Cla august 2007

4
August 2007 A Financial Services Corporation Finance Matters Keeping you in touch with your financial future 9300 Wade Boulevard Suite 125 Frisco, Texas 75035 1.888.404.6848 www.clausa.com Telemarketing Fraud When you send money to people you do not know personally or give personal or financial information to unknown call- ers, you increase your chances of becoming a victim of telemarketing fraud. Warning signs -- what a caller may tell you "You must act 'now' or the offer won't be good." "You've won a 'free' gift, vacation, or prize." But you have to pay for "postage and handling" or other charges. "You must send money, give a credit card or bank account number, or have a check picked up by courier." "You don't need to check out the company with anyone." "You don't need any written information about their company or their references." "You can't afford to miss this 'high-profit, no-risk' offer." If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone. Some Tips to Avoid Telemarketing Fraud It's very difficult to get your money back if you've been cheated over the phone. Before you buy anything by telephone, remember: Don't buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply. Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, beware -- not everything writ- ten down is true. Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations. Obtain a salesperson's name, business identity, phone number, street address, mailing address, and business license number before you transact business. Some con artists give out false information. Verify the accuracy of these items. Before you give money to a charity or make an investment, find out what percentage of the money is paid in commis- sions and what percentage actually goes to the charity or investment. Before you send money, ask yourself a simple question. "What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?" You must not be asked to pay in advance for services. Pay services only after they are delivered. Some con artists will send a messenger to your home to pick up money, claiming it is part of their service to you. In reality, they are taking your money without leaving any trace of who they are or where they can be reached. Always take your time making a decision. Legitimate companies won't pre ssure you to make a snap decision. Don't pay for a "free prize." If a caller tells you the payment is for taxes, he or she is violating federal law. Before you receive your next sales pitch, decide what your limits are -- the kinds of financial information you will and won't give out on the telephone. It's never rude to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor. Never respond to an offer you don't understand thoroughly. Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons. Your personal information is often brokered to telemarketers through third parties. If you have information about a fraud report it to state, local, or federal law enforcement agencies. Excerpt from the Federal Bureau of Investigation Website (http://www.fbi.gov/majcases/fraud/fraudschemes.htm)

Transcript of Cla august 2007

Page 1: Cla august 2007

August 2007

A Financial Services Corporation

FinanceMatters

Keeping you in touchwith your financial

future

9300 Wade BoulevardSuite 125

Frisco, Texas 750351.888.404.6848www.clausa.com

A Financial Services Corporation

9300 Wade Boulevard, Suite 125Frisco, Texas 75035

PRE-SORTEDSTANDARD A

U.S. POSTAGE PAIDDALLAS, TX

PERMIT NO. 3998

Bonds might catch you by surpriseWhen it comes to protecting your assets, aren’t federal government bonds and municipal bonds a safe way to go? Can’t we count on these entities to make their payments?

Absolutely! Government bonds are a dependable way to receive predictable income payments. However, there is more to a bond that the interest payment. When you pur-chase a bond, you have linked your cash value to the in-terest rate you purchased. Later, if you need to sell the bond for additional access to your principal, you will be selling the bond based on interest rates available at thattime. In other words, if you own a 4% bond and the go-ing interest rate is 6% when you want to sell, you willneed to drop the price in order to attract a buyer. Bondtraders call this selling at a discount.

These “discounts” can be fairly significant as pointed out by the Vanguard Group, one of the worlds leading bond managers. “Many investors looking for safety and higherreturns might falsely assume bonds are riskless invest-ments, not realizing that even a modest increase in inter-est rates would take a serious bite out of fixed income values.”

Vanguard realizes the folly of many investors who do not understand that they can lose principal if interest rates head higher. Vanguard has rightfully warned investors in the past, “…the value of a long-term bond fund might fall 20% if rates went up just two percentage points.”

It would be wise to ask yourself, “Do I think interest rateswill be higher in the future than they are today?” Since the middle of 1982, bond yields have been steadily declin-ing and appear to have hit bottom in 2003. Since thattime, interest rates on the 10-year treasury have fluctuatedin between 4.50% and 5.10%. Higher interest rates in the future may be a reality.

