Business Monthly - January 2011 by Waterloo-Cedar Falls Courier

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CEDAR VALLEY BUSINESS MONTHLY

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JANUARY, 2011

This may be the most practical Business Monthly of the year Most issues of the Cedar Valley Business Monthly tend to celebrate some aspect of the local economy, from its long tradition of familyowned businesses to individual leaders who have built and maintained a vibrant Jim Offner is the Courier community. business editor. This issue is Contact him at different. Once a jim.offner@ year, the magawcfcourier.com. zine pauses to ask some of the sharpest ﬁnancial minds in the area to offer insights on key issues that affect businesses, the people who run them and their customers. This issue of Cedar Valley Business Monthly attempts to cover a full range of ﬁnancial

issues, from the cover story on credit card use to tips on how to deal with important decisions like retirement, taxes and health care. There is an array of business people in these pages who will offer advice on what to do with money now and in the future. All offer some common-sense advice. Such ﬁrmly grounded outlooks are one reason the Cedar Valley has weathered some pretty serious economic tempests in the last couple of years. One of the ongoing issues is credit. Banks say there is plenty of cash to lend to borrowers. Credit may be tighter these days, but it hasn’t seemed to slow the parade of mortgagees looking to reﬁnance their deals at today’s lower interest rates. A major credit agency says

credit card debt in Iowa, and particularly the Cedar Valley, is at a low point, pointing to the ﬁscal conservative and common-sense spending attitudes of the populace. Car dealers say business has been good. Retailers reported a nice sales bump during the holiday shopping season. Meanwhile, unemployment continues to hover well below national averages month after month. Maybe all of that is an indication of why the area has weathered the economic crisis with relatively little damage. The region’s latest economic indicators seem to point out that more consumers are saving, providing a buffer against the harshest elements of the ongoing national economic slump. That’s not to say the Cedar

CREDIT

Roby said. Dubuque experienced the largest decline in credit card delinquency from the second quarter of all metropolitan areas in the U.S. at 48.4 percent. The metropolitan area with the largest increase in delinquency since last quarter was Lewiston, Idaho, at 92.7 percent. Financial experts say the economic downturn has turned consumers away from credit cards. According to TransUnion, more than 8 million consumers stopped using bank-issued, general purpose credit cards since last year. Instead, consumers seem to be turning to a different type of plastic: debit cards “What is interesting is the increase in debit card use,” said Joe Vich, CEO of Community National Bank in Waterloo. “It looks like a credit card, but it accesses your checking account. That usage nationally is up dramatically and has been over the last couple of years. It’s a growing trend not only to not write checks but to keep from overextending on credit.” Vich said the industry has seen debit card usage grow by around

15 percent annually. Roby said that trend applies to Veridian’s customers, with a 19 percent increase in debit-card usage, even with the increased credit-card activity. Itzen said debit-card transactions have “gone through the roof.” At Lincoln Savings Bank in Reinbeck, many customers eschew credit cards altogether, said Steve Tscherter, president and CEO. “I would wager 50 percent of our customers don’t even carry credit cards,” he said. “Being in rural markets with better than half our business, that reﬂects the age bias, and the older customers are averse to credit.” And the half of Lincoln’s customers who do use credit cards likely are being more prudent than before about using them, Tscherter said. “It ties to the fact that we’ve seen a couple of million dollar reduction in consumer loans the last year and 25 percent over the last two years,” he said. “So, people are noticeably drawn in with their spending and credit. It’s to their credit that they’re being cautious and conservative.”

From page A3 Veridian’s November 2010 credit card transaction volume increased by 109 percent compared to November 2009. “This increase can be attributed to our low interest rates and marketing promotions during 2010,” Roby said. Incidence of credit card delinquency was highest in Nevada (1.28 percent), followed by Florida (1.09 percent) and Mississippi (1.06 percent). The lowest credit card delinquency rates were found in North Dakota (0.48 percent), South Dakota (0.53 percent) and Nebraska (0.56 percent). “I guess I’m not surprised because of the character of the people in the Midwest and Iowa in particular,” said Wade Itzen, president of the Waterloo-Cedar Falls markets for BankIowa. Veridian has seen a downturn in defaults, Roby said. “Although nationwide default rates are up, Veridian has actually experienced a decrease in defaults from 2009 to 2010,”

Valley is immune from the perils that threaten the national business climate. Some of the ideas presented this month perhaps will spark

an idea, a path to more proﬁts. In some cases, this issue may serve to reaffirm the path you and your business have taken is the right one.

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CEDAR VALLEY BUSINESS MONTHLY

Practicing martial arts brings hidden beneďŹ ts Tae kwon do and hap ki do are typically viewed exclusively as forms of self defense. However, these forms of martial arts may also be an excellent way to help you keep your New Years resolution to get in shape. Practicing martial arts regularly may lead to improvement in Francis Moore the areas of ďŹ&#x201A;exis marital arts ibility, balance, instructor at Covenant Wellness c o o r d i n a t i o n , Center in Waterloo. stamina and body Contact him at awareness. These 272-2255. health benefits, along with stress release and cardiovascular beneďŹ ts, can help you to live a longer, happier and healthier life. Martial arts are popular among middle-aged and elderly people because of the tremendous antiaging beneďŹ ts that come with this type of exercise. In many Asian countries it is common to see groups of elderly people practicing tai chi in public areas. Although many of these people are in their 70s and 80s, they are in much better health than many of their counterparts in America, where this practice has not yet become so popular. Martial arts are proven to improve immune systems and could greatly beneďŹ t American adults who are more likely to develop chronic diseases at an early age. Thirty-four percent of American adults are now considered overweight and this may lead to other health issues like cancer and diabetes.

According to NaturalNews. com, people in their 40s and 50s who practice martial arts regularly have 12 percent less body fat and are able to do twice as many sit ups as their counterparts who do not practice martial arts. These individuals have greater ďŹ&#x201A;exibility and balance and overall happiness with their lives. Many of these results may appear more quickly from martial arts than they do from other types of exercise, and that is partially due to the level of intensity that comes with practicing martial arts. Each type of martial art will produce results, but the extent depends on the amount of work that each individual is willing to put into their martial arts program. Tae kwon do and tai chi are some of the most popular forms of martial arts, but there are many other forms that may be right for you. There are different styles of martial arts that focus on different areas of health improvement, and each person needs to choose a style that is right for them. The more difficult styles of martial arts are made up of aerobic and cardiovascular routines, while the less strenuous styles focus on ďŹ&#x201A;exibility and control. Choosing and following a style of martial arts can be difficult to do on your own, but there are many martial arts schools in Northeast Iowa that can help you. Adding martial arts to your exercise routine can help you make good on your resolutions this New Year and may add many happy and healthy years to your life.

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Wartburg College We make leaders Sharon Corrigan / 1980 graduate Vice president for marketing Jaguar North America Named by Automotive News as one of the leading women in the automotive industry Corrigan was honored for her longstanding leadership roles in the automotive industry. She has helped spearhead the transformation of Jaguar in the United States through advertising and public relations initiatives â&#x20AC;&#x153;to get people to realize that we are not the old Jaguar, but a new, contemporary luxury brand.â&#x20AC;? Jaguar reported a 14% year-to-date increase in sales in November.

Future leader Sarah Shoemaker Senior, Nashua Fitness management major Psychology, leadership minors Sarah is in Wartburgâ&#x20AC;&#x2122;s Leadership Certificate Program and has been a mentor in Wartburgâ&#x20AC;&#x2122;s unique summer High School Leadership Institute, which trains high school students in team-building skills and leadership development prior to their senior year. â&#x20AC;&#x153;Wartburgâ&#x20AC;&#x2122;s Leadership Certificate Program has provided me with invaluable opportunities by challenging my leadership skills in various settings and allowing me to reflect and apply what Iâ&#x20AC;&#x2122;ve learned to new experiences.â&#x20AC;?

Wartburg College has trained generations of business and community leaders.

Get your moneyâ&#x20AC;&#x2122;s worth Advertising in the Cedar Valley Business Monthly is an efficient way to spend your advertising dollars. To place a display ad, call an account executive at 291-1497 from 8 a.m. to 5 p.m. Monday through Friday. Our account executives and creative department will help you establish a campaign, step-by-step, that will sell. Before you set next yearâ&#x20AC;&#x2122;s budget, give us a call.

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Wartburg College has trained generations of business and community leaders.

Future leadersâ&#x20AC;&#x201D;like Sarahâ&#x20AC;&#x201D;benefit from our Institute for Leadership Education and Leadership Certificate Program.

Leadership. Service. Faith. Learning. 8BSUCVSH #MWE 8BWFSMZ *PXB t XXX XBSUCVSH FEV

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Where credit is due Credit card usage down in the Cedar Valley www.cvbusinessmonthly.com

Volume 5 ● No. 2

By JIM OFFNER jim.offner@wcfcourier.com

BUSINESS MONTHLY COLUMNS Page 4

Jim Offner This issue offers advise on ﬁnances and investing.

Page 16

University of Northern Iowa Ten tips to home business success.

Page 23

Wartburg College Social entrepreneurs use ﬁnance to do good.

BUSINESS MONTHLY STAFF DIRECTORY EDITORIAL CONTENT Nancy Raffensperger Newhoff nancy.newhoff@wcfcourier.com (319) 291-1445

ADVERTISING Bret Danielson bretdanielson@wcfcourier.com (319) 291-1403

Jim Offner jim.offner@wcfcourier.com (319) 291-1598

Jackie Nowparvar jackie.nowparvar@wcfcourier.com (319) 291-1527 Sheila Kerns sheila.kerns@wcfcourier.com (319) 291-1448

Cedar Valley Business Monthly is published monthly. It is a free publication direct-mailed to more than 6,500 area businesses. For distribution, call Courier Communications at (319) 291-1527 Contact Cedar Valley Business Monthly at P.O. Box 540, Waterloo, IA 50704.

BUSINESS MONTHLY ON THE COVER This issue of Cedar Valley Business Monthly attempts to cover a full range of ﬁnancial issues, from the cover story on credit card use to tips on how to deal with important decisions like retirement, taxes and health care.

WATERLOO — “Pay as you go” seems to be the mantra among consumers across Iowa and, if the numbers are an indication, especially the Cedar Valley. Iowa has the lowest average credit card debt — the aggregate balance on all bank-issued credit cards — in the nation, and the Cedar Valley’s card debt load is even lower, according recent report issued by credit reporting agency TransUnion. Chicago-based TransUnion’s recently released analysis of trends in the credit card industry found Iowans had average credit card debt of $3,807 in the third quarter, up slightly from $3,792 in the second quarter of 2010, according to its third quarter analysis ending Sept. 30. The Waterloo-Cedar Falls metropolitan area was even lower, at $3,122 in the quarter. That was down from $3,720 a year earlier. North Dakota consumers had the second-lowest credit card debt, with an average of $4,103. South Dakota was third, at $4,196. The highest state average credit card debt remained in Alaska at $7,159, followed by Hawaii at $5,716 and North Carolina at $5,640. Iowa also checked in during the quarter with the sixth-lowest credit card delinquency rate — the ratio of bank-issued card borrowers 90 days or more late on one or more of their credit cards — at 0.61 percent, compared to a national rate of 0.83.

Photo illustration by BRANDON POLLOCK

Waterloo-Cedar Falls came in at 0.40 percent, down from 0.74 a year earlier and 1.07 in the fourth quarter of last year. A number of Cedar Valley banks have stopped issuing their own credit cards. Veridian Cred-

it Union, based in Waterloo, still issues its own card and has seen usage increase recently, according to Kalola Roby, vice manager of card services at Veridian.

