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| Investment
Portfolio Analysis for: |
| You
'n Me |
Foundations, Endowments
&
Not-for-Profit Organizations |
Corporations |
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Corporations (small
& private)
Small
professional, service, and general corporations have few things in
common with their larger brethren, but three of these can become life threatening very quickly...
cash flow, cash flow, and cash flow. You need it to pay the
bills, the salaries, and the marketing expenses that you just can't
afford to eliminate when the business cycle cycles into recession...
one of those normal features of economies (similar to stock market
corrections) that you just have to deal with. Cash flow can be juiced
up a bit with credit-line financing, and most entrepreneurs can tap
into personal resources if they really have to, but some reasonable
preparation when you are flush can smooth the recession curve
significantly, and keep the longer variety of financing off the
balance sheet.
For every dollar you invest in sports cars and
country clubs during the good times, consider stashing some Franklins
in Closed End Municipal Bond Funds, the managed, monthly
payout, variety. If that's too boring for you, Investment Grade
Value Stocks also have magical qualities that you need to be aware
of. A corporate investment portfolio can cushion the impact of a
shrinking market for your products and services, but only if it is invested in a manner that (for lack of a better word) hedges against a
falling stock market and/or rising interest rates. Thus, it is
important to avoid the popular Investment Products of
the day, with their inflexibility, and built-in speculations. You are creating a special-features reserve account that makes you your very
own least-hassle source of emergency money. The banks and the credit
unions become the source of last resort.
It may be difficult to find investment advisors who
are interested in constructing properly diversified, high quality portfolios, comprised
solely of stocks and Municipal Bond CEFs. Individual
security recommendations are becoming rare for a variety of reasons,
not the least of which being the modern need for instant gratification
on the part of investors, and the fear of lawsuits and liability
problems for advisors. Sometimes it takes some extra effort to make
magic.
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The magic in your corporate investment portfolio is mostly a
result of the ridiculous way the tax code deals with two types of
investment income... dividends received by the corporation from
another corporation and Municipal Bond Interest received by anyone.
The fact that any form of investment income is taxed at all is also
ridiculous, and the repeal of the Corporate Income Tax itself would be
magical for job growth, productivity, GDP growth, etc. (Tax related
Articles: The Fair Tax; The
Corporate Income Tax; Social
Security)
Here's the deal: Investment Grade Value
Stocks (definition)
pay regular dividends that are mostly exempt from the corporate
income tax. Municipal Bonds pay interest that is 100% exempt
from Federal income taxes. Yeah, I know that a 5% or so cash flow is
peanuts compared to what the business generates when it is running on
all eight cylinders. But when sales/fees/commissions are shrinking, a
large enough portfolio can generate some bucks to pay a few bills. No,
that's not the magic.
The magic is when you decide to borrow money
from yourself to finance that sales campaign or seminar. So long as
you own the securities before doing so, you can borrow about 50% of
the Market Value of the portfolio at an interest rate that is
competitive with the nosey bankers, but without the paper work and
humiliation. The portfolio, if properly designed, will generate more
than enough to cover the interest charges and to payoff a portion of
the loan every month... and you never have to write a check. And, this
is the magic, the interest payments may just be tax deductible.
(None of this
information should be considered tax or accounting advice. It is
simply an experience-based opinion that your tax advisor may disagree
with. You should ask your tax person before implementing any of the
suggestions here, or anywhere else in this website.)
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Sanco Services helps corporations with
the important tasks of: Portfolio Design, Asset Allocation Planning,
Diversification, Risk Control, and Income Production.
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If you are thinking of starting a corporate
investment portfolio, the place to go for
the basics is the Investment Management Clinic provided in The
Brainwashing of the American Investor: The Book that Wall Street
does not Want YOU to Read.
This is not a sales
pitch or a gimmick provider. It's straight talk on the intricacies of
the Investment Markets, woven together with the real life experiences
of an Investment Manager, and a tutorial on how
to use the real time investment environment to your advantage. You'll still
be on your own, but with much more of the background
information you need.
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If you
have a corporate portfolio already, whether or not you are pleased
with its design or performance, it is wise to have a periodic content
analysis. Investment Manager Steve Selengut will provide you with a professional portfolio
examination and analysis that focuses on these key
elements:
- The fundamental QUALITY of the securities
in the portfolio. Are they Investment Grade?
- The DIVERSIFICATION of the portfolio.
What is the exposure in any one area?
- The INCOME GENERATION from the
portfolio. Is it adequate and growing?
- The appropriateness of the portfolio's
ASSET ALLOCATION. Is it goal orientated?
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A detailed analysis, specific as to the content of the existing portfolio, but general in recommendations for action is provided.
Fees are:
- $175.00 per hour, ending
with a verbally
presented report.
- $175.00 per hour for
review and analysis, plus $325.00 per hour spent in preparing a
written report, including email reports.
One hour must be paid for in advance, PayPal to: sanserve
(at) aol.com.
Few verbal analyses have ever taken more
than two hours.
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3912
Betsy Kerrison Pkwy
Johns Island, SC 29455
Phone (800) 245-0494 • Fax (843) 243-8509 |
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