes our companies less competitive in the global marketplace. If our companies are less competitive, they hire fewer Americans and they invest less in R&D, which further constricts our economy.

So if your policy is to try and increase U.S. manufacturing jobs, you probably actually want a weak dollar so the goods we export are more attractive to foreigners, not less.

But then it gets complicated because after we look at the first order impacts, there are many other forces and factors, such as interest rates, trade imbalances, reserve currency speculation and even expected inflation that can all come into play and either support or alter the attractiveness of a strong dollar.

Suppose you have a strong dollar, but you feel it’s strong enough at the moment, but you’d also like to raise interest rates. Raising interest rates will likely increase demand for dollars and strengthen the currency even more. And that’s the crux of economics; there are always 2nd, 3rd and 4th order impacts and considerations that may not necessarily be consistent with your original intent. And that’s even assuming that the economists agree on what will happen in each of the scenarios.

So if you’re planning a big foreign vacation or have your eyes on a foreign automobile, you want a strong dollar. If you want U.S. companies to be as competitive as possible in a global marketplace, a weak dollar is probably better.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

Investing Memes Explained

There's just no escaping it, people like internet memes?!?

And apparently, they really like investing memes as explained by J. Bradford Investment Management!! This is an edited re-post from a prior blog.

Type "investing memes" into Google and voila, there we are on page 1!

If we can explain memes, imagine what other complicated financial matters we can help explain and solve!

We also do pretty well on Google for more serious searches. If you search for a "Nashua investment manager", there we are! Yeah us!

The effort that businesses of all sizes put into Search Engine Optimization to get onto page 1 of Google and Yahoo search results is enormous and we're really proud our content is resonating.

So, we've added some new investing memes, and new explanations, because really, investing memes can get a chuckle out of accountants and financial advisors, but the rest of you are probably just shaking your collective heads...

Let's start with one of the originals...

Now, as an investment advisor AND a Star Wars fan, I find this pretty darn funny.

But I suspect many people don't get the full reference. Most people probably do remember the famous scene in Return of the Jedi where Admiral Ackbar leads his troops into the Emperor's trap as Luke watches from the deck of the Imperial Star Destroyer with his father in the background. When the Admiral discovers their surprise attack is not a surprise, he utters the famous line "It's a trap!"

But what the heck is EBITA and why is this funny?

EBITDA is an accounting term that stands for Earnings Before Interest, Tax, Depreciation and Amortization. Which is a fancy way of saying revenue minus operating expenses. It's a figure that many believe represents the core profits of a company, a true figure of profitability. Revenue minus basic expenses, it's simple and elegant. There are no adjustments (or some may say manipulations) that can come into the EBITDA.

And that’s the trap. It seems like because those possible manipulations and adjustments are EXCLUDED, we are lulled into using EBITDA as a virtuous measure of profitability. In many cases, yes, that’s true, but there are still many ways EBITDA can be manipulated that financial analysts need to consider. As analysts, we know that, but those that don’t, fall into the trap...


Here’s another one:

I chuckle here too.

This refers to the quest all investors and investment professionals are on to determine when a stock, stock market index or other investment is at the very lowest point in its valuation cycle. In some cases, the bottom or the lowest price of a stock is the price you’d like to buy the investment if you think it will subsequently rise in price. Finding that price is very elusive and even with highly sophisticated tools and analytics, the best investment analysts are often wrong.

This meme is funny because we know how hard it is to analyze and determine when a stock or index has hit bottom and we all likely regret times we’ve been wrong trying to time the market.

In most cases, investors are better off not trying to time the market. The most prudent strategy is often pursuing an approach of dollar cost averaging and holding a diversified portfolio that is periodically rebalanced.


If we're going to hit Star Wars, we should hit Star Trek too...

Value investing generally refers to buying stocks that are currently out of favor in the market, hoping and predicting that they will rebound. We've all heard the saying, "buy low, sell high". But much like calling the bottom, determining when a stock is truly a value and when it's on a permanent downward slide is difficult. This is why value investing can at times look very much like the scenario described and the people doing it without skill, well, the meme is spot on.


Finally, we have our obligatory investing meme with a pet. This one’s a little more straightforward. I’m of to a tennis lesson myself right now, we'll see how my rate of return compares to Fido.