The Chicago Board of Trade (CBOT) measures the vola-tility in price fluctuation of bonds each year. Over the last 27 years, bond prices have averaged annual swings of 10.6%. During the last two years, bond prices have been

extraordinarily stable averaging 54% less volatility com-pared to the last 27 years. When interest rates begin climbing, expect bond prices to react.

There is one other “surprise” bonds pull on investors.Many people overlook the tax exposure created by inter-est they are earning each year even if they are not usingthis income for ordinary living expenses. This includes a “sneaky” tax on Social Security benefits. Even Municipal Bonds interest counts toward a “threshold income” calcu-lation that erodes your Social Security benefits.

If you are not using the interest you receive from your bonds as income, you may benefit from another approach. You may want to consider a tax-deferred fixed annuity.

Individuals with threshold income of $34K or coupleswith earnings of $44K may see an increased tax burden.Under current rules, up to 85% of Social Security benefitscan be taxed. One way to reduce your threshold income is to take advantage of tax-deferred growth inside of a fixed annuity. The tax deferred build up in an Annuity is not counted in the threshold income formula.

This is a huge advantage for folks wanting to keep all oftheir Social Security benefits. A fixed annuity can also help you avoid that pesky bond volatility. In most fixed annuities, the insurance company guarantees your princi-pal and past credited interest allowing you to enjoy truegrowth without exposure to your principal. You can also access funds without cost or exposure throug h a variety of free withdrawal options, income strategies and specialprovisions.

Call today for our FREE Social Security Tax Work-sheet (888-404-6848)

This tool will help you demonstrate the value of tax deferred growth.

Telemarketing Fraud When you send money to people you do not know personally or give personal or financial information to unknown call-ers, you increase your chances of becoming a victim of telemarketing fraud.

Warning signs -- what a caller may tell you• "You must act 'now' or the offer won't be good." • "You've won a 'free' gift, vacation, or prize." But you have to pay for "postage and handling" or other charges.• "You must send money, give a credit card or bank account number, or have a check picked up by courier."• "You don't need to check out the company with anyone."• "You don't need any written information about their company or their references." • "You can't afford to miss this 'high-profit, no-risk' offer." If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone.

Some Tips to Avoid Telemarketing Fraud It's very difficult to get your money back if you've been cheated over the phone. Before you buy anything by telephone, remember: • Don't buy from an unfamiliar company. Legitimate businesses understand that you want more information about their

company and are happy to comply. • Always ask for and wait until you receive written material about any offer or charity. If you get brochures about

costly investments, ask someone whose financial advice you trust to review them. But, beware -- not everything writ-ten down is true.

• Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations.

• Obtain a salesperson's name, business identity, phone number, street address, mailing address, and business license number before you transact business. Some con artists give out false information. Verify the accuracy of these items.

• Before you give money to a charity or make an investment, find out what percentage of the money is paid in commis-sions and what percentage actually goes to the charity or investment.

• Before you send money, ask yourself a simple question. "What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?"

• You must not be asked to pay in advance for services. Pay services only after they are delivered.• Some con artists will send a messenger to your home to pick up money, claiming it is part of their service to you. In

reality, they are taking your money without leaving any trace of who they are or where they can be reached. • Always take your time making a decision. Legitimate companies won't pre ssure you to make a snap decision. • Don't pay for a "free prize." If a caller tells you the payment is for taxes, he or she is violating federal law. • Before you receive your next sales pitch, decide what your limits are -- the kinds of financial information you will

and won't give out on the telephone.• It's never rude to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople

with a trusted friend, family member, or financial advisor.• Never respond to an offer you don't understand thoroughly. • Never send money or give out personal information such as credit card numbers and expiration dates, bank account

numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons. • Your personal information is often brokered to telemarketers through third parties. • If you have information about a fraud report it to state, local, or federal law enforcement agencies.

Excerpt from the Federal Bureau of Investigation Website (http://www.fbi.gov/majcases/fraud/fraudschemes.htm)

Page 2: Cla august 2007

The Retirement Account Rescue Model™ Solution!The Retirement Account Rescue Model™ (RAR™) is a simple and understandable financial strategy with four important and powerful objectives:

1. Eliminate market risk. To ensure successful implementation, the RAR™ model is best served by moving retire-ment assets into a financial vehicle that will not lose value due to market fluctuations. A stable base allows this plan-ning strategy to reach its full potential. Consider using a Fixed Indexed Annuity (FIA) to accomplish this objec-tive. This means the retirement account would purchase a FIA. A FIA is a fixed annuity that links your interest cred-its to the performance of an external market index without exposing your principal or past interest credits to market risk.

