Solutions for Individual Investors
We provide a unique and personalized approach to investing, tailored to each of our client's unique needs. We work with our clients to build a relationship – not just an account.
Our years of experience in various fluctuating markets allow us to provide essential information that equips our clients to make confident, educated decisions on their investments. We take a traditional approach to investing that leans towards the conservative side in order to help our clients achieve steady growth and weather any market conditions.
Whether you’re preparing for retirement, planning your estate, or just putting your money to work, our experts are here to ensure that your investments help you reach your goals. We offer our clients a variety of investment options including tax-free municipal bonds, corporate bonds, and mutual funds, as well as discount stock commissions on equity trades.
Find out more about our services below and give us a call to learn how Conners can help you prepare for the future.
What Is A Mutual Fund?
Once you've decided to invest in the stock market, mutual funds are an easy way to own stock without worrying about choosing individual stocks. A mutual fund is a single portfolio of stocks, bonds, and/or cash managed by an investing company on behalf of many investors.
The investment company is responsible for the management of the fund, and it sells shares in the fund to individual investors. When you invest in a mutual fund, you become a part owner of a larger investment portfolio, along with all the other shareholders of the particular fund. When you purchase shares, the fund manager invests your funds, along with the money contributed by the other shareholders.
Every day, the fund manager totals the value of all the fund's holdings, determines how many shares have been purchased by the shareholders, and then calculates the net asset value (NAV) of the mutual fund. This is the price of a single share of the fund on that day. If you want to buy shares, you just send the manager your money, and they will issue new shares for you at the most recent price. This routine is repeated every day on a never-ending basis, which is why mutual funds are sometimes known as "open-end funds."
If the fund manager is doing a good job, the NAV of the fund will increase, meaning you shares will be worth more.
How Does A Mutual Fund Increase?
A mutual fund can receive dividends from the stocks that it owns. Dividends are shares of the corporate profits paid to the stockholders of publicly traded companies. The fund may have cash held in a bank, which would receive interest. Or, it might receive interest payments from bonds that it owns. These are all sources of income for the fund. Mutual funds are required to hand out this income to shareholders. This is usually done twice a year in a move called an income distribution.
At the end of the year, a fund makes another kind of distribution, this time from the profits they might make by selling stocks or bonds that have gone up in price. These profits are known as capital gains, and the act of passing them out is called a capital gains distribution.
Can A Mutual Fund Decrease?
Unfortunately, funds don't always make money. If the fund managers made some investments that didn't work out, selling some investments for less than the original purchase price, the fund manager may have some capital losses.
Everyone hates to have losses, and funds are no different. The good news is that these losses are subtracted from the fund's capital gains before the money is distributed to shareholders. If the losses exceed the gains, a fund manager can even pile up these losses and use them to offset future gains in the portfolio. That means that the fund won't pass out capital gains to shareholders until the fund has earned back more profits that it had lost. However, you may wish to reconsider your decision to remain invested in a fund that's losing money if the rest of the market is growing.
What is a Stock?
Stock is ownership.
Along with ownership, a share of stock gives you the right to vote on management issues. Company executives work at the behest of shareholders, who are represented by an elected board of directors. By law, the goal of management is to increase the value of the corporation's equity. To the extent this doesn't happen, shareholders can vote to have management removed.
How is a Stock Valued?
The stock market is basically a daily referendum on the value of the companies that trade there. All those people screaming at each other? Their job is to take in the day's news and distill it down to a single question: Will it help the companies I own make money in the future, or will it prevent them from doing so?
Earnings (a.k.a. profits) are the supreme measure of value as far as the market is concerned. Wall Street is obsessed with them. Companies report their profits four times a year and investors pour over these numbers - expresses as "earnings per share" - trying to gauge a company's present health and future potential.
The market rewards both fast earnings growth and stable earnings growth. Things the market will not tolerate are declining earnings or unexplained losses. Companies that surprise Wall Street with bad quarterly reports almost always get punished.
What About Risk?
While history shows that stocks will rise given the fullness of time, there are no guarantees - especially when it comes to individual stocks. Unlike a bond, which promises a payout at the end of a specified period plus interest along the way, the only assured return from a stock is if it appreciates on the open market. While many companies pay shareholders dividends out of their earnings, they are under no obligation to do so. The worst-case scenario is that a company goes bankrupt and the value of your investment evaporates altogether.
For all the risk, however, there are ways to manage your exposure. The best is to diversify by owning a variety of stocks. That way, no single company can hurt you.
What Are Tax-Exempt Municipal Bonds?
Tax-exempt municipal bonds are debt obligations issued by states, cities, counties, and other governmental entities to raise money to build schools, highways, hospitals, and sewer systems, as well as many other projects for the public good.
When you purchase a municipal bond, you're lending money to an issuer who promises to pay you a specified amount of interest (usually paid semiannually) until a specific maturity date, at which time they pay back the original principal amount. Some bonds include a feature that allows the issuer to call back all or part of the bonds after a certain date, but before the maturity date. In some cases they may pay the investor a premium to do so.
Under the present federal income tax laws, the interest income you receive from investing in municipal bonds is free from taxes. In most states, interest income received from municipal bonds issued by governmental units within the state are also exempt from state and local taxes.
What Are The Different Types Of Municipal Bonds?
Municipal securities consist of both short- and long-term issues. Short-term securities, often called notes, typically mature in one year or less. These are issued to raise money in anticipation of future revenue, such as taxes or state or federal aid, to cover irregular cash flows, meet unanticipated deficits or raise immediate capital for a project until long-term financing can be arranged. Long-term securities are commonly known as bonds and may not mature for several decades. These are issued to finance capital projects over longer period of time. In some cases part of the revenue generated by the completed project goes towards paying back the investors. Most municipal securities are issued in denominations of $5,000.
How Safe Are Municipal Bonds?
When you invest in any bond, your primary concern should be the issuer's ability to meet its financial obligations. Issues of municipal bonds have an outstanding record of meeting interest and principal payments in a timely manner.
Issuers will disclose details of their financial condition through official statements or offering circulars which they make available to us. You may also wish to examine their credit rating. Many bonds are graded by various ratings agencies such as Moody's Investor Service and Standard & Poor's Corporation. These ratings are important benchmarks because they reflect a professional assessment of the issuer's ability to repay the investors. Moody's rates range from Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C. Standard & Poor's rates range from AAA, AA, A, BBB, BB, B, CCC, CC, R, NR. Generally, ratings of Baa or BBB are considered suitable for those looking for a low risk choice, with little chance of the issuer defaulting on payment.
Many municipal bonds are backed by insurance specifically designed to further reduce your investment risk. In the unlikely event of a default, the insurance company will guarantee to make both the interest and principal payments to you when they are due.
Are you thinking about the future? With a little planning, you can save now and make your retirement comfortable and enjoyable. We offer different investment options with a variety of tax advantages. Perhaps you've been considering setting up an IRA to help you save money and limit your taxes. We can help get you set up with an IRA that best suites your needs. Call us today to learn how we can help you plan for retirement now.
Will your family be provided for after you're gone? Conners & Co., Inc. can help you with financial planning as well as the creation of trusts and estates. We will work with your legal advisor to ensure your wishes are carried out and your family has a hassle free experience.