ARE YOUR ASSETS REALLY DIVERSIFIED?

Regina M Beatty, owner of Mosaic Consulting, has been advising her clients on common mistakes made when planning their financial future.  She noted the following mistakes are often made and can be easily avoided.  The article is provided in conjunction with Lincoln Financial Advisors/Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor.

 

You've heard the old investment adage, "Don't put all your eggs in one basket." It's good advice. A diversified portfolio should be at the core of any well-planned investment strategy. While a worthy goal at any age, it's especially desirable as your net worth grows over the years.

 

The basic purpose of diversification is to reduce your portfolio risk and volatility. It's primarily a defensive type of investment policy. Depending on your investment goals and tolerance for risk, your strategy may emphasize one type of investment over another. But overall, your portfolio should be diversified. That's because no single type of investment performs under all economic conditions. A diversified portfolio is capable of weathering varying economic cycles and improving the trade-off between risk of loss and potential return. Of course, diversification cannot entirely eliminate the risk of investment losses or cannot guarantee a profitable investment return. Diversification lowers the risk of a portfolio.    

 

Forms of Diversification. An investment portfolio consisting of twenty different construction industry stocks is not diversified. Diversification means dividing your funds among different classes of assets, such as stocks, bonds, real estate, savings accounts and tangible assets. For instance, suppose your portfolio consisted entirely of bonds. Your money would be at significant risk if interest rates rose since bond prices generally fall when rates go up.

 

It's also important to diversify by owning several stocks in different industries. Suppose you held just 1,000 shares of a major company’s stock from September 30, 2007 through September 30, 2009, and you suffered a loss of $40 per share when the stock fell from 100 to 60. A diversified portfolio consisting of many different stocks in various sectors may have cushioned the blow of the loss.

 

A prudent investor managing his own portfolio might diversify his holdings by selecting some stocks for their rising earnings or accelerating “growth” potential while buying other stocks because they offer “value” by temporarily being out of favor. In addition, an investor may buy individual securities for other reasons, such as income or a certain situation in the marketplace. An alternative to selecting and managing individual stocks and bonds is to invest in mutual funds. Some mutual funds offer diversification by holding many securities within the portfolio. However, some other funds may not be diversified across industries or asset classes and may focus on a single sector. Mutual funds offer several other features, including:

1. Shareholders receive periodic reports reviewing the fund’s results and performance.
2. Funds are managed by full-time professionals.
3. Fund families allow investors to allocate investment dollars among a combination of funds with varying investment objectives.
4. Mutual funds may provide immediate diversification.
    
   Funds have clearly defined investment objectives and strategies, which are detailed in the fund’s prospectus.
    
   An investor should carefully consider the investment objectives, risks, charges and expenses of the investment company before investing.  Read the prospectus carefully before investing or sending money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares when redeemed may be worth more or less than the original amount invested.
    

Diversification also means not tying up all your funds in long-term investments. You'll need to keep a certain amount easily accessible -- that is, in money-market accounts, savings accounts or short-term certificates of deposit (CDs) -- for on-going expenses, emergency needs, and short-term goals such as saving to buy a car or pay taxes. And through dollar-cost averaging, a process of buying stocks and bonds from time to time instead of all at once, you can spread the risk over both good and bad markets. Using this dollar-cost averaging investment method involves continuous investment in securities regardless of fluctuating price levels of securities. Therefore, investors should consider their financial ability to continue purchasing through periods of fluctuating price levels. Dollar cost averaging does not ensure a profit and does not protect against a loss in declining markets. Diversification is also important because CDs are FDIC-insured and typically offer a fixed rate of return while investments such as stocks and bonds are not FDIC-insured and their value will fluctuate with current market conditions.

 

Sample Portfolio. Your specific investment decisions will depend on several factors: your age, tax bracket, risk tolerance, liquidity needs, investment time horizon and investment goals. In general, however, a well-diversified portfolio might include:

1. Cash Reserves for short-term needs -- checking accounts, money-market accounts, savings accounts and shorter-term CDs.
2. Longer-term, taxable investments that are relatively liquid, such as:
3. Stocks -- common or preferred
4. Bonds -- U.S. Government, corporate
5. Mutual Funds -- bond funds, growth funds, balanced funds, international funds
6. Tax deferred and tax free investments, such as:
7. Annuities -- fixed and variable
8. Qualified Plans -- 401(k), 403(b), Roth, IRAs, SEPs, SARSEPs
9. Municipal bond funds
10. Real estate -- commercial, residential
11. Tangible asset exposure through mutual funds -- precious metals funds, natural resources funds
    You may want to consult an advisor regarding designing a portfolio that is right for you and your time frame, risk tolerance and potential return on investment.
     