See CREDIT, page 4

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CEDAR VALLEY BUSINESS MONTHLY

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DECEMBER 2011

CREDIT

Valley is immune from the perils that threaten the national business climate. Some of the ideas presented this month perhaps will spark

an idea, a path to more proﬁts. In some cases, this issue may serve to reaffirm the path you and your business have taken is the right one.

JANUARY 2011

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Economy recovering — believe it or not The country is recovering! The country is recovering! Although you will not hear Paul Revere riding through the Northeast Iowa shouting this out, it is time to recognize the national economy may be coming out of the doldrums.

Stock market has improved

As the public sees its 401 (k) balances and stock market investments improving, it will give a big air of confidence to the consumers, especially to the baby boomers who had stopped spending due to the rapid decrease in their 401 (k) values in 2008. As the boomers feel Money to lend more confident they again start looking Many banks that had problem loans at the extras — vacation homes, newer have formulated plans vehicles, etc. to deal with these loans. For the last 24 to 30 Iowa’s indicators are up months, banks pulled in The index used by Iowa revenue forethe reins on new lend- casters to predict the state’s economy ing. Local banks have rose for the 13th straight month in Octopositioned themselves to ber. The Iowa Department of Revenue loan money for business said six of eight components in the Iowa and personal borrowers. Leading Indicators Index contributed Robert E The business borrower to the overall increase of 0.5 percent for Manning will find bank financing October above a baseline of 100 points is senior vice available for building, set in 1999. president of First equipment and inventoSome of the stronger positive comSecurity State ry. Adequate cash fl ow in ponents of the index were agriculture Bank in Waterloo. business will be the key futures profits, diesel fuel consumpContact him at to accessing these loans, tion and average weekly unemployment 233-1181or rmanning@ but local banks are look- claims. fssbonline.com. ing in their own backAverage weekly hours in Iowa manuyards for new business facturing jobs increased to 42.3, above loan activity. the historical average of 41.7 hours for It appears personal borrowers will October. have additional cash available to them as the recent tax cut agreement propos- Refinancing increases al goes beyond what economists were The public overwhelmingly choose expecting by including a 2 percent cut in fixed-rate loans in the third quarter of payroll taxes that fund Social Security 2010 for personal residences, according and Medicare. As disposable income to Freddie Mac. increases, confidence will improve and While 30-year fixed-rate mortgages consumers should increase new car are still the most preferred product chopurchases, conduct home improvement sen for new loans among borrowers who projects or build new housing. It takes previously had that product or an ARM, time for the confidence to return after borrowers who previously held shortthe stock market declines, real estate er-term fixed-rate mortgages showed value declines and job losses over the a stronger preference for staying with a last 3 years. 15-year or 20-year fixed-rate loan than they have in recent quarters. Overall, Tax cuts extended fixed-rate loans accounted for more If the agreement as proposed is final- than 95 percent of refinance loans. ized by Congress and signed by the president, the payroll tax cut would apply to 2011 is looking better all wage earners. That would be an $800 This new year has the indications of a savings for individuals with an income strong recovery for the U.S. Confidence of $40,000. Those with salaries of more is returning and as buyers spend more, than $106,800 would save a maximum companies will need to hire new people of $2,136. That would provide a nice lift and the economic circle will be spinning in disposable spending. in a positive direction. We are ready.

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You don’t have to be ‘rich’ to start investing In my over 33 years in the investment brokerage business, probably the most frequently asked question I have received is some form of “I know I should do Gary L. Glawe some investing for retirement, but I is owner of Glawe Investment do not have much money — so how Services Inc. in Cedar Falls. do I start?” Contact him at There are some 277-6043 general princior (toll-free) ples that apply to at 800-723-2310. everyone — and everyone should be saving for retirement. ■ You do not have to be rich. ■ It does not have to be complicated. ■ An investment broker can help you.

Use free money In most situations, a ﬁrst step in investing is to take advantage of any 401(k) plan offered by your employer. Employees should contribute at least enough to take maximum advantage of any matches their employer makes. Many employers will match up to 2 or 3 percent of a person’s salary. The match is essentially a raise and free money. This should be the ﬁrst investment for most novice investors. You will have to make some choices, but do not let this deter you. Company personnel or investment brokers can help sort out your options so your money can grow over time.

Invest your own money Once this investment is made, starting an IRA contribution would be a logical second step. People who receive a W-2

form are eligible in most cases to contribute up to $5,000 for 2010 and if over 50 years old, $6,000 can be contributed for tax year 2010. You can open IRA accounts with as little as $250 with many mutual fund companies, and it can be added to in amounts as small as $25 a month. This contribution can be made until the time taxes are ﬁled, so in theory a person has until April 15, 2011, to make a 2010 contribution. There are several types of IRAs. A traditional IRA brings a tax reduction immediately when ﬁling your tax form. The alternative is a Roth IRA, where taxes are paid on the funds invested in the current tax year, but no taxes are paid when the money is taken out. New investors can consult a competent investment broker to learn the

nuances of each type of IRA account. For self-employed investors, there a type of IRA account known as a SEP-IRA. Your contribution is based on your income. A tax adviser can tell you how much you are allowed to invest each year The same choices of investments can be made into the SEP-IRA, as for a regular or Roth IRS. An investor has a choice of several types of investments to put into an IRA. In most cases a selection of mutual funds allows for more diversiﬁcation of investments to be included in the account. If a person wants to select stocks on their own to deposit into the IRA, it can be done, but unless a person is investing at least $1000 or more at a time, commission costs can become more prohibitive. .

Branching out after that Once basic plans are established, an investor has many choices when making investments outside of retirement or education plans. These range from conservative to speculative. Investments can range from stocks, to bonds — either corporate or municipal — to mutual funds to exchange-traded funds to tax shelters to commodities. Consulting with an investment adviser would help in making the determination of how much risk you are willing to take, what the likely rewards will be, time horizons and tax implications. This article was not intended to give all the answers, but to establish that one does not need to be “rich” to get started. The sooner you start, the better, There are choices that are quite simple to get started.

JANUARY 2011

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Credit score affects loan rates, insurance premiums, your job Do you know your credit score? Do you know who is reporting on your personal credit report? You should, because many times during your life what decisions are made for you depend on what is on your credit report. Of course ﬁnancial institutions such as credit unions and banks review your credit report. But so do Chad Kaeppel some landlords, is with Cedar Falls insurance compaCommunity Credit nies and employUnion. Contact him ers. For example, at 266-7531 or if you are looking chad@cfccu.org. to rent an apartment, the landlord may refuse you as a tenant based on your credit history. Also, if you are applying for insurance coverage, some insurance companies may decide how much you will pay in annual premiums based in part on your credit history. Even some employers will review your credit history to determine if you qualify for employment. Credit reports are more commonly used by credit unions and banks. Some of these ﬁnancial institutions determine your interest rate by your credit score

on a variety of loans such as a personal, auto or home loan. This method of determining your interest rate by your credit score is referred to as risk-based pricing. The reason for using riskbased pricing is based on the consumer’s risk of nonpayment. The higher your credit score the less risky the loan and the better the interest rate. The interest rate has a direct impact on your repayment obligation. Beginning Jan. 1, new regulations will begin under which a lender must disclose in writing to the borrower if they are not getting the better rates of interest available. Those consumers who receive this “risk-based pricing” notice will be able to obtain a free credit report to check the accuracy of the report. Your credit report will have all kinds of information about your credit history. It will display existing and past loans you have obtained, monthly payment obligations, payment history, employment, unpaid collections and much more. The three most common credit bureaus are Equifax, Experian and TransUnion. You can check out your credit report by going to www. annualcreditreport.com.

Poor credit can hurt job-seekers McClatchy Newspapers

Job hunters, know your credit score. Nearly half of employers say they include consumer credit checks in some of their preemployment investigations. According to congressional testimony by the Society for Human Resource Management, credit checks are a useful tool to “assess the skills, abilities, work habits and integrity of potential hires.” According to the society, only 20 percent of employers conduct credit checks on all applicants, but those that use them believe they’re worthwhile insights into candidates’ qualiﬁcations. The Society for Human

Resource Management said 57 percent of employers who do credit checks do them only after contingent offers, while 30 percent do them after job interviews. Most employers said they would look at the past four to seven years of a credit history. The Fair Credit Act requires employers to inform applicants if a creditrelated issue caused them to be rejected from consideration. Sixty-ﬁve percent of employers in the survey said they allow job candidates to explain their credit results before the hiring decision is made. About 22 percent said they allow explanations after the hiring decision is made.

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Tax planning is key for small businesses Small business success depends in part on smart tax planning. When you consider investment options, income options or even options for Roth IRA conversions, employee beneﬁts and owner David Beaty compensation, is an investment u n d e rs ta n d i n g adviser with Heartland Financial the may determine which Services LTD in Cedar Falls. choice makes the Contact him at most sense for 277-1059. your financial plan. Tax Smart planning is a process that combines tax, investment and benefit planning to bring you a higher level of ﬁnancial success. Tax Smart

planning is not the preparation of a tax return, but the process of looking ahead at the tax code and projected changes in that code so you can make the best possible decisions regarding your ﬁnances. With Congress debating the tax code for 2011 at this writing, it is imperative that you take a few minutes early in the year to develop a tax strategy and review that strategy periodically during the year. Business professionals are especially targeted by the tax code, thus making it even more important for you to make tax planning part of your ﬁnancial plan. ■ 2010 tax code: Married joint tax tables provide federal tax rates are 10 percent (up to $16,750), 15 percent (up to $68,000), 25 percent (up to

$137,000), 28 percent (up to $209,250), 33 percent (up to $373,650) and 35 percent (top bracket over $373,650). Projected rates for 2011 eliminate the 10 percent bracket, thus increasing federal tax by (5 percent on $16,750) $837.50 for most taxpayers. Projected rates for 2011 also increase rates by 3 percent for brackets over $70,000. The resulting increase for $150,000 taxable income is over $3,200. Recommendation: Identify your current top bracket and take additional income during the year from IRAs, retirement plans, or make Roth conversions to use the entire tax bracket at your current rate. ■ 2011 capital gains: Projected changes include eliminating capital gains or at least increasing the rate on them.

Recommendation: Take capital gains as rates offer you opportunities at rates lower than other income. ■ Estate tax rates: Estate tax rates are scheduled to revert to the pre-Bush rates for 2011. The personal estate exemption will be $1 million. Business values are included in the estate tax calculations even if the business is not sold. Recommendation: Review your estate plan to determine what values might become subject to estate tax as a result of this reversion. This is an excellent opportunity to review your plan for other changes as well. ■ Roth conversions: Roth IRA conversion rules also have changed. Starting in 2010 you can make a Roth IRA conversion from a traditional IRA regard-

less of your income. Recommendation: Have a Roth Conversion analysis prepared to determine if a Roth conversion is suitable for your ﬁnancial plan. These are a few of the tax items that you should be aware of and take into consideration for your ﬁnancial planning for the coming year. A tax smart review early in the year and again in the fall are important for those that have funds in retirement plans, IRAs, or have taxable income that is being reinvested. Sometimes taking income from after tax accounts makes sense to reduce current income taxes and other times taking taxable income at lower tax rates makes sense rather than leaving the taxable event to spouses or children.

