Rising Interest Rates Worry Fixed-Income Investors

Just as volatility and high prices might make some investors leery of stocks now (see “Fluctuating Stock Market Heralds Covered Calls”), the threat of rising interest rates may worry fixed-income investors. Rising rates tend to depress bond prices. Again, a time-tested strategy might be useful in the current environment. You could put together a bond ladder to hold the fixed income portion of your asset allocation. A ladder might consist of many individual issues with staggered maturities. As the nearest “rung” on your ladder is…

Fluctuating Stock Market Heralds Covered Calls

Up one month, down the next. The stock market this year has offered lots of excitement. As of this writing, broad market indexes have provided little sustenance for bulls or bears, with results not far from early 2018. One strategy that may be appealing in a relatively flat stock market is to use covered calls. Even if the actual stock you own goes nowhere, trading in options may deliver meaningful investment income. The downside of this approach is that any gains in a strong upturn…

Sales Tax and the Out-of-State Buyer

If your company makes sales to out-of-state buyers, do you need to collect state sales tax? Until recently, Supreme Court decisions from the 20th-century declared that would not necessarily be the case. Example 1: ABC Corp., based in Alabama, sends a catalog to customers and prospects. A consumer who lives in Wyoming places a $100 order. Assume that ABC has neither employees nor property in Wyoming. ABC would not be required to collect Wyoming sales tax on the $100 purchase price and remit to Wyoming…

Funding Company’s Buy-Sell With Life Insurance Can Be Tricky

Among the trigger events of a small company buy-sell agreement, death of a co-owner typically is included. Example 1: Wendy Young and Victor Thomas both own 50% of YT Corp. They have a buy-sell, which calls for Wendy to buy Victor’s interest in YT if he dies. Similarly, Victor will buy Wendy’s interest in YT from her estate if she is the first to die. Small company buy-sells such as the one for YT Corp. often fall into one of two categories: Cross purchase. Wendy…

Life Insurance for More Than Just Cash Flow

  Many people think of life insurance as a product for family protection. The life of one or two breadwinners is insured; in case of an untimely death, the insurance payout can help with raising children and maintaining the current lifestyle. Once the children are able to live independently and a surviving spouse is financially secure, insurance coverage may be dropped. Such a strategy uses life insurance as a hedge against the risk of lost income when that cash flow is vital. This type of…