    Diversify Beyond Investments. Diversification alone may not be sufficient to protect your investments. By taking a broader view, a financial planning strategy can put safeguards in place to help protect yourself and your family.
    For instance, purchasing disability income insurance provides protection for your ability to earn a living. Life insurance is another form of protection. It can help preserve your estate assets and reduce the risk that a disaster could wipe out your family's standard of living. Life insurance can also provide the necessary cash for your survivors to pay estate taxes and other expenses, or to carry on a family-owned business.
     
    A properly planned estate can also be a part of your overall strategy. Simply having a will may not be enough. You may need to coordinate your will with trusts for your children, life insurance and estate tax planning. Estate planning can help preserve and direct the distribution of your assets after your death.
     
    A diversified financial planning strategy will not eliminate risk or guarantee success. But it does offer a sound approach to help accumulate, preserve and protect your assets, reduce risk and potentially grow assets over time. Talk with a qualified professional about how to put an effective financial planning strategy in place.
     
     
     Regina Beatty, CFP®, CRPC® is a registered representative and investment advisor representative of Lincoln Financial Advisors Corp., a broker-dealer (member SIPC) and registered investment advisor, One Northgate Square, Greensburg, PA, 724-834-8100,  offering insurance through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was created by Lincoln Financial Advisors for its representatives and their clients.

Get into the Greensburg Holiday Spirit

I began working as an intern for the Greensburg Community Development Center this August, balancing my time at the office with my time as a senior at Seton Hill University. This internship allowed me to become much more involved with Greensburg, and I fell in love with the city's unique businesses and lively atmosphere. 

One of my jobs as the office intern was to help promote the 2014 Greensburg Holiday Parade. I designed the posters for the event,  created and distributed the press release, and attended planning meetings at City Hall. After dedicating so much time to the project, I decided I had to go to the parade myself.

Bundled up in my winter gear, I stood huddled among a crowd of holiday jubileers one Saturday afternoon, eagerly peering down the street at parade attractions. We cheered for the floats, and reveled in the beating drums and blaring horns of marching bands. 

What better way to spend a Saturday than at a parade!

 The parade was a great success. Floats, bands, and other various organizations marched down Main Street on November 22^nd, while people of all ages enjoyed the spectacle. It was a cheerful environment, with children dashing to pick up tossed candies and shake hands with mascots such as the Pirate Parrot and the Pirate Pierogies.  

Personally, I loved seeing all of the animals in the parade. Dogs, miniature horses, and llamas all walked down the city streets, guided by their owners and dressed in their holiday best.

 After the parade, my boyfriend and I strolled through Greensburg, looking at the festive storefronts. Seeing all the glittery Christmas trees, shiny ornaments, and smiling elves in the store windows really infects you with the holiday cheer. Greensburg shops go all out with their seasonal decorations! 

Carolers adorn the storefront at Penelope's.

Stockings and a gift-wrapped bicycle add festivity to American Adventure Sports.

We also stopped at the “Before I Die” wall, a new project in Greensburg, located on the side of the Art Tech building. People’s wishes and goals were scribbled all over the blackboard, written between the lines and in the margins. I added my own “Before I Die” goal--to read “The Ocean Full of Bowling Balls,” a short story written by one of my favorite authors, J.D. Salinger, that he instructed not to be published until 50 years after his death (the year 2060). 

Spending the day in Greensburg was a fantastic way to get into the holiday spirit! It was great to see that all of the business owners and citizens of Greensburg are as excited for the Christmas season as I am!

Greensburg Foodie Tour

Savor the crisp autumn weather by walking around downtown Greensburg on a foodie tour, treating your senses to an evening of mouth-watering food and fall ambiance. Park in one location, and stop at four unique restaurants all within a three block radius for drinks, an appetizer, dinner, and dessert. The delicious food and drinks were specially chosen by the restaurant owners as perfect fall dishes, and are sure to leave you satisfied!  On your walk through Greensburg, you’ll see the majestic Courthouse, the historic Greensburg Train Station, and The Palace Theatre. Experience the welcoming atmosphere of The Rialto, the classy aura of The Supper Club, the contemporary style of One Eleven, and the whimsical offerings of the White Rabbit Café.  Gather your friends for a day out in Greensburg, with some of the best dining the City has to offer!

