After our usual Pledge of Allegiance we had the pleasure of listening to Phyllis Speer talking about the wonders of Arkansas. Phyllis is the education program specialist with the Arkansas game and fish commission. She has a wide range of outdoor experience. Phyllis hunts for game not only with a rifle but also with bow and arrow. Phyllis is a life member of the Arkansas bow hunters association. She is a charter member of the Arkansas Dutch Oven Society and organizes group outings and picnics using her dutch oven expertise. Phyllis is also a co-producer for the ‘Arkansas Outdoors’ program on AETN. The list goes on. Phyllis concentrated her talk on Arkansas bird life. There are about 400 species of birds around us. She challenged us to name just 25. Few of us can do that. She had a cute story about an owl: There was an injured owl, I think, at some animal shelter with one wing hanging loosely on one side and was about to die. Phyllis wanted the bird for taxidermy. She picked up the bird still alive expecting the owl to die shortly. The next day the owl was still alive. She was advised that freezing the bird is the easiest way for the poor animal to die. So she put the bird in a freezer. The next day the bird was still alive in the freezer; so she took it to a vet.  The vet fixed the owl and it recovered. For the last ten years the owl was her pet. Phyllis has a delightful and cheerful way of reporting her outdoor adventures.

Start Planning Now to Cope with Estate Taxes

Throughout your life, you strive to provide financial security to your family. And your efforts can extend beyond your lifetime — if you work to control estate taxes.

It’s always challenging to create financial strategies that are somewhat dependent on tax laws, because these laws are always changing. In 2009, your estate could have passed up to $3.5 million to your heirs before incurring federal estate taxes at a maximum rate of 45 percent. In 2010, the estate tax was scheduled to be repealed, but in 2011, it was supposed to return, with a maximum exemption of $1 million and a top rate of 55 percent. But this may change, as Congress is considering extending the 2009 exemption and tax rate figures into 2010, 2011 and possibly even further.

You might think you’ll never have enough wealth to incur these taxes, but virtually every asset — your home, cars, life insurance policy, IRA and 401(k) — may be included in your taxable estate. These assets could push your estate over the exemption amount, costing your heirs a substantial amount in estate taxes.

To help address this potential problem, you might  want to think about some of the following estate considerations. For example, if you owned a $1 million dollar life insurance policy, and it was subject to an estate tax rate of 45 percent, your beneficiaries would receive a death benefit of just $550,000. But if you established an irrevocable life insurance trust (ILIT) with a new insurance policy, the trust would own the policy and distribute the proceeds to the beneficiaries you’ve chosen. By using an ILIT, you’d keep the life insurance out of your taxable estate.

Another estate planning consideration is a charitable remainder trust, which might be useful if you have a sizable amount of assets, such as stocks, that have significantly appreciated since you bought them. If you kept these assets in your estate, your heirs would inherit them on a “stepped-up” basis, which, in plain English, means the value of the stocks would be the same as their fair market value on the date of your death. (However, in 2010 — and 2010 only — the step-up basis is limited to $1.3 million for your children or other heirs and $3 million for your surviving spouse. Beyond those figures, your heirs would assume, or carry over, your basis — the amount you paid for the assets. In 2011, full step-up is scheduled to return.)

All stocks, and especially those that receive step-up treatment, could add to your heirs’ estate tax burden. But you could remove the stocks from your taxable estate by placing them in a charitable remainder trust. Furthermore, you could receive an income stream for life once the trust sold the stocks. You could then use this income to make gifts to your loved ones, further reducing the size of your taxable estate. You can give up to $13,000 per year to as many individuals as you like without incurring gift taxes, up to $1 million over your lifetime.

Before making any decisions related to estate taxes, consult with your estate planning professional and your tax advisor. Vehicles such as life insurance trusts and charitable trusts are complex and don’t lend themselves to “do-it-yourself” solutions.

Start thinking soon about estate tax issues. By putting your estate plans in order early,  you could be helping your loved ones far into the future. 

Salem, AR.  December 8.  The North Central Arkansas Regional Economic Development (NCARED) Board held their December meeting recently at the NAEC offices in Salem.  NCARED member counties with representation at the meeting included Izard, Sharp, Baxter, Fulton, Van Buren and Marion.  Searcy and Stone county representatives were not in attendance.

Following approval of minutes from the prior meeting and a current Treasurer’s report, Board Chair, Greg Bess, moved to a discussion of old business.  It was noted that Marion, Stone, Van Buren, Searcy and Baxter counties had open seats on the Board.  NCARED bylaws provide for a minimum of two Board positions for each member county, and additional seats if the population of a county exceeds a specified level.  Steven Sanders, Jr. from Marion County advised that he would work with the county judge to fill his county’s single open position.  Sue Newton, representing Judge Bodenhammer of Baxter County, advised the Board of the appointment of Ron Proctor and Pat Bailey to fill that county’s open Board seats.  The appointments were unanimously accepted by the Board.  Chairman Bess accepted responsibility for sending communication to the single Board members from Stone, Van Buren, and Searcy counties, requesting that they initiate work to fill their open seats.

