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Lower risk alternatives
in today’s volatile markets
nvolatile markets, many
investors seek the safety
of lower-risk invest
ments that enable them to
protect their principal at the
same time lockingin specific
ratesofreturn. Forexample,
certificates of deposit (CDs)
provide safety through FDIC
insurance, but the returns
haveatendency toberather
low.
There are other types of
lower-risk 'nvestments
that may also enable you to
participate in higher re
turns. These investments
include U.S. government
securities, mortgage
backed securities, some
municipal bonds and cer
tain annuities.
U.S. Treasury Securities
U.S. Treasury securities
are debt obligationsissued
by the U.S. Treasury to
finance the activities of the
federal government. These
investments are backed by
the full faith and credit of
the U.S. government, which
has never defaulted or de
layed payment of interest
or principal.
Most Treasury securities
offer fixed income payments
until maturity, when the
principal comes due. They
also often provide the po
Investment seminar to he held at Beulah Grove Resource Center
The 30901 Training Insti
tute of the 30901 Develop
ment Corporation presents
Market Volatility and the
Long Term Investor. This
seminar takes place Thurs
day, October 11, 2001 from
7:00 p.m. to 8:30 p.m. at the
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iginancial
\Consultant
tential for capital apprecia
tion in certain economic en
vironments if sold before ma
turity. Generally, interest
income earned from U.S.
Treasury securities is exempt
from state and local taxes,
but fully taxable on the fed
eral level.
Mortgage-Backed Securi
ties
Mortgage-backed securities
may provide high levels of
monthly income by produc
ing yields higher than other
top-quality fixed-income in
vestments. They also main
tain high investment ratings
or assurances against de
fault.!
Municipal Bonds
Muni.ipal bonds are one of
the primary ways states and
towns finance their infra
structures. Considered sec-
Beulah Greve Resource Cen
ter located at 1446 Linden
Street, Augusta, GA 30901.
All class participants must
call (706) 823-0905 to reserve
seating. Register today be
cause seating is limited.
At times such as these, it is
ond in safety only to direct
obligations of the U.S. gov
ernment, municipal bonds are
usually secured either by rev
enues from the projects they
finance or the tax dollar of
local residents. In some
cases, they are guaranteed
by independent insurance
companies giving them an
AAA credit quality. Munici
pal bonds provide competi
tive rates and are one of the
few remainingtax-free invest
meuts in America. Munici
pal Bonds are free from fed
eral income taxes and often
from state and local taxes®,
as well, in the state of issu
ance.
Annuities
Annuities are designed to
provide for the long-term po
tential growth of assets, tax
deferred.® Fixed annuities
guarantee a rate of return
based on the claims-paying
ability of the insurance com
pany. Variable annuities
have a variablerate of return
based on the performance of
the underlying portfolios. In
either case, your principal is
guaranteed not to lose value.
For more information on
any of these “lower-risk”
products and their benefits,
contact your financial advi
understandable many people
are uncertain about the
economy and the financial
markets. It may seem like a
good idea to get out of the
stock market and put money
into something safe, like a
money market fund. But the
Sor
‘Mortgage-backed secu
rities may not be suitable
tor all investors. These
securities gave the possi
bility of premature return
of principal due to mort
gage prepayment, which
can reduce expected yield
and lead to price volatility.
“Income may be subject
to state and local tax. In
come may also be subject
to Alternative Minimum
Tax (MT). Bonds can be
called prior to maturity
which can reduce vield.
Quoted yields will fluctu
ate if sold prior to matu
rity.
3Variable annuities are
sold by prospectus, which
contains more information
on charges and expenses.
Pleaseread it carefully be
fore sending or investing
money. Variable Annuities
involveinvestment risk, so
an investor’s units may be
worth more or less than
the original amount when
redeemed.
Constance Woods is a Fi
nancial Consultant with
Salomon Smith Barney.
For more information, con
tact Constance L. Woods
at (706) 823-8144 or
constance Lwoods(¢ rssmb.com.
realdanger facinginvestors
isn’t the risk stock prices
might fall. The real danger
1s doing something now
you'll regret later. Be proac
tive about your investments
and geteducated on the capi
tal markets.
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