2. Control the impact of future taxes on your retirement assets. By strategically liquidating retirement accountsnow, you can accurately predict your income tax exposure today. This reduces the "crystal ball of taxation" risk. Will taxes be LOWER in the future? Will taxes be HIGHER in the future? We know exactly what they are to-day. Getting out of the tax game today may make the most sense for your client based on his/her personal situation and their goals for the future.

3. Capture the benefits of tax-smart premature distributions. By properly following Section 72(t) distribution rules,withdrawals can be made from an existing retirement account without exposure to the 10% penalty! The Fixed In-dexed Annuity purchased must be issued by an insurance company that is equipped to properly administer 72(t) dis-tributions. Otherwise, the client could be faced with administrative charges or worse yet, the dreaded 10% pre-59 ½distribution penalty on the money withdrawn.

4. Replace income tax burdens with income tax-free benefits. The 72(t) distributions are utilized, after taxes, to pur-chase a specially designed life insurance plan created to generate a maximum future income benefit. By following the prescribed guidelines, clients can access their accumulating cash value in the future on an income tax free basis.

Consider using an Indexed Universal Life (IUL) Policy. Like the FIA, an IUL generates interest credits linked to the performance of an external market index. Principal and past interest credits are always protected. A number of these IULs have been designed specifically to take advantage of this future income approach.

Let's look at an example of how this would work for a 53-year old male non-smoker with a Retirement Account value of $100,000 averaging a 5% annual growth. His goal is to develop an attractive income stream at age 70.1. The Retirement Account is transferred to an FIA with an insurance company capable of administering the 72(t) distri-

butions without penalty. This would create annual withdrawals for the next six years of $6,912.50.2. Assuming a 19.18% state and federal tax impact, these distributions would have an after tax value of approximately

$5,586.00. Each year, this premium amount would be used to purchase/fund the life insurance policy. The IUL would be carefully designed to receive $5,586 per year for exactly six years. The death benefit created is $112,355.

3. At age 70 ½, two things happen: a. The Retirement Account begins making required distributions. Again, assuming the FIA averaged a 5% annual

return, the account balance would be $132,941. The first required minimum distribution would be $4,851. Each year, the required distributions would increase based on the remaining life expectancy of the Retirement Accountowner. Each distribution will be exposed to state and federal income taxes.

b. The IUL has achieved a projected cash value of approximately $87,114. The owner begins accessing $9,703 each year income tax free through a policy loan provision.

By age 100, the Retirement Account would have distributed a total of $301,967 in taxable distributions to the owner. The account balance at that time would be $54,051 again assuming a 5% average return.

During this same period, the IUL would have distributed $291,090 in tax free loans! In addition, this plan at age 100would have a residual death benefit for the beneficiaries in excess of $224,000; also income tax free!In summary, we have utilized a 53 year old's $100,000 Retirement Account (without making additional contributions) to accomplish the following:

By age 100 the Retirement Account owner has made taxable minimum distributions totaling $301, 967.00 from his FixedIndexed Annuity with the 5% assumed growth rate. He has also taken $291,090.00 in tax free loans from the Indexed Universal Life policy. And, again at age 100, he still has a balance of $54,051.00 in his Retirement Account and the tax free residual death benefit from the Indexed Universal Life policy is $224,000! Incredible but true!

The Retirement Account Rescue Model™ can be an amazing tool for the right customer. Working together, we can help you design this case to make the most of the opportunity. Give us a call at 888-404-6848.

Surprising Reasons Why We Gain Weight As We AgeBy Stephen Gullo, PhD

I never had a weight problem, but thanks to two pregnan-cies and being in my 40s, I scrupulously need to watch what I eat now. “There’s no question that the rules of eat-ing change as we age, but weight gain does not have to be inevitable,” New York City diet doctor Stephen Gullo, PhD, told me recently in response to my complaints.“Decreased metabolic efficiency is inevitable. If a 40-year-old were to eat the same foods as he/she did in high school, he would burn fewer calories - and the rest would be stored as fat.”

