November 25, 2009

Happy Thanksgiving!

I would like to wish all of my readers and their families a very happy and healthy Thanksgiving.

November 24, 2009

Georgia Educator Recovery Adjustment - More Information

In May, I wrote a post called "Did You Contribute to TRS Between 1987 and 1990?" In that post, I discussed that a client of mine had passed on some information that she had received from TRS regarding a recovery adjustment for contributions to TRS during July 1, 1987 through January 1, 1990.

Since that time, there has been no real news, but recently, TRS added some information to their website regarding the subject.

Essentially, several people believed that the amount for the recovery adjustment was in fact a recovery credit (meaning that they were owed the entire figure). Unfortunately, this is not the case as I stated in my previous post, but I can definitely understand where someone would believe this to be true.

Georgia's income tax rate is 6%, so the largest benefit you could possibly receive would be about 6% of the amount on the letter (i.e. $2,000 in contributions in the letter would net about $120 in recovery). There are several factors of course, so your accountant and/or tax preparer is the best person to help you find out how much (if any) benefit you may receive.

The information below is directly from the TRS website - click here to see the entire article:

"To be clear, the amount shown in the letter you received is not the amount you are owed by the Georgia Department of Revenue, but is the amount of money from which you can recover the taxes you paid on it. This money has nothing to do with incorrect contribution amounts. The contributions you made to TRS during this time were and are correct."

"If you fall into this adjustment period and are unsure as to whether or not you filed for this adjustment, we recommend that you go back and check your tax returns for the applicable year to avoid claiming the recovery more than once. If you already received your adjustment, then you are all set. If you did not claim the adjustment, please contact the Georgia Department of Revenue directly at or 877-602-8477 to find out if you are still eligible."

November 23, 2009

The "Secret Sauce" of Investing

A well known fund company likes to say that they have a "secret sauce" when it comes to investing in various companies. The ingredients of the "sauce" are not really secret, but in what amounts and how they use them is. The ingredients I am talking about are research and experience.

As an educator, your first year in the class room you made "rookie" mistakes, and you learned from them. Every single industry is just about the same, but with investing, you must also have thorough research to dig into to understand a company.

The "secret sauce" is that balancing act of combining the right amount of research with the right amount of experience to know if you are choosing a great company that has a great future or a company that looks "cheap" and it should be.

I have tried to preach research and education over the past year and a half, and hopefully, all of you have heeded my advice. There is no one that can say that they make every single decision perfectly, but when you have all of the information in front of you, what is it telling you? At this point, in steps your experience.

In your profession, most new educators have mentors that help guide them along through the various potholes of the first year or two. Financial professionals sometimes have the same, but whether they do or do not, most fall back on their own thoughts and values.


When you look at the various funds that you have to choose from in your accounts, are you looking at just last year's performance? The last 3 years? The last 5 years? Are you taking into account the various categories of investing to make sure you are diversified? Do you know what you are buying?

I have my own thoughts on different funds for different situations, but one of the best tools to use to analyze any mutual fund starts with Morningstar ( They have free tools and a system of categorizing each fund along with a rating system (1 to 5 stars) for most funds (I am not advocating to purchase a subscription - use the free info). You can also use Yahoo! finance to see if there were any recent "news" articles on the fund you are researching. These are definitely not the only resources available, but they can be a good place to start.

Once you have acquired this information, this is where that experience and learned knowledge come into play.


In October 2008 (six months before the bottom of the stock market), Warren Buffett wrote an Op-Ed piece in The New York Times called, "Buy American. I am." In the piece he gave two pieces of information that every investor should always understand:

  • "A simple rule... : Be fearful when others are greedy, and be greedy when others are fearful."
  • "Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."
So one of the most seasoned and successful investors of all time gave you a few bits of information: 1) When everyone wants in... be cautious. When everyone wants out... start buying. 2)The direction of the market changes well before the sentiment and the economy, so if you are waiting for the good news to invest, it will be too late.

Looking Forward

The fund company that I visited believed that their funds were positioned for a 2010 economic and job recovery. They gave great ideas, analysis, and predictions for the future of the market and the domestic and global economy. The question has thus become not if the US is going to continue to grow, but at what pace and what areas?

What Does This Mean to You?

Today's post is not about investing all of your money today, but instead more about trying to make the right decisions based on research and experience. Reevaluate your allocations, see if they are still in-line with where they should be. Should you be more aggressive or more conservative? Should you contribute more to your retirement now? Do you have your debt and savings where they should be?

Just a little reminder that while the market and economic recovery bodes well for the future, it does not mean that there are not lessons to be learned.