Road to Financial Success by Bozeman Daily Chronicle

The Road to

financial success 2014

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Creating your own Money Generator Provided by

dr. stephen r. hample, cfp

Anyone who earns even a small amount of money can build his or her own money generator by

cluding sole proprietors). “If you don’t see it, you don’t spend it.” Starting early is the key. Amounts

regularly investing in a retirement

can be increased later. Even $25 per

account. If a person age 25 were

month is great and some employer

to hypothetically invest $100 per

plans will match such contributions,

month earning an assumed steady

amounting to free money.

rate of 6% annually, in 480 months

Investment returns are not guar-

(age 65) the account would be

anteed and stock markets have up

worth $200,000.

and down swings, but the concept

An interesting thing begins hap-

is real. I personally have tried to

pening by month 140 when the

invest the maximum IRA or com-

earnings on the growing balance

pany plan amount every year. Now

exceed the monthly $100 contribu-

I’m age 66 and very happy to have

tion. The investment takes on a

my own money generator working

life of its own, becoming a more

for me.

powerful money generator than the amount deposited by the person. By

Let’s encourage young people to start building theirs.

month 278 it is three times more powerful and at the end of the period almost ten times more powerful. A person who is now retirement age called me this week to say she is amazed that her account has grown to $162,000 even though she was not able to contribute every month. Most people can afford to set

Dr. Stephen R. Hample, CFP, of Hample & Peck, now owns a trust / banking corporation and is a registered representative of KMS Financial Services, Inc. Opinions expressed are his own. Reference:

aside $100 per month, particularly

http://www.thecalculatorsite.

through a company retirement plan

com/finance/calculators/

like a low cost SIMPLE or SEP plan

compoundinterestcalculator.

designed for small businesses (in-

php#results

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FINANCIAL FOCUS

www.edwardjones.com

Investors Can Learn Much from Super Bowl Teams

you’re a football fan (and probably even if you aren’t), you are aware that we’re closing in on the Super Bowl. This year’s event is unique in that it is the first Super Bowl held in an outdoor, coldweather site — New Jersey, to be specific. However, the 2014 game shares many similarities to past Super Bowls in terms of what it took for the two teams to arrive at this point. And some of these same characteristics apply to successful investors. Here are a few of these shared traits: • A good offense — Most Super Bowl teams are adept at moving up and down the field and crossing the goal line. And good investors know how to choose those investments that can provide them with the gains they need to keep moving toward their own goals, such as a comfortable retirement. That’s why, at every stage of your life, you will need to own a reasonable percentage of growth-oriented investments, such as stocks and stock-based vehicles. • A strong defense — Even a good offense usually isn’t enough to vault a team into the Super Bowl, which is why most participants in the Big Game also have strong defenses. Similarly, the best investors don’t just put all their money in a single type of aggressive instrument and then forget about it — they know that a downturn affecting this particular asset class could prove extremely costly. Instead, they “defend” their portfolios by diversifying their holdings among a range of investments: stocks, bonds, government securities, certificates of deposit, and so on. And you can do the same. Keep in mind, however, that although diversification can help reduce the impact of volatility on your portfolio, it can’t guarantee a profit or always protect against loss. • Perseverance — Every team that

makes it to the Super Bowl has had to overcome some type of adversity — injuries to key players, a difficult schedule, bad weather, playoff games against good opponents, etc. Successful investors have also had to overcome hurdles, such as bear markets, bad economies, political battles and changing tax laws. Through it all, these investors stay invested, follow a long-term strategy and continue to look for new opportunities — and their perseverance is often rewarded. You can follow their example by not jumping out of the market when the going looks tough and not overreacting to scary-sounding headlines. • Good coaching — Super Bowl teams contain many fine players, but they still need coaches who can analyze situations and make the right decisions at the right times. Smart, experienced investors also benefit from “coaching — in the form of guidance from financial professionals. It’s not always easy for busy people to study the financial markets, stay current on changing investment-related laws, monitor their own portfolios and make changes as needed. By working with a financial professional who knows your situation, needs, goals and risk tolerance, you will find it much easier to navigate the increasingly complex investment world. As we’ve seen, some of the same factors that go into producing a team capable of reaching the Super Bowl are also relevant to investors who want to reach their own goals. By incorporating these behaviors and attitudes into your own investment strategy, you’ll be following a pretty good “game plan.”

