In this month's edition of the Smart Money Insights Newsletter prepared by Boston-area Clear View Wealth Advisors and Steve Stanganelli, CFP(R), we provide investing tips for 529 College Savings Plans, discuss Social Security and Stretch IRA Strategies for Retirement and offer insights into asset allocation and inflation data.

1. Smart Money
Insights
August 2012 Vol. No. 1 Investment Updates
more conservative as your child nears college age. But
Find the Right Stock/Bond Mix for it's important to conduct due diligence on an age-
based plan beforehand. And if your 529 plan's age-
College Savings based options are dramatically out of whack with
industry averages, that's a red flag to look for another
529 plan, create your own age-appropriate portfolio
When it comes to selecting specific investments for a using individual funds, or supplement the age-based
college portfolio, asset allocation is every bit as crucial, plan with individual stock, bond, or cash holdings.
if not more so, than it is for retirement savers. Retirees
can delay retirement or work part-time longer if their Government bonds and Treasury bills are guaranteed
retirement portfolios come up short. Most young by the full faith and credit of the U.S. government as
people, on the other hand, want to go to college right to the timely payment of principal and interest, while
after high school, making the target date for a college stocks are not guaranteed and have been more volatile
fund much more specific. (The target date is the than bonds. Diversification does not eliminate the risk
approximate date when investors plan to start of experiencing investment losses. 529 plans are tax-
withdrawing their money for college.) As it takes most deferred college savings vehicles. Any unqualified
students only four to five years to get through college, distribution of earnings will be subject to ordinary
a college fund's drop in value during high school or income tax and subject to a 10% federal penalty tax.
early college years can be catastrophic. The principal
value of such funds is not guaranteed at any time,
including at the target date.
A healthy share of the assets flowing into 529 plans is
now directed toward age-based options. Much like
target-date mutual funds, age-based options contain a
mix of stocks, bonds, and cash, and grow progressively
Personal Note from Steve Stanganelli
My Core Values and value having a reliable Let’s make a plan together to
second opinion or need help improve your bottom line.
I strive to run my practice and my getting on track, then I look
life on the core principles best forward to being a part of your
summed up in Don Miguel Ruiz's team.
The Four Agreements:
I want to help you make sense of
Be Impeccable with Your Word your money.
Don't Take Anything Personally
Steve Stanganelli, MSF, CFP® Don't Make Assumptions Please call me and we can set up
Fee Only Planner & Tax Coach
Always Do Your Best a time for a no pressure chat to
steve@clearviewwealthadvisors.com explore the ways that we may be
978-388-0020 If you are like me and appreciate able to work together.
www.ClearViewWealthAdvisors.com this approach to life and business

2. Clear View Wealth Advisors LLC Investment Updates August 2012 2
ensure a profitable outcome and investing in securities
Keeping It Real always involves risk of loss. The rates used in the
analysis and their corresponding compound annual
growth rates are the consumer price index for: all
urban consumers (CPI-U) (3.1%), medical care
(5.4%), and college tuition and fees (7.4%).
Inflation has averaged 3.1% over the last 30 years.
This might not seem like much, but this reported
figure only tracks total goods and services purchased
by the typical consumer. This is a good measure for
the economy at large, but it may not be representative
for individuals whose lifestyles and buying habits differ
from the typical consumer.
Goal-based investors may experience higher inflation.
People who need to focus on savings for college or
medical care may be left short, as the cost for such
items often tends to rise at a faster rate than the
average cost of living. Those investors might not be
able to keep pace with rising costs if they do not take
their real inflation rate into account when planning
their investment goals.
The image illustrates the effect of three types of
inflation on an investment of $1,000 in stocks and
bonds: overall U.S. inflation, medical-care inflation,
and college inflation. After 30 years, inflation has
considerably reduced the wealth of the original
investment. For example, the $1,000 invested in stocks
and bonds only grew to $9,198 and $9,325,
respectively, after adjusting for U.S. inflation. Alas,
even more bad news for a family with children or a
baby boomer nearing retirement.
Further, of the two asset classes considered, bonds
provided more growth after inflation, which is
unusual. Investors wishing to keep pace with inflation
would typically consider a larger allocation to stocks or
explore other investments that protect against
inflation. However, due to the two major crises and
associated stock market declines experienced during
the “lost decade,” stocks performed more weakly than
bonds.
Past performance is no guarantee of future results.
This is for illustrative purposes only and not indicative
of any investment. An investment cannot be made
directly in an index. Government bonds are
guaranteed by the full faith and credit of the United
States government as to the timely payment of
principal and interest, while stocks are not guaranteed
and have been more volatile than bonds. Holding a
portfolio of securities for the long term does not

