But not everyone ages the same way, and each person's situation is unique.
So as the population ages, long-term care providers are starting to rethink the traditional retirement home model.
"The name of the game (in long-term care) is options and choices," says Cynthia Dunn, president and CEO of Judson at University Circle. "No one program is right for every person; there need to be comprehensive choices."
As life expectancies increase, aging American's want to remain in their own homes as long as possible. However, as self-sufficient as they may want to be, many seniors find themselves unable to do many of the things they once could.
"There are some people that wish they just had some services," says Dunn. "The house is getting hard to take care of ... and they need help finding someone to help."
Judson found that it could offer programs to help those who aren't ready or willing to move into the Judson community but who still need services unique to the elderly. Included in those services is a pilot program for seniors who remain in their homes but need referrals for basic house repairs and maintenance.
"This way, we know (the contractors) are reliable and that their work is good, and if there is a problem, we can help with it," says Dunn. "When you live in a house for 20 years, you don't see things, things slip away. For personal and health care there are a lot of agencies out there. What is tougher is when they need other things like house repair."
The programs create a "virtual retirement community," that includes home care, health and wellness services. The wellness component allows seniors to purchase a membership to the health facilities and programs located on Judson campus.
"These programs are targeted to people that are looking for health maintenance," says Dunn. "We have a menu of choices. Not everyone wants to work with weights or yoga, so we have a broad range of options."
Wellness programs are age-appropriate and take into consideration the issues older people face, including bone density issues surrounding osteoporosis, exercising with diabetes and physical rehabilitation. Classes range from tai chi and reiki to swim lessons and personal training. And participants can share the experience with others their own age.
"This way, they don't have to go to a Bally's. And it's never too late to start exercising," says Dunn. "With these programs, they feel better, feel more balanced and have more energy."
Judson also offers an adult day care program in conjunction with its permanent residency program, but as technology changes, so will the program options. Dunn says that with new technology, even the daycare services may go the way of in-home monitoring,.
"Technology promises to be a big part of the solution. We are hearing some exciting things that are rolling out like remote monitoring devices for heart and blood pressure," she says. "With that technology, the (long-term care industry) is ready to pop open."
The concept revolves around giving seniors and their families a host of options and some flexibility.
There are social programs, as well, with trips to the orchestra and museums, art classes and even planned care programs for residents' pets.
Dunn adds, "If we have a nude drawing class, we bring in a nude model ... It's all about keeping the body and mind healthy." How to reach: Judson at University Circle, www.judsonretirement.org
The number of senior and long-term care options is growing every day. Following is a list of resources for researching those options.
* American Association of Home and Services for the Aging, www.aahsa.org/index.shtml
The AAHSA represents more than 5,000 not-for-profit nursing homes, continuing care retirement communities, assisted living facilities, senior housing facilities and community service organizations.
* Guide to Retirement Living, www.retirement-living.com
This online directory provides general information on choosing retirement housing, long-term care and other health care options.
* LivOn: Senior Living Online Network, www.livon.com
The site provides a searchable database of housing options that includes retirement communities, senior apartments, assisted living facilities, nursing homes and continuing care retirement communities.
* New LifeStyles Online, www.newlifestyles.com
Provides information on housing options, including a nationwide database of assisted living facilities, retirement communities and long-term care facilities.
* Retirement Living Information Center, www.retirementliving.com
Provides a directory of retirement communities and senior housing options, arranged by state and community type.
* Senior Sites, www.seniorsites.com
A source for nonprofit housing and services; includes links to housing resources, information on selecting a nonprofit housing facility and a directory of national and state older adult housing associations. Source: AARP's Internet Resources on Aging
Whether it's nonpublic, material information overheard at a cocktail party, a rumor from a friend or family member or even a financial adviser, if you profit from that information, it can be construed as a crime.
"Insider trading has always been prohibited, and there is a lot of case law about it," says Shelly Goering, a securities attorney at Tucker Ellis & West LLP.