Brief discussion was held regarding the need to look at the organization’s 2010 funding strategy, membership dues structure, and the need to fill the soon-to-be-open NCARED Executive Director position.  A sub-committee chaired by new Board member, Ron Proctor, was established to develop a job description for the Executive Director, to be completed by the Board’s February meeting.  Due to the critical importance of funding, a special Board meeting was scheduled for December 15 for the sole purpose of dealing with the issue.  Once a membership dues structure is finalized for 2010, the Board agreed that efforts to communicate and invite members could begin in earnest.

Renee Doty from the Arkansas Economic Development Commission (AEDC) briefly addressed the group in regard to the Arkansas Site Selection Center website on which counties and/or communities may post available properties.  Ms. Doty advised that at present Izard and Stone         counties had not designated an individual to serve as Property Manager.  Izard County Board member, Rich Fischer, indicated that he would handle getting someone named to serve in this capacity for his county.

The Board moved on to the action of naming officers for 2010.  The following individuals agreed to continue in their current positions:  Greg Bess: Chairman, Sherry Jackson: Treasurer, Mike Durow: Secretary.   Rich Fischer was elected to fill the position of Vice Chair, a position recently vacated due to resignation.

Discussion next turned to the planned NCARED newsletter, the first issue of which is due to go out in late January, 2010.  Rich Fischer, newsletter editor, reminded Board members of his need for names and email addresses for key individuals in their respective counties for addition to the electronic distribution list he was currently building.  Additionally, content for the first issue of the newsletter was requested to be submitted to Fischer by January 15. 

Chairman Bess concluded the meeting by taking a moment to recognize departing Executive Director, Gil de Lorenzo, for his many years of service and leadership to NCARED and wished him well in whatever his next endeavors might be.     

By: Fred Hilsenrath

Before I write our usual routine opening sentence about the Pledge of Allegiance, I have some comments: 

It is boring to repeat the same sentence over and over again with every report about Rotary club activities. However that is only a partial judgment.  Rituals are psychologically an important part of our lives. We repeat prayers in church or synagogue over and over again. We recite the Pledge of Allegiance at many occasions. The more we repeat the words the more meaningful becomes the context; the words of the pledge of allegiance get printed deeper and deeper into our sub conscience until freedom and justice become part of our value system.  I did not experience freedom and justice until I came to the United States. The Pledge of Allegiance, therefore, touches a chord in my heart.

The Rotary Club of Fairfield Bay held its regular scheduled meeting at noon at  IHCC on Dec 2.  We opened the meeting with the usual Pledge of Allegiance.

Rotary’s important function is to support education. The value of education cannot be overemphasized. Cynthia Coleman is the principal of the Shirley elementary school. She talked to us about issues and successes:

School is Not What it Use to Be

Shirley Elementary School is located in a depressed rural area in Arkansas.  Van Buren County.  The elementary school has declined in enrollment due to the lack of jobs in the area.  Many of the students have moved out of state due to parents moving for jobs.  Some students have moved with parents to another district that would be closer to family or jobs.

Test scores continue to meet AYP (adequate yearly progress) scores that the Arkansas Department of Education has set forth.  The Shirley School has adopted what most other schools in the state have adopted a program called Total Instructional Alignment.  The Shirley School works through their education cooperative, Arch Ford.  Arch Ford has helped develop pacing guides and assessments that follow our Arkansas Frameworks.  Frameworks are what the students are expected to be able to do for each grade level.

Mrs. Coleman shared with the Rotary what is expected of a kindergartener.  Much surprise.  Schools have so much academic pressures that the expectations of parents is great before one starts kindergarten.  Students must be ready socially and emotionally for academic learning.  She explained that spelling for example is not like what we did when we were in school.  We do not have a list of words on Monday and a test on Friday.  We have a few words and students must learn the concept and be able to spell words that they have not been given to study.  She also shared some of the release items of how our students are tested.  There is a lot more than answering the question.  Students must explain how they came to their answer and must show all their work.  Answers are more than one part.  When a student just answers the question, they are scored basic and basic is not passing.  

Shirley Elementary has two people on campus from Pinnacle Point.  They serve and see many of the students on a daily basis.

With the state mandates, people must realize that schools must have Fine Arts, Physical Education, Library, counseling as well as a certain number of minutes a day for literacy, math, science, social students, as well as Arkansas History.  High schools must offer the thirty-eight courses to students, which causes a hardship to most rural Arkansas schools.  Teachers in rural high schools will have more than one certification and will be required to teach in areas of their certification.

Proud to say that Shirley School is meeting all state mandates and realize that more challenges are ahead.

Here's Your Year-end Investment Checklist

We’ve pretty much seen it all this past year— a bear market, a long rally and even a period of neither-up-nor-down. But even though we’ve only got a few weeks left of 2009, you still have time to make some moves that can pay off for you in 2010 — and beyond.