We Understand Commitment For decades, Edward Jones has been committed to providing financial solutions and personalized service to individual investors. You can rely on us for: • Convenience Locations in the community and face-to-face meetings at your convenience • A Quality-focused Investment Philosophy A long-term approach that focuses on quality investments and diversification • Highly Personal Service Investment guidance tailored to your individual needs

Call or visit any of our ten financial advisors in the Gallatin Valley. Bozeman

Jim Hamilton 406-587-5457 Marty J Haskins 406-556-8164 Jared A Hauskins 406-586-8640 Nathan M Kirby 406-585-1141 Kris Kumlien 406-585-7878

Katie E Pederson 406-587-5457 Greg Rotert, AAMS® 406-586-5879 Dave Shepard, AAMS® 406-585-7878 Jon Stites 406-994-9189 Belgrade

Kelly Swanson 406-388-0665

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Member SIPC

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cash flow managemenT An underappreciated fundamental in financial planning.

You’ve probably heard the saying that “cash is king,” and whether you own a business or not, it is a truth that applies. Most discussions of business and personal “financial planning” involve tomorrow’s goals, but those goals may not be realized without attention to cash flow today.

Management of available cash flow is a key in any kind of financial planning. Ignore it, and you may inadvertently sabotage your efforts to grow your company or build personal wealth.

Cash flow statements are important for any small business. They can reveal so much to the owner(s) and/or CFO, because as they track inflows and outflows, they bring non-cash items and expenditures to light. They denote your sources and uses of cash, per month and per year. Income statements and P&L statements may provide inadequate clues about that, even though they help you forecast cash flow trends.

Provided by

m i k e m c c l o s k e y, f i n a n c i a l a d v i s o r j c c s w e a lt h a d v i s o r s , l l c

Cash flow statements can tell you what P&L statements won’t. Are you profitable, but cash-poor? If your company is growing by leaps and bounds, that can happen. Are you personally taking too much cash out of the business and unintentionally letting your growth company morph into a lifestyle company? Are your receivables getting out of hand? Is inventory growth a concern? If you’ve arranged a loan, how much is your principal payment each month and to what degree is that eating up cash in your business? How much money are you spending on capital equipment?

A good CFS tracks your operating, investing and financing activities. Hopefully, the sum of these activities results in a positive number at the bottom of the CFS. If not, the business may need to change to survive.

In what ways can a small business improve cash flow management? There are some fairly simple ways to do it, and your CFS can typically identify the factors that may be sapping your cash flow. You may find that your suppliers or vendors are too costly; maybe you can negotiate (or even barter) with them. Like (continued next page)

Since 1946 Our Primary Services Include: Accounting & Auditing • Insurance Planning Litigation Support • Tax Preparation & Planning Wealth & Investment Planning • Estate Planning • Retirement Planning Securities offered through 1st Global Capital Corp., Member FINRA/SIPC Investment advisory services offered through 1st Global Advisors, Inc.

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many companies, you may find your cash flow surges during some quarters or seasons of the year and wanes during others. What steps could you take to improve it outside of the peak season or quarter?

installment payment plans.) Selling things you don’t want can make you money in the short term; converting a hobby into an income source or business venture could help in the long term.

What kind of recurring, predictable sales can your business generate? You might want to work on the art of continuity sales – turning your customers into something like subscribers to your services. Perhaps price points need adjusting. As for lingering receivables, swiftly preparing and delivering invoices tends to speed up cash collection. Another way to get clients to pay faster: offer a slight discount if they pay up, say, within a week (and/or a slight penalty to those that don’t). Think about asking for some cash up front, before you go to work for a client or customer (if you don’t do this already).

