I am posting this newsletter for our valued clients as a reminder of our expanded client services, which now include personal financial and estate planning, asset management, insurance and annuities. For years our clients have requested that we play a more strategic role in their personal financial lives and sought our assistance to better plan for retirement and the escalating cost of a college education among other goals. We have listened to you and have taken steps to now address all areas of personal financial planning.

We hope you enjoy this newsletter and find its contents informative. If you would like to explore how we may help you better protect your assets and prepare for your financial future, please contact our office for an appointment.

ARE ALL YOUR EGGS IN ONE BASKET?
THE EASY WAY TO INVEST
ARE SMALL STOCKS WORTH THE TROUBLE?
IT PAYS TO DEDUCT!
RULE OF 72

What's the single determinant of investment performance? Many financial advisors will tell you it's an asset allocation plan. An asset allocation plan is a valuable tool that may help you achieve your financial goals. Without a plan, you're gambling with your life savings-and your future. Asset allocation, simply put, means that you're not putting all your eggs in one basket.

Instead, when you use asset allocation, you actually distribute portions of your investment into different asset classes: stocks, bonds and money markets. The money market and bond classes are two vehicles that help you preserve your capital, since they involve the least amount of investment risk. Stocks on the other hand, present greater investment risk; however, they also offer the potential for growth. Generally speaking, the younger you are, the more risk you can afford to take with your investments.

Younger investors, with a long time to recover from market setbacks, may choose to focus almost exclusively on the stock market. As you approach retirement age, preserving capital will most likely become more of a priority for you, so you may want to put less money into the stock market and a greater percentage of your assets in bonds and money markets. Choosing the right investment mix will not only provide you with the potential for return on your investment-if one class does not perform as well as you hoped, you'll likely be more protected from loss.

It's wise to review and rebalance your portfolio from time to time. However, rebalancing too often may do you more harm than good. Most experts recommend an annual review of your holdings. Your advisor may alert you if it's advisable to adjust your mix. Keep in mind that it's never too late to establish or revise an asset allocation plan. Begin by scheduling an appointment with a qualified financial advisor. He or she will assess your goals, risk tolerance, and the time frame in which you're hoping to achieve your goals-and suggest an asset allocation strategy that may well work for you.

Over 65 million Americans currently own mutual funds, making them the nation's preferred investment vehicle.* The reason the funds are so appealing is because they make it much easier for the average person to invest. You don't need a lot of money to own a mutual fund. In fact, 60% of investors have annual incomes under $75,000.* With just a single investment in a mutual fund, any individual can effectively purchase stocks from hundreds of companies-since the mutual fund portfolio managers invest the individual's funds by purchasing stock in a broad array of companies, based on the mutual funds investment objective. These portfolio managers are a team of full-time, professional money managers whose job is to closely monitor the portfolio/fund. What's more, most mutual funds are completely "liquid" so you can redeem your investment whenever you choose.

*(1999 Women's Financial Services)

The returns may be very high with small stocks (those stocks that sell for less than $5 per share). However, the level of risk can be higher also. So before investing, be sure to do your homework or consult an investment professional ho may be able to assist you.

Look for a strong balance sheet. Be sure to check the company's annual report or quarterly reports. You may also access a company's financial information through the Securities and Exchange Commission's Web site at www.sec.gov. The balance sheet may provide a little more insight into the company's total debt versus its total assets. And by checking the company's earning per share, you may determine whether the firm is actually making any money. An earnings-per-share level of 10% or higher may be one indication that a company is financially stable. Investing in smaller stocks takes a little more time and effort but it may be worth it in the long run. Don't rule them out!

Keep more money in your pocket (and send fewer dollars to the IRS) by taking advantage of all allowable tax deductions you may be eligible for. Here are some tax-saving ideas you may benefit from this year.

Check your filing status. If you have dependents and are unmarried or a surviving spouse, you may be able to file as "Head of Household," which may significantly reduce your tax liability. IRA contributions. If you are single, or are married and file jointly and neither you nor your spouse contributes to an employer-sponsored retirement plan, you may be eligible to deduct your entire IRA contribution. If you (or your spouse) do contribute to an employer-sponsored retirement plan, the amount you may be eligible to deduct depends on your adjusted gross income. The IRS 1040 instruction booklet has a worksheet that can help you determine eligibility for this deduction and how much you can deduct. Home ownership expenses.

The mortgage interest and property taxes you pay on your primary residence are generally deductions you can claim on IRS Schedule A. You may also deduct interest paid on home equity loans in most instances. Medical and dental expenses. If more than 7.5% pf your adjusted gross income is spent on medical and dental expenses, the excess may be deductible. State and local taxes. State and local taxes may be deductible in the year in which you pay them. If you pay a fee to the state to register and license your car, you may deduct the part of the fee related to the vehicle's value. Several states have state disability funds. If you pay into these funds (check your W-2), you can deduct them as well.

Occupation-and finance related expenses. If you spend more than 2% of your adjusted gross income on job-related education, job search/career counseling/job-related moving, unreimbursed job expenses and/or investment and tax-related expenses, you may be able to take the amount that exceeds 2% of your income as a deduction. See the IRS instruction booklet for more details or consult your tax advisor for detailed information on how you can reduce your tax liability.

The Rule of 72 is an investing rule of thumb that says your savings will double, approximately, in the number of years you determine by doing the following.

1. Start with the number 72.
2. Divide by the interest rate you earn on your deposits.

For example, if the interest rate you receive on your deposits is 7.2 percent, you would double your money in about 10 years:

1. Start with the number 72.
2. Divide by 7.2 to get a result of 10.

Keep in mind that the Rule of 72 does not include taxes or inflation. Also, the rule assumes that you compound your interest yearly. If you compounded more frequently, you would save more.