Here are a few suggestions to consider:

•Convert your traditional IRA to a Roth IRA.  Depending on your individual situation, a Roth IRA, which offers the potential for tax free growth, provided you meet certain conditions, may be a better choice for you than a traditional IRA, which offers the potential for growth on a tax deferred basis. Consequently, if you meet eligibility limits, you may want to convert your traditional IRA to a Roth IRA. However, this conversion is likely going to be a “taxable event,” so you’ll need to have money available outside your IRA for the tax bill. You’ll want to discuss this move with your tax advisor.

•Sell your “losers.” If it’s appropriate for your portfolio balance and long-term goals, you may want to sell some investments that have lost value to take the tax losses. If these losses exceeded your capital gains from selling appreciated stocks, you can deduct up to $3,000 (or $1,500 for married couples filing separately) against your other income, reducing the amount on which you must pay taxes. And if you lost more than $3,000, you can carry over the excess into subsequent years. Consult with a tax advisor before selling investments to claim a tax loss.

•Consolidate your investment accounts. Instead of having an IRA with one firm, some other investments with another and a cash-value insurance policy with a third, you might want to consolidate all your assets with one provider. That way, you’ll be better able to align all your assets with a central, unified investment strategy.

•Review your insurance coverage.  Over the course of a year, you could experience significant changes in your life: marriage or divorce, the birth of a new child or the departure of an older child from your home, the start of a new job or retirement from an old one, and so on. That’s why you’ll want to make sure you have the right amount and type of insurance to protect your family and your financial future.

•“Max out” on your IRA — and make regular contributions next year. For the 2009 tax year, you can contribute up to $5,000 to a traditional or Roth IRA, or $6,000 if you’re 50 or older. And you have until April 15, 2010, to fully fund your 2009 IRA. Of course, it’s not always easy to come up with lump sums of money, but do whatever you can to make up for any shortfalls in your IRA for 2009. And in 2010, consider setting up automatic monthly contributions to your IRA — it’s a much more efficient way to maximize a great retirement-savings vehicle.

•Increase your 401(k) contributions. If your employer permits it, try to add more money to your 401(k) or other retirement plan before the year ends. By increasing your 401(k) contributions, you can lower your adjusted taxable income while you potentially build more resources for retirement.

By making these moves, you can close out 2009 on a positive note — while positioning yourself for progress on your long-term goals.

Smart Financial Moves Can Help Brighten Holiday Season

If you’re like many people, you’re watching your dollars extra carefully this year as you do your holiday shopping.  And that’s a good thing, because even in the best of times, it’s never wise to go overboard on gifts. But by making the right moves during this holiday season, you can also help ensure that you stay on track toward your long-term financial goals.

Specifically, what steps should you be taking during these weeks? Here are a few suggestions:

Avoid racking up big debts. In a time of economic uncertainty, the last thing you want is to take on a new debt load. Everyone in your life who is important enough to receive a gift from you will understand if you don’t splurge on presents you can’t afford. And winter can be pretty gloomy when you’re trying to pay off big credit card bills from the past holiday season.

Establish a gift fund. For next year’s gift-giving season, you may want to open a special “gift fund.” Of course, it’s not easy for any of us to find “extra” money after we’re done paying our bills, so the best way to set up your gift fund may be to have the money moved automatically each month from your checking or savings account to another liquid account — one that you wouldn’t normally touch for your day-to-day expenses. Even if you can only afford to put in a small amount each month, you might be surprised at how much you’ll accumulate in a year.

 Don’t touch long-term investments to pay for gifts. Some people tap into their long-term investments to pay for holiday gifts, telling themselves they’ll re-fund the investment when they “get caught up” — but that rarely happens. In fact, once you cash out part of an investment to pay for a gift or an everyday expense, you’ll set yourself back in your pursuit of your financial objectives — so do whatever you can to help preserve  those investments. Apart from setting up a gift fund, you’ll also want to make sure you have a reasonable amount of “cash” and cash equivalents in your investment portfolio.

Protect yourself from identity theft. Victims of identity theft can testify that it’s an enormous — and possibly expensive — hassle. Unfortunately, identity theft seems to go up during the holiday season, so take steps to protect yourself. When you go out shopping, just take one debit or credit card with you — and look around whenever you use it. Identity thieves have been known to copy down credit card numbers and even photograph credit cards with cell phones. Also, if you’re shopping online, make sure you’re on a secure web site. One way to check for a secure site is to look for “https” in the Web address, along with the icon of the locked padlock on your browser’s status bar.

Shop early for bargains.  As you probably know, some of the best bargains come during stores’ “after-holiday” sales. By taking advantage of these sales, you can stock up on gifts for the next holiday season.

By following these suggestions, you may be able to remove a lot of the financial stress that often accompanies the holidays — and that, by itself, can help you enjoy the season even more.

By: Fred Hilsenrath

The Rotary Club of Fairfield Bay held its regular scheduled meeting at noon at the IHCC on Nov. 4. Our president, Terry Lee, opened the meeting with the usual Pledge of Allegiance.

