DAMON CARR

My childhood friends and I were very close. We spent practically every waking moment together—playing sports, video games and just hanging out. Looking back on life from an adult point of view, I must say, “we were spoiled “BROKE” kids.” None of us worked or even thought about doing anything to create an income. We just took what our parents gave us and improvised. We were very creative with the little resources and money that was available to us.
One thing that we did that was smart is we combined our money and our resources allowing us to do and purchase things collectively that we could not do on our own. We called this process “Ante-up.”
If we wanted pizza, a group of five of us may have one to three dollars per individual. Individually none of us could purchase a pizza. By “Anteing up”—pooling our cash together, collectively we can purchase a pizza and all of us would share a piece of the “pizza pie.” This Anteing up or pooling your cash together process is the foundational concept of Mutual Funds.
I believe that mutual funds are the investment vehicle of choice for my target audience—ordinary upwardly mobile people. Since I’m in the business of “Helping Ordinary People Make Extraordinary Progress Toward Their Financial Goals—Regardless of Current Financial Status, I’m always looking at what’s best for the common man.
As I look into my crystal ball, I can state with confidence three things about the stock market. The stock market will rise (Bull Market). The stock market will decline (Bear Market). Fortunately, it has risen far more times then it has declined. As a result, the majority of investments do well the majority of the time. Consequently, simply being in the market over an extended period of time—five years or more, you have a high probability of your investments earning a reasonable rate of return. As investors we want to reduce the likely hood of harm by making wise decisions. The best decision you can make when you’re investing is—DIVERSIFICATION!

Diversification is the process of spreading your investments around. In other words, it’s following the old adage of not putting all your eggs in one basket. If you have the ability to invest in 100, 300, 500 or 1,000 of America’s and even some foreign country’s brightest and best companies, you have the closest thing you’ll get to a guarantee that your investments will make money. In order to lose money all 100, 300, 500 or 1,000 companies would have to go broke at the same time. Can you imagine Microsoft, Wall Mart, Dell Computer, Home Depot and 150 other companies all going broke at the same time? I can’t. If by chance that was to happen, your Certificate of Deposit isn’t safe either because the whole economy will have collapsed.
How does the common man invest in 100, 300, 500 or 1,000 companies with limited cash? Many individual securities have large minimum denominations—meaning you have to purchase a block of securities of an individual firm spending a minimum amount of $10,000. If you don’t have $10,000 you can’t invest. If you did manage to save $10,000 and you decided to invest this money, you would have a highly concentrated portfolio. Let’s say that this particular security turned out to be Enron, MCI or K-Mart? There goes your $10,000.
Mutual Funds works to the advantage of the common man because you can make a one time investment with as little as $250 or you can engage in a process called dollar cost averaging and systematically invest as little as $25-$50 dollars per month. Furthermore, your contribution—no matter how large or how small will purchase you a pro-rata share of 100, 300, 500 or 1,000 securities of well-established companies. So if one of those companies happens to be Enron, your portfolio is not as devastated because you have a vested interest in 100-1,000 other companies—many of which may be doing great.
Mutual Funds allow small investors—common man type of investors to pool their cash together (Ante-up). This cash is used to buy hundreds to thousands of securities of established companies that these individual investors could not do on their own. Each individual who invests with the mutual fund has a pro-rata share or piece of the pie based on his or her contribution.
So if you’re like me and you consider yourself to be a common man, 90-100 percent of your investments should be with mutual funds. Your retirement plan including, 401(k), 403(B), 457 Plan, IRA should be invested with mutual funds. Your college savings including Education Savings Account and 529 plans should be with mutual funds. Your wealth-building portfolio should consist of mutual funds.
Why do I believe strongly in this? You get professional management, diversification, convenience, record keeping, liquidity, minimal investment requirements, and regulations!
As an aside, it’s important to note that no two mutual funds are exactly alike. There’s a science to selecting high qualify mutual funds. I’ll share ideas on how to select qualify mutual funds in an upcoming article.
(Mortgage and Money Coach Damon Carr is owner of ACE Financial. Damon can be reached at 412-216-1013.)

by Melanie Hicken
CNN—Despite improving economic conditions, a record percentage of American workers remain worried that they won’t be able to afford retirement.
They’re worried about their jobs, high debt levels and rising living expenses, according to a survey released Tuesday by the Employee Benefit Research Institute.
Only 13 percent of workers surveyed said they “feel very confident” that they will be able to retire comfortably—less than half the percentage reported in 2007.
Nearly half—49 percent—said they were “not too” or “not at all” confident.
A large chunk of the workers surveyed have little or no retirement savings. Of those who provided estimates, 57 percent reported household savings and investments of less than $25,000, which included 28 percent of respondents who said they had less than $1,000. Only 24 percent reported savings of $100,000 or more.
Debt is standing in the way of saving. More than half of workers reported having a problem with their level of debt, while only about half of those surveyed said they could definitely cover $2,000 worth of unexpected expenses within the next month.
“Many lack even a short-term cushion,” Matt Greenwald, president of Greenwald & Associates, a market research firm which conducted and co-sponsored the survey, said in a release.
Though economic conditions are improving, workers may also be waking up to just how much they actually need to save for retirement, according to EBRI.
Workers fear that cuts to Social Security could leave them picking up a bigger share of retirement expenses. Nearly 70 percent of workers reported a lack of confidence that Social Security would be kept at current benefit levels.
Spiraling health care costs and long-term care expenses are also a growing concern.
In 2013, 29 percent of respondents expressed concern with their ability to cover medical costs in retirement, up from 24 percent last year. Nearly 40 percent said they were worried about paying for long-term care, compared to 34 percent last year.
The survey polled 1,254 Americans ages 25 and older, including 1,003 workers and 251 retirees.