Insider trading has garnered so much attention because it destroys the public's perception of fairness in the market and therefore destroys confidence.
"When there is fraud in the market, public investors lose confidence," says Goering. "They need to know that the market is fair."
Even though white-collar, corporate crime has been so high-profile recently, what actually constitutes an act of illegal insider trading is not so apparent -- at least that's what Martha Stewart might say.
One of the problems is that before the SEC attempted to prohibit the limited and private dissemination of "forward-looking" statements with its Fair Disclosure rules, keeping key information from the public was par for the course.
"There is no statuary definition of insider trading ... it's all case law," says Goering. "Insider trading is fundamentally fraud, and it is charged as a fraud offense."
As confusing as the specifics can be, Goering says the basic are simple. You cannot profit from trading on nonpublic material information. Therefore, "it is very difficult to commit insider trading by accident," she says.
Perhaps the first question is, who is an insider?
"There are the true insiders ... directors and officers of the company who know specific corporate information, material nonpublic information," says Goering.
Any information passed on by this group and acted upon falls under the definition of insider trading and constitutes a criminal offense.
But with insider trading, there is often a chain of people involved who are also liable, including anyone who receives information or tips.
SEC insider trading cases have gone well beyond information given to family and friends; vendors, brokers and legal and financial advisers have also been charged.
"There was a case that the SEC brought (regarding) a temp, a word processing employee that was working at Goldman Sachs and passed on material information," says Goering.
The SEC also continues to prosecute cases against brokers getting advance information from the media and employees at printing companies who have seen sensitive financial documents while printing.
"If you hear something from someone that that works for the company or has a fiduciary responsibility to the company ... you have to question yourself," says Goering. "Even if you are simply passing on information, you can still be a defendant. Everyone involved in the chain is liable."
And getting caught is not worth the risk.
"You can be charged civilly or criminally," says Goering. "Restitution is common, and it can be three times the amount of the unjust profit."
And with corporate and market integrity being at the forefront of the mind of the public, Goering warns there are no special circumstances for inside traders.
"All bets are off in terms of white collar criminals receiving less penalties," she says. "It goes to the integrity of the market ... and it will continue to be high-profile." How to reach:Tucker Ellis & West, (216) 696-1114
The economy may still be uncertain, but even with increasing jobless rates and unemployment, there are areas in the legal profession that promise to grow, according to the Affiliates, a legal staffing firm. Here are six hot legal practice areas.
* Bankruptcy. In 2002, 186 public companies with a total of $386 billion in assets filed for bankruptcy, increasing the demand for firms that specialize in this field.
* Intellectual property and patent law. Many businesses are concerned with intellectual property rights and patents, and with more process patents being awarded, this area promises to grow.
* Employment law. The number of class action lawsuits is growing, especially in the area of wage discrimination and overtime disputes, due in part to complicated federal and state regulations.
* Commercial real estate. Spurred by low interest rates, real estate-related practice areas like banking, land use and eminent domain are picking up.
* White-collar crime. Recent accounting scandals have increased the public's awareness and government's pursuit of white-collar crime and regardless of whether criminal charges are filed, attorneys must advise clients on potential exposure.
* Business litigation. From toxic mold contamination to shareholder class action lawsuits, this is another area that will more than offset slowdowns in the merger and acquisitions work. Source: The Affiliates
Part of the problem with the process is that most pharmaceutical companies' idea of high-tech reporting is filling out paper forms that eventually make their way to three-ring binders.
"In an average FDA study, there are about 98,000 pages of paper generated," says Dr. Jeffrey Green, president and CEO of DATATRAK International Inc. "When the study is completed, those pages fill up a semi truck ... and once the FDA sifts through, they have to store all of that in a warehouse."
But word on the street is that even the director of the FDA is fed up with maintaining warehouses of binders. At a recent conference, he told the heads of the top pharmaceutical companies to start "getting comfortable with new technology."