This time we had a special treat.  Bob Wilson and Rolando Lopez described the work Rotary together with the local community did, building water supplies for villages in Honduras. Mesquite villagers get their water from rivers. The water however is polluted from dead animals and other disease laden pollutants. Living conditions in those villages are primitive. Families live in tents or little huts badly in need of repair. The men did not do the needed volunteer work. They are busy providing the meager needs of the family. The local population was enthusiastic in providing volunteer help in dam building but it had to be the women and children.  The dam and waterworks are built without engineering reports and building permits. Rotary also helped in opening a vocational tech school where they teach basic electrical work, plumbing and sewing and more; these are courses that will raise the standard of living. Rotary contributed 12000 to the projects. Rotary also ships clothing to Honduras via returning banana ships. Mr. Wilson is a member of the Heber Springs Rotary and Mr. Lopez is Honduran.

It is amazing to see such undeveloped areas so close to the USA where we live with all the comforts. Mr. Lopez showed us photos of  smiling locals. They appear to be quite happy. I sometimes wonder about our happiness linked to possessions and comfort.

Changing "Seasons" of Life May Require Changes in Investment Strategy

As we make the transition from autumn to winter, you may be reminded that seasons don’t just change on the calendar — they also change in your life. And as you move from one season of your life to another, you’ll find that some of your goals may have changed. Consequently, as time goes by, you may need to adjust your financial strategies as well.

To illustrate the “seasonal” nature of your investment strategies, let’s quickly go through a typical life cycle and look at the differing financial goals at each stage:

Starting out — When you are beginning your career, you may not have a lot of money with which to invest, but it's important to try to put away something each month. If you have a 401(k) where you work, take advantage of it — your money is deducted, pretax, from your paychecks, so it’s an easy way to start investing. And at this stage of your life, consider investing primarily for growth. Of course, when you invest in growth-oriented vehicles, you typically assume an above-average degree of risk because the price of these investments can fluctuate greatly over time. However, if you buy quality investments and hold them for many years, you may be able to overcome the “blips” along the way and benefit from the growth prospects these vehicles can offer.

Middle years — During this season of your life, things have likely changed. Your kids may have already graduated from college or otherwise left home, so you may need to re-evaluate your life insurance needs. You’re likely earning more money and have more available to invest — which means, among other things, that you should consider “maxing out” on your IRA and also putting as much as you afford into your 401(k) or other employer-sponsored retirement plan. Because you may have a decade or more until you retire, you still may need considerable growth potential from your investments. At the same time, though, you might not want to invest quite as aggressively as you did when you started out, so you may want to increase the percentage of bonds and other fixed-income vehicles in your portfolio.

Retirement years — Many people assume their expenses will drop when they retire. And some will drop — but others, such as health care, will increase. Furthermore, it’s not at all unusual for people to spend two, or even three, decades in an active retirement — and during those years, inflation can be a factor. Consequently, even as a retiree, you'll find that growth-oriented investments are important, balanced with others that provide income. Furthermore, you’ll want to manage the withdrawals you take from your IRA, 401(k) or other employer-sponsored retirement plan to help make sure you don’t outlive your resources. At the same time, you should consider exploring estate-planning techniques, such as life insurance trusts, that can help you leave the legacy you want without burdening your heirs with heavy estate taxes. To help you meet these needs, work with your tax advisor and estate-planning professional.

The seasons of the year change every three months. The seasons of your life change much more slowly, but these changes can have a big impact on your financial situation.

By Rich Fischer

The North Central Arkansas Regional Economic Development (NCARED) Corporation board recently held their November meeting on the Melbourne campus of Ozarka College.  Board Chairman, Greg Bess, convened the meeting which included representatives from Searcy, Stone, Izard, Baxter, Sharp, and Fulton counties.  No representatives from Van Buren or Marion counties were in attendance.

The first item on the agenda was an update on the planned Regional Adult Leadership Program that will be rolled out in 2010.  As NCARED Executive Director and chair of the Education committee; Gil de Lorenzo, was not in attendance, Izard County Board member, Ken Ballman, shared that a Leadership Program meeting had been scheduled for noon on November 16th at Ozarka College in Melbourne.  Further information on the purpose and content of the meeting will be forthcoming.

Izard County NCARED Board member and leader of the Creative Economy team, Rich Fischer, next provided a brief update on the Creative Economy initiative.  Development work continues on the Naturally Ozark website, with a conference call held on October 20th during which site design work done to date by the DINA Program was reviewed.  A first pass at the layout and design for the website homepage had been completed and hardcopy of a screen print of the page was shared.  The next step will be to add additional photos to the site and begin plugging in functionality.  Another conference call will soon be scheduled to continue tweaking the website as more work is completed by DINA. 

