Golden Gate Advisors Investment Planning

Golden Gate Advisors, Inc. investment management is centered on two main areas: Portfolio Risk Management and Dynamic Asset Allocation using Modern Portfolio Theory. Our goals are to increase net worth, plan for a secure retirement, provide investments that fight inflation and simplify everything. Where requested, we emphasize socially responsible and faith-based investing, i.e. Value Based Investment criteria.

To determine the right mix, we utilize six steps in the investment planning process. These steps hold true for the beginning investor to the most sophisticated institutional investor.

1. Investment Means: The investor must first determine to invest and save rather than spend and consume.

2. Investment Time Horizon: Next the investor must determine the time period for the investments based on the financial objectives. The choices are from a combination of short-term investments to long-term investments.

3. Investment Risk vs. Investment Returns: The investor must determine the acceptable level of risk for the portfolio based on the investor's tolerance for risk. As the level of risk increases so will the return potential and the loss potential.

4. Investment Selection: Investments are selected based on the goals determined in 2 and 3 above. These investments would fit the investor's time horizon and risk tolerance.

5. Investment Performance Evaluation: Once selected, investment performance should be evaluated in three ways. First, by comparing actual realized returns against expected returns. Second, by comparing actual realized returns against a benchmark. A typical benchmark used today is the S&P 500 Index. Third, investments should be reevaluated periodically to make sure they conform to the investor's original goals determined in 2 and 3 above.

6. Investment Adjustment: As goals and investment performance criteria change, the portfolio should be adjusted accordingly.

CUT LOSSES: Always strive to cut your losses. Don't try to turn a bad trade into an investment. If a stock declines more than 8 to 10%, sell.

SELL WITH CHANGE: If you buy a stock for fundamental reasons and the fundamentals change, sell. Or as they say in Texas: "If the horse dies, get off".

AVOID LEVERAGE: Never use borrowed money to attempt to turn a mediocre investment into a winner. Use leverage to make a great investment even better but provide a margin for error.

Financial Dates To Remember:

Sometime during 2007, you and other members of your family will celebrate their birthdays. Beyond simply being a year older, some of these birthdays may be financially significant because of tax or retirement reasons. Note that both federal and state tax codes are currently in flux with various proposals being discussed so check with your tax advisor for the latest data.

Age 14. The “kiddie” tax goes away. That’s the tax where any net investment income (not earned wages) that exceeds $1,600 (2004 inflation adjusted) is taxed at the parent’s marginal rate instead of the child’s. Now any income will be taxed at the child’s rate, which is usually lower.

Age 17. Sorry, but if your child turns 17 during 2007, you will no longer he able to claim the child tax credit of $1,000 per child.

Age 18. In some states, age 18 is the age of majority, which means the child can do whatever he or she wants to with any money you’ve put into a custodial account (such as under the Uniform Gift to Minors Act).

Age 21. The age of majority in some states.

Age 29. The last chance to withdraw tax free, for qualified education expenses, after tax earnings left in a Coverdell education savings account (CESA), or name a new beneficiary for the account. Otherwise, any earnings left in the account when the current beneficiary turns 30 will face regular income taxes and a ten percent penalty. The exception is if the child is a “special needs” child. The maximum annual contribution is $2,000.

Age 50. You’re eligible to take advantage of new “catch up” retirement provisions. For example, in 2007 one who is age 50 or over can kick an extra $1,000 into their individual retirement account above the $4,000 IRA maximum contribution. The catch-up amount for qualified retirement plans (401(k), 403(b), 457 Plan) is $5,000.

Age 55. Distributions from a qualified retirement or annuity plan are not subject to the ten percent early withdrawal penalty as long as you are at least 55 years old during the year you leave your employer (if the plan allows this). The distributions are subject to regular income tax.

Age 59 1/2. You can start taking distributions from qualified retirement plans, annuities and IRA’s without risk of the ten percent early withdrawal penalty. The distributions can be subject to regular income tax.

Age 60. The age at which a surviving spouse (or in some case, a former spouse) becomes eligible for Social Security benefits based on the deceased spouse’s work record.

Age 62. The earliest age you can start collecting retirement benefits from Social Security. The benefits would be reduced as much as 20 percent because you are starting before you reach the full retirement age. So the decision of whether to do this depends on such factors as life expectancy, income needs and so on. You also become eligible for a reverse mortgage, which is a way to borrow against the equity in your home and not repay it until you move or die.

Age 65. You can retire and start taking full Social Security benefits. For people born in 1938 or later, however, the normal retirement age will begin to increase.

Age 70. If you postponed collecting Social Security benefits beyond your normal retirement age in order to increase the size of the payments (three percent a year) once you did start collecting them, don’t delay any longer. Social Security won’t increase the benefits after you reach age 70.

70 ½. You must start taking the first annual minimum distributions from your retirement plans and IRAs. The exception is an employer’s plan if you are still working for that employer and don’t own five percent or more of the business. Actually, you can postpone making the distribution until April 1 of the next year, but that will mean two minimum distributions in the same year, which could push you into a higher income tax bracket and increase the amount of Social Security benefit income exposed to tax.