Cue in Green and DATATRAK's software for the electronic collection, transmission, review and storage of clinical trial information via the Internet.
DATATRAK is one of a handful of companies vying for this burgeoning market, and with a contract that involves 3,000 patients at 350 research locations in multiple countries, it's one of the leaders.
"With approximately 10,000 clinical trials initiated annually, sponsors spend $12 billion processing investigative data," says Green about the potential of the clinical testing market. "We believe our market share could be about $4 billion in size."
Beyond ridding the FDA of huge amounts of paperwork, electronic data capture (EDC) can facilitate getting much-needed drugs to market faster and more cheaply.
"Our product reduces overall time of the study by 30 percent (from eight years to five years) ... and it improves the quality of the data by 85 percent," says Green.
The custom program also reduces the number of queries the FDA has regarding data sent from doctors, which can number 100,000 per study.
"Do you know how many pregnant male patients come up in these studies?" Green says.
He refers to it as dirty data, which can happen with a simple check in the wrong box.
"With our system, the software talks back to you and says, 'This is an incorrect answer ... it corrects the problem instantaneously.'"
Information is stored on the Internet, accessible to any doctor involved in the study and recorded in real time.
"If you're a doctor and you have patient with a problem, you can sit in front of a computer screen and go through the data," says Green. "All the doctor's office or hospital needs is a 20K speed Internet connection." How to reach: DATATRACK International Inc., (440) 443-0082
Imagining is as far as most of us will get, but whether you or anyone in your family are ready for the PGA or NBA, playing in the privacy and safety of your home is almost as good.
Whether you want to recreate your favorite or most challenging hole or install a regulation full basketball court with a slightly shorter than regulation hoop -- for the kids, of course -- your imagination is the only limit.
And as golf becomes more popular, tee times are valuable and increasingly difficult to get. Driving ranges are one way to practice, but beyond miniature golf or that Sharper Image electronic ball return putting green in your office, the short game is often neglected.
"Fifty-seven percent of golf is the short game," says Terry Elkin, president and founder of Putter's Edge, a commercial and residential custom green company. "A 300-yard drive is nice, but if you can't make a three-foot putt, what good is it?"
One option is to have a custom-built putting green installed in your backyard. With new technology, homeowners can get greens of any size or speed, along with a variety of sand traps and directional breaks.
Once considered a businessman's game, golf is becoming multigendered and multigenerational, making a home putting green more of a home investment instead of a purely personal one, says Elkin.
Versatility is another selling point. Elkin boasts that he has installed greens for every budget and imagination, with greens as small as 12 inches by 15 inches and as large as 4,500 square feet.
"We've done a number of signature holes," he says. "We can emulate any type or shape ... you can have holes that break to the right and to the left on one green."
If practicing your short game without the hassle of getting a tee time is not enough incentive, there is also the unintentional benefit of a backyard green, or in Elkin's case, a front yard green -- less lawn care and general aesthetics.
"We installed a red green," he says. "It turns out this client's favorite color was red, so we did it."
If golf's not your game, just pick another -- full- or half-court basketball, tennis, street hockey, even four-square for the kids.
Better, it is now possible to install a professional-quality custom court in as little as two weeks.
"It's great for tiny yards, where nothing grows anyway," says Bob Yanega, president and owner of Sport Court. "You don't have to mow it or water it ... all you need is a leaf blower or sometimes to hose it off."
Because each court surface is customized, there is the ability to combine sports.
"I see more of a trend in multipurpose game courts," says Yanega.
The court surface is made of a UV stable co-polymer that doesn't break down with sunlight or crack and peel with changing temperatures, and that gives more cushion than traditional court surfaces.
"For those of us who are a little past our prime, it reduces the chance of some serious injuries ... the material has more lateral forgiveness," he says.