Fischer further recommended that additional domain names NaturallyOzark.net, .org, and .info also be obtained with linkages to be established to the .com site.  A motion was passed to allocate funds sufficient to execute this activity.  Efforts to trademark the Naturally Ozark name are also on Fischer’s radar screen for upcoming attention.

Production of an NCARED quarterly newsletter was the next topic of discussion.  Fischer, who had accepted the chairmanship of a Newsletter Committee at the Board’s October meeting, shared a draft of the format and layout which he had developed.  All agreed that increased visibility into what NCARED is doing and had accomplished was critical to the ongoing success and viability of the organization.  The Board quickly approved moving forward with the newsletter as presented, with Fischer accepting temporary editorial responsibility.  The first issue of the newsletter was scheduled for distribution in mid January of 2010.  Recipients of the publication will include NCARED region county and municipal elected officials, Chamber of Commerce presidents, NCARED board members, and key business leaders.

Board chairman Bess next reminded the group that nominees for 2010 Board member positions were now be accepted and urged those present to advise Executive Director de Lorenzo and himself of candidates willing to serve in the various roles. 

In the final piece of business, Ken Ballman provided a brief update on the recent activities of the North Central Arkansas Tourism Council (NCATC).  FAM (familiarization) tours had been conducted in Calico Rock, Horseshoe Bend, and Hardy in conjunction with a mayors’ meeting that was held at Hillhigh Resort in Horseshoe Bend.  All involved enjoyed the tours with many making plans to come back to fish or just enjoy the many things the area has to offer.

With Board business concluded, Chairman Bess introduced program speaker, Dr. Richard Dawe, President of Ozarka College.  Dr. Dawe shared his feeling that community colleges should serve as a stimulus for economic development.  He indicated that Ozarka was “on the cusp of a growth phase” which would begin in earnest as the economy continues to get back on track.  Aggressive planning for this growth is now underway.  Plans for continued expansion of the Ozarka nursing curricula and possible development of a program somehow associated with aviation were on the table for consideration.

Dr. Dawe further stated his interest in working closely with regional groups such as NCARED to collaborate on identifying what other types of educational programs would be of value to the area and its residents.  He acknowledged that in today’s challenging fiscal environment there are great strengths and advantages in developing coalitions, especially when seeking grant funding.  Those entities issuing grants are even more interested in getting the “biggest bang for their buck” during tough economic times such as these.

In closing, Dr. Dawe shared his interest in the possibility of starting up a Small Business Development Center (SBDC) at Ozarka which would serve as “an incubator for small business enterprises” offering support in areas such as business plan development, market analysis, etc. 

The meeting concluded with guest Renee Doty from the Arkansas Economic Development Commission (AEDC) advising that four (4) NCARED member counties had not yet established a Site Editor or Property Manager on the new Arkansas Site Selection website.  If not completed by the January 1st deadline, then these counties’ profiles would be dropped from the website.  Ms. Doty offered her assistance to any county in need of guidance on how to proceed.

Everyone Wins When You Make Charitable Gifts

It’s Thanksgiving time again. Like everyone, you have many things in your life for which you are thankful. And you may want to show your appreciation for what you have by making a gift to a charitable organization. If you do, both you and the charitable group can come out ahead.

Of course, it’s no secret that 2009 has been a pretty rough year, with most of us feeling the effects of the recession in one way or another. Consequently, you may feel that you can’t really afford to make charitable gifts right now. But there’s probably never been a more urgent need for these gifts, as the distressed economy has led to a decline in contributions for charities across the country. Furthermore, your charitable gift can provide you with some distinct economic advantages.

Specifically, by making charitable contributions, you can gain these tax benefits:

You can take an immediate tax deduction. If you itemize your taxes, you can deduct your contributions to charitable organizations, as long as they are “tax qualified.” (Be sure to ask the organization if it has tax-qualified status.) Your tax deductions for charitable contributions are generally limited to 50 percent of your adjusted gross income. (If you want to claim a deduction for the 2009 tax year, you’ll need to make your contribution before Jan. 1.)

You can avoid capital gains taxes. If you want to support a charitable group, you’re not limited to making cash contributions — you can also donate other assets, such as stocks or real estate. If you’ve held these assets for a long time, their value may have risen considerably, despite the volatility of the financial and real estate markets the past couple of years. If they have appreciated, and you wanted to sell then, you’d have to pay capital gains taxes on your profits. But if you donate these assets, you can avoid the capital gains liability while still claiming the tax deduction.

You can remove assets from your taxable estate. In 2010, the estate tax is repealed, but it will be back in 2011. Estate taxes can be heavy, and if your heirs aren’t prepared for them, they may have to sell assets to pay them. To possibly help avoid this problem, you may want to reduce the value of your taxable estate. One way of doing this — and of also receiving an immediate income tax deduction — is to donate assets, such as investments and property, to a charitable group. If you want to still enjoy the benefits of these assets while you’re alive, you could transfer them to a charitable remainder trust, which can then sell them and reinvest the proceeds, out of which you could receive an income stream for life. Upon your death, the charity you have designated will receive the remainder of the trust’s assets. (To properly establish this type of trust, you’ll need to work with a qualified legal advisor.)