by Blake Ellis
If you’re looking for a free checking account, a credit union is probably your best bet.
More than two-thirds, or 72 percent, of the nation’s 50 biggest credit unions still offer free checking accounts without minimum balance or direct deposit requirements, compared to only 39 percent of banks, according to a new survey from Bankrate.com.
While free checking has declined across the board, it has disappeared more rapidly at the banks—with 65 percent of banks and 78 percent of credit unions offering free checking in 2010.
“While banks have significantly scaled back free checking accounts, free checking remains the rule, rather than the exception, among credit unions,” said Greg McBride, senior financial analyst at Bankrate.
Many banks have been adding fees to checking accounts in recent years as new regulations—like the 2010 Card Act, which limited fees and interest rates issuers can charge certain customers—forced them to find alternative revenue streams.
There are usually ways for customers to avoid monthly fees, however, like carrying a minimum amount of money in an account or setting up direct deposits. A total of 96 percent of credit unions and 95 percent of banks have checking accounts that allow you to avoid a monthly fee by meeting certain requirements.
Monthly checking account fees range from $1 to $10 at credit unions, and the most common are $2 and $5. Checking accounts at banks come with an average fee of $5.48.
ATM fees are also higher at banks. The average fee for a non-customer to use a credit
union’s ATM is $2.29, compared to $2.50 at banks. Meanwhile, using an out-of-network ATM costs a credit union customer $1.01 and costs a bank customer $1.57.
Charges for overdrawing your checking account, known as overdraft fees, average $26.74 at credit unions and $31.26 at banks.

The American Taxpayer Relief Act of 2012 resolved most of the tax issues that were a part of last year’s “fiscal cliff” debates and answered many pending tax questions for small businesses. The act will have an effect on businesses and long-term planning implications, so the Pennsylvania Institute of Certified Public Accountants offers this update to answer some of the most common questions.
Are There Changes in Payroll Taxes?
Immediately after Jan. 1, 2013, the new law did not extend the temporary 2 percent reduction in the employees’ portion of the Social Security payroll tax. That increase, which is not related to the new law, returns the tax to 6.2 percent on income up to $113,700 in 2013. In addition, there is a 0.9 percent Medicare surtax on certain taxpayers who earn in excess of $250,000.
What about Section 179 Expensing?
The law does extend a number of valuable small business provisions, including small-business expensing under Internal Revenue Code Section 179, through 2013 and retroactive to the beginning of 2012. The deductions can be used for purchases of a wide range of new and used capital equipment, including software, from both last year and this year. The dollar limit that can be expensed in 2012 and 2013 is $500,000, with a $2 million investment limit. There is some uncertainty in this area going forward, since the expensing and investment limits are set to drop significantly in 2014. Your CPA can offer advice on the best steps for your business.

Can I Still Use Bonus Depreciation?
Small companies can also continue to take advantage of 50 percent bonus depreciation through 2013. This applies to new assets that are expected to last 20 years or less. It is possible to apply Section 179 and 50 percent on the same asset, but some limitations apply. In addition, since this option also expires at the end of the year, it may affect your 2013 purchasing decisions. Ask your CPA for the details.
What Credits Are Available?
Company owners are still eligible for several credits. The Work Opportunity Tax Credit, for example, is available through 2013 to those who hire workers from specific groups, including qualified veterans. (To receive the credit, you must have certification from your state’s employment security agency.) Companies can also continue to benefit from the Section 41 research tax credit, which can be applied to increased research activities, through the end of 2013.
Are There Any Other Incentives?
On the list of preserved items is the 15-year recovery period for qualified leasehold improvements, qualified retail improvements, and qualified restaurant property, which were extended until the end of 2013. The 100 percent exclusion for gains on a sale of small-business stock can be used through the end of this year. In addition, the special tax incentives for empowerment zones and rules on S corporations making charitable donations of property remain in force.
Were There Changes to Estate Tax Rules?
Business owners should also be interested in the act’s impact on individual taxes. Of particular interest may be the permanent retention of the existing estate and gift tax exclusion, which was held at an inflation-adjusted $5 million. (That translates to $5.12 million in 2012 and $5.25 million this year.) The top estate tax rate rose to 40 percent from 35 percent on Jan. 1, 2013, but that is much lower than the 55 percent it was set to reach—with a $1 million exclusion amount—if the act had not been passed. On another front, the estate tax portability election, which allows a surviving spouse to use a deceased spouse’s unused exemption amount, has been made permanent.
Your CPA Can Help
While one fiscal crisis has passed, several more are looming. Discussions on the federal debt ceiling are pending, as are the debates on the federal budget and tax law changes. Business planning is critical, so turn to your local CPA for understandable and practical advice on the best available tax-planning choices. To find a CPA in Pennsylvania by location and area of expertise, or for more tax resources, visit www.picpa.org/taxhelp.