INFORMED FOR LIFE - Advisor Products

INFORMED FOR LIFE
RETIREMENT PLANNING • TAX PLANNING • ESTATE PLANNING • INSURANCE • INVESTMENTS
S U M M E R 2 0 1 0 E D I T I O N
Joshua Kadish and RPG will be
recognized in the November
Issue of Chicago Magazine as
a Five Star Wealth Manager for
Overall Satisfaction for 2010.
www.rpgplan.com

SUMMER 2010
Informed for Life
Clients and Friends:
We’re pleased to provide you with our latest newsletter, Informed for Life.
Informed for Life is intended to be a bridge between
education and action. Our goal is to help educate you
on topics that are relevant and provide you with the
ability to take action on what appeals to you.
As you know, Retirement Planning Group provides
erge service across 5 core areas:
RETIREMENT PLANNING
TAX PLANNING
ESTATE PLANNING
INSURANCE
INVESTMENTS
Each quarterly issue will include a timely article on
each of our core services. There will then be a follow
up action that you can take for additional information.
As it’s been said, “None of us plan to fail.
We merely fail to plan.”
We’re happy to be able to provide you with yet another
educational tool and hope you will find this newsletter
interesting and helpful for your life planning.
Regards,
Concierge Service Directory
1.800.596.0253
For Service
To schedule an appointment or
get directions to our office:
Director of First Impressions - x100
For questions on new account
paperwork or account transfers:
Operations Associate - x155
For check requests, account values,
tax information, to place a trade, change
your email, phone number or address:
Team Leader - x117
For Planning Advice
Press "0" and ask for your financial planner
Joshua Kadish & Scott Loochtan
Award is based on a survey conducted by an independent third party. The opinions of those
who responded to the survey may not be representative of the experience of others. The
Five Star award is not based on investment performance nor is it an indication of future performance.
Respondents were not paid to participate in this survey.
Registered Representatives offer securities and advisory services through
National Planning Corporation (NPC), Member FINRA/SIPC, a Registered
Investment Adviser. Additional advisory services offered through Advantage
Investment Management (AIM), a Registered Investment Adviser. RPG,
AIM and NPC are separate and unrelated companies.
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www.rpgplan.com

INVESTMENT
Tired of low CD and money market rates?
If you have money sitting in CD’s or money market
accounts, no doubt you have noticed that interest
rates have been dropping for months now much to
the frustration and chagrin of aggressive savers.
Before you decide to move away from traditional
bank savings and CD accounts, it’s important to
think about how much additional risk you are willing
to assume in your new short term savings vehicle.
If you want maximum protection from loss and do
not want to take on additional risk, then it’s best to
stick with FDIC-insured options. But if you’re willing
to take slightly more risk or give up some liquidity
(degree of immediate access to your money), that
may enable you to get a higher potential rate of
return, while still being comfortable with the
amount of risk you are taking.
We have a number of different strategies
available, including:
1. FDIC insured & principal protected
structured CDs with returns linked to
securities or indices of your choice, such
as the S&P 500.
2. Institutional Capital Preservation Portfolios
3. Fixed Income Bond Portfolios
For cash or income-producing alternatives,
give us a call. 1.800.596.0253
Principal Protected CDs are sold only by prospectus
and may not be suitable for all investors. Investors
should read the Prospectus carefully before investing.
Investors should read the prospectus carefully for a
more complete description of the risks associated
with investing in principal protected CDs. This communication
is prepared solely for informational purposes
and should not be considered an offer to buy
or sell or a solicitation to buy any security. Investors
should consult their accounting, legal or tax advisors
before Investing. Many factors may affect investment
value such as interest rates, volatility of the underlying
asset, trading market and time remaining until
maturity. FDIC insurance does not apply to principal
losses incurred when selling a CD in the secondary
market prior to maturity. An active trading market
may not develop.
The S&P 500 is an unmanaged stock index. S&P
500 is a registered trademark of Standard & Poor's
Corporation. Investors cannot invest in the S&P 500
Index.
RETIREMENT PLANNING
Build Your Financial Foundation with Regular Reviews
Life in the 21st Century offers many exciting challenges
and opportunities. Recent market volatility
and a struggling economy may have thrown you off
track to accomplish some of your goals.
www.rpgplan.com
Today, there are many financial strategies that can
help you reach your short and long-term goals. We
can be a valuable resource as you review your
financial situation, ascertain your progress, and
Continued on page 6
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INVESTMENT
The Importance of Reviewing Your Portfolio
There are many lessons to be learned from the
2008-2009 financial crises. For individual investors,
the most important lessons come out of a complex
theory of investing called Modern Portfolio Theory.