As you can see, the old saying “when you give, you also receive” is certainly true when it comes to making charitable donations. So, during the upcoming holiday season, be as generous as possible — to charitable groups and to yourself.

Ralph Nollenberger was welcomed to the ranks and admitted to membership in the Rotary Club of Fairfield Bay on November 4, 2009. Ralph’s interest in Rotary stems from the experiences of his brother with Rotary International Student Exchanges. As a long time teacher of math, he will be an asset on the Scholarship Committee, this club’s signature service project. As a member of the Rotary Club of Fairfield Bay, he is also a member of the worldwide association; and by virtue of his membership in this club, he will be welcomed into the fellowship of any Rotary club in the world.

Time to Make Post-recession Investment Moves?

Like a tiresome dinner guest, the recession has long outstayed its welcome. But there are some clear signs that the economy has begun to turn around. If that is indeed the case, how should you, as an individual investor, respond?

Before we get to that question, let’s quickly review some of the key factors that suggest the recession may be ending. First, we’ve seen four straight months of gains by the Conference Board’s Index of Leading Economic Indicators. Also, the job market is improving somewhat and bank lending is increasing. The Federal Reserve’s efforts to stabilize the financial system have improved conditions in the corporate credit markets, as indicated by a dramatic increase in the amount of new bonds issued by companies thus far in 2009. We’ve also seen improvements in the housing market and in industrial production.

 Even if all this evidence indicates the recession is ending, does that necessarily mean that boom times for investors will follow? A look back in time shows reasons for optimism. In 10 recessions, extending from 1949 through 2001, the S & P 500 rose, on average, 9.5 percent six months following the recession’s end date, and 15.5 percent after 12 months, according to Ned Davis Research. Of course, as you have no doubt heard, past performance is no guarantee of future results, but in years gone by, staying in the market rewarded long-term investors —those who could look beyond the recession at hand. 

In any case, if the recession is ending, let’s return to our original question: What investment moves should you make? As we’ve already seen, the most important step you can take is to remain invested — and if you’re out of the market, consider getting back in. As exhibited by the strong market rally this summer, large gains can come quickly, but they only come to those who aren’t on the investment sidelines.

In addition to staying invested, consider these other post-recession moves — which are actually pretty good moves before and during a recession, as well:

Look for quality.  In any economic environment, you’ll be making a smart move by focusing on quality investments that fit your unique situation. You may look for the stocks of those companies with strong management teams and competitive products. And stick with investment-grade bonds, if fixed income is appropriate.

 Diversify. Build a portfolio containing a variety of investments, including stocks, bonds, government securities and certificates of deposit. While diversification, by itself, can’t guarantee a profit or protect against a loss, it can help you reduce the long-term effects of volatility on your holdings.

 Keep a long-term perspective. It’s not easy to overlook market fluctuations, especially severe ones, but if you can keep your eyes on what you hope to achieve in the future, you might be less likely to over-react to short-term events. While you may need to periodically adjust your investment mix in response to changes in the economy and in your own life, you’ll be better off, in the long run, by establishing a strategy that’s appropriate for your individual risk tolerance and goals — and sticking to it.

As individuals, we’re all subject to the ebbs and flows of the economy. But by focusing on those things you can control — such as buying quality investments, diversifying and thinking long-term — you can become an investor for all seasons.

The Rotary Club of Fairfield Bay held its regular scheduled meeting at noon at  IHCC on Oct. 21, 09.  Terry Lee opened the meeting with the usual Pledge of Allegiance.

Kim Manville and Kim Waring informed us about the rescue service in Fairfield Bay.

The service , called Code Red, is active 24 hours a day  and 7 days per week on 911.

The Code Red was started in Van Buren Co in June of 2008. It is an emergency alert system that is used for natural disasters, man-made disasters, Search & Rescue, Public Works, Crime (such as a missing person, escaped prisoner), and weather warnings such as a tornado.

 Everyone who has telephone service is signed up for the code red alert systems and will receive everything that is sent out except for the weather warnings. You do have the option of receiving the weather warnings and what type of weather warnings you want such as severe thunderstorm, tornado, or flash floods. This is done by calling the Fairfield Bay Police Dept.

Should You Add “Munis” to Your Portfolio?

 It’s election season. Although you won’t be selecting either a new president or a new Congress, you may well have the opportunity to vote on something that can affect your city or state: municipal bonds. However, just because you vote to give your state or local government permission to issue municipal bonds doesn’t mean you have to invest in them. But should you?

Before you can answer that question, you need to know what municipal bonds are and how they work. General obligation bonds are backed by property taxes and finance projects from cities, counties, school districts and states. Revenue bonds are backed by a specific revenue source and finance hospitals, utilities, airports, affordable housing and other public works. So when you invest in a revenue bond, you are being somewhat civic-minded, although you aren’t confined to bonds issued by your city or state.