If your own personal basketball or tennis court seems extravagant, Yanega stresses that in most cases, a custom court is less expensive than an in-ground pool and requires a lot less upkeep. Sport Court can also resurface tennis and basketball courts that are past their prime.
"I think there is a segment of people out there that don't just want to run on a treadmill. For them, it's boring and restrictive.
"They like the competitiveness of playing a game with their friends," says Yanega. "And maybe let out a little aggression." How to reach: Putter's Edge (800) 875-3151 or www.putters-edge.com; Sport Court, (440) 498-6000 or www.sportcourt.com
But even successful business owners may think they know more than they do about some basic business principals.
"One of the secrets to business is knowing the questions to ask," says Peter Constantino, CPA and partner at C&P Advisors. "You need to know about the businesses life cycle. There are different cycles that require different knowledge."
See how your business IQ holds up to a few basic questions.
If you are negotiating to buy a business, you should generally try to buy ... ?
A. The stock of the company
B. The assets of the company
C. The goodwill of the company
The answer is B.
"The buyer want to buy the assets," says Constantino. "For one thing, when you buy the stock ... you step into the company's legal shoes, and all liability is yours."
If you are negotiating to sell a business, you should generally try to sell which of the above three?
You guessed it -- A.
The answer is the opposite if you are the seller. Selling the assets is likely to result in at least some ordinary income that is subject to higher tax rates.
Are Christmas gifts given to customers or clients deductible?
Yes and no.
You can deduct a client gift, but only up to $25 per recipient, per year.
"The rule is you can deduct client expenses that are reasonable," says Constantino.
But these expenses are gone over with a fine-tooth comb in the wake of an audit.
If you operate your business as an S-Corp, must you take a salary?
The answer is somewhat of a qualified yes, if you don't want to do a lot of explaining to an IRS agent somewhere down the line.
"Because an S-Corp is a pass-through entity, it may be tempting to take a lower salary or no salary so not to pay as much in taxes, but the IRS requires you take a 'reasonable salary,'" cautions Constantino.
What advantage does an LLC have over a corporation?
A. Owners are liable for fewer losses than a corporation.
B. LLC owners can determine their own allocation of profits and losses.
C. LLC rules differ from state to state.
The answer is B.
Unlike a corporation, profit and loss allocation in an LLC does not have to be based on a pro rata share of ownership.
"With an LLC, you get the pass-through like an S-Corp, but it is great for investment groups because there are less limitations about who can be a member (and) ... has more equity options," says Constantino.
The definition for "break-even" is ... ?
A. The point at which a company's sales are covering only overhead.
B. The point at which sales and cost are equal.
C. The point at which gross profit is 50 percent.
The answer is B.
Break-even is when revenue covers the cost of running the business.
"Every company should be aware of its break-even point," says Constantino. "You need to know how many units cover your fixed costs ... to be able to react if your fixed costs rapidly alter." How to reach: C&P Advisors, (216) 831-7171 or www.cp-advisors.com
Bad business form
Snapping your fingers and yelling for your waiter is more than bad form, it's a bad business decision.
According to a group of executives surveyed, being rude to the waitstaff tops the list of the fastest ways to make a bad business impression at a breakfast, lunch or dinner meeting. It's second only to being late for the meeting.
The survey, developed by Creative Group, a marketing and advertising staffing firm, asked professionals from Fortune 1000 firms, "Which actions hurt the chances of impressing a current or potential client the most?"
* 50 percent said being rude to the waitstaff is the biggest faux pas one can make
* 36 percent regarded tardiness as a sign of disrespect
* Displaying poor table manners and dressing too casually garnered about 5 percent each
So next time, if you lose your tempter at a waiter, you may also lose your client.
Preparing for risk
More than one-third of the nation's leading companies report they are not sufficiently prepared to protect top revenue sources and have room for improvement, according to the 2003 Protecting Value Study.