Better cash flow boosts your potential to reach your financial goals. A positive cash flow can contribute to investment, compounding, savings – all the good things that tend to happen when you pay yourself first.

While the Small Business Association states that only about 10% of entrepreneurs draw entirely on their credit cards for startup capital, there is still a temptation for an owner of a new venture to go out and get a highlimit business credit card. It might be better to shop for one with cash back possibilities or business rewards in mind. If your business isn’t set up to receive credit card payments, consider it – the potential for added cash flow could render the processing fees utterly trivial.1

How can a household better its cash flow? One quick way to do it is to lessen or reduce your fixed expenses, specifically loan and rent payments. Another step is to impose a ceiling on your variable expenses (ranging from food to entertainment), and you may also save some money in separating some or all those expenses from credit card use. Refinancing – if you can do it – and downsizing can certainly help. There are many, many free cash flow statement tools online where you can track family inflows and outflows. (Your outflows may include bugaboos like long-term service contracts and

Mike McCloskey may be reached at 406.761.2820 or mccloskey@jccscpa.com. www.jccscpa.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. Citations. 1 - smallbusinesscomputing.com/ tipsforsmallbusiness/5-tips-for-asmoother-small-business-cash-flow.html [11/19/12]

• Retirement Planning • Estate Planning • Tax-Free Income** • Life Insurance • Tax-Deferred Growth

planning for your future. increasing your options. managing your risk.

Joel Harris financial advisor • FINRA Series 7 & 66 Licensed • Securities Licensed in Montana • Montana Life & Health Insurance Licensed CONTACT INFORMATION

BRANCHES

Phone: 406-582-6602 Fax: 406-582-8637 Email: Joel.Harris@cusonet.com

8645 Huffine Ln., Bozeman 90 W. Madison Ave., Belgrade (by appointment)

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (”CFS”), a registered broker-dealer (Member FINRA / SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principle. Investment Representatives are registered through CFS. Rocky Mountain Credit Union has contraced with CFS to make non-deposit investment products and services available to credit union members. **For specific tax advice, please consult a tax professional.

Have you really planned for everything?

F REE

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Please call our caring professionals at 587.3184 to schedule a consultation or request a booklet.

“There is a difference.”

113 S. Willson Ave. in Bozeman | www.dokkennelson.com

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2014 tax changes

awmakers allowed many tax provisions to expire in 2013. Tax planning for 2014 will be a challenge, as Congress may not take action on expired tax provisions retroactively until later this year. Here are some current tax changes. Health Reform: The business mandate was deferred until 2015. Starting in 2014, the individual mandate requires individuals to have health insurance for themselves and their dependents or owe a tax/penalty. A refundable tax credit is available to assist individuals in obtaining affordable health coverage. Health insurance must be obtained through the exchange/marketplace. The credit may be sent directly to the

exchange/marketplace to decrease premiums throughout the year or taken on their tax return. The small business health care credit increased to 50% (35% for tax-exempt groups). The business must obtain the insurance coverage through the Small business Health Options Program marketplace and pay at least 50% of the health insurance premiums for the employees. Montana has the Health Insurance for Uninsured Montanans Credit available to eligible businesses.

Expired Individual Tax Provisions • Exclusion for discharge of qualified principal residence indebtedness

• Mortgage insurance premiums as qualified residence interest • Qualified energy improvements to taxpayer’s home • Energy-efficient appliances credit • Deduction for state sales tax in lieu of income tax. • Tuition and fees deduction

T y l e n e V i t t, CPA R u d d & C o m pa n y, PLLC

homes-expired • R&D credit

Montana tax opportunities to take advantage of: • Contributions to Montana AND non-Montana 529 education plans • Energy credit for new and existing homes

Business Tax Provision Changes • Qualified leasehold improvements, restaurant property, retail improvements recovered over 39 years

• Alternative energy production and geothermal systems credits

• Section 179 deduction is limited to $25,000 and $200,000 of property placed in service during 2014

• Montana first-time home buyers savings account

• Credit for new energy-efficient

• Qualified endowment credit

• Purchases of Montana produced organic fertilizer

using your smartphone as a budgeting tool Provided by

A n n i e B e av e r A s s o c i at e F i n a n c i a l A d v i s o r w i t h D . A . D av i d s o n & C o .