CEDAR FALLS INDUSTRIAL PARK

TO HAVE YOUR BUSINESS LISTED ON THIS PAGE IN THE NEXT ISSUE, CALL JACKIE NOWPARVAR AT 291-1527.

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Tax Deductible Gifts Contribute to the Bottom Line

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Goodwill is converting corporate and personal donations of any sort into training and jobs for disadvantaged and disabled. For more information on how Goodwill can be good for your bottom line call 234-4626. For breaking news updated all day

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Long-term care insurance can make great business deduction The tax battle in Washington has been resolved. Rates will stay the same for a couple of years, but then what? With the mountains of debt we have accumulated it would not surprise most of us to see rates go up on Lance Kruger everybody, probis with the Sinnott ably back to the Agency Inc. in levels we paid in Waterloo. Contact the ’90s. There’s him at 233-6103. also talk of eliminating some of the more popular deductions. Those that remain will be more valuable than ever. Long-term care insurance premiums enjoy some unique tax deductions, especially for businesses and the self-employed. Politicians at both the state and federal level have done a lot to encourage people to buy this insurance. The new Health Savings Accounts allow premiums for LTC insurance as an eligible tax-free withdrawal. Iowa recently introduced Partnership Plans, a cooperative effort between insurance companies and the state. The assumption seems to be that if more people are covered, fewer will end up on Medicaid. That saves everybody money in the long run. For self-employed individuals, the LTC premiums for themselves and their spouse are deductible as a business expense, up to a maximum. That maximum is on a per person basis and varies based on age. It’s also adjusted for inﬂation each year. Here are the 2011 limits: taxpayers 40 and younger at the end of the year, $340 deductible limit; between 40 and 50 years, $640; 50-60 years, $1,270; over 60 but not more than 70, $3,390; older than 70, $4,240. In a partnership, S-corp or LLC premiums paid for anyone with more than 2 percent ownership can be deducted in the same way as the self-employed individual. If the business decides to pay the premium on any non-owner employees it would be 100 per-

cent deductible with no maximum. There is also no payroll tax on the amount paid. In addition to covering the owner, businesses of any type can choose to offer coverage as an employee benefit. There is a lot of flexibility. A business can open it up to all employees on a voluntary, payroll deduct basis. It’s also possible to “carve out” key people or long-time employees and pay part or all of their premium. No matter who pays, everybody gets a group discount. If an employee leaves they still get to keep the discount. And unlike disability insurance, even if the business deducts the premium for long-term care insurance, the benefit remains tax-free. With a C-corporation, 100 percent of the premium paid for owners, employees and even spouses can be deducted. Most insurance companies offer an option to pay more now in order to have the policy paid for by age 65. That larger premium is still fully deductible and the owners or employees can retire without having to worry about paying the premium on their own. Individuals who purchase LTC insurance have tax advantages too. A Health Savings Account is set up in conjunction with a highdeductible heath insurance plan offered through your employer or purchased individually. You or your employer can contribute to the Health Savings Account on a pre-tax basis. Qualified expenses including LTC premiums can be withdrawn tax free. If you don’t have an HSA you may still be able to deduct your LTC premium. The amount you pay, up to the maximum in the proceeding table, can be added to your other medical expenses. Any amount over 7.5 percent of you adjusted gross income is deductible. The cost of care for nursing homes, assisted living facilities and home care has been skyrocketing. Long-term care insurance is one way to defray those costs. It’s nice to know our leaders in Washington have at least given us some ways to help with the cost of the premiums.

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...

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Yes!

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An Iowa Original.

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The work of Goodwill continues after half a century in NE Iowa Every business owner has experienced the ongoing flood of calls from nonprofit agencies and organizations seeking financial contributions. Whether it is the United Way annual appeal or the everyday charity deal, the calls are constant because the need is great. Goodwill IndusDavid E. Boyd tries has some is president and CEO of Goodwill suggestions that may help when it Industries of Northeast Iowa comes to deciding Inc. in Waterloo. how to divide the Contact him at corporate citizen234-4626. ship pie. Goodwill Industries of Northeast Iowa Inc. is celebrating 50 years of charitable giving. Corporations and individuals have donated mountains of usable goods and salvage that

has been converted into training and job placements for persons with disadvantages and/or disabilities. Since its earliest days in 1960, Goodwill has partnered with various businesses creating jobs and fulﬁlling contracts. As our organization has evolved and the needs of those we serve have become more complex, Goodwill has devised work services to meet a changing market. Today, Goodwill evaluates, trains and supervises its disadvantaged and/or disabled work force on its own work load. When it is clear that an individual has the potential for more demanding tasks, Goodwill attempts to create a suitable work setting. Our donated goods program has fueled work opportunities and challenged our workforce. Opening our e-waste program in cooperation with Dell has deliv-

ered new work requirements and skills training that prepares workers for more opportunity. Our retail stores now process donations on site, and our Bookwork’s — Goodwill Bound program is offering expanded opportunities. But it is our Hire Performance program that moves workers into community businesses to test skills that ultimately lead to greater independence. Our goal is to foster the highest level of independence possible for each individual we serve. Every day we assist one of our workers into independent employment is a day we celebrate. All of this is made possible by your tax deductible donations of goods and cash. What better measure of corporate citizenship’s return on investment than to put people to work? Companies that identify a cause with which they wish to

align their charitable resources are able to sort out the dozens of requests received annually. Companies that align their brand with a particular charity are able to maximize the impact of donations. Goodwill is grateful to every business that has included it on its list for gifts. All agencies who

rely on donations feel the same. But Goodwill is always looking for ways to improve its appeal. Contact us if you have old computers or e-waste, need contract janitorial or other task work or would like to have a Goodwill donation drive at your workplace. Goodwill wants to be a good geal for your business!

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JANUARY 2011

Financial Decisions Group maximizes price to value for customers We have all heard the ďŹ nancial terms price to earnings (P/E) and loan to value (LTV) ratio. What about the term price to value? Price to value could be explained like the commercials we have seen: a new red bicycle Patricia for Christmas Harkin (price) â&#x20AC;&#x201D; $200. is director The look on your of business g ra n d c h i l d â&#x20AC;&#x2122;s development with face when she Financial Decisions Group in Waterloo. receives it (value) â&#x20AC;&#x201D; priceless! Contact her at Price can come 233-8476. in many forms. We can pay a price with money, hard work, long hours and dedication. The same can apply to value. We can have monetary value in our ďŹ nancial assets, and we can have emotional value in the lives of people we care about. For Financial Decisions Group the price to value concept began 50 years ago. In 1960, Frank Kneeland Sr. followed his dream and the entrepreneurial vision of Life Investors, a newly formed Iowa insurance company. He and his wife, Peg, uprooted their family of 12 from Wisconsin and moved them to Waterloo, where they opened the doors in the old YMCA building and formed the Kneeland Agency. His sons, Frank Jr. and John, are still actively involved in the insurance business. Today, Frank Jr. continues his business in the

Financial Decisions Group (FDG) building in Waterloo, and John serves as senior vice president of marketing and sales training for the Life Investors Financial Group Inc. Grandsons, Tim and Tom Kneeland have taken the passion into the next generation. Tom works in the FDG Waterloo office and Tim is director of business development for Transamerica Life and Protection in Cedar Rapids. In the mid-1990s under the leadership of Tim Kneeland, a survey was conducted of clients that suggested a name change was in order to better reďŹ&#x201A;ect the type of work the organization does, and the name was changed to Financial Decisions Group. To better assist with ďŹ nancial decisions, FDG uses a variety of carefully selected investment and insurance products that can customize speciďŹ c programs for their clients. Lifetime Val evaluates the clients personal as well as employer-based financial and insurance programs. This process helps the client create a lifelong plan to help ensure ďŹ nancial ďŹ tness. Other ďŹ nancial services include fee-based planning, managed-money accounts, insurance, investments and retirement planning. Today, President Pete Meehan is guiding FDG into the next century and most recently into a brand-new facility. Peteâ&#x20AC;&#x2122;s son, Jesse, has been with the organization for ďŹ ve years. The new location at 3013 Grey-

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WORDS of WISDOM FOR THE BUSINESS COMMUNITY

How have your spending habits changed in the current economic conditions?

“I watch what I spend and how often. But I also believe that the Cedar Valley has not had the shock effect of our property values going up rapidly and back down rapidly and thus we feel that economic conditions are more stable and not as susceptible to the wild effects seen on the coasts. Small steps, well thought out plans, and hard work is the basis of our Midwestern culture. Who wins the race - the tortoise or the hare?” Bob Manning / First Security State Bank

“I try do my part to stimulate the local economy by buying from locally owned businesses rather than a nationally owned chain business. This not only keeps our money circulating at home it helps to preserve our community’s one-ofa-kind businesses and distinctive character.” Amy Steffen / Gibson Specialty Co.

“Based on our experience at Goodwill Industries of Northeast Iowa, we are seeing more shoppers visit our stores hunting for bargains or just the right gift. We are grateful to be able to provide a low cost shopping alternative.” David E. Boyd, Pres/CEO / Goodwill Industries of North East Iowa

“While we have been fairly well insulated from the economic conditions over the past few years here in the Cedar Valley, they have been a great reason for my wife and I to revisit our budget and spending patterns. We have always had one, but we have found ourselves being more conscious about the things we buy and making sure we stick to that budget. It can be easy to overspend if you don’t have a clearly deﬁned spending plan in place.” Jordan Alborn / FSB Warner Financial, Inc.

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JANUARY 2011

Ten steps to home-based business success Thinking about starting a home-based business? Youâ&#x20AC;&#x2122;re not alone. More people are taking advantage of advances in technology and are choosing to work from the comfort of their own homes. But before you trade in your business suit for a bathrobe, think: Do you Richard L. know what it will Petersen is interim director take to turn your of the University business dreams of Northern Iowaâ&#x20AC;&#x2122;s into reality? FolSmall Business low these 10 steps Development to home-based Center. Contact business success: him at 236-8123. 1. Have a plan. No matter what the size of the business, every entrepreneur should write a business plan. A detailed and accurate plan will not only help you obtain ďŹ nancing, it will help you down the road. The more planning in the beginning, the fewer surprises in the future. 2. Donâ&#x20AC;&#x2122;t isolate yourself. One of the most common complaints of home businesses owners is the lack of human interaction. Just because youâ&#x20AC;&#x2122;ve decided to work solo doesnâ&#x20AC;&#x2122;t mean you have to give up your relationships. Develop and maintain a network of colleagues, friends and mentors who can give you guidance and support. Become active in a trade association or chamber of commerce. 3. Get your house in order. Before you start your home business, you need to be sure your ďŹ nancial and legal house is in order. Be sure you have enough money to support yourself if things donâ&#x20AC;&#x2122;t get hopping right away, and be sure youâ&#x20AC;&#x2122;ve checked on zoning laws, business licenses and taxes before you open. Be sure to check in with your insurance agent to see how operating a business will affect your homeowners insurance. 4. Design an office that works.