In its most basic form, this theory stresses the
importance of diversifying your portfolio among
different asset classes for safety. As the old saying
counsels, “Don’t put all your eggs in one basket.”
Unfortunately, diversification was proved not to be
as effective as believed and the baskets failed
many investors when they needed them to protect
the eggs the most.
Does this mean that we should abandon the theory
of diversification? Absolutely not! Diversification has
been useful over the long term. But investors may
need to find another way to protect portfolios from
the short term shocks. Investors need to recognize
the value of diversification and, at the same time,
compensate for its weaknesses. However, diversification
is still an important first step in the investment
process.
So how can investors overcome the shortcomings
of diversification and protect their portfolios from
major downturns of the market? Large institutions
such as pension plans and insurance companies have been employing downside protection strategies in their
own portfolios for years. These are tools that attempt to bring more certainty to the investment process and
can help stabilize a portfolio during market volatility. While the relationship between stocks, bonds, real estate,
and alternative investments can change dramatically over time, there are other investments that have an
opposite relationship to stocks. By allocating a portion of your portfolio to these tools that historically move
opposite to stocks, you can help ensure that something within your portfolio is always working toward your
goals. Unfortunately, many of these tools have not been easily accessible for the individual investor, until
now. Employed correctly, these tools are designed to reduce risk compared to a portfolio not implementing
any form of downside protection strategy. This results in a portfolio with much less volatility and downside
risk, but one that keeps most of the upside participation intact.
To many investors, the math of portfolio returns is not as simple as it seems on the surface. If your portfolio
declines by 20%, you need more than 20% to recapture all your losses. Actually you would need a 25% return
to get back to the breakeven point. If your portfolio declines by 40%, you need a return of 67% to get back to
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Continued on page 5

INVESTMENT
The Importance of Reviewing Your Portfolio
Continued from page 4
breakeven. And if your portfolio matched the 56% decline of the S&P 500 during the crisis, you would need
a return of 127% to get back to pre-crisis levels. How many investors have the time and the courage to sit
around and wait for their portfolios to recover from such devastating losses?
The chart shows the cumulative returns necessary to break even when an investment loses value.
If your portfolio is down 50%, you need a return of 100%
to get your portfolio back to where it was. Of course,
achieving that return is highly unlikely.
Initial Investment: $100,000
Examine the chart’s different returns and appreciate how
long it takes just to break even.
Years Needed to Break Even at These Rates of Return
If your
portfolio
is down...
Current value
Amount
needed to
break even
Return needed
to break even 2.00% 6.00% 10.00% 12.00%
10%
$90,000 $10,000
11.1%
5.32 1.81 1.11 0.93
20%
$80,000 $20,000
25.0%
11.27 3.83 2.34 1.97
30%
$70,000
$30,000
42.9%
18.01 6.12 3.74 3.15
40%
$60,000
$40,000
66.7%
25.80 8.77 5.36 4.51
50%
$50,000
$50,000
100.0%
35.00 11.90 7.27 6.12
This highlights the importance of controlling risk in your portfolio. If you can reduce the downside exposure
and limit losses when the markets decline, you will be in a much better position if and when the markets
begin to recover. By losing less on the way down, you don’t have as much to make back on the way back
up. By limiting risk, a downside protection strategy can not only give you a more comfortable path of investing...
it will give you a much greater chance of success over major market cycles.
Many people take steps to protect themselves from catastrophes. People insure their homes from fire and
flood, their cars from the inevitable fender-bender, their health from the flu and major illnesses, and their
lives to ensure their spouse’s financial security or provide for their children’s education. But when it comes
to investment portfolios, which in many cases are the largest and most liquid components of an investor’s
net worth, many forge ahead and subject themselves to the whims of the market. There is a better way.
Please don’t continue to leave your portfolio unprotected. There are strategies available that are designed
to help protect your portfolio in times of market volatility, Please consider if they are appropriate for you. 1
Call us to learn more about these strategies!
1.800.596.0253
www.rpgplan.com
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ESTATE PLANNING
The Basics of Estate Planning
If you become incapacitated and you need medical care, who do you want to make your medical
decisions? The doctors? The hospital? The court?
If you fall into a coma where death is imminent and
there is not even a remote chance of recovery,
would you want to be kept alive by being plugged
into various machines?
If you become incapacitated, who can legally make
financial decisions on your behalf?
If you have children and die without a will, would
your spouse inherit all your assets?