Using Your Smart Phone As a Budgeting Tool Today, we use our phones in ways we would never have dreamed possible just a decade ago. Below you will find a list of just a few of the apps and websites designed to help us organize our financial lives – and hopefully help us save some money. GoodBudget (formerly EEBA) is an app version of carrying around envelopes of cash for various budget categories. You create your virtual envelopes and physically record your transactions. It is a simple, straightforward, and free (there is a more robust version for $5/month) way to monitor one account. You can sync two devices so you and someone else can work together to monitor spending. This mobile system helps avoid the problem of having a paper grocery envelope at home on the kitchen counter while you are at the grocery store. Android and iOS. Mint.com offers a concise way to monitor all your bank, credit card, investment and loan accounts. It does not offer the ability to move money from one account to another. However, it does track expenses automatically, meaning users don’t have the pain of manually entering expenses and none of those little trips to the gas station or coffee shop slip through the cracks. Mint can also suggest ways for you to save and will send automatic alerts and bill reminders. Mint is free. Android and iOS. An alternative to Mint is Accounts 2 Checkbook. It doesn’t have a catchy name, but it does allow you to do more than simply track your accounts. You can transfer funds, use and store photo receipts, schedule transactions, split transactions, export reports, and more. In addition, it has a large number pad for data entry (yes, I’m over 40 and can’t always see the little buttons). The “lite” version is free, so you can take

it for a test run, but the full version costs $1.99. iOS. Finally, you may want to check out Toshl. Toshl automatically syncs to multiple devices as well as toshl.com and touts itself as having greater export options (PDF, Google Docs, Excel, etc) than Mint. It allows you to manually track expenses, organize bills, and create a budget, and it functions on Android, iOS, Meego, and Windows Phone. Toshl Finance is free, but Toshl Pro is $1.99 per month. You’ll have to decide for yourself if the little cartoon monsters are fun or annoying. Security is always a concern when we talk about storing our financial data “out there.” According to PCMag.com, “the apps don’t store any personal financial data on their servers or even your mobile device itself,” meaning that if you lose your phone you are not providing someone with the key to your finances. Additionally, you can remotely deactivate your accounts. Lastly, again according to PCMag.com, “most of the name brand apps we recommend are probably as secure as carrying a credit card in your wallet.” Nonethless, make certain that “the apps use 128-bit bank level, or 256-bit military-level, encryption and are verified by TRUSTe, VeriSign, or MacAfee.” If you’re looking for financial advice, talk to your financial advisor! But if you are trying to rein in your expenses or just simply keep an eye on them, call on your phone. Annie Beaver is an Associate Financial Advisor with D.A. Davidson & Co. in Livingston, MT. This information is not intended as specific advice. Information from sources deemed reliable include http://www.nytimes. com/2013/01/31/technology/personaltech/ using-a-smartphone-to-look-after-the-pennies. html?ref=technology&_r=0; http://www.pcmag. com/article2/0,2817,2407617,00.asp; and D. A. Davidson & Co., member SIPC.

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‘Twas the Season for Giving $182,557

In December, D.A. Davidson & Co. (Bozeman) announced a special program to encourage gifts of securities to charitable organizations in our community. Through this program D.A. Davidson & Co. offered to sell donated securities at no commision, in effect donating these normal costs to the non-profits. We are pleased to report that this program assisted in the donation of $182,557 to these worthy organizations in the Bozeman area. The employees of D.A. Davidson & Co. are privileged to have been able to demonstrate our commitment to our community through this program.