Whether you prefer a messy desk or a spotlessly clean office, design a system that works for you. Put ďŹ les, phone and keyboard within immediate reach. Make sure other equipment is a short walk away so that you can efficiently move between tasks. You also may want to consider getting a second phone line or separate fax line. Most customers are put off when a child answers a business phone. 5. Eliminate distractions. A serious problem about working at home is all the distractions: children, visitors, the phone, the television. Let friends know what your â&#x20AC;&#x153;workingâ&#x20AC;? hours are to avoid coffee cliques. Find a way to deal with distractions so that they donâ&#x20AC;&#x2122;t have a negative impact on your productivity. 6. Listen. Without customers, youâ&#x20AC;&#x2122;ll have trouble keeping a business going. Listen to what theyâ&#x20AC;&#x2122;re telling you. Your business must be able to solve your customersâ&#x20AC;&#x2122; needs. And donâ&#x20AC;&#x2122;t forget the importance of a thank you. Keeping current customers happy is a lot easier than ďŹ nding new ones. 7. Set goals. If you know where youâ&#x20AC;&#x2122;re going, itâ&#x20AC;&#x2122;s easier to get there. Set goals and strive to achieve them every day. You may consider putting them up on the wall in view of your desk so that you can use them as motivation. 8. Be flexible. Seize new opportunities and donâ&#x20AC;&#x2122;t let setbacks frustrate you. Be ready to adapt to new strategies when your current plans are not working. 9. Remember the little things. Develop a system for organizing all of the little things you have to do in a day. Whether itâ&#x20AC;&#x2122;s a planner or organizer or a bulletin board with scraps of paper, ďŹ nd a system that works for you and use it. 10. Donâ&#x20AC;&#x2122;t forget youâ&#x20AC;&#x2122;re in this for fun. Remember the reasons why youâ&#x20AC;&#x2122;re choosing to work at home â&#x20AC;&#x201D; fulďŹ llment and happiness.

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Collaboration is the key to success of marketing user group For a couple of years I have been writing a personal blog (JCBlog.net). Several co-workers have taken an active interest in its success. They read each day’s post, comment and retweet links they ﬁnd interesting. They have become sounding Juli Camarin boards for ideas. is senior designer Dave edits my with Aces/AMT articles in the — ACES morning before Marketing Through work. Megan has Technology. The Web site is Web: spent countless www.acesiowa. evenings discusscom; www.amt2. ing my mission, com offering ideas to accomplish them. Scott helps with technical aspects and overall strategy. Phil hosts my site for free. Collaboration is the reason I’ve been successful. In the spirit of the collaborative mindset, ACES launched a marketing user group (www. amt2.com/mug) this summer. Members share knowledge about marketing technology, spending one hour a month to share ideas

and offer solutions. Since the key ingredient of this group is collaboration there was a need to further the conversation throughout the month. As a result we developed a marketing portal to share ideas with each other as they come. The portal has discussion groups based on the topics we’ve identiﬁed during our ﬁrst user group meetings. The current topics are related to online marketing, building and maintain an effective Web presence, traditional marketing, social networking, blogging, search engine optimization and using Facebook as a marketing tool. Other groups are being added as the conversation arises and members are encouraged to join a group, and participate in the discussion by both asking questions and offering advice. The site was launched at the beginning of this month and its success depends on community involvement. The community’s involvement in this marketing portal will help form the topics we discuss during our monthly user group meeting. The more involvement the better; it is for everyone. The

portal is free and you can register by visiting www.amt2.com/ mug. Join the groups that interest you and post a question or

two. Let the collaborative spirit efforts. For an upcoming calendar and of our members offer tips and suggestions that will help and location details, please visit our inspire you in your marketing amt2.com homepage.

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PAGE 21

Cedar Valley banks have money available to lend There have been comments in the media that banks are not lending money. This is not necessarily accurate. What have changed are the requirements needed to obtain ﬁnancing today. The economic climate in the Cedar Valley is fairly stable. Commodity Dave Deaver prices in the agriis president of First sector National Bank’s cultural Cedar Falls ofﬁces. provide positive earnings for many Contact him at (319) 268-7000. of the grain farmers in our state. This is a positive for the agricultural industry in our area and manufacturers like John Deere, whose performance provides a stable work environment, along with rising enrollment at Hawkeye Community College and the University of Northern Iowa. Housing prices have not plummeted, and we have not experienced the rash of foreclosures other parts of the country have endured. Housing starts are rela-

tively stable. A large segment of our market has good sources of income which they are depositing in banks for safety and security. Why all this savings activity? Because although many are not seeing changes in their income, they know others who have not been so fortunate. That knowledge coupled with high national unemployment and lower-thannormal growth creates an uncertain local atmosphere. What does this have to do with lending? These are the reasons money is available for lending. For banks money is inventory, and based on current savings practices there is plenty of inventory. So why do we hear stories of financial institutions unwilling to make loans? Prior to the 2007-2008 ﬁnancial crisis several factors occurred that created a relaxed lending environment. Congress passed laws to encourage access to loans whether it was prudent or not. Regulators took their cue from Congress and allowed financial institutions to take more risk and lend more

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money. Finally, undisciplined institutions took advantage of the lax regulations to increase proﬁts at excessive risk to their customer and themselves. In the end, customers began to fail and then the institutions. In response, Congress recognized too much risk was taken by institutions to obtain higher proﬁts. They blamed regulators for allowing that to happen. In response, regulators started looking for stricter lending requirements and asking that less risk be allowed for the borrower and the institution. This has created a less-favorable lending environment. We know savings are up, so money available to lend is up. We also know the Cedar Valley economy is stable. First National did not take excessive risk to obtain

higher proﬁts and thus maintained a safe and secure environment for our depositors. Because of this, First National is looking for customers who want to take advantage of low interest rates to accelerate the completion of their goals. We want to make the loan for you. But we want the loan decision to be prudent. We do not want to put you or your family or your business in an unacceptable risk position. To be sure that will not happen, be prepared to provide sufficient ﬁnancial information to allow us to guide you through the process. We will match your information against current guidelines. We will coach you on ways to make the loan request successful because we want to make the loan and make you successful.

For those of you in the home purchase or reﬁnance market, here are a few helpful tips: ■ Depending on the dollar amount of your existing mortgage, a half-percent reduction can save you money. Be prepared to know: ■ Your credit score. ■ Monthly income and payments. ■ Existing loan balance and interest rate. ■ Purchase price. ■ Property value. ■ Do you have any existing liens? ■ Where is your abstract? ■ Current mortgage statement. There are opportunities to identify options and make adjustments. We want to make the loan and help you be successful in your ﬁnances.

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CEDAR VALLEY BUSINESS MONTHLY

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JANUARY 2011

Weight-loss surgery an effective treatment for type 2 diabetes Diabetes is a disease caused by either lack of insulin or the body’s resistance to insulin. The end result is a lack of ability to control one’s blood sugar. The effects of a chronically elevated blood sugar are devastating. Diabetes causes early development M. Cameron of blood vessel Hodges blockages leading M.D., minimally to heart attacks, invasive, bariatric strokes, kidney and general surgery, is with failure and loss of Covenant Clinic limbs of the lower extremity. DiabetCedar Falls. Contact him at ics also suffer from 268-3992 or early development drhodgesiowa@ of cataracts and gmail.com. loss of sensation in the feet and hands. Kidney failure frequently results in a need for dialysis. Weight-loss surgery is emerging as one of the most effective tools we have to send type 2 diabetes into complete remission. Childhood onset diabetes is referred to as type 1 and is caused by failure of the body to produce insulin. Type 2 diabetes is referred to as adult onset diabetes and develops when a person develops resistance to insulin produced at normal levels. About 90 percent of type 2 diabetes is related to obesity. The development of adult type 2 diabetes has been increasing in children in the past decade with signiﬁcant increases in childhood obesity. In most type 2 diabetics, the development of the diabetes mirrors the increase in body weight. Patients are initially treated with medicines to increase the body’s sensitivity to insulin and frequently progress to needing large doses of insulin. While the extra insulin helps control blood sugar, it also promotes further weight gain which produces further resistance to the insulin. Even with medical treatment, life expectancy is dramatically decreased in patients with type 2 diabetics. On average, a patient diagnosed with diabetes

will have their remaining aver- less than the risk of continuing age life expectancy cut by 30-40 to remain diabetic and morbidly percent. For a 40-year-old, this obese. Remission of diabetes means means dying 11 to 15 years earlier than nondiabetics. A recent report released by United Health Center estimates that by 2050, half of Americans will have either pre-diabetes or type 2 diabetes. The average annual health care costs in 2009 for a person with known diabetes were about $11,700 compared with about $4,400 for the nondiabetic public, according to a report drawn from 10 million United Healthcare members. The average annual cost nearly doubles to $20,700 with complications related to diabetes. Because 90 percent of type 2 diabetes is caused by obesity, controlling weight is the key to eliminating diabetes. Once a patient begins taking insulin, weight loss becomes more difficult. The most effective treatment in a patient with obesity is weight-loss surgery. About 85 to 90 percent of gastric bypass patients achieve complete remission of diabetes. Patients undergoing lap band surgery see a 73 percent incidence of complete remission. While diet and exercise are important treatments, these measures alone only achieve a 13 percent incidence of remission. Gastric bypass cures diabetes by helping patients control their weight as well as producing metabolic changes that improve the interaction of insulin and diabetes. Lap-band patients achieve remission of diabetes through weight control. Gastric bypass patients routinely leave the hospital 48 hours after surgery with their diabetes in complete remission or with their insulin requirements cut in half and the need for insulin quickly eliminated. With the diabetes in remission, a patient’s risk of dying related to diabetes complications returns to that of the nondiabetic patient population. Lifelong diabetes remission is maintained through weight control with routine follow up. While surgery does carry risks, the risks of complications from weight loss surgery are far

adding years to a patient’s life expectancy. Remission means a dramatic improvement in quality of life and dramatic decreases

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PAGE 23

Social entrepreneurs use finance for social, environmental goals Because the United States and other nations face serious challenges — unemployment, inequality, financial turmoil, affordable energy, food and water security, climate change, and poverty — it’s easy not notice a small global revolution. Because economic and political systems repeatedly fail us in dealing with these problems, Scott Fullwiler social entrepreis associate neurs are designprofessor of economics and ing and leading James A. Leach o r g a n i z a t i o n s Chair in Banking —for-profit and and Monetary nonprofit—to Economics at fill this void. SEs Wartburg College. create innovative change for good. Who will finance these SEs? Even the smallest organizations must be financially viable. Truly scalable solutions to big problems will require a lot of finance. We typically consider two kinds of business: ■ Traditional for-profit businesses maximize profits. While they’ve enabled the standard of

living we now enjoy, they haven’t solved social and environmental problems. Some think they made them worse. ■ Traditional nonprofits focus on social or environmental value but often don’t leverage basic business practices to scale solutions, or have limited financial resources to scale solutions. This dichotomy does not serve us. Every business — for-profit or nonprofit — creates a blend of social, environmental and monetary returns, or value. Some provide monetary returns but negative social or environmental returns. Some do the opposite. Some seek to provide all three, particularly as more businesses run by SEs fall somewhere in between for-profit and nonprofit. Sadly, mainstream finance doesn’t have tools or desire to evaluate and scale businesses that can generate blended returns consistent with innovative solutions to real problems. This is so, even as a recent Hope Consulting survey of investors found there is at least $120 billion of capital that could work for good. This isn’t charity or

philanthropy. These investors expect monetary return while also seeking social benefit. Still, really good things are already happening: ■ Numerous venture capital funds are scaling for-profit SEs that incorporate social or environmental missions. Good Capital is scaling fair trade and Better World Books; Equilibrium Capital is scaling clean water technologies and green buildings. City Light Capital scales solutions to inner-city problems like crime and education. ■ Venture philanthropists — venture capitalists that do not return a profit to investors — invest in for-profit and nonprofit SEs. Acumen Fund invests in SEs alleviating poverty; Social Venture Partners brings individuals together to fund and mentor growing nonprofits in cities across the country.