This study was conducted by commercial and industrial property insurer FM Global, the Financial Executives Research Federation and the National Association of Corporate Treasurers. It polled nearly 400 CFOs, treasurers and risk managers at national and international companies from a broad variety of industries.
Every company surveyed said that a major disruption to a top revenue source would have a negative impact on earnings, with 28 percent stating such an event would threaten business continuity.
Anthony Hodel knows more about business than some other business people will ever know, and a portion of that knowledge comes from the people he employs.
"I listen to everybody ... You can get a lot of feedback from employees and customers from all walks of life," says Hodel, CEO of Platinum Warranty Corp., a credit and gap insurance company.
Since 1998, when Hodel quit selling cars and went into the business of providing car owners, banks and dealerships with insurance, Platinum has grown organically and expanded its product line by integrating technology and providing accountability.
"I know the other side, the customer, and what they are looking for," says Hodel. "We are black and white, we deal with people candidly. I don't understand how business people use any other tactic."
Technology has provided the other part of Platinum's growth. Thanks to a new integrated online system, customers can go to a Web site, shop for a warranty and enroll online, directly dealing with Platinum without having to wait for a dealership to process paperwork.
"With the new technology, we were able to acquire some big key accounts," says Hodel. "Last year, 2002, was a big year for us. We grew 177.78 percent. We brought everything in-house. And now we have more contracts with less payroll expense."
Hodel believes his company has been successful in part because it is flexible and responsive to the needs of the customer.
"Part of it is the economy today. The consumer is seeking alternatives," he says. "They search the Internet and do their own due diligence and save money by buying direct."
As the company has grown beyond its original products -- including emergency roadside and gap insurance -- Hodel plans to continue expanding into new markets and adding staff.
"I promote from within, regardless of whether the job requirements are perfectly filled or how they look on paper," Hodel says. "I look at their demeanor and how they treat the office, their surroundings and others, because I believe that's what reflects back into the company." How to reach: Platinum Warranty Corp., (800) 692-KEYS or www.dealersprofit.com
In 2000, 35 percent of international travel by U.S. residents was work-related. Each year, 7 million to 8 million Americans travel to countries where malaria is present; in 1998, 636 travelers returned infected with the disease.
"Companies need to be aware that when employees travel, they need to make them safe," says Joyce Almasy, R.N., of Passport Health, a national travel health company that consults with traveling employees. "OSHA has recently gotten into the picture and issued a tech bulletin regarding the safety and health of employees and international travel."
Almasy says there is no one way to stay safe and healthy while out of the country. Different destinations require different precautions and medications, but with a little education, travelers can familiarize themselves with what infectious diseases they may be exposed to.
There are specific threats for employees traveling to underdeveloped and tropical countries.
"The three to watch out for are Hepatitis A, which is transmitted through food and water; typhoid, also transmitted through food and water; and malaria ... transferred by mosquitoes," says Almasy. "We do encourage a personal first aid kit with what you use when you get ill -- decongestants, topical antibiotics, antacids. Whatever you use at home," take with you, she says, because buying medication in another country can be problematic. "It could have a different name, or be hard to come by."
Know your blood type, and if you're traveling to underdeveloped countries, to bring a wound kit with, among other things, a sterile syringe.
"I've heard stories of people getting sick in these countries, and they are sent out to buy a syringe from a street vendor," says Almasy.
Depending on the length of the trip, some businesses provide employees with supplemental travel insurance that covers hospitalization and medical transportation.
"Many people don't know this, but Medicare doesn't cover anything overseas," she says.
The optimal situation, however, is not to get sick in the first place, and Almasy has some suggestions for staying healthy.
* "No. 1, wash your hands in soap and water often," she says.
* "Only drink bottled water ... and beware of ice cubes."
Also beware of water bottles without a seal, and use bottled water when brushing your teeth and washing your hands before changing your contact lenses.
* "If you can't boil, cook or peel it, don't eat or drink it," says Almasy.
