Michele Clark
Clark Hourly Financial Planning - Chesterfield, MO Advisor
1415 Elbridge Payne Road, Suite 255
Chesterfield, MO 63017 USA
Work 636.264.0732
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Coffee with Michele Clark, CFP® and Jan December 2017

October 6th, 2017

We want to invite you to join us in the Community Room at Kaldi’s in Chesterfield, MO.  Bring your financial planning and tax questions and enjoy a cup of coffee with Michele Clark CERTIFIED FINANCIAL PLANNERTM professional in St. Louis and Jan Roberg, Enrolled Agent.

Financial Planning and Tax Questions Answered

There is no prepared presentation, just a casual conversation in a comfortable small group environment; your opportunity to pick our brains.  Feel free to invite family or friends who could benefit from an hour with us.  Open to registered attendees only, due to the size of the room.

Coffee with Michele Clark and Jan

Kaldi’s Coffee Chesterfield, MO
Wednesday, December 13th, 2017
10:30 am to 11:30 am

RSVP Information

RSVP online Clark Hourly Financial Planning and Investment Management RSVP or call 636-264-0732.  Space is limited.  Coffee and pastries are complimentary.

Kaldi’s Coffee Chesterfield Missouri address and map. The Community Room is an enclosed room in the back of the coffee shop.

Hope to see you there!

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Michele Clark in the News: US News and World Report about College Planning and Grandparents

September 27th, 2017

I was honored to help US News and World Report recently in their article “How Grandparents Can Help Save for College”  the author of the article and I discussed how difficult it can be for families to discuss money and saving for college and different ways to broach the subject.  We also discussed how the money that a Grandparent has saved for a grandchild can sometimes hurt their financial aid prospects depending on how it is managed.  We also discussed different investment vehicles and the pros and cons of each.

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Michele Clark in the News: US News and World Report about Mistakes Grandparents Make When Helping Pay for College

September 27th, 2017

I was honored to help US News and World Report recently in their article “6 Mistakes Grandparents Make When Helping Pay for College”   we had a nice long conversation which was used for a couple of articles.   Discussed in this article are making sure that you do not miss tax breaks, that if you choose to use savings bonds that you title them correctly, and that you are careful about the timing of your gift to the grandchild so that you do not harm their financial aid chances.

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Six Steps: What To Do About The Equifax Hack / Breach

September 8th, 2017

This is important.

Equifax disclosed yesterday that it had a data breach that in all likelihood involved you.

Info was stolen for about 143 million consumers including names, Social Security numbers, addresses, birth dates, and driver’s license numbers. Serious stuff and hard to imagine we are not all impacted.

If you have a credit card or loan or have had in the last seven(+) years, then the credit bureaus have been keeping a credit report on you.  Be safe and assume your information has been hacked.

There is an Equifax website that you can use to verify if you were affected, however, some are concerned that you may be giving up some legal rights by using it.

Take some steps to help protect yourself and restrict how your personal information is used.

What to do?

  1. Freeze your credit

Be aware that some agencies may charge a small fee to freeze and unfreeze your credit.   You can freeze your credit by using the following phone numbers and links:

 

2. Call your brokerage firm to put verbal passwords on the account, check with your bank/credit union to see if they also offer this.

 

3. Set up two-factor authentication on your financial accounts if it is available and not automatically required. Yes, it is a bit of a pain, but it is designed to help protect you.  When you log into a website, they send a code which you must use to get into the website.  This prevents someone from impersonating you even if they do figure out your password.

 

4. Open your mail/emails from your financial institutions! When your contact information is changed; emails, address, phone numbers, you are notified.  Changing contact info is often step one of fraud (often, but not always.)

 

5. Be especially watchful of phishing, links to duplicate sites, and other types of email scams. These are attempts to collect additional sensitive data/information to perpetrate fraud.

 

6. If you logged into Equifax in the past, change that password and if you used the same password on any other website, change the password for that website as well.

 

If you think that this would be helpful to family or friends please share the info!

While this is serious, and you need to take steps to protect yourself, please do not panic or worry.  Take control of the situation and take action.  Then go spend time with your loved ones, do some gardening, sip some wine, go hiking, have some chocolates (see my Clark HFP &IM Facebook post from last Friday!) do whatever it is that you enjoy!

