Download Summer 2013 - Hansen`s Advisory Services, Inc.

S U M M E R
2 0 1 3
7067 East Genesee Street
Fayetteville, NY 13066
315.637.5153
“Investing in companies that give a hooooot”
www.hansensadvisory.com
Securities offered through Cadaret, Grant & Co., Inc. Member FINRA, SPIC ~ Hansen’s Advisory Services and Cadaret, Grant are separate entities.
TRUST, a Beautiful Word
The word, ‘trust’ has many connotations to all of us for a variety of
reasons. To be trusted and have trust wraps us in a feeling of security
and well being. When we are talking about a way to hold our physical
or monetary assets in protective custody, setting up a Trust is a way
to grant piece of mind to the benefactor.
One creates a trust to make sure they determine the eventual destination of their assets. If they wish to have the power to change what
they have written in a trust document, a revocable or living trust is
established. If they wish to give away their assets to a trust, appoint a
trustee(s) to administer the trust, they no longer have the right to
change the language of the trust document. This is an irrevocable
trust.
The Grantor puts money or other property in a trust, appoints a trustee, and specifies the rules of the trust. At a certain time the trustee
follows the rules and dispenses the property to the beneficiaries.
Grantor
Trust
Beneficiaries
If you have real estate or personal property that does not have a
beneficiary named, setting up a trust allows you to name the beneficiaries and explain how you want the ownership divided. You can provide this information in a will but sometimes wills are contested. A
trust is more difficult to contest and may protect your assets from
creditors.
An irrevocable trust places your assets outside your ownership.
This may be a benefit if you wish to lower your amount of wealth for
medical or estate planning reasons.
The word ‘trust’ came from private banks entrusted with the money
of depositors. Therefore, we have trust departments at banks. As
well as naming a family member or friend as a trustee of your trust,
banks can be trustees of personal trusts by themselves or in conjunction with another trustee.
Inside!
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Did You Know?
And the Good
News Is . . .
Q & A:
HAS News
Investing 101
common financial
questions answered
by Sue Hansen.
Fiat’s What You Got
You’ve probably heard of the Italian
made car, the Fiat. You may also know
the reference to fiat as an order or a government decree. And you may know that you
carry around fiat currency everyday. The
dollar and coins that allow us to purchase
goods or services is a fiat currency. The
word is derived from the Latin word, fiat,
that means ‘it shall be ’ or ‘let it be done’.
Our government has decreed that our
dollar and coins will be the way we will
pay for items of value. Fiat currency does
not have real value of its own. It is not like
silver or gold where the metal has a certain
worth by itself with no decree. If our coins
do contain metal it is still fiat currency
unless the metal is worth more than the
declared value of the coin.
There was a time when fiat currency was
used as a simpler way to trade one product
for another. Rather than having gold or
silver in your pocket you could have lighter
coins and paper currency. Each dollar
could be exchanged for a certain amount of
gold. We knew our money had collateral
and wasn’t created by a machine with no
way to measure its worth other than by the
machinations of the banks and economists
deciding the worth of our money. During
President Nixon’s tenure the dollar was
deemed ‘off the gold standard’ and our currency was no longer backed by gold.
Now the dollar’s strength is measured in
comparison to the fiat currencies of other
countries. The value of the fiat currency is
more likely to be based on a stronger economy and a more stable government.
Don't eat anything your great-grandmother wouldn't
recognize as food.
Michael Pollan
Did You Know?
GMO Labeling in US Getting Closer!
If you think we have a right to know when our food
contains GMOs (genetically modified organisms), you
will be pleased to hear there’s promising movement in
that direction. This spring, around 2 million people
gathered in 50 cities across the globe for a “March
Against Monsanto”—a protest of this company’s
GMOs in our food supply. A June ABC News poll reported 93% of Americans support mandatory labeling
of foods containing GMOs, 57% said they’d be less
likely to buy these products, and 62% feel they are unsafe. Also in June, Connecticut became the first US
state to pass a law that requires labeling foods with
GMOs—the vote was 134–3.