A. Rialto Cafe
25 West Otterman Street

B. The Supper Club
101 Ehalt Street

C. One Eleven Restaurant
113 South Pennsylvania Avenue

D. The White Rabbit Cafe
113 North Main Street

The Rialto Cafe

The Rialto Cafe, located in the heart of Greensburg’s cultural district and voted Best Bar in Greensburg by Tribune-Review readers, is the oldest continually operated bar in Greensburg. It is located in one of the original stone buildings in Greensburg, built in 1796 and a popular rest stop for travelers journeying on Forbes Road from Philadelphia to Pittsburgh. The building was sold to the Montuori Family in 1933, the year prohibition was lifted, and turned into a neighborhood bar and Italian restaurant. In 1997, current owners Mr. and Mrs. John Rullo became fourth generation proprietors, expanding the business to include Baldy’s Pizza and adding a new, modern bar and private party facility in the adjoining building. Today, The Rialto Café remains a Greensburg landmark and local gathering place for people of all ages. With its great drink selection, atmosphere, and location, The Rialto is the place to go to relax after work or to hang out with friends on the weekend. The cozy environment and friendly staff are welcoming to all—even visitors are treated like locals at The Rialto.

The Supper Club

The Farmers Plate

The Farmers Plate appetizer features local seasonal fare from Pennsylvanian farms. The platter contains Hidden Hills Old Gold Gouda, Goot Essa house-smoked camembert, house-smoked Maple Leaf Farms duck breast, and toasted house-made whole wheat buttermilk honey bread. Complementing these snacks are pickled vegetables and condiments, including herb grain mustard, summer squash relish, spicy tomato jam, pickled radishes, hot & sweet green beans, and “smokra” smoked paprika okra. All pickled vegetables and condiments are from The Pickled Chef—a local canning and preserving company started by The Supper Club’s own Chef Greg Andrews. This seasonal dish is sure to pique your appetite as the foodie tour continues.

Chef Greg selected a white wine to accompany this appetizer. The 2011 Vermentino by Peltier Station is a flavorful citrus driven wine with vibrant aromas of lime and green apple, and hints of minerality. A sip of Vermentino will leave your taste buds bursting with its lively, crisp flavors and bright acidity.

One Eleven

Spicy Beef Goulash with homemade Spaetzle and Fried Brussel Sprouts and paired with a Fall Mist cocktail

This comfort food dish really hits the spot on a chilly day in November. One Eleven slowly braises Short Ribs in a rich stock made of sweet and hot paprika, tomato paste, and aromatic vegetables for 4-5 hours until fall apart tender. The secret spice to this dish is the caraway seed; which gives the meat another dimension of depth.  Just before plating, a little vinegar brightens up the savory short ribs. Homemade Spaetzle crispy pan-fried and quartered brussel sprouts with sweet golden raisins, crunchy walnuts, and salty bacon make a delicious side-dish to round out this hearty meal. Lighten this dinner with the Fall Mist cocktail. The base of this seasonal craft cocktail is a generous pour of Private Label One Eleven Vodka, Sage Liquor, Maraschino, and a dash of fresh Lemon Juice are shaken until clouded, strained into a coupe, and garnished with a soaked cherry to create a memorable cocktail.  The combination of flavors makes this meal a noteworthy one.

The White Rabbit Cafe & Patisserie

Cranberry Bourbon Cremeux and Cappuccino

 The White Rabbit’s Cranberry Bourbon Cremeux is all the flavors of autumn in a dessert. Sweet and crumbly pecan sablee adds a nice texture as the base. The next layer is caramelized white chocolate cremeux that is silky smooth. The cremeux is a soft and creamy pudding, and the caramelization process gives the white chocolate a rich brown color and imparts a butterscotch flavor—perfect for fall! The dessert is topped with a cranberry compote, containing hints of oranges and bourbon. The beautiful red color and tart flavor of this seasonal berry pairs well with the sweet sable base and cremeux for a truly savory dessert. 

In between bites, sip a traditional cappuccino. The cappuccino is made with an espresso bean with a big, sweet, chocolate-like body, and steamed milk is added to provide a very robust, long-lasting taste that pairs well with sweets.  Taking a second cup for the road is never a bad idea!

Check out the "Explore Greensburg" section of WHIRL magazine's November edition for more content on our city!