The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

IMS Tax Preperetion Guide 11 What a tax shelter does for you By Helen L. Call Copley News Service "Everybody, whether they make a lot of money or none at all, asks the same question -- How to do something about taxes," said Alfred Monahan, chairman of Private Ledger Financial Services. "What a tax shelter does is change income to long-term capital gains which bring down your tax bracket," Monahan said. In most cases, the best tax shelter for the small investor is the individual retirement acount. For others, there are the conven­ tional tax shelters, but these are for people who pay large amounts in taxes. These shelters are governed by suitability requirements that monitor the level of income of someone who wants to get into a tax shelter, said Monahan. For example, the requirements for more common shelters -- such as a limited real estate partnership -- could be that a person have an annual income of $35,000 and a net worth of $35,000, ex­ cluding a house. For more speculative tax shelters, the suitability requirements are very high, Monahan said. For example, an investor may have to be in the 50- percent tax bracket and have a net worth of $200,000. Brokerage houses can have even higher suitability requirements, Monahan said, adding, "We assume that someone with a lot of money is sophisticated enough to know where to invest. The suitability requirements are to protect the neophyte." The suitability requiements are used only as a guide, but bypassing the suitability requirements can lead to dissatisfied investors, Monahan said. At most brokerage houses, represen­ tatives approach clients with a finan­ cial plan based on their income, net worth and goals, Monahan said. Dif­ ferent houses specialize in certain in­ vestments. Private Ledger, for example, prefers to use mutual funds and to handle managed accounts of blocks of stock. Discount brokers taking the lead By Monica Perez Copley News Service Once a relatively unknown service, discount brokerage has become a fast- growing sector of the securities brokerage industry. In 1983, about one retail trade in six went through a discount broker. By 1987, it could be one trade in three, ac­ cording to studies conducted by Dis­ count Brokerage Advisory Services of New York. There were about 125 independent discount brokers in the United States in November 1982. In that month, Bank of America bough Charles Schwab & Co., the country's largest discounter. Following the leader, more than 3,000 banks were estimated to be offering the service by the end of 1983, either through their own facilities or by offer­ ing services provided by others. While it is customary to speak of dis­ count brokers and full-service brokers, this distinction is misleading. It dates from the early days of discounting when discounters were really bare- bones affairs. Joan Baurer is an independent Registered Financial Counselor. Her credentials include formal graduate education in investment, financial analysis, real estate, and association with a New York Stock Exchange Firm. An active member of the International Association of Financial Planners, and President of the Estate Planning Council ot McHenry County, she has been listed recently In "Who's Who in American Women." Today, discounters provide virtually the same range of services as full- service brokers with one major excep­ tion -- they don't provide investment advice. For the investor who is willing to dispense with his broker's advice, the commission savings.can be substan­ tial. The savings average about 50 per­ cent but can be as high as 90 percent on high-priced stocks with the right dis­ counter. Discounters are able to offer less ex­ pensive services for several reasons: They don't have to pay 30 to 45 percent of the commission to their broker, since they use salaried order-takers. Their overhead is lower, and they don't main­ tain a research department since they don't offer investment advice. But discounters do offer basically the same range of services as other brokers. , They handle options, bonds and stocks. They offer money funds and other interest-paying accounts, In­ dividual Retirement Accounts and Keogh plans. They will hold or deliver your stock certificates, as you instruct. (Please turn to page 33) A p r o f e s s i o n a l , comprehensive approach aimed at reducing your taxes, increasing your net worth, and helping you a c h i e v e F i n a n c i a l Security... with our expertise in any or all of the following concerns. • FINANCIAL GOAL-SETTING •WEALTH ACCUMULATION • INVESTMENT MANAGEMENT • RETIREMENT PLANNING •TAX PLANNING •ESTATE PLANNING •CASH FLOW PLANNING •PLAN IMPLEMENTATION •FINANCIAL COUNSELING •ONGOING MONITORING NO CHARGE INITIAL MEETING 815-455-4963 or 312-639-6321 JOAN BAURER & Company, Inc. Financial Consultants Registered Investment Advisor* 481 Coventry Lnnn-Suttn 98 Crystal LakeJL. A* AA AA AA AA AA AA *A AA AA AA AA AA AA AA AA AA AA A* AA AA AA AA AA AA AA AA AAA.* j ADAMS & COMPANY CERTIFIED PUBLIC ACCOUNTANTS Founded in 1947 by Elmer P. Adams Accounting/Auditing/ Management Consulting/ Income and Estate Tax Planning and Return Preparation/ . Financial Planning Fox Lake, IL (312) 587-2301 McHenry, IL (815)344-3349 c £ WW gis' mn • * • * m **