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Submitted by: Puthan(VJ) Vijayan
Puthan(VJ) Vijayan is the Principal member of PMV Investment Advisors,LLC.The firm is a Registered Investment Advisor.VJ is a Certified Estate Planner and Registered Financial Consultant, with over 15 years of planning and investment experience.
July 10.2006
You hired your Advisor to create a financial plan that meets your needs.But, it is not always able to predict exactly what those needs will be.Unexpected costs always arise. Let us look at how different types of income may help meet the unexpected and expected expenses faced by investors like you.
LONG TERM FIXED INCOME-Long term treasury bonds,maturities with ten years or more, offer a constant rate of return which is determined at the time of purchase.Values can fluctuate, but unlike mutual funds, the principal and interest payments are guaranteed bu the US government. The interest income offered can be attractive.The return stays unchanged and the same applies to the intial investment, provided you hold the bond to maturity. The intial investment cannot shrink and there is no growth. This limits the investment's capability to produce greater future income.
SHORT TERM FIXED INCOME- If you chose not to lock in the interest for longer time periods, you might want to chose shorter term treasury bills and notes. The notes and bills have maturites ranging from one month to ten years, but they offer the same interest and principal guarantees as their longer term counterparts. Short term bonds allow you to turnover the proceeds more frequently, and if interest rates are rising, give you the potential to earn higher return. What about when rates are falling. The intial investment cannot shrink and there is no growth.
INCOME FROM MUTUAL FUNDS-Investors seeking different choices and rising income may consider growth and income mutual fund, which typically seek to generate growth in increase in value of fund share, generate income-dividends. Mutual funds can provide rising income to those who do not need to draw on their investment and can use the dividend reinvestment conduit to increase investment's value and it capacity to produce greater future income. If you require income, you can take intermittant distributions on a as needed basis or combination of the two. Fund assets are managed to increase the underlying share price, you can make timely judicious withdrawals as the overall value of your investment continue to grow. It puts you in charge as you determine when you need monies.
VJ Vijayan; PMV INVESTMENT ADVISORS,LLC
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