If you're unsure about the best way to balance risk and return
within your stock portfolio, you may want to consider the strategy of combining
growth and value funds. Because these funds often do not move in tandem in
response to market or economic conditions, you may minimize risk without
sacrificing return by owning some of each.

Growth and Value Defined

Growth stocks represent companies that have demonstrated
better-than-average gains in earnings and are expected to continue delivering
high levels of profitability. While earnings of some companies may be depressed
during an economic slowdown, growth companies generally continue to expand
their earnings. The primary risk associated with a growth stock is the
potential for its price to decline sharply if the company releases negative
news that disappoints investors.

Value stocks, in contrast, generally have fallen out of favor
in the marketplace and are priced much lower than stocks of similar companies.
The lower price may reflect investor reaction to recent company problems, such
as disappointing earnings or a lawsuit, which may raise doubts about a
company's long-term prospects. The value group may also include stocks of new
companies that have yet to achieve recognition. Value stocks also pose a
potential risk -- the stock price may not rebound, leaving an investor with
limited upside.

An All-Season Portfolio

Mixing growth and value funds within your portfolio allows you
to potentially gain as the market moves through different cycles. Although past
performance cannot guarantee future results, value stocks, often those of
cyclical industries, tend to do well early in an economic recovery; growth
stocks, on the other hand, tend to outperform during bull markets, which are
normally fueled by falling interest rates and rising company earnings. But the
good news is you don't have to choose -- combining growth and value funds may
present a prudent strategy for balancing risk and return over the long term.

###

January 2012 — This column is provided through the Financial
Planning Association, the membership organization for the financial planning
community, and is brought to you by Ronald J VanSurksum, CFP®, a local member
of FPA.

Required Attribution

Because of the possibility of human or mechanical error by
McGraw-Hill Financial Communications or its sources, neither McGraw-Hill
Financial Communications nor its sources guarantees the accuracy, adequacy,
completeness or availability of any information and is not responsible for any
errors or omissions or for the results obtained from the use of such
information. In no event shall McGraw-Hill Financial Communications be liable
for any indirect, special or consequential damages in connection with
subscriber's or others' use of the content.

© 2012 McGraw-Hill Financial Communications. All rights reserved.

Did you know that there's a wealth-transfer technique you can
use to reduce your taxable estate and keep more of your assets for your heirs?
You can make annual gifts of up to $13,000 ($26,000 per married couple) to as
many people as you wish without incurring federal gift taxes.

An example: A married couple with three children could reduce
their estate by $78,000 each year if $26,000 were given to each of their
children.

Gifting can be used in a number of unique ways. You can use
annual gifts to help build a college fund for a child, grandchild, relative, or
even a friend -- by contributing to a 529 plan account, a Coverdell Education
Savings Account, or a UGMA/UGTA account. In fact, 529 plans have special rules
that allow you to make five years' worth of contributions in one year without
incurring any gift taxes -- that's $65,000 for individuals and $130,000 for
married couples!

Gifts can also be used to build wealth for future generations
as well as help a child, relative, or friend fund a down payment on a home, buy
a car, or start a business. Your financial advisor can help you determine how
annual gifts might fit into your overall financial plan.

###

January 2012 — This column is provided through the Financial
Planning Association, the membership organization for the financial planning
community, and is brought to you by Ronald J VanSurksum, CFP®, a local member
of FPA.

Required Attribution

Because of the possibility of human or mechanical error by
McGraw-Hill Financial Communications or its sources, neither McGraw-Hill
Financial Communications nor its sources guarantees the accuracy, adequacy,
completeness or availability of any information and is not responsible for any
errors or omissions or for the results obtained from the use of such
information. In no event shall McGraw-Hill Financial Communications be liable
for any indirect, special or consequential damages in connection with
subscriber's or others' use of the content.

© 2011 McGraw-Hill Financial Communications. All rights reserved.

Stories abound about the fireman who retires at age 45 with a
six-figure pension, or the city manager who leaves after just five years'
service with full salary and health coverage for life.

What doesn't make headlines, however, is the growing number of
public sector employees who have seen their retirement benefits erode in the
face of budget cutbacks and mounting public deficits. States and cities across
the country are taking steps to reduce pension costs by whittling away
employees' retirement entitlements. Even San Francisco, bastion of liberal
handouts, recently saw voters approve a plan to scale back retirement benefits
for city employees.

Although traditional pensions still dominate at all levels of
state and local government, hybrid plans are emerging that combine a
401(k)-type component with a guaranteed benefit. In fact, 11 states --
including Alaska, Michigan, Colorado, Florida, and Ohio, plus Washington, D.C.
-- now have primary retirement plans that include some defined contribution
component.¹

The upshot for public
sector employees is that, increasingly, they are likely to need to augment
their pensions with salary contributions to employer-sponsored plans or save on
their own if they want to maintain their preretirement lifestyle. And since
many states have "double dipping" laws in place that prevent public
employees from collecting both Social Security and a state pension, the need to
set aside their own funds for retirement is even more important.

How to Compensate

Several tax-advantaged retirement savings options exist that
may be accessible to public sector employees. The most popular include:

• 403(b)
  plans are generally available to employees of qualified public organizations
  such as schools, hospitals, and certain nonprofit employers. Similar to 401(k)
  plans, 403(b) plans allow employees to contribute a portion of their salary on
  a pre-tax basis; and no tax is paid on contributions or earnings until it is
  withdrawn in retirement.²
• 457
  plans are available to state and local government employees and are somewhat
  similar to 403(b) plans. There is no penalty for early distributions from a 457
  plan (however, taxes are due), although you generally cannot take in-service
  distributions unless you have an unforeseen emergency.
• IRAs
  are available to both public and private sector employees. Like 403(b) and 457
  plans, IRAs also offer tax-deductible contributions and tax deferral. However,
  IRAs have lower annual contribution limits and eligibility for favorable tax
  treatment may be subject to certain income limits.2

To find more information on these or other tax-advantaged
retirement savings plans, see Publication 590 at http://www.irs.gov/.

Source/Disclaimer:

¹Source: Journal of Pension Economics and Finance,
"Behavioral Economics Perspectives on Public Sector Pension Plans,"
April 2011.

²Withdrawals from 403(b) plans and IRAs prior to
age 59½ may also be subject to a 10% early withdrawal penalty, in addition to
ordinary tax on withdrawn amounts.

###

January 2012 — This column is provided through the Financial
Planning Association, the membership organization for the financial planning
community, and is brought to you by Ronald J VanSurksum, CFP®, a local member
of FPA.

Required Attribution

Because of the possibility of human or mechanical error by
McGraw-Hill Financial Communications or its sources, neither McGraw-Hill
Financial Communications nor its sources guarantees the accuracy, adequacy,
completeness or availability of any information and is not responsible for any
errors or omissions or for the results obtained from the use of such
information. In no event shall McGraw-Hill Financial Communications be liable
for any indirect, special or consequential damages in connection with
subscriber's or others' use of the content.

© 2011 McGraw-Hill Financial Communications. All rights reserved.