■ Nonprofit investment funds like Calvert Foundation or RSF Social Finance provide investment options to fund community-oriented for-profit and nonprofit businesses. ■ Banks like Shorebank Pacific and New Resource Bank evaluate all loans against social, communit and environmental criteria in addition to financial viability. ■ Microfinance institutions like Grameen Bank provide small loans to entrepreneurs in developing countries. Kiva enables you to invest as little as $25 in entrepreneurs you select on its website. Vittana allows you to help people in the developing world get a college education. ■ Tools for evaluation are emerging. The Impact Reporting and Investment Standards provide standards for measuring blended outcomes; the Global Impact Investing Rating System

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will be the equivalent of Moody’s or Fitch’s; the Global Reporting Initiative sets standards and ratings for sustainability reporting by public companies; the Impact Assets Global 50 will be an index of top investment fund managers delivering blended returns. ■ Numerous studies and books argue that portfolios of publicly held companies that do good outperform traditional ﬁnancial benchmarks. While small, the movement is growing, particularly as some at the forefront — like Nobel Peace Prize recipient Muhammad Yunus of Grameen Bank or Jacqueline Novogratz of Acumen Fund — become better known. But now that you can put your money where your values are, will you? In a world of increasingly dysfunctional government combined with serious problems, it’s nice to be on the side of good.

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Financial planning helps you see big picture, accomplish goals Do you picture yourself owning a new home, starting a business or retiring comfortably? These are financial goals that may be important to you, and each comes with a price tag attached. That’s where financial planning comes in. Financial planning can help you Jordan Alborn reach your goals is a financial adviser with FSB by evaluating your Warner Financial financial picture outlining Inc. in Waterloo. and Contact him at strategies tailored 235-6561 or to your individual jalborn@fsbfs.com. needs and available resources. With a financial plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them. A financial plan can help you balance competing financial priorities. A financial plan will show you how your financial goals are related—for example, how saving for your children’s college education might impact your ability to save for retirement. You can use the information to prioritize

your goals, implement strategies and choose suitable products or services. You’ll have the peace of mind that comes from knowing your ﬁnancial life is on track.

Financial planning process Creating and implementing a comprehensive financial plan generally involves working with financial professionals to: ■ Develop a clear picture of your situation by reviewing your income, assets and liabilities, and evaluating your insurance coverage, investment portfolio, tax exposure and estate plan. ■ Establish and prioritize financial goals and time frames for achieving these goals. ■ Implement strategies that address financial weaknesses and build on financial strengths. ■ Choose specific products and services tailored to meet your financial objectives. ■ Monitor your plan, making adjustments as your goals, time frames or circumstances change.

Some members of the team The ﬁnancial planning process can involve a number of professionals.

■ Financial planners typically play a central role, focusing on your overall ﬁnancial plan and often coordinating the activities of other professionals who have expertise in speciﬁc areas. ■ Accountants or tax attorneys provide advice on federal and state tax issues. Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death. ■ Insurance professionals evaluate insurance needs and recommend appropriate products and strategies. ■ Investment advisers provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio. ■ The most important member

of the team is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.

Why can’t I do it myself? You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas. A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.

Staying on track The ﬁnancial planning process doesn’t end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it’s up-to-

date. It’s also possible that you’ll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan: ■ Your goals or time horizons change. ■ You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss. ■ You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses). ■ Your income or expenses substantially increase or decrease. ■ Your portfolio hasn’t performed as expected. ■ You’re affected by changes to the economy or tax laws.

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The right medications can prevent, treat osteoporosis Osteoporosis causes fractures, deformity, disabilities and loss of independent living. Today we have many medications which can prevent or treat osteoporosis. But which one is right for you? The answer can get complicated. OsteoporoJay Ginther, sis medications M.D., is director of come in three the Cedar Valley main classes, and Bone Health the biggest class Institute. has three diviContact him sions. Which class at 233-2663 is appropriate for or at www. CVBoneHealth. you depends on com. your situation. Do you have low bone mineral density, or osteoporosis, or vertebral compression fractures or a recent hip or other fracture? A DXA test can determine your bone mineral density. To see if you have a vertebral compression fracture, you need a VFA test or a lateral spine x-ray. A VFA machine checks for vertebral compression fractures quickly,

easily, and with only 10 percent of the radiation exposure of standard x-ray. If you have low bone mineral density but no fractures, you need to prevent osteoporosis and fractures. You need to preserve bone tissue and add calcium. Several drugs may help. Antiresorptive medications like Fosamax, generic Alendronate, Actonel, Boniva, Reclast, and a new type antiresorptive, Prolia, are all possibilities. Evista also could be considered. If you have fractures or very low bone mineral density, you need to be more aggressive. You need to consider the “anabolic” medication which actually builds new bone matrix and increases bone volume. Forteo is the only medication in this class. To determine which medications could be best for you, you need blood tests and a detailed history. We need to check for medical conditions which can make each medication the right one or the wrong one for a particular person. Fosamax, generic Alendronate, Actonel and Boniva are all pills

taken weekly or monthly. You generally should not take these if you have ulcers, heartburn or reflux disease. If you have ulcers or reflux disease, you could take IV Boniva or Reclast to avoid that problem. These are both an intravenous medications. IV Boniva is given every three months in our office. Reclast is once a year and must be given over an hour in an infusion center. IV Boniva and especially Reclast can be dangerous if you have kidney disease, so we need to check for that in our tests. All of these are bisphosphonates. They accumulate in the bone and slow down the cells that cause osteoporosis by resorbing or eating away bone too fast. They also can slow down the normal replacement and repair process in your bones. We generally do not give them more than five years before taking a “drug

holiday” for at least one year. Prolia was approved by the FDA in June 2010. It also slows down the cells that cause osteoporosis by eating away bone too fast. It is an antiresorptive of a new variety. It does not accumulate in bone, so it is totally gone 12 months after the last shot. It is a shot given in the office twice a year. It is safe for older persons whose kidneys are slowing down. Evista is a medication that convinces the bone that estrogen is still on board. Evista reverses menopause effects in the bone so a woman maintains her bone density and strength. Evista also can prevent invasive breast cancer in women at high risk by blocking estrogen receptors in breast tissue. Evista is ideal for a woman with a family history of invasive breast cancer who also wants to prevent osteoporosis. It is a daily pill. If you have had

blood clots in your veins or lungs, you should not take Evista. Forteo is an anabolic. That means that its primary function is to build new bone. Forteo is the only medication to target the cells which make new bone. In two years Forteo can build up your bone volume by 30 percent or more. Forteo is often the best medication for someone with a vertebral compression or other fracture or very low bone mineral density. Forteo is a daily shot with a needle that I cannot see without my glasses, same as insulin. If you have cancer which has spread to bone or radiation to bone you should not take Forteo. Remember, none of these medications can work without calcium, vitamin D and magnesium. We now have many different ways to prevent and treat osteoporosis. Picking the best one requires a full evaluation.

LINCOLN SAVINGS BANK

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PAGE 26

THE COURIER

CEDAR VALLEY BUSINESS MONTHLY

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JANUARY 2011

Retirement plans bring big benefits to small business If you’re a small business owner, it may be less burdensome than you think to offer retirement benefits to your employees. A retirement plan can enhance your business. It can improve employee morale and increase retention. Your Larry K. Fox is senior financial employees benefit from consistent, adviser with automatic and Ameriprise tax-advantaged Financial Inc., Waterloo. saving. You may Contact him not be required to at 234-7000. make employer contributions, but if you do those contributions are tax deductible. And you can participate in the plan to help save for your own future. Here’s a brief introduction to your options for retirement savings.

Simple IRA plans A simple IRA is one of the easiest ways to help employees save for retirement. It requires minimal paperwork and no IRS reporting. Employees can con-

tribute up to 100 percent of income up to $11,500 limit for 2010 or $14,000 if over age 50. For 2010, employers can match up to 3 percent of the eligible employee’s compensation or $11,500 (whichever is less) or can choose to make a non-elective contribution of 2 percent of each employee’s compensation. Employer contributions are tax deductible. The assets reside in self-directed accounts, meaning employees decide how assets are invested. This option is only available if you have 100 or fewer employees. A word of warning: while all plans impose a penalty for early withdrawal, withdrawing from a simple IRA plan within the ﬁrst two years of participating may result in a whopping 25 percent penalty.

employee. SEP IRA plans allow an employer to establish minimum eligibility requirements for employee participation. Because an employee must establish an IRA to receive employer contributions, they may also make traditional IRA contributions to their IRA. For 2010, you may contribute up to 25 percent of each employee’s gross income or a maximum of $49,000. You are not required to contribute every year, lending ﬂexibility in the event of a down year. In years you do contribute, you must fund the plans of all eligible employees. You may create your own SEP IRA and make contributions toward your retirement.

deferrals. For 2010, the deferral limit was $16,500. You can make tax-deductible matching contributions. The savings are typically invested in self-directed investments such as mutual funds. These plans are require more plan administration that SEP or SimpleIRA plans. There are other ways to help employeesprepareforretirement. Options such as profit sharing plans and employee stock ownership plans (ESOPs) are complex and regulated; consult a certified financial planner who can help you explore whether they make sense for your business.

IRA, contributions generally are tax deductible. Upon withdrawal, distributions will be subject to income tax. The deductibility of your contributions depends on your adjusted gross income and whether or not you or your spouse participate in a workplace retirement plan. Contributions to a Roth IRA depend only on your adjusted gross income. For 2010, the income limit to make a Roth IRA contribution is $120,000 for a single tax ﬁler and $177,000 for a married joint tax ﬁler. The Roth IRA is funded with after-tax dollars, allowing you to take tax-free withdrawals in retirement if certain holding period requirements are met.

401(k) plans

Saving with an IRA

Get help from the experts

Other options

A 401(k) plan is a defined conUsing a traditional or Roth IRA, The IRS and the Small Busitribution plan to help employees you can contribute up to $5,000 ness Administration provide free SEP IRA plans save. The plan is funded primarily per year ($6,000 if you’re 50 years resources to help small businessA simplified employee pension by employees with elective salary old or above). In a traditional es establish retirement plans. plan requires minimal paperwork and no IRS reporting on behalf of the employer. With a SEP IRA, the employer makes a defined contribution on a pre-tax basis to an individual retirement account established for each eligible

cvbusinessmonthly.com

JANUARY 2011

CEDAR VALLEY BUSINESS MONTHLY

THE COURIER

PAGE 27

Give your college students the gift of professional financial planning In August, the Wall Street Journal reported that student-loan debt now surpasses credit card debt as the No. 1 source of outstanding consumer debt with some $829.8 billion in current federal and private school loans. It’s a sign that the rising cost of college is simJohn Englin ply becoming a is a certified financial planner greater albatross around the necks with Lincoln Savings Bank in of graduates for Waterloo. Contact years to come. him at 233-1900. Maybe a financial education should start earlier. Parents might consider introducing their 18-year-old to a financial planner who will instill some critical lessons about debt, savings, invest-

ing and planning before they’re off on their own on a campus far from home. The average college loan debt now tops $20,000. News reports are filled with stories of college students signing their name to private loans that cost them heavily down the line. A financial planner and possibly a tax professional can act as advisers to teens and young adults so they won’t fall into financing traps that can damage the rest of their financial lives. Based on current bankruptcy law, student debt is virtually impossible to eliminate in a bankruptcy filing. Young people possess the most valuable asset of all — time. In college, most students are focused on one goal – graduating and getting a good job. But what if students put that goal

in the context of affording a home, affording graduate school and eventually affording a solid retirement? A planner could help a student entertain the notion of smart savings and tax planning so they can focus on goals and what it will take to pay for them. Learning about the need to save independently for retirement is best done while someone is young. The moment a new graduate qualiﬁes for an employer-sponsored 401(k) plan, they’ll know how attractive that option will be particularly if it offers matching. The opportunity to interact with a trained adult on the subject of money gives a student a chance to learn and ask questions. Planner and student can work together to set and monitor savings, investing and spending goals. Parents and children can

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Jim Sulentic • 319-215-5000

also decide how much information they’ll be sharing about each other’s ﬁnancial situation. Financial literacy can help students better evaluate career decisions. Students who understand money stand a better chance of choosing careers and employers who will meet their expectations in terms of work-based

challenges and compensation. A ﬁnancial planner can provide a good sounding board with regard to job offers and beneﬁts offered at prospective employers. Students who get this training are destined to be better than many of their peers at negotiating with employers throughout their careers.