If you have minor children but you don’t have a will,
who will be the children’s legal guardian if both you and your spouse die? How will the children get your assets?
Who will manage these assets and make financial decisions for your children?
The following documents can help give the answers that you intend:
• A Will with contingent children’s trusts
• A durable Power of Attorney for health care
• A durable Power of Attorney for property
• A Living Will
Comprehensive Estate Planning also includes addressing probate avoidance, tax planning, asset protection,
and other issues.
You should, at minimum, however, address the issues above with an attorney specializing in Estate Planning.
To schedule a time to chat with one of our Estate-Planning attorneys, call: 1.800.596.0253
Continued from page 3
Build Your Financial Foundation with Regular Reviews
make any necessary adjustments. Most everyone
has a formal or informal financial strategy that
should be regularly reviewed. For example, you
probably follow a budget, save for special goals,
or look over your retirement savings from time to
time. Whether paying bills or preparing your income
tax return, you frequently look at various
parts of your finances. However, once each year,
you should pull all your records together and take a
close look at your entire financial picture.
“None of us plan to fail. We merely fail to plan!”
Call us for a review of your current strategy
or to update your plan! 1.800.596.0253
1 Opinions voiced in this article are not intended to provide specific advice and should not be construed as recommendations for any individual. To determine which investment products and strategies
may be appropriate for you, consult with your financial, tax or legal professional. Please remember that investment decisions should be based on your individual goals, time horizon, and tolerance for risk.
Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Neither diversification nor rebalancing can ensure a profit or
protect against a loss
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TAX PLANNING
Making the Most of Low Capital Gains Tax Rates
Whether you are selling real estate, stocks, or antiques,
chances are good the federal government will demand a cut
of any profit you make on the transaction in the form of capital
gains taxes. Fortunately for taxpayers, current long-term
capital gains rates are relatively favorable, and lower-income
investors now owe no capital gains taxes on the sale of certain
types of assets. But, with long-term capital gains rates
scheduled to rise in 2011, you should start planning now to
take maximum advantage of these reduced rates.
Capital gains arise when a capital asset is sold at a price that
is higher than the basis, which is usually the original purchase
price. A capital asset can be almost any property owned for personal or investment purposes, including
stocks, bonds, land, homes, computers, and even household furnishings. Assets used in business may also
qualify as capital assets, unless they can be depreciated or are inventory items. Under current law, profit
from the sale is considered a short-term capital gain if the investment or property was held for a year or
less and a long-term capital gain if the asset was owned for more than a year.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) lowered long-term rates to 15% for
higher tax brackets (25% or higher). Starting in 2008, taxpayers in the lower tax brackets (10% and 15%)
now owe zero tax on long-term gains. These reduced rates of 15% for higher-bracket taxpayers and 0% for
lower-bracket taxpayers were recently extended through the end of 2010. (Congress has not, however,
adjusted the higher capital gains rates that apply to the sale of certain
types of property, such as small business stock, collectibles, and real
estate that has been depreciated).
While it is seldom wise to sell assets for tax reasons alone, if you have
considered selling stock or other property, you may want to act to take
advantage of these favorable rates before they expire. You may also be
able to reduce or eliminate the capital gains tax bite by selling off
investments that have decreased in value since you purchased them.
If you lose money upon selling a capital asset, the loss can be used to
offset any capital gains on a dollar-for-dollar basis, and the excess losses can be used to reduce your
ordinary income. While the maximum deductible loss in any given tax year is $ 3,000, additional losses may
be carried forward into future tax years.
To discuss your tax situation, call:
1.800.596.0253
www.rpgplan.com
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INSURANCE
How Much Life Insurance Do You Really Need?
Sometimes people buy life insurance before
performing a financial needs analysis. They might
choose an amount that seems comfortable,
without actually taking into account all the potential
expenses their families might face in the event of
an untimely death. If they did make an objective
assessment of the possible economic consequences,
they would be doing what is called a
financial needs analysis.
In addition, we can also review your current policies
to see if you may be able to save money on
your premiums and/or improve your coverage.
Call us so we can help you identify how much
life insurance you need and to see if you can
improve your current coverage.
1.800.596.0253
We are happy to help you perform a financial
needs analysis to help you evaluate if your current
levels of insurance are appropriate.
www.rpgplan.com
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2610 Lake Cook Road, Suite 250
Riverwoods, IL 60015
Newsletter Recipient
2610 Lake Cook Road Suite 250
Riverwoods, IL 60015
Inside: The Importance of Protecting Your Portfolio