Lettuce is a good example of a food that is prone to harbor disease because it can be grown in contaminated soil. Avoid anything unpasteurized, undercooked or from a street vendor.
* Don't go barefoot, and get a tetanus shot. Don't swim in fresh water, unchlorinated lakes, pools or rivers.
* Make sure all prescriptions, including those for the trip like anti-malaria drugs, are with you at all times. In some cases, it's wise to have an antibiotic prescribed before the trip, but don't take it unless needed.
Employers and employees should take Centers for Disease Control warnings to heart and follow medical instruction.
"We are spoiled, when you think of how many diseases we have eradicated," Almasy says. How to reach: Passport Health, (216) 591-9380 or www.passporthealthusa.com
Most dangerous places
There are some places best avoided by American travelers right now. The U.S. State Department has issued travel warnings for the following countries.
* Liberia -- Rebels are engaged in clashes with government troops in a number of areas throughout the country. The president of Liberia has called for the resignation of his cabinet, which may lead to further instability.
* Yemen -- The security threat to all American citizens in Yemen remains high due to credible reports that terrorists have planned attacks against U.S. interests in Yemen.
* Kenya -- Terrorist actions may include suicide operations, bombings or kidnappings. U.S. citizens should be aware of the risk of indiscriminate attacks on civilian targets in public places, including tourist sites.
* Saudi Arabia -- This travel warning is being updated to inform U.S. citizens that the Department of State has ordered the departure of all non-emergency personnel and family members from the U.S. embassy and consulates in Saudi Arabia.
* Iran -- Tensions generated by the situation in Iraq have increased the potential threat to U.S. citizens and interests abroad posed by those who oppose U.S. policy. Some elements of the Iranian government and population remain hostile to the United States.
"It wasn't until sometime in the '60s that banks decided to get into the consumer credit industry," says Bob Weltman, managing partner at Weltman, Weinberg & Reis. "Before, it was mostly retail and oil companies."
Weltman, who joined the firm where his father was a partner, realized the potential to create a niche practice that offered collections and legal services to creditors on credit cards and loans.
Under Weltman, the firm, founded in 1930 as Gardner & Spilka, expanded from collection services and bankruptcy to include foreclosures, litigation and probate collections.
"A traditional law firm has one or more support staff per attorney," says Weinberg, adding that only 80 to 90 of his more than 750 employees are attorneys. "We are more of a business than a traditional law firm because of the ratio of non-lawyers to lawyers."
To handle the volume of work for the expanding firm, Weltman trailblazed in an area many attorneys have yet to really embrace -- technology. The firm is now updating its entire computer system. The technology is customized, the process is taking over two years and the price tag is approximately $2 million.
"Technology is really a driving force for us," says Weltman. "In order to manage the volume, we had to be highly computerized. Our work requirements are much tighter than the collections agency. We are expected to do the same work and operate at the same efficiencies, but because we provide legal services, we are audited."
The ability to litigate is one of the firm's point of difference from a collections agency, but it also poses challenges. Laws in each state are different, and marketing for law firms is restricted.
Weltman has no plans to rest on his laurels, which include eight offices in three states. Expansion is always on the horizon, but like a true entrepreneur, he continues to train new partners himself.
"I enjoy working the files as much now as I did the first day," he says. How to reach: Weltman, Weinberg & Reis Co., (216) 685-1040 or www.weltman.com
Lower value, albeit usually not a good thing, can work in favor of family owned businesses looking to transfer ownership to the next generation.
"Now is a good time to be thinking about succession, in part because the economy is down," says Cindy Johnson, an accountant at Bober, Markey, Fedorovich & Co.
The benefits are apparent when drafting a succession plan and gifting stock.
"There is a big opportunity in term of gifting," Johnson says. "We are looking at the historical income stream to see the value of the business, and the last few years for many haven't been so good. Because of these poor results, parents can gift more shares of the business to their children."