3. Clear View Wealth Advisors LLC Investment Updates August 2012 3
any capital gains distributions. International bonds are
Mixed Income not guaranteed. International investments involve
special risks such as fluctuations in currency, foreign
taxation, economic and political risks, and differences
in accounting and financial standards.
Fixed-income performance reversals are common: It is
extremely difficult to predict which category of bonds
will be the best or worst performer in any given year.
The performance of any fixed-income investment can
have drastic periodic changes. Investors could
potentially diminish their returns by attempting to
follow last year’s winner.
Furthermore, investors who have an asset allocation
policy consisting of different asset classes such as
stocks and bonds may still not be diversified.
Therefore, branching out within each asset class may
further lessen overall portfolio risk.
Diversified bond funds might alleviate portfolio
volatility: The image illustrates the performance of
various fixed-income instruments in relation to one
another from 2002 to 2011. The data shows it is
impossible to predict the winners for any given year.
For example, high-yield corporate bonds were the
worst performers in 2007 and 2008, but rose to
become the best-performing investment in 2009 and
2010. While aggregate bonds have never been the top
performer in any of the years examined, their
performance has remained fairly consistent, with
minimal swings when compared with other categories
such as long-term and international bonds.
It can be beneficial to hold a fund that is diversified
across several types of bonds. This might reduce
portfolio risk while allowing for more consistent
performance over time.
Past performance is no guarantee of future results.
This is for illustrative purposes only and not indicative
of any investment. Diversification does not eliminate
the risk of experiencing investment losses.
Government bonds and Treasury bills are guaranteed
by the full faith and credit of the United States
government as to the timely payment of principal and
interest. With corporate bonds, an investor is a
creditor of the corporation and the bond is subject to
default risk. High-yield corporate bonds exhibit
significantly more risk of default than investment
grade corporate bonds. Municipal bonds may be
subject to the alternative minimum tax (AMT) and
state and local taxes, and federal taxes would apply to

4. Clear View Wealth Advisors LLC Investment Updates August 2012 4
Retirement Income Sources
Concerns about shortfalls in traditional retirement
income sources like Social Security and pension plans
have caused people to expect to rely more heavily on
personal savings to fund their retirement. The graph
illustrates that while only 50% of current retirees
utilize their personal savings for retirement income,
65% of current workers anticipate personal savings to
play a role during retirement. Further, 73% of workers
expect to receive retirement income from an employer-
sponsored retirement savings plan, while only 51% of
those already retired actually receive income from such
a source.
It may be a good idea to plan for a diminished reliance
on Social Security or a pension plan. Whatever extra
funds you save by taking this more conservative view
will make retirement all the more enjoyable.
in your IRA, be sure they are transferred properly.
Stretching an IRA
When you pass on, providing certain conditions are
met, each beneficiary who elects to go with a stretch
strategy will have a range of options to choose
from—depending upon your age at death (and
Many retirees depend on their individual retirement whether or not you have begun to take required
accounts to fund living expenses during their golden minimum distributions from the IRA) and whether a
years. However, there are retirees who find themselves spousal or non-spousal beneficiary is involved. If you
in the enviable position of having no need to withdraw happen to be named a beneficiary and choose to
from their IRAs. If you are fortunate enough to be in implement a stretch strategy, be sure you know what
this camp, or if you are fairly confident that you will comes next. In some cases you may be able to keep the
have plenty of money left in your account when you assets growing on a tax-deferred basis while in other
leave this world (even after taking required cases distributions will need to be taken soon. Because
distributions), you will want to make sure you preserve of the many rules, it is highly advisable that you speak
as much of your IRA assets as possible for future with a financial advisor or tax professional when it
generations. You can accomplish this by implementing comes to stretch strategies.
a stretch strategy.
The first step in setting up a stretch IRA strategy is to
simply name one or more beneficiaries. If you are
married, your spouse can serve as your primary
beneficiary while your children or even grandchildren
can serve as your secondary beneficiaries. You can also
name others as beneficiaries, such as family members
or friends. You worked hard to accumulate the funds

5. Clear View Wealth Advisors LLC Investment Updates August 2012 5
Time Horizon: Time horizon is the length of time
The Asset Allocation Puzzle your portfolio will remain invested before withdrawals
need to be taken. If your average investment horizon is
fairly short, you will most likely want a more
conservative portfolio—a portfolio with returns that
do not fluctuate too much. If your investment time
Possessing a considerable amount of knowledge about horizon is longer, you can most likely invest more
stocks, bonds, and cash is only a small part of the aggressively.
investment planning process. Many investors are
under the false notion that the greatest determinant of Risk Tolerance: Everyone has a different emotional
portfolio performance is the specific investment reaction to sudden changes in their portfolio value.
choices that they make. In reality, the biggest decision Some people have trouble sleeping at night because
you will make is how much to allocate to different they are too busy worrying about how their portfolio is
investment categories. Asset allocation is all about performing. Other investors are unfazed by
finding the mix of investments that is right for your fluctuations in the market and can endure the
situation. Goals, time horizon, and risk tolerance are uncertainty associated with more risky investments.
some of the key factors that should be taken into
consideration when allocating assets.
As you can see, the asset allocation decision is not an
easy one and it may be best to work with an
Goals: Determining what asset allocation is investment advisor who can piece together a plan that
appropriate depends largely on the goals you seek to is right for you.
achieve. Are you saving for retirement, college
education for your children, or a vacation home? Each
goal must be considered in creating the appropriate
asset mix.
©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not
warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising
from any use of this information. Past performance is no guarantee of future results. "Morningstar" and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar Market
Commentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder.
Steve Stanganelli, MSF, CFP® Clear View Wealth Advisors LLC steve@clearviewwealthadvisors.com Tel:978-388-0020
Fee Only Planner & Tax Coach 12 Amidon Avenue www.ClearViewWealthAdvisors.com
Amesbury, Massachusetts 01913