Brian Brown, CFP® Jamie Wieferich, RP® Tim Owen, CWS® Jacob Werner, CFP® Jim Webster, CWS® Senior Vice President, Associate Vice President, Senior Vice President, Financial Advisor, Regional Supervisory Financial Advisor Branch Manager Manager Associate

Senior Vice President, Financial Advisor

Tutti Skaar

Shelley Lehrkind

Jack McInerney

Ryan Meeks

Paula Stocker, CWS® Brenda Kitto, Associate CFP®, CWS®

Ron Matelich

Senior Vice President, Financial Advisor

Morgan Owen, CFP® Financial Advisor

Vice President, Financial Advisor

Financial Advisor

Teresa LeProwse Dianne Novotny Senior Registered Associate

Senior Registered Associate

Vice President, Financial Advisor

Neil Sexton, CFP® Anne Ashton, CFP®

Assoicate Vice President, Financial Advisor

Financial Advisor

Erin Yost, CFP®, CWS®

Annie Beaver Associate Financial Advisor

Associate Financial Advisor

Sarah Hostetler, RP®

Sarah Canfield, RP®

Becca Carrie Youderian Registered Client Dammann, RP®

Senior Registered Associate/Cashier not pictured:

Client Associate

Registered Client Associate

Page Dabney

Senior Vice President, Financial Advisor

Financial Advisor

BreAnna Bentley

Carl Nystuen

Vice President, Financial Advisor

Senior Registered Associate

Associate

Registered Client Associate

bozeman

livingston

406-587-5461 1-800-233-4359 529 East Main

406-222-4883 1-888-624-5004 119 North 7th Street

Amy Carter

Cashier/Receptionist

Investing in our community.

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5 money resolutions for the new year Provided by

dr. stephen r. hample, cfp

NEW YORK (AP) — New Year’s

the numbers down will help you

likely to stay on track for the rest of

Hevert, Fidelity’s vice president of

resolutions often involve eating

see how your net worth is changing

the year, says Love.

retirement products. Paying $100

better and exercising, but you can

over the years, says Ernst & Young’s

also use the start of the year to get

Elda Di Re, who is a partner at the

3. PAY YOURSELF FIRST

due every month will help you pay

financially fit.

accounting firm’s personal financial

Make any savings automatic. Ask

it back faster and save money in

Making resolutions is easier than

services group.

your employer to send a certain

interest payments, says Hevert.

keeping them, however. The

more than the minimum amount

amount of your paycheck to a

Associated Press talked to a few

2. THINK SMALL

savings account. If you manually

5. SAVE MORE FOR RETIREMENT

financial experts about what you

Aiming to save a big pot of money

move money to your savings

No matter your age, most people

should be doing to keep your

can be overwhelming and set you

account, you’re likelier to forget.

should be putting 10 percent to

money goals for the year on track.

up for failure. Instead of resolving

“You should invest in yourself

15 percent of their income toward

Here’s five money resolutions to

to save $1,200 over the year, for

before having a chance to spend

retirement, says Hevert, who

consider for 2014:

example, break that amount into

the money,” says Lisa Featherngill,

works for a company that manages

smaller goals, says Jerry Love,

a CPA and managing director

retirement accounts. That could be

1. KNOW WHERE YOU STAND

an independent certified public

of Abbot Downing, the money

in a 401(k) account, a retirement

Begin 2014 with an overall view of

accountant and a member of the

management business of Wells

savings plan provided by employers,

your finances. Figure out your net

National CPA Financial Literacy

Fargo.

or an individual retirement account.

worth: Write down your assets —

Commission, which aims to educate

bank balances, retirement accounts

Americans on personal finances. For

4. PAY DOWN DEBT

pensions from employers, which

and the value of your home. Next

a figure like $1,200, focus on saving

Tackle credit-card debt this year

used to help fund retirements,

list your debts, such as car loans,

$100 a month instead. Pulling

by writing down all the cards

are disappearing, says Hevert.

mortgages or credit-card balances.

together smaller amounts may be

you have, their balances and the

“Retirement has become a do-it

Subtract your debts from your

more manageable. Once you see

interest rate you pay. You should

yourself project,” he says.

assets. Save it, and do this exercise

that you’re able to meet that goal

increase payments on the card

annually or twice a year. Writing

after a few months, you’re more

with the highest rate, says Ken

People are living longer and