And if planned correctly, gifted shares of stock may also be discounted to less than the fair market value.
"It's a great tool ... it helps keep the value down and is recognized by the IRS," says Johnson.
Valuation discounting requires an analysis of the fair market value of the assets, then discounts on those assets can be applied elsewhere.
One discount applies to family limited partnerships, in which senior family members contribute assets (shares or stock) to the partnership but retain control.
And while a parent can transfer the entire value of a business into a limited family partnership, the benefit is greater if only a minority, noncontrolling share is transferred, allowing the assets to be discounted according to minority interest rule.
"It is one of the big things in wealth preservation," Johnson says. "What kind of position is (the business owner) in, and what is the value of the assets and the liquidity of those assets?"
The discounts correspond with the degree of influence the shareholder has in the company and normally will not exceed 25 percent to 30 percent.
There is also a discount for the lack of marketability derived by comparing the value of publicly-traded stock with privately-held stock.
"Smaller, closely-held businesses don't have the same access to the marketplace," Johnson says. "If I own shares in IBM and I want to sell them, I just call my broker and sell ... If I'm invested in a smaller company, the market is different."
Discounting done properly and within IRS guidelines can save a succession plan almost 50 percent of its value.
Johnson cautions, however, that navigating the legal, tax and financial challenges of succession planning is just part of the story. Succession and valuation are as much emotional as quantitative for those who spent their lives building a business.
"It's not just preparing the younger generation for taking over the company, but preparing the founder to step aside," she says.
And devaluing someone's life work can be emotionally charged.
"It is a very big deal," Johnson says. "In many cases, it is the scorecard of someone's life." How to reach: Bober, Markey, Fedorovich & Co., (330) 762-9785 or www.bobermarkey.com
In recent years, the IRS has increased its audit activity for gifts of limited partnership interests in an effort to attack perceived abuses of the use of discounts.
Also, the IRS has disallowed a discount when a family limited partnership was formed shortly before the death of an individual, ruling in those cases that the partnership was an artificial attempt to depress the value of the individual's assets.
To keep the IRS from disqualifying your valuation, it's a good idea to follow some basic guidelines, especially when valuating a business.
According to the IRS, a qualified appraisal:
* Is not done earlier than 60 days before the transfer date.
* Is prepared, signed and dated by a qualified appraiser.
* Includes a description of tangible assets transferred, with any terms of conditions, and the appraiser's full name.
* Lists the appraiser's qualifications.
* States that the appraisal was performed for income tax purposes.
* Provides a date and method of valuation.
* Reveals the fee arrangement between donor and appraiser.
The case tragically illustrates the importance of diversification. You can't escape the stories of Enron employees who had their proverbial eggs in one basket.
In his job as regional director of investments at Cleveland Financial Group, Azim Nakhooda has seen many an executive with portfolios heavy in their employer's stock. "We have seen some portfolios with as much as 70 to 100 percent in company stock," he says.
The problem with allocating most or all investment dollars toward the company can mean a double whammy if problems hit.
"You have to remember that 99 percent of the time the company match is coming in the form of company stock," says Nakhooda. And often, that match is not flexible. "You can't get on a touch tone phone and change it like your 401K."
It is also important to take into account the stringent insider trader rules that dictate large sales of stock by an employee. "Because of the SEC rules you don't have the flexibility and movement you have with other investments," he says.
So what can you do? Well, don't just sell off stock without taking a look at the tax implications. Even if you lost money this last year, don't be so sure that means you won't realize a capital gain when tax time rolls around. If you are going to sell make sure you are well aware of the basis and how that will affect your tax.
"Always match gain and losses, just picking the best rate of return and you may end up paying half in taxes," he says.
According to Nakhooda, those capital gains are going to hurt even more in this economy.
"They don't care about taxes when it's (stock) up 30 percent," he says. "But when it's down…"
How to reach: Cleveland Financial Group, (216) 595-4923