PAGE 28

WWW.GREATERCEDARVALLEYCHAMBER.COM

Business Education Series: Part One

JANUARY 2011

Take a look at our New

Member Benefits! Member Coupon Page

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Member Videos

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Non-Profit Media Sponsorship

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JANUARY 2011 MARCH 2010

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PAGE 29

WWW.GREATERCEDARVALLEYCHAMBER.COM

Veronique's Security Note Service 6OJWFSTJUZ "WF -PXFS -FWFM 8BUFSMPP *" 1IPOF 'BY $POUBDU 7FSPOJDB $VMQ $BUFHPSZ 3FBM &TUBUF *OWFTUNFOUT Waterloo Bucks Baseball 1BSL 3E 10 #PY 8BUFSMPP *" 1IPOF 'BY 8FCTJUF XXX XBUFSMPPCVDLT DPN $POUBDU %BO $PSCJO $BUFHPSZ &OUFSUBJONFOU Waterloo Christian School 8 3JEHFXBZ "WF 8BUFSMPP *" 1IPOF 'BY 8FCTJUF XXX XBUFSMPPDISJTUJBOTDIPPM OFU $POUBDU -JTB (PFELFO $BUFHPSZ &EVDBUJPO

Interested in joining the Greater Cedar Valley Chamber of Commerce? Contact one of our membership representatives today to learn how \RXU EXVLQHVV ZLOO EHQHÂżW E\ EHLQJ D &KDPEHU 0HPEHU $VN IRU %HWWH RU 0ROO\ DW wwww.GreaterCedarValleyChamber.com

Building Something Greater Our Total Resource Campaign (TRC) was a huge success. $225,264 in sponsorships for 2011 were purchased by our members. Thatâ&#x20AC;&#x2122;s more than three times the amount of non-dues revenue the Chamber had secured in recent years. None of this would have happened without the tireless efforts and dogged determination of our volunteers. They stepped up to an opportunity to do something that had never been done before by our Chamber, and I cannot thank them enough. A big thank you to the leaders of our Campaign, Chair, Jim Coloff - 93.5 The Mix/1650 The Fan and his Vice Chairs: Stacey Bentley - Community National Bank, David Braton - Courier Communications, Corey Clark - Lincoln Savings Bank and Jim Mudd, Jr., - Mudd Advertising. Also, a big thanks to our business community who agreed to sponsor a wide variety of events and initiatives in 2011. Throughout our seven week campaign we held weekly reporting luncheons. A big thank you to the businesses listed below who donated door prizes and incentives for those luncheons. Cathy Rottinghaus was the coordinator of our campaign and did an excellent job encouraging and assisting our volunteers. Our staff learned a great deal from this past TRC and look forward to working with our volunteer corp. again next year. If you are interested in learning more about how you can participate, please give us a call. Bob Justis, President All Smiles Family Dentistry Awesome Carwash Bentonâ&#x20AC;&#x2122;s Ready Mixed Concrete, Inc Bill Colwell Ford Isuzu Blaineâ&#x20AC;&#x2122;s Farm and Fleet Cedar Bend Humane Society Cedar Falls Community Theatre Cedar Valley Medical Specialists, P.C. Consumer Credit Counseling Service of Northeastern Iowa Copyworks County Inn & Suites, Hammond Ave. County Inn & Suites, South Main Denver Construction, Inc. Elements Therapeutic Massage Energy Systems of Iowa, Inc. Fareway, Magnolia Drive Hawkeye Community College Isle Casino Hotel Waterloo Junior Leaque of Waterloo-Cedar Falls Karenâ&#x20AC;&#x2122;s Print-Rite/ProSign

Kathy Flynn Livingston Aviation, Inc ME&V Mediacom Dan Gable International Wrestling Institute & Museum NRG Pilates Organized for You! PDCM Sprint Sulentic-Fischels Commercial Group The Pump Haus & Grill University Book and Supply Upper Cervical Health Centers VGM Club Waterfalls Car Wash Waterloo Community Playhouse Black Hawk Childrenâ&#x20AC;&#x2122;s Theatre Wells Fargo Bank YWCA of Black Hawk County

PAGE 30

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Ribbon Cuttings

JANUARY 2011

JANUARY CALENDAR OF EVENTS Jan. 4 Tues., TechWorks Board Mtg. Location to be announced. 3:00 PM

Financial Decisions Group 3010 Greyhound Dr., Waterloo

Hawkeye FoodService Distribution

Heartwood Investments

Matt Parrott/Storey Kenworthy

216 East 4th St., Waterloo

514 Bratnober St., Waterloo

Jan. 4 Tues., Alliance Board Mtg., CUNA, Waverly 4:00 - 5:00 PM Jan. 5 Weds., Cedar Valley Leadership Institute Jan. 6 Thurs., TechBrew, Voodoo Lounge, Cedar Falls, 5 :00- 7:00 PM Jan. 11 Tues., Cedar Valley Ambassadors, Clarion, 5826 University Ave., Cedar Falls Waterloo, 4:00 - 5:00 PM Jan. 12 Weds., Strictly Business Expo Task Force, Cabin Coffee Co., 2040 Kimball Ave., 7:30 AM Jan. 12 Weds., Diplomats, Cabin Coffee Co., 2040 Kimball Ave., 9:00 - 10:30 AM Jan. 13 Thurs., Business Education Series, Drive the Business, Steer the Brand Isle Casino Hotel Waterloo, 7:30 - 9:00 AM Jan. 14 Fri., Government Relations Committee, Chamber Ofﬁce, Cedar Falls, 7:30 - 8:30 AM

Stuff Etc.

Suburban Extended Stay Hotel

1210 Flammang Dr., Waterloo

300 Viking Rd., Waterloo

Jan. 20 Thurs., Investor Relations Meeting Chamber Ofﬁce, Cedar Falls, 8:00 - 9:30 AM Jan. 27 Thurs., Power Networking, Gary's Event Center & Catering, 2820 Falls Ave., Waterloo, cost $10, 4:00 - 5:30 Jan. 31 Mon., Deadline for Nominations for Annual Awards Celebration

TurnKey Associates

Waterloo Fire & Rescue

3015 Greyhound Dr., Waterloo

LaPorte Rd., Waterloo

JANUARY 2011

WWW.GREATERCEDARVALLEYCHAMBER.COM

PAGE 31

Greater Cedar Valley Alliance & Chamber Now Accepting Nominations for Annual Awards .BSL ZPVS $BMFOEBS GPS UIF (SFBUFS $FEBS 7BMMFZ "MMJBODF $IBNCFS Harold Brock Innovation Award "OOVBM $FMFCSBUJPO PO .BSDI BU UIF 'JWF 4VMMJWBO #SPUIFST 3FDPHOJ[F UIF FÃªPSUT PG B QSJWBUF TFDUPS Ã«SN B (SFBUFS $FEBS 7BMMFZ $POWFOUJPO $FOUFS 4PDJBM CFHJOOJOH BU PP 1. GPMMPXFE CZ EJOOFS BOOVBM "MMJBODF $IBNCFS JOWFTUPS GPS JOOPWBUJPO JO UFDIOPMPHZ BEWBODFE BXBSET QSFTFOUBUJPO BOE EFTTFSU CBS 5P OPNJOBUF B CVTJOFTT JOEJWJEVBM NBOVGBDUVSJOH PS UBMFOU EFWFMPQNFOU PS PSHBOJ[BUJPO QMFBTF DPOUBDU #FUUF 8VCCFOB BU PS CFUUF! HSFBUFSDFEBSWBMMFZDIBNCFS DPN /PNJOBUJPO EFBEMJOF JT +BOVBSZ Treating Capital Well Award 3FDPHOJ[F UIF FÃªPSUT PG UIF QSJWBUF TFDUPS Ã«SN B (SFBUFS $FEBS 7BMMFZ Business of the Year Award "MMJBODF $IBNCFS JOWFTUPST GPS B TJHOJÃ«DBOU JOWFTUNFOU JO UIF $FEBS 3FDPHOJ[F UIF FÃªPSUT PG B (SFBUFS $FEBS 7BMMFZ "MMJBODF $IBNCFS 7BMMFZ UIBU NPTU FNQIBTJ[FT UIF BUUSJCVUFT PG UIF $FEBS 7BMMFZ JOWFTUPS JO QSPNPUJOH UIF RVBMJUZ PG MJGF BOE PÃªFSJOH MFBEFSTIJQ XJUIJO UIF /PNJOBUJPO GPSNT BSF BWBJMBCMF BU UIF $IBNCFS PÃ¯DFT PS POMJOF BU $FEBS 7BMMFZ BDIJFWJOH B NBKPS CVTJOFTT BDDPNQMJTINFOU PS NBLJOH BO XXX HSFBUFSDFEBSWBMMFZDIBNCFS DPN VOEFS UIF $IBNCFS 1SPHSBNT MJOL PVUTUBOEJOH DPOUSJCVUJPO UP UIF $FEBS 7BMMFZ DPNNVOJUZ FDPOPNZ BOE 1MFBTF DPOUBDU #FUUF 8VCCFOB BU CFUUF!HSFBUFSDFEBSWBMMFZDIBNCFS DPN GPS DJUJ[FOT NPSF JOGPSNBUJPO 4QPOTPSFE CZ

Cedar Valley Partner Award

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Fulfilling the Vision of One Award