I was surprised when Stephen told me that many elements of lifestyle beyond what you eat and how much exercise you get play a major role in all this. Midlife factors that cause us to gain weight…….

Marriage. Single people tend to make time for the gym.Married folks tend to be home more and are more likely to eat mindlessly – for example, nibbling in front of the TV or while cooking and cleaning up meals (a dangerous habit I developed after becoming a mother). Some take on their partners’ poor eating and drinking habits.

Stress increases blood levels of the hormone cortisol,which may in turn increase the appetite and cause thebody to store excess calories as fat.

Sleep deprivation can lead to a hormonal imbalance that stimulates appetite during the day.

Pregnancy and menopause trigger hormonal changes that may cause the body to gain weight and reduce meta-bolic efficiency.

We all know the solution: Eat wisely. Stephen’s recom-mended diet, detailed in his book The Thin Command-ments Diet: The 10 No-Fail Strategies for PermanentWeight Loss, optimizes the body’s ability to burn calories.He recommends……

Consume foods rich in low-fat protein, such as low-fat dairy, egg-white omelets and “white” fish and shellfish – shrimp, flounder, snapper, etc. Salmon has health benefits but is slightly higher in calories. He suggests taking 1,000 milligrams (mg) of fish oil daily to enhance the body’s ability to burn calories.

Stephen puts poultry and pork on his “B” list. They have more saturated fat than white fish and no heart-healthy fish oils. Red meat, too, is okay but only occasionally.

Eat Lots of vegetables. Fiber kills appetite, and low-starch vegetables, such as spinach and broccoli, allow“volume eaters” – people who are not satisfied until that have consumed a large amount of food – to eat more with-out gaining weight.

High-sugar fruits, such as grapes and watermelon, aren’t as good because they increase insulin levels and actually make it harder to lose weight. He recommends no more than two fruits a day for women over age 40.

Minimize intake of white bread, white rice and pasta. Limit white bread to the occasional sandwich, rice to one-half cup and pasta to two ounces. Whole grains are al-ways preferable.

Drink lots of water, especially cold water. Hydration improves metabolic efficiency, and the cold forces thebody to burn more calories.

Stephen observes that appetite expands in direct propor-tion to the amount of food available. So…..

Dish out portions in the kitchen.

Don’t stock up on cheese and nuts – they are high in fat, and people tend to eat more than they should.

Stay away from all-you-can-eat buffets.

Beware of too much variety. If you have five kinds ofcookies at hand, you may be tempted to sample everykind.

Stay active. Exercise – climbing stairs, walking, dancing, etc. – is a powerful tool to lessen the effects of again. Butremember, exercising good judgment about what to eat is the most powerful exercise of all.

CLA Client Testimonials

If you are pleased with the service you have received from CLA, whether from a field representative, home office personnel or just a nice experience you had in general we would love to hear from you!

Two ways to provide this valuable feedback:

1) Online by internet: www.clause.com/testimonial (You can attach a digital photo!)

2) Telephone (800) 609-9006 x.2355

Page 3: Cla august 2007

The Retirement Account Rescue Model™ Solution!The Retirement Account Rescue Model™ (RAR™) is a simple and understandable financial strategy with four important and powerful objectives:

1. Eliminate market risk. To ensure successful implementation, the RAR™ model is best served by moving retire-ment assets into a financial vehicle that will not lose value due to market fluctuations. A stable base allows this plan-ning strategy to reach its full potential. Consider using a Fixed Indexed Annuity (FIA) to accomplish this objec-tive. This means the retirement account would purchase a FIA. A FIA is a fixed annuity that links your interest cred-its to the performance of an external market index without exposing your principal or past interest credits to market risk.

2. Control the impact of future taxes on your retirement assets. By strategically liquidating retirement accountsnow, you can accurately predict your income tax exposure today. This reduces the "crystal ball of taxation" risk. Will taxes be LOWER in the future? Will taxes be HIGHER in the future? We know exactly what they are to-day. Getting out of the tax game today may make the most sense for your client based on his/her personal situation and their goals for the future.

