Published by: Lyon Capital Management, LLC - A Registered Investment
Advisor
24B Grove Street * Pittsford, NY 14534 * Tel: 585-248-9821 *
www.lyoncapital.com
T.I.P.S or Treasury Inflation Protected Securities are a new and interesting investment
vehicle that any astute investor should investigate. T.I.P.S. are issued by the U.S.
Treasury. The payments of their interest and principal are made and backed by the U.S.
government. T.I.P.S. are so named because the principal value is protected from inflation.
The return investors can expect from T.I.P.S. is in two forms:
| 1. |
Interest paid by the borrower (the
federal government) at a constant rate semi-annually over the life of the bond. |
| 2. |
Increases in the principal value of
the bonds based on the level of inflation over the life of the bond. |
Interest paid by T.I.P.S. is like that of conventional
bonds. The increases in principal value, however, need a little explaining. When the bond
is first issued the principal value or par value is $1,000 per bond. Over the life of the
bond the principal value changes with the consumer price index (CPI), a common measure of
inflation. If the investor bought a 10-year bond when it was originally issued and held it
to maturity and inflation averaged 2% per year, the principal the investor would receive
at maturity is $1,220 per bond. An investor in a bond without inflation protection would
receive $1,000. While the principal value of T.I.P.S. goes up, and sometimes down, with
changes in consumer prices, the principal value never goes below $1,000 or par.
The interest on T.I.P.S. is subject to federal income tax just like any
other taxable bond. Any increases in the principal value due to changes in the CPI are
also taxable in the year of the increase but not at maturity. Because of this feature of
taxing an increase in principal when no income is received, we typically hold T.I.P.S.
only in tax-deferred accounts like IRAs or 401k/Profit Sharing accounts.
At the current time inflation does not appear to be a problem. As we all
know events happen in cycles. And, often when something seems least likely to occur, that
is when that event does happen. Even though inflation is not a problem now, that could
change in the future. The advantage of the T.I.P.S. are that they offer a hedge against
inflation.
T.I.P.S. have a place in most tax-deferred portfolios. To learn more
about T.I.P.S. or to find out how they might fit into your investment plans, please
contact Lyon Capital Management. $$
Trust and Estate Account Management
By Kate Lyon
Did you know that a registered investment advisor like Lyon
Capital Management can manage the funds in a trust? If you are the trustee of a trust
or are interested in establishing a trust you can have Lyon Capital Management manage
these assets for you.
Did you know that an investment advisor can manage funds in an
estate account? An estate account is typically established when an individual dies. The
monetary assets of the deceased are moved into an estate account held in the name of the
executor. If you are the executor of an estate you may establish an estate account
through Lyon Capital Management.
Often these accounts are managed by banks. Investors are not aware they
have other options. An attorney, who may have a long-standing relationship with a bank,
may often advise clients to use a bank merely out of habit.
Advantages of using Lyon Capital Management for trust and estate
accounts:
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You use an advisor with whom you
have an on-going relationship to oversee assets, rather than starting a new and uncertain
relationship with a bank. |
|
The custodian we use holds funds for
these types of accounts and does not charge a fee to do so. |
|
We have experience acting as a
liaison between trust and estate attorneys, accountants and clients to provide the advice
and management required for these accounts. |
|
As a CFA--Chartered Financial
Analyst--Doug Lyon has undergone specific training for the fiduciary responsibilities that
accompany managing a trust or estate account. |
|
We make investments that are easily
transferable. This is especially important as an estate settles. Banks often invest trust
or estate assets in proprietary mutual funds that are costly and assess a penalty if you
wish to liquidate. |
If you are the trustee of a trust or the executor of an estate and wish to work with a
trained advisor and someone who has only your best interests in mind, contact Lyon Capital
Management $$
The Role of a Registered Investment Advisor
By Douglass C. Lyon, CFA
What, exactly, does an investment advisor do? Our clients give us discretionary power
to make decisions about when and where to invest their money. We manage money for
individuals, and corporations. We invest primarily in individual securities: stocks and
bonds. We are called a “registered” investment advisor because we are registered
with the appropriate state and federal agencies to do this.
What we don't do: We don't sell a "stock of the day" or "fund of
the moment." We do not sell a product for which we receive a commission. We
will not buy a proprietary mutual fund. We do not sell insurance or annuities. We do not
invest in unlisted securities, penny stocks, IPOs, puts, options, or other such exotics.
We are not brokers.
What you get: A professional investment service. A portfolio is
constructed for you based on your financial situation and goals. We buy and sell
securities for you and provide a quarterly account of your assets and their
performance. You receive stock reports that tell you about the stocks we buy.
In addition we act as a liaison between you and your accountant or you and your
attorney. We are the investment component of your professional financial
team.
Our investing style: Lyon Capital Management's investment style is best
described as "value-contrarian." We buy stocks that are undervalued and out of
favor (and often overlooked). We are long-term conservative investors.
Over time this investment style has been shown, statistically, to produce higher
returns with less risk than other styles.
How we are compensated? We are compensated by a fee based
on a percent of the assets in an account. It's incentive for performance! You pay only
our competitive fee and low brokerage commissions when we buy or sell a security. The
brokerage commission is paid to an outside broker, not us. We have no incentive to make
unnecessary trades.
Who holds the assets? We use a third party, nationally known
financial institution (called a "custodian") to hold assets. You pay no
additional fees for this service. Some firms use custodians who assess annual account
fees, fees for reports or checks, or for opening or closing an account. We do not.
Special qualifications: Doug Lyon, our investment manager, is
specially trained to select high quality investments and to assist clients in determining
how assets should be allocated between stocks and bonds. He has an M.B.A. and has earned
the Chartered Financial Analysts (CFA) designation from The CFA Institute.
Ask yourself:
|
Do you have a trained professional
managing your money? |
|
Do you have an investment strategy
in place? |
|
Do you know the percent gain (or
loss) of your portfolio each year? |
|
Have your investments consistently
generated strong returns with low volatility? |
|
Do you hear from your advisor
regularly? |
|
Do you feel you receive excellent
customer service? |
If you answered," no," to any of these
questions, then you deserve to see what Lyon Capital Management, a professional money
manager, can offer. Call us at 585-248-9821! $$