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Greater Cedar Valley Alliance Sets Legislative Priorities for 2011 4UFWF 'JSNBO %JSFDUPS PG (PWFSONFOU 3FMBUJPOT É¨F (SFBUFS $FEBS 7BMMFZ "MMJBODF $IBNCFS IBT BEPQUFE JUT ($7"$ -FHJTMBUJWF 1PMJDZ "HFOEB GPS É¨F 1PMJDZ "HFOEB TQFMMT PVU UIF QSJPSJUJFT GPS UIF "MMJBODF GPS UIF MFHJTMBUJWF TFTTJPO É¨F "MMJBODF IBT BQQSPWFE UISFF QSJPSJUJFT GPS Secure funding for capital investment and program operation at the TechWorks Campus JODMVEJOH QSFQBSF UIF 5FDIOPMPHZ * #VJMEJOH GPS CVTJOFTT SFTJEFOUT DPNQMFUJOH UIF $FOUFS GPS 5FDIOPMPHZ "EWBODFNFOU BTTJTUJOH JO UIF EFWFMPQNFOU PG %FFSF T 5SBDUPS &OHJOF .VTFVN )JTUPSJD 4JUF BOE EFTJHOJOH BOE JOTUBMMJOH B NVMUJ TPVSDF SFOFXBCMF FOFSHZ HFOFSBUJPO TZTUFN UP EFMJWFS FMFDUSJD FOFSHZ UP DBNQVT SFTJEFOUT BOE QSPWJEF FEVDBUJPO PO SFOFXBCMF FOFSHZ Create meaningful state incentives to encourage location and start up of firms designing, proving, producing and marketing renewable energy generation and storage technologies in Iowa XJOE TPMBS CJPNBTT GVFM DFMM TUPSBHF XBTUF IFBU DBQUVSF PUIFST Create and maintain an environment where business can grow, flourish and be profitable in Iowa by: "EESFTTJOH DSJUJDBM JOGSBTUSVDUVSF OFFET "EPQUJOH JODFOUJWFT UP FODPVSBHF TDIPPMT DJUJFT DPVOUJFT BOE UIF TUBUF UP BEPQU UFDIOPMPHZ BOE EFDSFBTF EVQMJDBUJPO PG TFSWJDFT XIJMF JODSFBTJOH FÃªFDUJWFOFTT BOE FÃ¯DJFODZ 1SPUFDUJOH B TUSPOH CVTJOFTT GPVOEBUJPO JO *PXB &YQBOEJOH UIF WBSJFUZ PG FDPOPNJD EFWFMPQNFOU JODFOUJWFT BEESFTTJOH CPUI OFX BOE FYJTUJOH CVTJOFTTFT PG BMM TJ[FT FOTVSJOH UIF JODFOUJWFT BTTJTU JNQPSUBOU UBSHFUFE TFDUPST XJUI MBSHF OVNCFS PG IJHIMZ QBJE FNQMPZFFT PS MBSHF DBQJUBM JOWFTUNFOUT UIBU NBZ OPU HSPX JOJUJBMMZ XJUIPVU TVDI BTTJTUBODF 4JNQMJGZJOH UIF UBY TZTUFNT JO *PXB JODMVEJOH QFSTPOBM BOE DPSQPSBUF JODPNF UBY QSPQFSUZ UBY BOE UBY JODFOUJWFT GPS CVTJOFTT 1SFTFSWJOH 5BY *ODSFNFOU 'JOBODJOH 5*' BT BO FTTFOUJBM DPNNVOJUZ FDPOPNJD EFWFMPQNFOU UPPM GPS JOEVTUSJBM BOE UBSHFUFE DPNNFSDJBM VTFT

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JANUARY 2011

CEDAR VALLEY BUSINESS MONTHLY

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New Year is time for financial resolutions, too The new year can bring the hope of a fresh start. We often resolve to improve something in our lives when January rolls around. Other than losing 10 pounds, financial New Year’s Erica Feldick resolutions are is a financial adviser with, and common. Many securities and of us have a feelfinancial planning ing we could make offered through better financial LPL Financial decisions, but we Member FINRA/ have no idea what SIPC. Contact her at Jacobson to do or where to Financial Services start. If you want LLC in Cedar Falls your financial life at 266-2445 or to go from good erica.feldick@lpl. to great, consider com. one or more of the following goals as a starting point:

1. Contribute 1 percent more of your salary to your 401(k) plan this year. This small change can make a big difference in the long run. For example, if you make $70,000 gross salary per year and contribute 4 percent of that salary to a 401(k) plan, you are contributing $2,800 per year, or $233 per month. Increase your

contribution from 4 percent to 5 percent, and you’ll contribute $3,500 per year, or $291 per month. That’s an increase of about $50 more each month. In 20 years, assuming a 7 percent rate of return, contributing 5 percent per year gives you $151,589 or $30,214 more at the end of 20 years than making a contribution

moreinformation informationononhow how ForFormore helpgive giveyou youanan ThePrincipal Principal® ®cancanhelp The edge,callcallMathew MathewororKelly Kellytoday. today. edge, ® ® Mathew Driscoll, CFPCFP Mathew Driscoll, Financial Services Representative Financial Services Representative Princor Registered Representative Princor Registered Representative Financial Advisor Financial Advisor driscoll.mathew@princor.com driscoll.mathew@princor.com

Kelly KellyChristensen Christensen Financial FinancialServices ServicesRepresentative Representative PrincorRegistered RegisteredRepresentative Representative Princor christensen.kelly@princor.com christensen.kelly@princor.com

(319) 266-6270 2302 W. First St., Suite 201E, Cedar Falls, IA 50613 ©2009 Principal Financial Services, Inc. “The Principal,” “Principal Financial Group,” the Edge design, “We’ll Give You an Edge” and the il ustrated character are registered service marks of Principal Financial Services, Inc. Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Securities offered through Princor Financial Services Corporation, 800/247-1737, member SIPC. Principal National, Principal Life, and Princor® are members of the Principal Financial Group, Des Moines, IA 50392. AD1793 | t100311001e

WE’LL GIVE YOU AN EDGE®

of 4 percent per year. 2. Trim spending. Many of us can make cuts in this area. January is a great time to take an assessment of last year’s spending and set goals for the new year. If you don’t know what you spend each month, save all the receipts for every item pur-

chased in the last one to three months. If most of your money goes to discretionary purchases such as shopping, eating out, or entertainment, decide how much you’d like to spend monthly on these items and stick to it.

See RESOLUTIONS, page 34

PAGE 34

RESOLUTIONS From page 33 If you find you have more money left over, make a plan for this money. Invest it, save it or give it to charity. 3. Supplement your retirement savings with a Roth IRA. It’s often a good idea to give yourself choices on where and how you’ll take income in retirement. Some accounts, such as traditional IRAs and 401(k)s, are taxed as ordinary income when the money is withdrawn in retirement. Other accounts, such as Roth IRA’s or Roth 401(k)s, are not taxed when the money is withdrawn in retirement. This is because the money was contributed aftertax, meaning you already paid the tax on the money you add to your Roth IRA or 401(k). Instead of contributing to one or the other, it’s a good idea to contribute to both. If you haven’t yet opened a Roth IRA, consider doing so if you have greater than five to 10 years until retirement. 4. Start a 529 college savings plan for a child or grandchild in your life. These accounts can be opened on your own or with the help of a financial adviser. Money contributed to a 529 plan grows tax-deferred until it is withdrawn to pay for qualified college expenses. Use www. savingforcollege.com to identify and compare 529 college savings plans in the state of Iowa, or the state where your child or grandchild lives. 5. Invest in a financial plan. When we visit the doctor, we go to him or her for a complete exam. The doctor thoroughly checks us over before making a

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CEDAR VALLEY BUSINESS MONTHLY

diagnosis. Even if we think we know what’s going on with our bodies, the doctor may discover an issue we didn’t know existed. If we had just come in and told him what we needed, the problem would have gone undetected, giving the doctor no chance to make an accurate diagnosis.

Unfortunately, this scenario can happen when we visit with our financial professional. Instead of going in for a specific account or issue, I would encourage you to allow a trusted financial professional to thoroughly analyze your entire financial life, not just a portion. An adviser can often

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quickly recognize what could be going wrong and give you recommendations to help you improve your situation. If you’re interested in making some ﬁnancial life changes this year, don’t be afraid to ask for help. Just as a ﬁtness trainer can help you achieve physical

JANUARY 2011 health and well-being, a financial adviser or planner can help you achieve financial health and well-being. A financial adviser can provide you with the tools, ideas and accountability you may need to make and follow through on your financial New Year’s resolutions.

JANUARY 2011

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A risk budget boosts investor conﬁdence You want your investments to make money for you. Now ask yourself: What is your goal for risk? Because, sooner or later, every upside has a downside. An investor who wants to avoid risk must stay away from assets David G Sparks that can change in is president value. This limof Heartwood its the choices to Investments Inc. in short-term, interWaterloo. Contact est-bearing vehihim at 233-1717. cles, like insured certificates of deposit, where there is little doubt the investment would be repaid with interest. Even these investments still leave investors at risk for inﬂation or low interest rates on reinvestments. Experienced investors look for opportunities where the anticipated reward compensates them for the risks that go with it. But that is not easy. Historical data are only as good as the time period they cover. They might not show what could happen in unusual circumstances such as the mortgage debt crisis of 2008. Risk cannot be prevented. No one can make it not rain. However, there may be ways to keep from getting soaked.

A risk budget in two steps Look at investment risk like any other potential expense. Large, institutional investors typically establish risk budgets for their portfolios. In simple terms having a risk budget means deciding how much loss you are willing to take. Investors begin a risk budget by dividing their portfolios into two parts. Step one — Provide for nearterm liquidity needs. The ﬁrst step is to determine the amount that will need to be used for personal expenses the next three years. This part goes into investments with high assurance of repayment, even

if the return on investments is low. Step two — Consider what’s right for the long term. The chance for a larger gain over longer periods of time is what attracts investors to assets that have risk. These kinds of investments may be well suited for the part of an investor’s portfolio that would not be needed for liquidity in the next two or three years. Risk has two parts: 1. The chance of losing money. 2. Uncertainty about which

way prices might fluctuate next. An investor completes a risk budget by deciding how much ﬂuctuation or loss he or she is willing and able to afford. Then consider what to do in case the risk shows up. For a simple example, an investor might choose to allow longer-term investments to ﬂuctuate as long as the total value of the portfolio remains above some lower threshold, but make changes if it falls below. To be effective, these thoughts about risk need to be

written down and monitored. Institutions follow this practice routinely by writing investment policy statements to guide their portfolio managers. Individual investors can do the same. Diversification is still the most widely-recognized tool for moderating risk in the longer-term part of the portfolio. It’s not perfect, which is one reason to consider adding a risk budget to the toolbox. Here are elements a risk budget could include: ■ Carve out a certain part of the portfolio for liquidity needs

over several years, ■ Set guidelines for how much risk to allow for longer-term assets, and ■ Select a method for measuring and monitoring risk. Of course, the portfolio needs to be managed in line with the new guidelines. A risk budget coupled with a process to monitor it can enhance an investor’s conﬁdence that the portfolio may satisfy anticipated liquidity needs and pursue growth without exceeding his or her ability and willingness to take risk.

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JANAURY 2011

Good health has its own financial rewards A new year is just around the corner, and it’s a time we often think of new year’s resolutions. Perhaps one of your resolutions could be using your finances wisely to maintain good health. Being unhealthy can quickly drain your finances. Being unhealthy can result in time from Marilyn Bartels away is owner of TnK work, visits to Health Food Store in see the doctor, Waterloo. Contact her h o s p i t a l i z a at 235-0246. tion, surgeries, and a long recovery time. Lack of health can put a strain on relationships with your loved ones as well on your finances. Take control of your health, and see for yourself the benefits you can reap. Here are some simple key steps to become healthier. Eat healthy foods, drink plenty of pure water, take high quality supplements, exercise, reduce stress, nurture personal relationships, have a positive attitude and get plenty of sleep. Nutritious eating doesn’t have to be expensive or boring. Choose natural foods such as fruits and vegetables, cut back on the refined sugar, eliminate artificial sweeteners and extra sweet beverages. Choose whole grains in breads, pastas and cereals that are packed with fiber. Fix yourself a fresh cup of tea that contains antioxidants. Did you know you can save a money by not eating a lot of the prepackaged foods? Natural foods are much better for you. Include a variety of foods high in antioxidants and fiber. Cut back on the refined sugar and include antioxidant rich foods in your diet to reduce inflammation. Inflammation is the root of all of our major chronic diseases. Drink plenty of pure water which keeps the body hydrated to flush toxins out and assist in many ways.

