Content about Finance

CHICAGO — If there is one investment philosophy that approaches universal agreement among financial advisers, it’s the need for careful diversification in every portfolio in order to minimize risk, but exactly what does diversification mean, and how can you tell if your investments are truly diversified?

One popular TV show on finances features a segment called “Am I Diversified?” in which viewers call in, give the host their top five holdings and the host lets them know if they are properly diversified. According to Jason Whitby, MBA, CFA®, CFP®, AIFA®, senior financial adviser with Miami-based Investor Solutions, it’s not that simple. “The idea of five-stock diversification is mostly refuted by the financial community,” he says, “which tends to agree that the number of individual stocks needed for diversification is actually closer to 30.”

SAN FRANCISCO — Dry cleaning consulting firm Methods for Management (MfM) has established the Smart Women’s Network as a forum for focused networking to help build profit and sales in their businesses.

The group covers major issues affecting industry management, including sales and marketing, customer engagement, finance, human resources, production, site selection and environmental impact.

Through Peer Management Bureaus and independent project assignments, MfM bureaus provide a non-competitive environment where members receive profit-enhancing tools while sharing information, issues and concerns with peers they trust and respect.

BERKLEY, Mich. — The Certified Restoration Drycleaning Network (CRDN), an international organization of textile restoration specialists serving the insurance industry, has named Robert Murray its national sales and operations manager.

Murray spent four years as select customer sales executive with The Hartford. His background includes advanced marketing and business development skills, as well as operational expertise.

“To this position, Rob brings diverse experience with finance and environmental services in addition to his strategically important insurance expertise,” says CRDN CEO Wayne Wudyka. “He also provides hands-on knowledge of franchise ownership and multi-location business management, which will be particularly relevant for the CRDN operations he will guide and direct.”

CHICAGO — A new report from NYSE Euronext provides some economic encouragement. Top executives for 62% of public companies and 71% of private firms expect to expand their businesses and add jobs in 2012, a move counter to growing uncertainty of the economy and political instability. This is the first report from NYSE Euronext to include private or emerging companies and MBA students that the NYSE dubs “aspiring corporate leaders.”

On the other end of the spectrum, the congressional so-called Super Committee failed to come to an agreement on a deficit reduction plan, leading to a drop on the stock market and continued debate as to the cause of the committee’s inaction. The main stumbling block appeared to be the continued tax cuts, rather than higher tax rates, for the upper tier of income earners.

CHICAGO — The filing deadline for 2011 federal income taxes is not far off, but you still have time to make sure you’ve done everything you can to keep Uncle Sam’s paws off as much of your money as possible. Here are some last-minute ways to do that by reducing your 2011 income tax bill:

Save More for Retirement

One of the most important tax-savings steps you can take is contributing the maximum to your 401(k) or other tax-deferred retirement plan. If you haven’t done so, max out your retirement savings now by bringing your contribution up to the legal limit. For 2011, you may put as much as $16,500 into a 401(k), 403(b) or 457 plan. If you’re over age 50, you may add an additional $5,500.

Every dollar you contribute means you will pay less income tax. Except for Roth IRAs, all contributions to tax-deferred retirement plans are tax-deductible in the tax year for which you make your contribution.

If you can’t come up with the maximum, bump up your contribution as much as you possibly can. It may seem painful now, but you’ll benefit greatly in the future.

CHICAGO — When it comes to investing your money, there’s more than enough pessimism to go around, and nowhere is it easier to find than in today’s municipal bond market. Many state and local municipalities are facing the toughest budget problems they have ever seen. California, Illinois and New Jersey are among the states wrestling with money woes. Major cities such as Philadelphia, Atlanta, and Columbus, Ohio, are on a long list of municipalities looking at major tax increases and/or cutting of services and personnel as a last resort for rising above an enveloping debt crisis.

Marilyn Cohen, president and CEO of Envision Capital Management, describes the current bond market as “the biggest slow-motion train wreck I've ever seen.”

ARDMORE, Pa. — Thanks to the 100% “bonus” depreciation write-offs created by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, many dry cleaning businesses are discovering that capital investments in equipment, machinery and other business assets are more affordable today than ever before. Remember, however, the 100% bonus depreciation write-off is available only for qualifying purchases made by dry cleaning plants and businesses in 2011.

Those dry cleaners that have hesitated or postponed making capital investments because of the recent economic downturn might now want to consider how the combined use of incentives and the 100% bonus depreciation can substantially reduce the cost of capital investments. Even funding those new-equipment purchases is easier—at least for a while.

CHICAGO — Early September brought a new proposal—the Americans Jobs Act—from President Barack Obama, which includes incentives for small-business owners to aid in cutting taxes and adding employees.

The proposal cuts employer payroll taxes in half, offers a series of tax credits for companies that hire workers who have been unemployed for longer than six months, establishes an “infrastructure bank” to offer loans for private-sector projects, funds a variety of transportation projects, intends to modernize schools and vacant properties, extends unemployment benefits and subsidizes jobs training programs, pumps money into communities for teachers and first responders, and sets up a summer jobs program for teens.

The bipartisan super committee in Congress—tasked with finding ways to reduce the nation’s debt by December—was due to hear the president’s proposals on cutting debt later in the month.

CHICAGO — Judging from my e-mail, it’s not difficult to find savers and investors who are questioning the conventional wisdom when it comes to investing their money. With the stock market on an erratic, volatile course that seemingly leads nowhere, and yields on cash investments such as money markets and CDs almost nonexistent, more and more income-seeking investors are breaking the old rules by dipping a toe in waters they would have considered too risky a few years ago.

Instead of sticking to the philosophy that calls for portfolios laced solely with a careful mix of quality stocks, well-rated bonds and cash, these hardy souls are venturing into eyebrow-raising investments such as junk bonds, commercial real estate, options like puts and calls, and equities in emerging markets in an effort to improve the anemic and unpredictable returns they’ve been enduring of late. According to one adviser, taking on even a little more risk requires overcoming fear of foreign markets.

CHICAGO — By any definition, Joe was a “success,” and so was his business, Success Co. Although Joe was a planner, after he died, his estate plan and business succession plan turned into an economic and tax tragedy—for son Sam, wife Mary and the rest of the family.

CHICAGO — This is a difficult time for anyone trying to build a portfolio of savings and investments capable of providing a financially secure retirement. According to the Center for Retirement Research, more than half of the Baby Boomer generation will not be financially prepared for retirement even if they work until age 65.

With corporate pension plans now largely just a memory, it’s up to individuals to design their own financial plans for retirement, and that calls for making some tough decisions.

I can’t remember a time when the economy has seemed more uncertain and fluid. Are interest rates for savings set to rise after a long period of stagnation, or will they continue to remain mired abysmally low? Is it time to start investing in the stock market again, or is it better to wait? How about real estate? Is this a good time to buy or sell a house? These and other questions about our economic future are never easy to answer, but they seem especially problematic in mid-2011.