Do you need something explained? We'd love to chat, answer questions or discuss any financial matters or topics in this post.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

 

The Best Performing Asset Class of 2017...

Will be known on December 31st, and probably not a day before.

Now, there is a big difference between knowing for sure what will happen and making forecasts and projections to help determine what is likely to happen. The problem is that it can be hard to tell what an article, story or sales pitch is really saying.

As everyone is well aware, there is no shortage of opinions these days and the investment world is no different. We see everything from full blown uninformed speculation on how unfolding economic and political events may impact the markets, to thoughtful and careful analysis to gain insights and build expectations to which asset classes we think will likely perform better than others. As with many things, some predictions are better than others, and at the end of the day, the market speaks and often moves in unexpected and unanticipated ways.

That unpredictability and inability to precisely determine the direction of the market is one of the strongest cases for diversification. Buy a little of everything and you'll get a nice blended average in the long run. Many mutual funds and exchange traded funds use this exact strategy. It is a very reasonable approach.

There have been many attempts to determine patterns in asset class returns over time, but few predictable reliable patterns emerge. Here is a grid of returns of some popular asset classes over the past 16 years. Do you see a pattern? Please let me know if you do. :-)

The point is that even though we can be fairly confident about some aspects of the economy and markets – such as interest rates rising in the short to medium term, we can't be 100% sure. We also don't know the magnitude or the impact of other factors, such as inflation.

So what do you do?

For our money and our client's money, we use our best judgment about what is most likely to happen and then align your investments with your willingness and ability to take risk. We invest for the long term. The process we use is personalized and updated periodically. Once you've built a diversified portfolio aligned to your risk tolerance, you can generally expect less volatility and you can confidently say that you've participated in that hot sector, whatever it may be and whenever it may be.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

Look At All Those People Protesting High Fees!

It’s great to see so many protesters in Washington D.C. protesting the high fees charged in the financial services industry!

Or, I suppose they may be there protesting something else...

And sure, protesting high fees in your 401(k) or with your advisor is probably pretty low on the list of lamentations under protest these days, but, it’s actually worth paying some serious attention to.

There is a great calculator on the Vanguard website where you can model how big of an impact fees can have on your return, particularly over long periods of time. You can access a link to that calculator and other great tools and calculators from 3rd party providers on our External Tools Page.

Here’s the bottom line. If you model a pretty typical managed account and you have average fund fees of say 1%, and then a 1% wrap fee on top of that, you’re looking at a 2% total fee. If you model that fee over 25 years at an average return of 6%, you can see the net accumulated lost returns is 43%! It’s actually pretty shocking.

That’s a lot of your pie that you’ve turned over to your investment manager. Now, if they were able to earn above average, market exceeding returns over time, and also provide other unique or value added services that are needed and reasonable to pay for, then you may assess that it was worth it.

However, many studies have shown that consistent, market-beating performance over time is very difficult to achieve and for most, many common financial planning and analysis services can be obtained through lower cost or fixed rate mechanisms.

OK, so low fees are important. Anything else? Yes, plenty, but it can be hard to keep all of the advice, tips, tricks and recommendations straight.

We’ve got a nice chart that summarizes seven of them, but at all of our workshops and seminars, we typically stress two key points:

·      Ask if the person giving you advice is a fiduciary, and if not, why not.

·      Ask how they are paid and how they keep fees low for core services.

The answers to those questions will either give you some pause or give you some comfort that your advisor is on your side.

There’s also an excellent and humorous tirade by John Oliver on 401(k) fees that’s worth watching. You can find the link to that video on our Video Series Page.

 

If you would like an assessment of your portfolio and the fees you are paying, we can provide a free consultation to give you the insight and transparency that can be hard to determine on your own. We can also provide no obligation alternatives.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

 

One Big 2016 Tax Strategy That's Still Available

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Happy New Year.

After eating, drinking and relaxing your way through the holiday, it's time to put all that procrastination aside and take action! Let's start with taxes.

Exceeeeeeeeeeept – all that tax advice that you ignored in November and December is no longer valid and you are no longer able to take advantage of most of the tax minimization and tax loss harvesting strategies that expired on December 31st. OK, so remember that for next year.