You can get other tangible benefits from investing in municipal bonds, or “munis.” First, you’ll receive regular interest payments. Just as importantly, these payments typically are exempt from federal income taxes — and possibly state and local income taxes as well. Keep in mind, however, that they may be subject to the alternative minimum tax. Consequently, if you’re in an upper tax bracket, you may be especially interested in munis.

Still, before investing in a muni, you’ll want to determine its yield. Basically, a bond’s yield is the rate of return it promises at any given price; when a bond’s price rises, its yield usually falls, and vice versa. The longer the time to a bond’s maturity, the greater its interest rate risk. To compare the yield of a tax-free muni to that of a taxable bond, you must calculate its tax-equivalent yield, which is based on the muni’s interest rate and your individual tax bracket. For example, let's say you are considering a tax-free muni that pays 4% interest, and you’re in the 28% tax bracket. To determine the bond's tax-equivalent yield, subtract your tax rate (.28) from 1, giving you .72. Then divide the bond's rate, or .4, by .72, giving you 5.5%. This means you would need to find a taxable bond that pays at least 5.5% to equal the yield of a tax-free muni paying 4%.

Even if you’ve determined that a tax-free muni’s yield compares favorably to that of a taxable bond, you need to assess some of the potential risks of owning munis. For one thing, municipalities are clearly not exempt from the effects of the long and harsh recession we’ve experienced. Consequently, some projects funded by munis may have trouble generating the revenue needed to repay the bonds’ investors.

Another potential issue to consider with munis is their liquidity. Some states, such as New York and California, issue a great many bonds, which are traded regularly. But some municipalities operate in more illiquid markets, so if you buy a muni from one of these issuers, you may need to hold it until it matures.

Also, munis are traded “over the counter” rather than on an exchange, so it can sometimes be difficult to get a price quote for your bond, not to mention a buyer. These liquidity issues may not matter to you, however, if you intend to hold your bond until maturity, collecting regular interest payments along the way and eventually receiving your principal back. There is also credit risk when investing in bonds, where if the issuer defaults you could potentially lose all of your principal.

In any case, as long as you’ve done your research and gotten help from a qualified financial professional, you may find that municipal bonds can benefit you — so give them some thought.

The Rotary Club of Fairfield Bay held its regular scheduled meeting at noon at the IHCC on Oct 14 09.  Robert Otis opened the meeting with the usual pledge of allegiance.

Dr Mark Davis gave us a very informative talk about dental implants.

Although not for everyone, dental implants are a wonderful way to replace lost teeth.  Either attritional or accidental loss of teeth can cause a loss of bone in the jaws.  Only in the last few years have dental implants been a way to treat single tooth loss or total edentulousness.  Sometimes placing only two or three implants can secure a once very loose denture.  Why replace perfectly good teeth with crowns and bridges when a single tooth implant would be so much more conservative and about the same cost?  The same technology of replacing defective knees and hips with titanium has now been shrunken to aid in the restoration of the human mouth.  Age is not a deterrent, inadequate bone sometimes is.  Even inadequate bone or sinus involvement can be dealt with sometimes using bone grafts and sinus lift procedures.  Titanium and zirconium all ceramic materials are creating lifelike dental aesthetics cases.  Dental implants are just another reason to smile.

Our insurance companies still refuse to recognize dental implants as a valuable procedure and do usually not cover the cost. This is another example of the shortsightedness of our insurance companies.

The Rotary Club of Fairfield Bay wishes to express gratitude to the following businesses and individuals who donated prizes the Rotary “EndPolioNow” Fundaiser,  A Nite at the Races.

Anna Owens

Arkansas Grand Showroom

Artisans Gallery

Batesville Furniture

Carnathan Clinic

Carters Hardware

Coltons Steak House

Dolores Anaya

Edward Jones

Fairfield Bay Marina

Fairfield Bay Pharmacy

Fairfield Bay Senior Center

Floral Fashions

Greg Mote

Heber Springs State Bank

Indian Hills Country Club and Golf Course

Janssens on the Lake

NCAFA&E

Peace Lutheran Quilters

Rita Bintliff

Ruby Krimm

Stas’ Productions

Sweet Shoppe

Thorncrown Chapel

Togas on the Bay

Avoid These Scary Investment Moves

It’s Halloween time again, so you’ll probably be seeing a lot of ghosts, goblins, witches and werewolves. While you may find these sightings more amusing than fear-inducing, you don’t have to look far to find things that really are frightening — such as scary investment moves.

Fortunately, by recognizing these sinister steps, you can help avoid them. Here are a few to consider:

Scary Move No. 1: Trying to “time” the market — If you always knew when to “buy low and sell high,” you’d be a tremendously successful investor. Unfortunately, no one can accurately predict highs and lows — and if you try to jump in and out of investments in response to speculation about where the market is heading, you could end up missing good opportunities. You’re typically better off by staying invested and investing based on your individual risk tolerance, time horizon and need for diversification. (Keep in mind, though, that diversification, by itself, cannot guarantee a profit or protect against a loss.)