I will leave you with this quote from the marvelous George Burns…

“If you ask what is the single most important key to longevity; I would have to say it is avoiding worry, stress, and tension.  And if you didn’t ask me, I’d still have to say it.”

Have a wonderful weekend!  I will.

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Bonds: How do they work

June 29th, 2017

Investing in Bonds

Bonds may not be as glamorous as stocks or commodities, but they are a significant component of most investment portfolios. Bonds are traded in huge volumes every day, but their full usefulness is often underappreciated and underestimated.

Why invest in bonds?

Bonds can help diversify your investment portfolio. Interest payments from bonds can act as a hedge against the relative volatility of stocks, real estate, or precious metals. Those interest payments also can provide you with a steady stream of income.  Additionally, because individual bonds have a face value and maturity date, investors like knowing how much and when to expect their investment.

Bonds as Part of Your Overall Portfolio Strategy

Bonds play an important role in your overall portfolio strategy, AKA investment mix.  As interest rates rise and bond prices are impacted, your overall portfolio allocation will be impacted as well.

For those of you who are managing a portfolio on your own and read this blog for education, or are hourly/project based clients, that will mean that you will need to monitor your portfolio and rebalance the allocation back to your original allocation/investment mix.  If you do not, then the amount of risk/projected return in the portfolio will not match the amount of risk/return you wanted in the portfolio.

For those of you who work with us on an ongoing basis for investment management/partnership based clients, we set up “target bands” according to your allocation/investment mix and make changes when your portfolio deviates from those bands.  So we do not wait until a certain time of year, we make changes as needed and only if needed.

I wrote earlier about the importance of rebalancing a portfolio and how rebalancing works.

How bonds work

When you buy a bond, you are essentially loaning money to a bond issuer in need of cash to finance a venture or fund a program, such as a corporation or government agency. In return for your investment, you receive interest payments at regular intervals, usually based on a fixed annual rate (coupon rate). You are also paid the bond’s full face amount at its stated maturity date.

You can purchase bonds in denominations as low as $100, and often in increments of $1,000 (though individual brokers may have a higher minimum purchase). Some are backed by tangible assets, such as mortgage contracts, buildings, or equipment. In many other cases, you simply rely on the issuer’s ability to pay. You can buy or sell bonds in the open market in the same manner as stocks and other securities. Therefore, bonds fluctuate in price, selling at a premium (above) or discount (below) to the face value (par value). Generally, the longer a bond’s duration to maturity, the more volatile its price swings. These factors expose bonds to certain inherent risks.

You can buy or sell bonds in the open market in the same manner as stocks and other securities. Therefore, bonds fluctuate in price, selling at a premium (above) or discount (below) to the face value (par value). Generally, the longer a bond’s duration to maturity, the more volatile its price swings. These factors expose bonds to certain inherent risks.

Bond risk factors

Although many bonds are conservative, lower-risk investments, some others are not, and all carry some risk. Because bonds are traded in the securities markets, there is always the chance that your bonds can lose favor and drop in price due to market risk; as a result, a bond redeemed prior to maturity may be worth more or less than its original cost. Much of this volatility in price is tied to interest-rate fluctuations. For example, if you pay $1,000 for a 5 percent bond, that same $1,000 might buy you a 6 percent bond the following month, if interest rates rise. Consequently, your old 5 percent bond may be worth less than $1,000 to current investors.

Since bonds typically pay a fixed rate of interest, they are open to inflation risk. As consumer prices generally rise, the purchasing power of all fixed investments is reduced. Also, there is a chance that the issuer will be unable to make its interest payments or to repay its bonds’ face value at maturity. This is known as credit or financial risk. To help minimize this risk, compare the relative strength of companies or bonds through a ratings service such as Moody’s, Standard & Poor’s, A. M. Best, or Fitch. Finally, bonds also involve reinvestment risk: the risk that when a bond matures, you may not be able to get the same return when you reinvest that money.

Corporate bonds

Bonds issued by private corporations vary in risk from typically steady utility bonds to highly volatile, high-interest junk bonds. Also, many corporate bonds are callable, meaning that the debt can be paid off by the issuing company and redeemed on a predeterminded fixed date. The company pays back your principal along with accrued interest, plus an additional amount for calling the bond before maturity.