However, the law goes into effect when 4 additional
states (one of these bordering Connecticut) passes a
similar bill—and—any combination of northeastern
states whose total population is 20 million must also
approve comparable legislation. Even though this isn’t
an instant victory for mandatory labeling—it does
seem a positive development. For more information
on this topic, see Green American magazine (issue 94)
http://www.greenamerica.org/pubs/greenamerican/ and
check out their website http://gmoinside.org/ .
Why Did the Bear Cross the Road?
Well, if it was in Banff, Canada, it’s likely because
of underpasses built to facilitate safe road crossings.
Recent research shown from a 3-year bear hair collection project on both sides of the Trans-Canada Highway showed that 20% of two different bear populations were using the crossings regularly. This was important information to find, since planners needed
proof to warrant maintaining these crossings, and
building more.
With around a million vertebrates a day killed in
vehicle crashes, 200 humans killed each year, and an
average of $2,300 in property damage per crash—these
and other road crossing projects (such as an elk and
deer project in AZ) are important steps in addressing a
big problem. Not only can the crossing reduce fatalities and damages, but also increase the health and existence of wildlife populations, whose increasingly
fragmented habitats result in gene isolation, what biologists call the “island effect.”
You can read more about these projects in High
Country News online, links http://bit.ly/12P1Xl6 and
https://www.hcn.org/issues/358/17342 .
HAS News
Exciting event………….. HAS has had a very busy spring and summer doing what we usually do and working with a film maker to produce a video for our web page to illustrate the meaning of socially responsible investing, corporate responsibility, sustainable investing or any other like minded title. The interview for the film
contained in-depth questions about our business and the people we service. It also allowed us to show the
value we place on the goodness of the earth and all it provides. If there was to be a garden planted, a walk
taken, birds watched, kayaking at the lake, the enthusiastic film maker, Amanda Zachem, wanted to be there.
The film is ready to be seen by all. Go to our website: www.hansensadvisory.com or look it up on YouTube
(Sue Hansen—socially responsible investing). We enjoy watching it and hope you will too! Please share the
production with others you think would appreciate the essence of the video.
You may have noticed as you drive by our office, there are fewer trees. The greenery along the stone wall
was lacking luster and health as were several trees around the periphery of the building. This has opened up
our land space to much more light. We’ve increased the efficiency of our building’s heating and cooling system this summer by installing new flues for the distribution of air from the updated furnace and air conditioner.
Along with being a Green Core company and certified by Green America, we are now part of Syracuse First
which focuses on the success of local companies.
It's not too late at all. You just don't yet know what you are capable of.
Mahatma Gandhi
And the Good News Is . . . Eating Healthy and Local
This is the season of fresh and plentiful. The farmers markets and the roadside stands are all here for
another season of offering you, the consumer, the
opportunity to have a real say in what goes on your
plate. Yes, you can buy some items in the other 3
seasons but not with the ease, or confidence, that the
summer gives you. We’ve had the benefit of strawberries, squash, peas, beans , lettuce, other green
leafy goodies nestled among anything else that the
farmer has harvested—and they’re all local. Then
along comes apples, peaches, grapes, late summer
veggies- colors, smells, unfamiliar items all laid out
before you. You have an opportunity now to pick up
meat, flours, butter and much more from, literally,
the person next door. And as an added plus they can
tell you anything you want or need to know about
the goods they are selling. Many even have days that
you can come to the farm and see for yourself. And
don’t forget the CSA next year many offer. Look,
too, for the small local grocers and butchers that are
beginning to appear. Good eating and good healthfrom your local farmer to you!
Investing 101
When you invest you are either an owner or a
lender. If you invest in stock (or mutual funds that
hold stock), you own shares in companies. If you
invest in bonds or bond funds, you are lending
money to companies. Investing in stock is more
risky than investing in bonds. Within each category
there are varying degrees of market risk. Bonds increase in risk from US Government Treasury
bonds, to municipal bonds, to corporate and global
bonds, to high yield and emerging market bonds.