3. Capture the benefits of tax-smart premature distributions. By properly following Section 72(t) distribution rules,withdrawals can be made from an existing retirement account without exposure to the 10% penalty! The Fixed In-dexed Annuity purchased must be issued by an insurance company that is equipped to properly administer 72(t) dis-tributions. Otherwise, the client could be faced with administrative charges or worse yet, the dreaded 10% pre-59 ½distribution penalty on the money withdrawn.

4. Replace income tax burdens with income tax-free benefits. The 72(t) distributions are utilized, after taxes, to pur-chase a specially designed life insurance plan created to generate a maximum future income benefit. By following the prescribed guidelines, clients can access their accumulating cash value in the future on an income tax free basis.

Consider using an Indexed Universal Life (IUL) Policy. Like the FIA, an IUL generates interest credits linked to the performance of an external market index. Principal and past interest credits are always protected. A number of these IULs have been designed specifically to take advantage of this future income approach.

Let's look at an example of how this would work for a 53-year old male non-smoker with a Retirement Account value of $100,000 averaging a 5% annual growth. His goal is to develop an attractive income stream at age 70.1. The Retirement Account is transferred to an FIA with an insurance company capable of administering the 72(t) distri-

butions without penalty. This would create annual withdrawals for the next six years of $6,912.50.2. Assuming a 19.18% state and federal tax impact, these distributions would have an after tax value of approximately

$5,586.00. Each year, this premium amount would be used to purchase/fund the life insurance policy. The IUL would be carefully designed to receive $5,586 per year for exactly six years. The death benefit created is $112,355.

3. At age 70 ½, two things happen: a. The Retirement Account begins making required distributions. Again, assuming the FIA averaged a 5% annual

return, the account balance would be $132,941. The first required minimum distribution would be $4,851. Each year, the required distributions would increase based on the remaining life expectancy of the Retirement Accountowner. Each distribution will be exposed to state and federal income taxes.

b. The IUL has achieved a projected cash value of approximately $87,114. The owner begins accessing $9,703 each year income tax free through a policy loan provision.

By age 100, the Retirement Account would have distributed a total of $301,967 in taxable distributions to the owner. The account balance at that time would be $54,051 again assuming a 5% average return.

During this same period, the IUL would have distributed $291,090 in tax free loans! In addition, this plan at age 100would have a residual death benefit for the beneficiaries in excess of $224,000; also income tax free!In summary, we have utilized a 53 year old's $100,000 Retirement Account (without making additional contributions) to accomplish the following:

By age 100 the Retirement Account owner has made taxable minimum distributions totaling $301, 967.00 from his FixedIndexed Annuity with the 5% assumed growth rate. He has also taken $291,090.00 in tax free loans from the Indexed Universal Life policy. And, again at age 100, he still has a balance of $54,051.00 in his Retirement Account and the tax free residual death benefit from the Indexed Universal Life policy is $224,000! Incredible but true!

The Retirement Account Rescue Model™ can be an amazing tool for the right customer. Working together, we can help you design this case to make the most of the opportunity. Give us a call at 888-404-6848.

Surprising Reasons Why We Gain Weight As We AgeBy Stephen Gullo, PhD

I never had a weight problem, but thanks to two pregnan-cies and being in my 40s, I scrupulously need to watch what I eat now. “There’s no question that the rules of eat-ing change as we age, but weight gain does not have to be inevitable,” New York City diet doctor Stephen Gullo, PhD, told me recently in response to my complaints.“Decreased metabolic efficiency is inevitable. If a 40-year-old were to eat the same foods as he/she did in high school, he would burn fewer calories - and the rest would be stored as fat.”

I was surprised when Stephen told me that many elements of lifestyle beyond what you eat and how much exercise you get play a major role in all this. Midlife factors that cause us to gain weight…….

Marriage. Single people tend to make time for the gym.Married folks tend to be home more and are more likely to eat mindlessly – for example, nibbling in front of the TV or while cooking and cleaning up meals (a dangerous habit I developed after becoming a mother). Some take on their partners’ poor eating and drinking habits.

Stress increases blood levels of the hormone cortisol,which may in turn increase the appetite and cause thebody to store excess calories as fat.

