| 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. $$
Trust and Estate Account
Management
By Kate Lyon
Did you know that a
registered investment advisor like Lyon Capital Management can manage the funds in a
trust? If you are the trustee of a trust or are interested in establishing a trust you
can have Lyon Capital Management manage these assets for you.
Did you know that an
investment advisor can manage funds in an estate account? An estate account is typically
established when an individual dies. The monetary assets of the deceased are moved into an
estate account held in the name of the executor. If you are the executor of an estate
you may establish an estate account through Lyon Capital Management.
Often these accounts are
managed by banks. Investors are not aware they have other options. An attorney, who may
have a long-standing relationship with a bank, may often advise clients to use a bank
merely out of habit.
Advantages of using Lyon
Capital Management for trust and estate accounts:
|
You use an advisor with whom you have an on-going relationship to
oversee assets, rather than starting a new and uncertain relationship with a bank. |
|
The custodian we use holds funds for these types of accounts and does
not charge a fee to do so. |
|
We have experience acting as a liaison between trust and estate
attorneys, accountants and clients to provide the advice and management required for these
accounts. |
|
As a CFA--Chartered Financial Analyst--Doug Lyon has undergone
specific training for the fiduciary responsibilities that accompany managing a trust or
estate account. |
|
We make investments that are easily transferable. This is
especially important as an estate settles. Banks often invest trust or estate assets in
proprietary mutual funds that are costly and assess a penalty if you wish to liquidate. |
If you are the trustee of a
trust or the executor of an estate and wish to work with a trained advisor and someone who
has only your best interests in mind, contact Lyon Capital Management $$
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! $$