What you certainly can do at this point in the year is some planning. Make sure your tax records are all in order, ensure you've made any estimated tax payments, review any tax law changes and ensure you've got the right software and tax forms – all those steps make good sense.

However, there is one tax move that is still available if you didn't get around to it by December 31st – you can still make an IRA contribution for 2016 all the way through the April 17th tax filing deadline, and potentially later if you are a small business and file for an extension.

IRAs can be complicated, but they generally do offer investors a very advantageous way to save for retirement. There are many different types of IRAs with many rules and qualifiers, so you have to be careful on which account you open, how much you invest into the account and then what you invest in once you've deposited the money.

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Here are some of the basics:

Traditional IRA – accounts generally for individuals without access to a 401(k) or other retirement plan at work. Money goes in pre-tax (unless you meet an income threshold), grows tax-deferred and is taxed when you withdrawal it. The big advantage here is the tax deferred growth.

Roth IRA – accounts generally for those with longer time horizons. There is no tax deduction for ROTH contributions. So, the money goes in after tax, but it too grows tax deferred and the big advantage of a ROTH is that it comes out tax-free. The ROTH also has income limits, which impact who can contribute.

SEP IRA and SIMPLE IRA – accounts generally for small business owners. These two structures allow for contributions higher than the $5,500 and $1,000 catch up individual limits, but they do have threshold and restrictive provisions that small business owners should be aware of and understand.

If you'd like to learn more or discuss your specific situation, we are available for free consultations. We also have a handy PDF guide that discusses some of the limits and restrictions of each type of IRA.

Once your money has been deposited into your IRA account, it is important to ensure that your investments align with the level of risk that you're willing and able to take. You can also read more about diversification, asset allocation and getting advice from a fiduciary on our Education page.

 

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

Job Hunting Today?

Job Hunting Today?

A guest blog by Rachael Bohac

It’s been reported the first Wednesday in January is the biggest job hunting day of the year.  We can all understand why:  We just had several great days or weeks off for the holidays and now it’s back to the grind.  The terrible boss, the long days, the thankless projects, the menial raise.  The glimmer of hope that somewhere out there on the world-wide-web is a new position that will be the glass slipper your LinkedIn profile has been crafted for, is all the motivation you need to hit up Indeed and Monster.  Heck, maybe even the local newspaper

So, once you’ve properly caffeinated and answered the critical emails, you sneak a peek to see if the grass might be greener.  The day-dreaming about that big raise is brimming with enough optimism to get you through the dark, dreary January hangover of Christmas.

After the requisite resume submissions to the corporate black hole, a couple of phone screens and finally a face to face interview, you land that gig.  Sweet.  Now what to do with that the bursting bank account?  If you’re fortunate enough to have your credit in order, investing in a home is historically a move that leads to long term wealth.  Furthermore, there are several additional factors developing in 2017 that may increase the probability of that being true, not only for wealth creation, but your internal rate of return (IRR) for that cash during the period of time in which you own the property.  In plain English, the IRR is the return you get from using your new, hard earned, direct deposited, salary to cover your mortgage payments, taxes and insurance instead of rent paid to a landlord. This flow can create a significant return on your investment, especially when you sprinkle in the appreciation rate and tax deductions.

Yay! Sounds good, so let’s buy a house or two since mortgage interest rates are still historically low and home prices have modulated since the bubble burst in 2008. But you heard interest rates “are going up”.  Yes, that is true on a micro-level, but the buying power of the low interest rates is still undeniably strong.  For example, if people were getting 4% last year, but today you’d have to stomach the atrocity of a 4.5% fixed rate for 30 gridlocked years, that is a difference of $30 whole American dollars per month for a $100,000 of the loan. (Wait! Don’t fret, because you still have the ellusive IRR on your side).

Now chances are if you are looking to trade up your job, you might also be looking to trade up a home you already live in.  If you purchased a home a few years ago, you can likely roll that equity into the new place when you sell that home in the spring market.  The stress of selling your first house can be overwhelming, but 2017 has your back, because there are shockingly low inventory levels of homes for sale on the market, making every new listing get that much more attention and sell that much quicker. 

Next, you’ll tell me you’ve got no equity, but you still want that bigger house because your new job helps you afford it.  Seriously, no problem.  Despite stricter mortgage lending practices since the great recession, there remains several high loan-to-value (LTV) mortgage programs ranging from 97 – 103% of the purchase price to help you into your dream home.  