Sleep deprivation can lead to a hormonal imbalance that stimulates appetite during the day.

Pregnancy and menopause trigger hormonal changes that may cause the body to gain weight and reduce meta-bolic efficiency.

We all know the solution: Eat wisely. Stephen’s recom-mended diet, detailed in his book The Thin Command-ments Diet: The 10 No-Fail Strategies for PermanentWeight Loss, optimizes the body’s ability to burn calories.He recommends……

Consume foods rich in low-fat protein, such as low-fat dairy, egg-white omelets and “white” fish and shellfish – shrimp, flounder, snapper, etc. Salmon has health benefits but is slightly higher in calories. He suggests taking 1,000 milligrams (mg) of fish oil daily to enhance the body’s ability to burn calories.

Stephen puts poultry and pork on his “B” list. They have more saturated fat than white fish and no heart-healthy fish oils. Red meat, too, is okay but only occasionally.

Eat Lots of vegetables. Fiber kills appetite, and low-starch vegetables, such as spinach and broccoli, allow“volume eaters” – people who are not satisfied until that have consumed a large amount of food – to eat more with-out gaining weight.

High-sugar fruits, such as grapes and watermelon, aren’t as good because they increase insulin levels and actually make it harder to lose weight. He recommends no more than two fruits a day for women over age 40.

Minimize intake of white bread, white rice and pasta. Limit white bread to the occasional sandwich, rice to one-half cup and pasta to two ounces. Whole grains are al-ways preferable.

Drink lots of water, especially cold water. Hydration improves metabolic efficiency, and the cold forces thebody to burn more calories.

Stephen observes that appetite expands in direct propor-tion to the amount of food available. So…..

Dish out portions in the kitchen.

Don’t stock up on cheese and nuts – they are high in fat, and people tend to eat more than they should.

Stay away from all-you-can-eat buffets.

Beware of too much variety. If you have five kinds ofcookies at hand, you may be tempted to sample everykind.

Stay active. Exercise – climbing stairs, walking, dancing, etc. – is a powerful tool to lessen the effects of again. Butremember, exercising good judgment about what to eat is the most powerful exercise of all.

CLA Client Testimonials

If you are pleased with the service you have received from CLA, whether from a field representative, home office personnel or just a nice experience you had in general we would love to hear from you!

Two ways to provide this valuable feedback:

1) Online by internet: www.clause.com/testimonial (You can attach a digital photo!)

2) Telephone (800) 609-9006 x.2355

Page 4: Cla august 2007

August 2007

A Financial Services Corporation

FinanceMatters

Keeping you in touchwith your financial

future

9300 Wade BoulevardSuite 125

Frisco, Texas 750351.888.404.6848www.clausa.com

A Financial Services Corporation

9300 Wade Boulevard, Suite 125Frisco, Texas 75035

PRE-SORTEDSTANDARD A

U.S. POSTAGE PAIDDALLAS, TX

PERMIT NO. 3998

Bonds might catch you by surpriseWhen it comes to protecting your assets, aren’t federal government bonds and municipal bonds a safe way to go? Can’t we count on these entities to make their payments?

Absolutely! Government bonds are a dependable way to receive predictable income payments. However, there is more to a bond that the interest payment. When you pur-chase a bond, you have linked your cash value to the in-terest rate you purchased. Later, if you need to sell the bond for additional access to your principal, you will be selling the bond based on interest rates available at thattime. In other words, if you own a 4% bond and the go-ing interest rate is 6% when you want to sell, you willneed to drop the price in order to attract a buyer. Bondtraders call this selling at a discount.

These “discounts” can be fairly significant as pointed out by the Vanguard Group, one of the worlds leading bond managers. “Many investors looking for safety and higherreturns might falsely assume bonds are riskless invest-ments, not realizing that even a modest increase in inter-est rates would take a serious bite out of fixed income values.”

Vanguard realizes the folly of many investors who do not understand that they can lose principal if interest rates head higher. Vanguard has rightfully warned investors in the past, “…the value of a long-term bond fund might fall 20% if rates went up just two percentage points.”