Stocks increase in risk from US Large Cap
(companies with a capitalization of 10 billion or
more) dividend paying, blue chip (well established,
financially stable) companies, to large growth and
global companies, to Mid Cap stocks (market capitalization 2-10 billion), to Small Cap stocks (250
million to 2 billion) and emerging market stocks.
Stocks of all categories are also broken down between dividend paying value stocks and growth
stocks.
Growth stocks are from companies that are in
their early or middle growth stages and are growing
faster than their peers or the overall market. The
companies reinvest their cash in their business
rather than declare dividends. Investors look for the
value of their share price to rise and to achieve
higher than market returns. These stocks are more
risky and volatile and usually do well in market upturn.
Dividend paying stocks are usually associated
with companies that have attained a certain size of
operations and do not need large capital investments for further growth. These tend to have high
cash flows, which they choose to return to shareholders in the form of dividends. These companies grow
at a steady pace and exhibit better resilience during
an economic downturn. Investors in these stocks are
exposed to lower downside risk and they prefer a
steady stream of income, though the gains usually not
as high as the growth stocks.
There are other types of risk in addition to market
risk. Interest rate risk applies to bonds. If interest
rates rise, the value of bonds declines. This is because
the bonds would have to sell at a discount to be competitive with higher interest products. There is also
inflation risk. Money invested in a savings bank or
credit union is safe from market risk. However, if you
are earning 1% on that investment and inflation is
3%, you are actually losing 2% in purchasing power.
This is inflation risk.
A financial advisor (like Sue or Gayle) can help
you craft a fully diversified, holistic investment strategy that considers your unique situation. We help
you review and adjust your portfolio as your life
changes. As a neutral third party, we provide balance
and offer specialized expertise. While you may have
access to a wealth of information, you probably don't
have time on a daily basis to delve into the nuances of
investing and investment products the way a financial
advisor does. A trusted advisor can provide a balanced perspective and encouragement to manage
your portfolio through the market ups and downs.
Diversification is the most widely accepted method of
reducing overall portfolio risk. An advisor can help
you stay on track to meet your goals with a truly diversified strategy.
HANSEN’S ADVISORY SERVICES, INC
SUMMER 2013
Questions and Answers
If you had $10 and it earned 1% per
year for 1 year and inflation was 2% in
that one year, how much money would
you have at the end of the year?
A: Ten dollars times 1% or .01 equals 10 cents.
Add that to the original $10 and you have
$10.10. Take the $10.10 and multiply it times
the inflation rate of 2% or .02 which equals 20
cents and subtract that from the $10.10 and you
will have $9.89. Since you have less than your
starting amount, you can see how inflation will
eat away at a low rate of return.
What happens to the value of my stock
when there is a stock split?
A: If your stock splits 2 for 1, that means you
will have two shares for every share you own.
If you had 100 shares, you will now have 200
Hansen’s Advisory Services, Inc.
7067 East Genesee Street
Fayettevi lle, NY 130 66
w w w . h a n s en s a d vis o ry. com
shares. Sound great, eh? But the price of the share
will also split. If the price was $20 per share, it will
now be $10 per share. Therefore, the value of your
shares will not change at the moment (100 times
20 = $2,000; 200 times 10 = $2,000). If the shares
go up in value during time, then you may very well
increase your earnings more than you would have
if it hadn’t split. The reason a company might
have a stock split is to encourage more people to
buy their shares since the price is lower.
There could be a 2 for 1 reverse split where your
shares are half the amount they were (100 shares
become 50 shares) and the price doubles ($20 per
share become $40 per share). This still does not
change your value unless the shares continue to
decline or the price goes down. If a company believes its share price is too low to attract investors,
this is one way to increase the price of the share.