 Scary Move No. 2:  Chasing after “hot” tips — You can get “hot” investment tips from anybody — your neighbor, your brother-in-law or even that guy you always see at the bus stop. But while these tips may be well intentioned, they may be flawed, f or a couple of reasons. First, if an investment really was “hot,” by the time you hear about it and get around to purchasing it, it may already be cooling off. But more importantly, it might not be suitable for your individual needs. Look for investments that you understand and that can help you meet your goals.

Scary Move No. 3: Investing too aggressively — or too conservatively. If you invest too aggressively, you could be taking unnecessary chances. On the other hand, if you invest too conservatively, you may never achieve your long-term objectives. Try to find a mix of investments that fits your individual risk tolerance.

Scary Move No. 4: Leaving your portfolio “unbalanced” — Over time, your individual situation will change, as will the fundamentals of some of the investments you own. That’s why it’s important that you regularly rebalance your portfolio, possibly with the help of an experienced financial professional.

Scary Move No. 5: Failing to take advantage of investment opportunities —   To help meet your goals, such as a comfortable retirement, it's important to take advantage of  suitable investment opportunities.   Contribute as much as you can afford to your 401(k) or other employer-sponsored retirement plan, as well as your IRA and other retirement accounts you may have. As an investor, your greatest ally is time, so the more years you invest — especially when you’re investing in tax-advantaged accounts such as a 401(k) and an IRA — the greater your prospects for achieving your financial objectives.

You can’t elude all the pitfalls that life may hold in store. But by avoiding these terrifying investment moves, you can help improve your prospects for long-term success — and that’s not a scary thought at all.

By: Fred Hilsenrath

The Rotary Club of Fairfield Bay held its regular scheduled meeting at noon at the IHCC on Oct 7  09.  Terry Lee opened the meeting with the usual pledge of allegiance.

Ralph Nollenberger from Fairfield Bay gave a most astonishing talk about pulmonary fybrosis. This disease , Idiopathic Pulmonary Fibrosis, is scarring or thickening of the lungs without a known cause.  The Symptoms are:

· Chest pain (occasionally)

· Cough (usually dry)

· Decreased tolerance for activity

· Shortness of breath during activity (this symptom lasts for months or years, and over time may also occur when at rest)

· Life expectancy is only 5 years

There is no known cause nor is there a known treatment except double lung transplant.  Ralph came down with this affliction a few years aqgo.  At first a lung transplant was refused but eventually Ralph and his wife Becky found a Hospital in Alabama that would do the operation. It was successful and now, years later, Ralph looks healthy and feels good.  What a heartwarming story and what courage and persistence it took to live through it.

Ralph is actively campaigning and encouraging people to sign up for organ donations after death, accidental or natural.

Keep Inflation in Mind When Investing

As an investor, you’re always aware of the potential effects of market volatility on your portfolio. But you also need to pay attention to another factor that could impact your investments’ return — inflation.

If you look back over the last few decades, you might not think inflation is much of a threat. Since the double-digit rates of the early 1980s, inflation has fallen significantly and, for the most part, has stayed low. Still, over time even a mild annual inflation rate can eventually erode your purchasing power.

Obviously, if you’re a retiree, or close to retiring, you need to plan for the impact of inflation on your income stream, which may, to a large degree, depend on the types of investments you own. But even if you’re at an earlier stage in life, you need to think about inflation because it can reduce the “real” rate of return you receive on your investments.

In any case, you can find investments that may be able to help you cope with inflation. When you own stocks, for example, you’ve got an ownership stake in companies that have the ability to raise prices — which make them effective inflation-fighting investments.  Keep in mind an investment in stocks fluctuates and you can lose your money.

But one of the biggest inflation-fighting benefits of stocks is the dividends that they may pay. Well-run companies may reward investors by paying them back with dividends — and some companies have increased their dividends annually for decades. A word of caution, though: Companies can reduce or eliminate them at any time, without notice. In fact, during the long market slump we experienced, some companies did cut back on their dividend payments.

Not all stocks pay dividends, of course. In any case, if you’re going to maintain a balanced portfolio, you’ll also want to own other types of investments, such as bonds.  But many bonds — along with other fixed-income vehicles, such as Certificates of Deposit — are not good “inflation fighters” because the fixed rate of return they offer simply may not keep up with inflation. However, if you built a “bond ladder” — that is, a group of bonds with varying maturities — you’d have more flexibility in combating inflation, because your longer-term bonds typically offer higher interest rates.

What about the so-called “inflation hedges,” such as commodities and real estate? Actually, these “hedges” are extremely volatile and should be approached with great caution. You need look no further back than the bursting of the housing “bubble” to see that real estate, for instance, can go down just as fast as it goes up — and once down, it can take years to recover.

In your efforts to invest wisely for the future, inflation is only one of the variables you need to consider. But it can be an important one — so make sure you choose the investments that both address inflation and can help you make progress toward all your financial goals.