MEA Investment Services
It’s not enough just to invest. At MEA we help you choose the right mix of investments to help you meet your goals. Many factors need to be considered, such as your previous investment experience, your time horizon for your investment goals, and your tolerance for risk, just to name a few. Additionally, it might be important to decide how to spread your money among different:
- Asset Types – Choose from stocks, bonds and cash. Note that equity investments are subject to market fluctuations, while lower-rated bonds are subject to fluctuations in value and risk of loss of income and principal.
- Sizes and Types of Companies – You can opt for investments in large, established companies or small cutting-edge companies; they each have their own benefits and risks. Investing in smaller companies entails additional risks, due to their small asset size. However, large companies may have difficulty keeping up with a rapidly changing market.
- Geographic Regions – You can invest primarily in the United States, internationally or globally. Investing outside the U.S. – especially in developing countries – entails additional risks, such as currency fluctuations and potential political instability.
By diversifying – choosing a wide variety of investments – we can help you reduce the volatility of your overall portfolio. Diversification does not ensure a profit or protection from losses.
Mutual funds pool the assets of multiple investors, and raise money to invest. We will help you understand the benefits and risks of mutual funds and how they may apply to your situation. Mutual funds may give you the diversification, convenience, and professional management which meet your needs.
Our financial professionals are experienced in identifying risks and opportunities inherent in purchasing stock (shares in the ownership of a company) as an investment, and our goal is to help you determine if and how to invest in stocks. Most stock investments are in common stock, which gives the stockholders the right to vote for the board of directors, receive information about the firm, and share in the profits of the company.
Preferred stock shareholders don’t have the right to vote for the board of directors, but they are paid dividends before the common stock holders, and if the company is forced to liquidate, preferred stockholders have priority over common. At MEA we can help you explore the benefits and risks of preferred stock (which holds characteristics of both common stock and bonds) in helping you reach your financial goals.
Corporate / Government Bonds
Bonds are a stable, predictable source of current income, and US government and municipal bonds have additional tax benefits. As part of your overall portfolio, we can help you determine if bonds are right for you.
What are bonds? When an institution such as a government or a corporation wants to borrow money, it does so by creating a bond. The bonds are then sold to many investors. The investors receive periodic interest only payments, and the principal is repaid in a lump sum at a predetermined time.
Exchange Traded Funds (ETF)
Brokers buy and sell exchange traded funds at current market prices whenever the exchange is open. Our investment representatives can explain the benefits (lower operating costs, tax benefits, trading flexibility and no required minimum purchase) as well as the disadvantages (commission charges and fees) which come with this type of investment.
Managed accounts are fast-growing, fee-based investment management products for individuals. The appeal of managed accounts is the access to professional money managers, high degree of customization and greater tax efficiencies in a fee-based product. There is also broad agreement that managed accounts provide the added well-known benefits of TLC: greater transparency, liquidity and control. Managed account minimums and the cost to operate managed account programs have steadily dropped as technology helps with efficiency and scale. Increasingly, the managed account products are seeing interest from the “mass affluent” as well.
Certificates of Deposit CDs
A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are “money in the bank” (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.
In exchange for keeping the money on deposit for the agreed-on term, institutions usually grant higher interest rates than they do on accounts from which money may be withdrawn on demand, although this may not be the case in an inverted yield curve situation. Fixed rates are common, but some institutions offer CDs with various forms of variable rates. For example, in mid-2004, with interest rates expected to rise, many banks and credit unions began to offer CDs with a “bump-up” feature. These allow for a single readjustment of the interest rate, at a time of the consumer’s choosing, during the term of the CD.
The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short-term financial instruments commonly called “paper.” This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity. The core of the money market consists of banks borrowing and lending to each other, using commercial paper, repurchase agreements and similar instruments. These instruments are often benchmarked to (i.e. priced by reference to) the London Interbank Offered Rate (LIBOR) for the appropriate term and currency.
An alternative investment is an investment product other than traditional investments such as stocks, bonds, cash or property. The term is most commonly used to describe investments in tangible assets such as art, wine, antiques, coins or stamps but may include some financial assets such as commodities. Private equity and hedge funds are also sometimes called alternative investments and the term is a relatively loose one.
Many people have 401(k) plans from a previous employer and sense that they should be doing something with the investments. Tax regulations and investment options seem to be an ever-moving target. At MEA we specialize in assisting our clients with understanding the available options for their 401(k), including direct (tax-free) rollovers and/or retirement income strategies for distribution planning. Note that careful attention should be paid to any distributions prior to age 59 1/2 that might be subject to tax penalties.