2017 is the perfect storm of good news for those dreaming of the first place to hang their hat or the place they can install their Griswold-Christmas-Bonus-Inground-Pool.  Now get out there and get those resume’s flying because it all starts by ditching that terrible boss.

Cheers to a prosperous 2017.

About Rachael Bohac

Rachael Bohac is a licensed Realtor with Keller Williams Realty Metropolitan out of Bedford, NH.  She’s been licensed since 2005 in the residential market and has additional specialties in multi-family, investment properties and financing solutions. With a M.S. in Marketing she brings an intense and comprehensive level of marketing to her listing clients.

www.RachNH.com

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Jiminy Crickets! Is Anything NOT Stressful Anymore?

And of course, we’ve got the biggie, financial stress. Ugggh, don’t remind me, right?

The good news is that most of the time, with a modest amount of planning, financial stress can be greatly reduced. Why is that?

It’s because good financial planning can help reduce and potentially even eliminate the fears and misunderstandings we may have about our finances. You probably have a general sense of whether you are ahead or behind with your retirement planning or college planning, but:

  • Do you know how far ahead or behind you are?
  • Do you how you are doing compared to your peers?
  • Do you know what will happen to your portfolio if there is a correction in the market?
  • How exposed or protected are you?
  • Is your money really going to last or is there a risk you will run out?

All of those questions can be answered and addressed through financial planning.

Most people are stressed because they don’t really know the answers to their financial worries and many people don’t want to ask because they don’t really want to hear the answer. OK. But in many cases, the answers and results may be better than you thought and you may be doing better than you think.

Now, to be fair, the answers could also be worse that you expected, which probably isn’t going to decrease your stress, BUT formulating and executing an action plan to get back on track, might help reduce your stress. Many people are relieved just knowing that very few people have lived their financial lives perfectly.

For most people, the certainty of knowing the situation they are in and having an action plan to address it is enough to reduce and minimize their stress.

Balancing living now, with saving for college, saving for retirement and saving for other life priorities and wanting to be responsible with your spending isn’t easy. There are many different strategies and approaches individuals can use for their specific situation and a little financial planning can help uncover them.

So hit those holiday parties, enjoy the season and post those pictures on Facebook, but at some point spend some time with your advisor doing some deeper financial planning or get started yourself with some on-line tools. Some financial stress relief may be closer than you think.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

 

 

 

What's Going on in the World, Economically.

Periodically, J. Bradford Investment Management publishes updated commentary, research, analysis and economic viewpoints. This work represents the views, insights and analysis of Jason Haviland, President and Chief Investment Officer at J. Bradford Investment Management.

We'll dig into all the details below, but here is a summary:

The disclosures at the bottom of this blog post are particularly relevant for this material. Let us know if you have any questions.

O.K. Let's jump in!

First, let's look at our domestic stock markets. The Dow Jones Industrial Average, the S&P 500 and the NASDAQ are all at or near record highs and have generally been on an upward trend for nearly eight years.

Assuming no major swings, March 9th 2017 will be the eighth year anniversary of this bull market. If you have a 401(k) and have been invested for the last decade, it’s been quite a ride. If you stayed the course, you saw your balance take quite a hit in 2008, but then it very likely came back rather nicely with the upswing in markets across the globe.

And if you're relatively young and started investing anytime after the Spring of 2009, you've only ever seen your balance climb steadily upward. Markets have been very positive for many years, but markets do not move forever upward.

So the big question on everyone’s mind is: Will the U.S. stock market climb higher yet? It might. And if it does, it will likely be driven by some combination of:

1.   The health of the U.S. economy

2.   A continued rise in corporate earnings

3.   Continued historically low interest rates

4.   The attractiveness of the U.S. market compared to other developed markets.

Let's look at how these factors may impact the market and the likelihood that their impact will be a positive one.

Let’s start with the first two factors, the U.S. economy as measured by GDP and corporate earnings. These two elements have been very impactful historically in driving stock market performance.

I can absolutely envision a scenario where the U.S. economy continues to grow and potentially even breaks out of the slow growth cycle that it has been in for many years. Some combination of the momentum already underway in the economy and pro growth policies in Washington could set the stage for this to happen.