Some corporate bonds are convertible and can be exchanged for shares of the company’s stock on a fixed date. You can also purchase zero-coupon bonds, which are issued at a discount to (below) face value. No interest is paid, but at

You can also purchase zero-coupon bonds, which are issued at a discount to (below) face value. No interest is paid, but at maturity you receive the face value of the bond. For example, you pay $600 for a 5-year, $1,000 zero-coupon bond. At the end of 5 years, you receive $1,000. Corporate bonds have maturity dates ranging from one day to 40 years or more and

Corporate bonds have maturity dates ranging from one day to 40 years or more and generally make fixed interest payments every six months.

U.S. government securities

The securities backed by the full faith and credit of the U.S. government carry minimal risk. United States Treasury bills (T-bills) are issued for terms from a few days to 52 weeks. They are sold at a discount and are redeemed

United States Treasury bills (T-bills) are issued for terms from a few days to 52 weeks. They are sold at a discount and are redeemed for their full face value at maturity. Other Treasury securities include Treasury notes, which have terms from 2 to 10 years, Treasury Inflation Protected Securities (TIPS), which have terms from 5 to 30 years, and Treasury bonds, which have a term of 30 years. Although the interest earned on these securities is subject to federal taxation, it is not subject to state or local taxes.

Other Treasury securities include Treasury notes, which have terms from 2 to 10 years, Treasury Inflation Protected Securities (TIPS), which have terms from 5 to 30 years, and Treasury bonds, which have a term of 30 years. Although the interest earned on these securities is subject to federal taxation, it is not subject to state or local taxes.

Various federal agencies also issue bonds. As with any investment, these bonds carry some risk. However, because the U.S. government guarantees timely payment of principal and interest on them, they are considered very safe. Some of these bonds use mortgages as collateral. Most mortgage-backed securities pay monthly interest to bondholders.

Municipal bonds

Municipal bonds (munis) are issued by states, counties, or municipalities, and are generally free from federal taxation (with some exceptions). Some may be completely tax free if you are a resident of the state, county, or municipality of issuance. Though municipal bonds generally offer lower interest payments compared with taxable bonds, their overall return may be higher because of their tax-reduced (or tax-free) status. Some municipal bond interest also could be subject to the alternative minimum tax. You must select bonds carefully to ensure

Though municipal bonds generally offer lower interest payments compared with taxable bonds, their overall return may be higher because of their tax-reduced (or tax-free) status. Some municipal bond interest also could be subject to the alternative minimum tax. You must select bonds carefully to ensure

You must select bonds carefully to ensure a worthwhile tax savings. Because municipal bonds tend to have lower yields than other bonds, the tax benefits tend to accrue to individuals with the highest tax burden.

Munis come in two types: general obligation (GO) bonds and revenue bonds. GO bonds are backed by the taxing authority of the issuing state or local government. For this reason, they are considered less risky but have a lower coupon rate. Revenue bonds are supported by money raised from the bridge, toll road, or other facility that the bonds were issued to fund. They pay a higher interest rate and are considered riskier. Therefore, research the project being funded to the extent possible before you invest, to make sure that it will generate sufficient income to make payments.

Monitoring your bond portfolio

Of course, you’ll want to keep an eye on your bond portfolio, as you should with all of your investments. Although other factors may affect them, bond prices are often closely tied to interest rates. When rates go up, the market price of your bonds tend to go down; when interest rates fall, your bonds generally rise in value.

Interest rates also tend to affect a bond’s current yield, which measures the coupon rate of your bond in relation to its current price. The current yield rises with a corresponding drop in the price of a bond, and vice versa. In addition, inflation, corporate finances, and government fiscal policy can affect bond prices.

The major bond-rating services offer letter grades regarding the relative strength of a corporation or bond.  Your brokerage statement or brokerage account website will often have the credit rating for your bonds.  Keep an eye on the credit rating to make sure that it is still in investment grade range which for Standard and Poor’s is BBB- or higher and Moody’s is Baa3 or higher.

Portions of this blog post are from an article prepared by Broadridge Investor Communications Solutions, Inc. Copyright 2017  But, I just had to add my own two cents!

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