Include high quality supplements in your regimen. A study showed that 38% of U.S. adults and 12 percent of U.S. children use alternative medicine and therapies? People expect more positive results with alternative therapies. At first you may think adding supplements into your life would add more expense, but think of it as eliminating unhealthy foods and replacing them with supplements to boost your health. For example, instead of stopping every morning to pick up a donut and cup of high-fat, sugar-loaded cappuccino or coffee latte on your way to work, replace it with fresh-brewed tea or coffee, and high-fiber whole grain cereal or toast. Do you need that super size french fry and soda for lunch? Some supplements may reduce inflammation and boost immunity. This may eliminate some trips to the doctor or the need for prescription medications. How much do you pay when you visit your doctor? Did you know properly prescribed

and properly used prescription drugs cause an estimated 700,000 emergency room visits per year in the U.S.? Emergency room visits are expensive. Adverse reactions from prescription medications cause about 106,000 deaths per year. Your health is worth a small investment in some high quality supplements. If ﬁnances are tight you might not have the money to go to the gym. Go out for a walk to get your body moving. Enjoy some sunshine and fresh air. A good walk can lift your mood and be a stress buster, especially when you walk with a loved one or a friend. Or put a CD in your CD player and exercise with a friend or family member. When you like your exercise regimen you are more apt to stick with it. Don’t forget to nurture family relationships and friendships. Studies have shown people who enjoy time with friends and family tend to be more healthy. Sleep is an ultimate part of health. People who rob them-

selves of sleep compromise their and restoration. Truly, health is wealth. Find health and are more inclined to be overweight. By design our out for yourself which is the bodies must have time for rest better route to take.

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Disability income insurance protects your future “It will never happen to me.” That’s what a lot of us think. In reality, however, disabilities can and do happen — to anyone, at any time. Consider these staggering statistics: ■ In the last 10 minutes, 498 Americans became disabled. ■ Almost 3 in 10 workers entering the workforce today will become disabled before retirement. ■ The number of disKelly abled workChristensen is a financial adviser ers in America with the Principal has risen by 35 Financial Group. He percent since can be reached at 2000. 319-266-6270 or ■ You are christensen.kelly@ three-andprincor.com. a-half times more likely to become disabled than you are to die prematurely. What constitutes a disability? Generally, when you become too sick or hurt to work you are disabled. Many disabilities are short-lived—a pulled muscle, a sprained ankle or a bout with the flu. These types of disabilities typically don’t interfere with your ability to continue working and providing for your family. But what if you suffered a heart attack? What if you had a serious car accident causing you to spend an extended period of time in a hospital, or worse yet, never fully recovered? What if you contracted a debilitating disease or became gravely ill? The financial implications of a disability can be disastrous. Think about the value of the home and vehicles you own, as well as the income required to obtain these things. Few of us think twice about insuring our important physical possessions against any sort of loss. Doesn’t it also make sense to insure the income that allows you to acquire and maintain

those same possessions? Consider this simple example: A 45-year-old man plans to work for 20 more years until he is 65. Assume, also, that he never has another pay raise and currently earns $50,000 per year. If he were permanently disabled tomorrow with no disability coverage, he is essentially forfeiting $1 million of income over those 20 years. Many of us take advantage of a group disability plan offered by an employer, and while this is a good start the coverage provided is often not enough. After taxes, most group plans only cover approximately 45 percent of your income. A separate, individual disability income insurance policy can help you ﬁll the gap and help you pay your expenses during a disability. When comparing individual disability income insurance policies, there are three primary points worth considering: ■ Deﬁnition of disability. Look for a policy that considers you to be disabled if you cannot perform the duties of your regular occupation. This type of policy is

called an “own occupation” policy. Conversely, it is in your best interest to avoid disability policies that have an “any occupation” definition. These types of policies pay only if you are unable to perform any occupation that reasonably fits your educational and training background. ■ How long should your disability benefits last? This depends on your age, income and level of savings. Usually, the shortest benefit period is two years. Other policies pay for five years or to age 65, 67 and even 70. Many people purchase coverage that lasts until age 65. If you can’t afford coverage to age 65, buy the longest benefit period you can afford. Many companies will allow you to upgrade coverage in the future if you remain in good health. ■ How long can you wait to receive benefits? If your income stopped today, how long could you continue to pay your bills on your own? The answer to this question will help you determine how long of an elimination period you can handle. The elimination period is the length

of time after you become disabled before the policy begins to pay beneﬁts. The longer the elimination period, the less expensive your policy will be.

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JANUARY 2011

Key resources to further your financial education Financial trading can be intimidating. What’s the best method to ensure good returns and few losses? How do you determine whose advice is best? How do you build a resource library? Trust your instincts. Run from book covers that promise “holy grail” methods. Karris Golden Trading sucis vice president of cess requires the Traders Press patience, realisInc. and coauthor of tic expectations “My Money Journal,” and education. a book that teaches Publishers of children ages 4 and financial litolder about personal offer finance. E-mail her at erature karris@traderspress. several sound com. resources to convert the nervous novice to a seasoned trader and informed investor. Even if you never execute a trade, you’ll be empowered to take a more active role in your finances. It’s best to begin with classics. Understand the history, and you’ll develop an understanding of the mindsets and methodologies. “Reminiscences of a Stock Operator” is in the must-read category. There are many versions of this masterpiece; the best is Jon D. Markman’s annotated edition, published by Wiley. Other top choices are Robert Sharp’s “The Lore and Legends of Wall Street” (Irwin Publishing), “Where are the Customer’s Yachts?” (Wiley) by Fred Schwed Jr. and Jesse Livermore’s “How to Trade in Stocks” (Traders Press Inc.). Once you know the history, tackle the basics. “The Secret Keys to Smart Investing” (Financial Guidebooks) is a quick read and full of great information. Written by Russell R. Wasendorf Jr. and Dan McMullin, it explains how to diversify your portfolio across unrelated asset classes. Sunny J. Harris’ “Trading 101” and “Trading 102” (Wiley) are nuts-and-bolts guides that outline the mechanics of creating,

testing and implementing personal trading techniques. Jack Schwager’s “Getting Started in Technical Analysis” (Wiley) also is a good basic text that covers the art and science of deciphering price activity to better understand market behavior and identify trading opportunities. In addition, “How Wall Street Works” (McGraw-Hill) by David L. Scott is a Q&A-style resource filled with fast information on financial planning, stocks, bonds, mutual funds and taxes. Michael J. Carr’s “Smarter Investing in Any Economy” (W&A Publishing) explores the benefits of relative strength investing. If you’re interested in options or futures, stick with popular reads. “The Rookie’s Guide to Options” by Mark Wolfinger (W&A Publishing) is a best seller. Meanwhile, Russell R. Wasendorf Sr. authored McGraw-Hill’s definitive, best-selling primers: “All About Futures,” “The Complete Guide to Single Stock Futures,” “All About Commodities” and “All About Options.” If you know a pint-sized entrepreneur, turn her or him on to

“Make More than Your Parents” (HCI) by Mike Bundlie, Kevin O’Donnell and Bart DiLiddo. Those with basic trading knowledge may wish to expand their skill set. Renowned options educator Mike Tosaw authored “Go Long: New Options Strategies for Buy & Hold Investors” (W&A Publishing). In it, he outlines unique ways to diversify your retirement portfolio. “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It” by Scott Patterson chronicles the story of the 2008 market crash. Many now use “the Quants” methods. Wiley even sells “The 2011 Quant Traders Almanac” is based on these techniques. J Dalton Trading offers “Field of Vision,” a DVD and workbook set based on the techniques of legendary trader James Dalton. The retail price is $750 — a bargain for those who can’t afford his renowned weeklong seminars. New this fall is Charles Rotblut’s “Better Good than Lucky,” (W&A Publishing) which outlines how you can use the risk-reward ratio to improve your trading success.

W&A Publishing also offers the “SFO Magazine Personal Investor Series” — anthologies that take the reader through basic to advanced articles on a particu-

lar topic. There series consists of four volumes: online trading, technical analysis, trading psychology and foreign exchange trading.

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THE COURIER

Wise asset allocation protects retirement account Just as parents worry about their children, investors worry about their retirement accounts. One way to help reduce your investment worries is by allocating your retirement portfolio in a variety of asset classes. Owning a variety of Michael D. securities helps Farmer minimize the is a ďŹ nancial adviser effects one asset with Principal class has on a Financial Group in Cedar Falls. Contact portfolio in the event that one him at 277-3500. asset class performs poorly. Professionally designed asset allocation programs can help you ďŹ nd the mix of stock and bond investment options that work together most efficiently to achieve the highest return possible at a risk level youâ&#x20AC;&#x2122;re comfortable with. And, while a professionally managed process of asset allocation cannot guarantee a proďŹ t or protect against a loss in periods of declining values, it is

Get your moneyâ&#x20AC;&#x2122;s worth Advertising in the Cedar Valley Business Monthly is an efficient way to spend your advertising dollars. If you want to place a display ad, call an account executive at 291-1497 from 8 a.m. to 5 p.m. Monday through Friday. Our account executives and creative department will be happy to help you establish a campaign, stepby-step, that will sell. Before you set next yearâ&#x20AC;&#x2122;s budget, give us a call.

a way for investors to minimize short-term volatility than bonds, their overall risk while increasing over longer time periods, the their potential for higher returns. additional risk of owning stock investment options can become Stock investment options much lower. Time helps increase Stock investment options are the likelihood of investment generally necessary to have the success. potential to grow capital, which impacts your standard of liv- Finding the right mix ing now and in retirement. The Allocating your assets correctgrowth of capital is a source for ly can be critical to the success higher income in retirement and of your retirement portfolio. To can help make possible a more make this determination, you stable, and potentially rising, need to closely consider three standard of living. things: InďŹ&#x201A;ation is a risk from which â&#x2013; Analyze your retirement you need to protect your ďŹ nancial income cash ďŹ&#x201A;ow. Learn which assets. Over the short-term, ris- expenses are â&#x20AC;&#x153;needsâ&#x20AC;? and which ing prices may go unnoticed. But are â&#x20AC;&#x153;wants.â&#x20AC;? over a decade or two, the impact â&#x2013; Your time horizon. Figure out can be signiďŹ cant. Assuming an when you will need the money average annual inďŹ&#x201A;ation rate of 5 and how long you anticipate percent, the purchasing power of needing the money to last. $1 will shrink to about $.38 over a â&#x2013; Identify your tolerance for period of 20 years. Though past risk. Find the mix of stocks performance is no guarantee of and bonds with which you are future results, a diversiďŹ ed port- comfortable. folio including stock investment Evaluate your portfolio. Learn if options has historically provided your investments can meet your an effective method to outpace retirement income needs. inďŹ&#x201A;ation over time. A ďŹ nancial professional can Though stock investment help you with these steps by peroptions may present greater forming a ďŹ nancial needs analy-

sis. Once the review is complete, the professional can make a recommendation on an asset allocation that meets your needs. So, stop worrying and contact

your ďŹ nancial professional today. He or she can help you make certain your portfolio is allocated appropriately for your retirement needs.

Jack Jennings, CCIM

Dustin W. Whitehead, CCIM

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