But the other side of that coin, limits on growth (such as restrictions to selling in international markets) and weakness or very tepid growth in the U.S. economy, are not unrealistic outcomes either. There is some risk that the incoming administration may take an action with unintended consequences that negatively impacts growth and earnings in certain sectors or even across the board.

Investment markets are often driven by expectations of what will happen in the future, and so far, the stock market believes that the grass is greener and that a negative, economic contraction scenario won't happen, which is probably a good thing. We'll be watching this closely.

And it's also possible that we could see more of what we've seen for the last several years. That is, things are generally pretty good for most, but some sectors that don’t perform well, particularly those in political cross hairs. Overall, we may see conditions not really deteriorating, but not really improving either. Things are just good.

Whatever happens, we believe that it is important to assess if there is a commensurate and appropriate reaction and absorption of that information in the stock market, which gets reflected in pricing. If the market is priced as if we are on a high growth path (which you could argue that it is now), but we are actually on a slow growth, neutral or downward path, that could be problematic. We're watching that balance closely.

Next, item #3, our low interest rate environment. We have had low, very low, zero and in some parts of the world, negative interest rates for an extended period of time. Such a long period in this low interest rate environment is relatively unprecedented in financial history. So, when we look at historical valuation measures for insight, the interest rate regime at the time of the analysis is an important factor for comparison. One problem we have now is that we don't have many equivalent historicalperiods like the one we are in now to analyze for comparison.

So how might this low interest rate environment be distorting prices? One simple explanation of the increased inflow of capital to the stock market over the last several years is that because interest rates are so low it just doesn't make any sense to earn half or a quarter of a percent in a CD or 1% on a bond, so investors are investing in stocks instead. Instead of bonds, they are buying stocks that are perceived to be safer (such as utilities) and that generate income (such as dividend stocks). I believe that there is some truth to that assertation and that if interest rates remain abnormally low, the stock market will be seen as an alternative, even if it is a quite imperfect and much, much more risky one.

Lastly, #4, our relative position to the rest of the developed world. In some sense, all stock markets worldwide compete for investment dollars, with investors making determinations as to where they can achieve the best return. If the world economy remains generally stagnant or certain key areas such as Europe start to experience contraction or even just very slow growth without full-blown recessions, it might be the case that the U.S. benefits from simply being the most attractive choice against a backdrop of mediocre choices.

Similar to individual winners and losers in the U.S. markets, there will be individual winners and losers in international markets as well. Most immediately, we’ll face the implications of Brexit, OPEC price controls, the delicate Chinese economy and potential fall-out from the financially troubled members of the Eurozone. As those implications unfold, international investors may judge the U.S. markets to be a better option in the short to medium term.

I believe that all four of these factors have been contributors to our current sustained bull market and some combination of them may drive the market higher, but it's not entirely clear that they will all be pushing upwards as they have been recently, especially interest rates.

So let’s dive a little deeper into interest rates. The Federal Reserve has recently signaled a willingness to raise interest rates. In addition, economic conditions also support increasing rates. As such, interest rate increases from the Federal Reserve in the short to medium term seems very, very likely.

Since bond prices move inversely to bond rates, that means that the prices and values of all our bond holdings in mutual funds and ETFs will likely decrease.

We are likely entering a tough stretch for bonds. However, we should not lose sight of the strategic reasons we hold bonds in the first place – income, diversification, reduced volatility and over the long term -- better risk adjusted portfolio returns. In this environment, individual bonds and bullet maturity shares have some advantages. Here too, we will be monitoring the markets closely.

We would be remiss if we didn’t also consider the political implications of the recent election.

In this area we have a tempered and measured view. Until we get back into the full legislative session, the market is reacting to what it thinks the current administration will do. Ultimately the market will move based on what the administration actually does vs. what they’ve said they would do during the campaign.

Yes, they have a legislative plan, but legislation is complicated and special interests are as powerful as ever in DC, so we’ll know a lot more in the Spring once we see how all the competing interests line-up and after the early executive orders actually get issued. That is, we’ll see what actually happens.

Whew, that was a lot. Or maybe you just jumped here to the bottom line...fair enough. So what does all that mean for our investment portfolios?