It would be wise to ask yourself, “Do I think interest rateswill be higher in the future than they are today?” Since the middle of 1982, bond yields have been steadily declin-ing and appear to have hit bottom in 2003. Since thattime, interest rates on the 10-year treasury have fluctuatedin between 4.50% and 5.10%. Higher interest rates in the future may be a reality.

The Chicago Board of Trade (CBOT) measures the vola-tility in price fluctuation of bonds each year. Over the last 27 years, bond prices have averaged annual swings of 10.6%. During the last two years, bond prices have been

extraordinarily stable averaging 54% less volatility com-pared to the last 27 years. When interest rates begin climbing, expect bond prices to react.

There is one other “surprise” bonds pull on investors.Many people overlook the tax exposure created by inter-est they are earning each year even if they are not usingthis income for ordinary living expenses. This includes a “sneaky” tax on Social Security benefits. Even Municipal Bonds interest counts toward a “threshold income” calcu-lation that erodes your Social Security benefits.

If you are not using the interest you receive from your bonds as income, you may benefit from another approach. You may want to consider a tax-deferred fixed annuity.

Individuals with threshold income of $34K or coupleswith earnings of $44K may see an increased tax burden.Under current rules, up to 85% of Social Security benefitscan be taxed. One way to reduce your threshold income is to take advantage of tax-deferred growth inside of a fixed annuity. The tax deferred build up in an Annuity is not counted in the threshold income formula.

This is a huge advantage for folks wanting to keep all oftheir Social Security benefits. A fixed annuity can also help you avoid that pesky bond volatility. In most fixed annuities, the insurance company guarantees your princi-pal and past credited interest allowing you to enjoy truegrowth without exposure to your principal. You can also access funds without cost or exposure throug h a variety of free withdrawal options, income strategies and specialprovisions.

Call today for our FREE Social Security Tax Work-sheet (888-404-6848)

This tool will help you demonstrate the value of tax deferred growth.

Telemarketing Fraud When you send money to people you do not know personally or give personal or financial information to unknown call-ers, you increase your chances of becoming a victim of telemarketing fraud.

Warning signs -- what a caller may tell you• "You must act 'now' or the offer won't be good." • "You've won a 'free' gift, vacation, or prize." But you have to pay for "postage and handling" or other charges.• "You must send money, give a credit card or bank account number, or have a check picked up by courier."• "You don't need to check out the company with anyone."• "You don't need any written information about their company or their references." • "You can't afford to miss this 'high-profit, no-risk' offer." If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone.

Some Tips to Avoid Telemarketing Fraud It's very difficult to get your money back if you've been cheated over the phone. Before you buy anything by telephone, remember: • Don't buy from an unfamiliar company. Legitimate businesses understand that you want more information about their

company and are happy to comply. • Always ask for and wait until you receive written material about any offer or charity. If you get brochures about

costly investments, ask someone whose financial advice you trust to review them. But, beware -- not everything writ-ten down is true.

• Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations.

• Obtain a salesperson's name, business identity, phone number, street address, mailing address, and business license number before you transact business. Some con artists give out false information. Verify the accuracy of these items.

• Before you give money to a charity or make an investment, find out what percentage of the money is paid in commis-sions and what percentage actually goes to the charity or investment.

• Before you send money, ask yourself a simple question. "What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?"

• You must not be asked to pay in advance for services. Pay services only after they are delivered.• Some con artists will send a messenger to your home to pick up money, claiming it is part of their service to you. In

reality, they are taking your money without leaving any trace of who they are or where they can be reached. • Always take your time making a decision. Legitimate companies won't pre ssure you to make a snap decision. • Don't pay for a "free prize." If a caller tells you the payment is for taxes, he or she is violating federal law. • Before you receive your next sales pitch, decide what your limits are -- the kinds of financial information you will

and won't give out on the telephone.• It's never rude to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople

with a trusted friend, family member, or financial advisor.• Never respond to an offer you don't understand thoroughly. • Never send money or give out personal information such as credit card numbers and expiration dates, bank account

numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons. • Your personal information is often brokered to telemarketers through third parties. • If you have information about a fraud report it to state, local, or federal law enforcement agencies.

Excerpt from the Federal Bureau of Investigation Website (http://www.fbi.gov/majcases/fraud/fraudschemes.htm)