Investor Ed

Investment Vehicles

• Mutual Funds: An investment that allows you to pool your assets with a group of people in a diversified portfolio of stocks, bonds, or a combination of stocks and bonds. The assets in the portfolio are professionally managed to achieve a specified investment objective, such as growth or income.
  
  
• Annuity: A contract between an insurance company and you in which a sum of money is deposited for a specified period of time. In the accumulation phase, the funds grow tax deferred. During the income phase, income is paid for a specified period of time.
  
  
• College Savings: One of the best ways to save for your children’s college education is through a 529 College Savings Plan. These plans provide valuable tax incentives, including the potential for tax-free growth and in some states, a state tax deduction for contributions. Each state offers its own plan and each state’s plan is available to non-residents. In addition, these plans offer an excellent tool for tax-free wealth transfer.
  
  
• Rollover Accounts: An account where your money is reinvested from one investment into a similar investment. For example, proceeds from a 401(k), tax-deferred annuity or IRA, are deposited into another qualified plan or IRA. Also, funds from a maturing CD can be deposited into another CD.

• Life insurance: Coverage that provides compensation to a beneficiary upon the death of the insured. Some life insurance policies provide a tax-deferred cash buildup that can be accessed by the policy owner.
  
  
• Health insurance: Insurance that compensates the insured for expenses or loss incurred for medical reasons such as illness or hospitalization.
  
  
• Disability insurance: Insurance providing income to a policyholder who is disabled and unable to work.
  
  
• Long-term care insurance: Coverage that pays for required assistance when an individual can no longer take care of themselves due to illness or prolonged disability.

Managed Account: An account for which you give your broker the authority to buy and sell securities, either absolutely or subject to certain restrictions. Also called a controlled account or a discretionary account.

Real Estate Investment: Commercial property can provide capital appreciation, income and numerous tax benefits for its owners. However, significant tax liabilities can be incurred upon disposition. One potential remedy is the use of a 1031 exchange which allows owners of investment real estate to sell property and buy similar property without paying capital gains taxes or recapturing depreciation.

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