Here are our five key takeaways:

  • U.S. stock market performance and portfolio performance may be mixed and even diversified portfolios may see more volatility than usual. However, we still believe that it will be more important than ever to hold a diversified portfolio that is periodically rebalanced and potentially tilted towards investments that will perform well in the more likely scenarios.

 

  • We believe that an increased cash holding is warranted. We believe that the market forces discussed here will push and pull against each other over the course of 2017, more so than in 2016, and when combined with potential for geo political instability and less ability to use bonds as a cushion, we’ll want higher cash holdings.

 

  • Sector, smart beta and individual security selection will be important investment lenses for 2017, which we intend to use and pursue.

 

  • We expect increased volatility for the short to medium term that may create opportunities for long-term value buys.

 

  • Interest rates will likely rise in the short to medium term and inflation may follow. Investments that move inversely to rates will be under pressure in the short to medium term and investments that rise during periods of inflation may be warranted.

----------------------------------------------------

PLEASE REMEMBER:

- This material is provided as of December 2nd, 2016 and readers should bear in mind that investment and economic conditions can change very rapidly and that changes or developments subsequent to that date may drastically alter the validity of this analysis.

- There are forward looking statements in this analysis and these statements should not be construed as a prediction or guarantee of what will happen.

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial planning and investment management services provided by J. Bradford Investment Management, Nashua NH.

 

 

 

 

 

Is Alexander Hamilton the Lead Singer in a Boy Band?

No, Alexander Hamilton is still that Alexander Hamilton, the first Secretary of the Treasury and the father of the United States banking system. That guy on the $10 bill. The one and only, Alexander Hamilton.

But thanks to the run-away success of the Broadway musical “Hamilton”, my kids, who now have a full-blown outbreak of “Hamilton Fever”, know a shocking amount of history on a revolutionary era figure who wasn’t even president. I’d be surprised if they could even name two or three more people from that era period?!?

 

Yet, they know where and when he was born, his family history, his professions, all of his suitors, the sisters, their rivalry, Hamilton’s son, how he died and they can recount a number of the interactions he had with Aaron Burr, including their duel. In all honesty, I often forget who won that duel, so on that matter, they actually knew more than me...

Now, I am getting a little tired of the repeat lyrics, but, they’re learning and they don’t even know it. Sort of the modern day equivalent to Billy Joel’s “We Didn’t Start The Fire”. Those lyrics are a history lesson unto themselves.

I love that my kids are engaged and it’s great to see such interest in such an impactful historical figure.

Back to Hamilton briefly. Almost everything he did set the stage for American capitalism to become American capitalism. From his penning of many of the Federalist Papers and their advocacy for a strong central government, particularly in matters of finance, to his ideas around the federal government assuming the debt of the states after the Revolutionary war, to his recognition of the need to set up both a central bank and regional banks that would help build prosperity across the nation, he really deserves the praise he gets and I’m glad he was spared removal from the $10 bill.

There are many ways in which today's Treasury, Federal Reserve and the Federal Reserve System play a very important role in keeping the United States economy moving forward at a stable and steady pace. The business of money can at times become highly politicized, but Hamilton laid a solid bedrock.

As investment managers, we do watch and pay attention to what the Federal Reserve says and does and we try to manage the risks that some of their actions might trigger, but generally we take the long view and invest in a diversified and balanced way for whatever decisions the Fed makes.

For some in our industry, watching and predicting Fed moves is a sport, which I suspect Hamilton would approve of knowing that we no longer duel when we disagree about inflation, interest rates or the debt. Federal Reserve TV anyone?

 

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

Congrats to the NH Community Loan Fund on Another Successful Year!

Just a brief shout-out to the New Hampshire Community Loan Fund on another successful year!

They provide a really compelling combination of loans, capital infusions and ongoing technical assistance and support to help ensure the success of their projects and ultimately, their investments.

Not only do their investments have a tremendous impact and do tremendous good in our communities, they also offer investment opportunities that can provide a very competitive rate of interest to investors of every shape and size.

Building a long-term track record is difficult, but build a long term track record they have!

I'd encourage you to read about all of their success stories in their Annual Report. It has the details of who they help, and why, and the breadth of their impact. According to that very Annual Report, the New Hampshire Community Loan Fund has had 33 years without investor losses. That's impressive.

Congrats to everyone involved with such an impactful organization!!

 

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.