Investments & Investment Advisory Services

Since 1983 Anthony J Pettola Jr has been providing investment services. Currently we provide a full service investment operation which includes but is not limited to; multiple mutual funds families, multiple variable life insurance and annuities companies, individual stocks and bonds (NYSE, OTC, etc.), government securities, brokerage certificate of deposits, alternative investments and more.

Investment Alternatives

 

The following is an overview of investment alternatives.

Money Market Funds:

These funds invest in sort term money instruments.  They are like checking accounts that pay short term interest rates.  Your money is completely liquid and may be withdrawn by check or a wire transfer.  This type of fund is not generally insured (unless issued through a FDIC or FSLIC Bank) however; the diversity of the money market portfolio provides a high level of safety.  When comparing funds you should note the minimum balances required to open and continue accounts, limitations on deposits and withdraws average length to maturity of the portfolio and current yield.

Certificates of Deposits:

These are time deposits with the banks.  They are insured by the FDIC or FSLIC and are available in various maturities (time frames) with the longer the maturities generally paying more interest.  Certificates of Deposits usually requires larger denominations and there are penalties for early withdraws.  The interest is fully taxable.

U.S Savings Bonds:

Series E and EE government savings bonds are sold at a discount from face value.  They may be redeemed at the amounts that increase as maturity approaches.  Taxation on the interest of these bonds is usually deferred to maturity. The interests earned on these bonds are always exempt from state and local taxes, but subject to federal income tax.

Series H and HH bonds do not have a tax-deferral feature.  They are sold at face value and pay interest semi-annually.  The interest is taxable in the year received.

U.S Treasury Bills, Notes, and Bonds:

These are direct obligations of the U.S. government and as such are very safe investments.  They are exempt from state and local taxes, but are fully taxable for Federal income tax purposes.

The primary difference between  these obligations is length of maturity; bills extent between 90 days and one year; notes are available in maturities greater than one year and less than ten years; bonds have terms greater than ten years.

Another investment difference is that bills are sold on a “discount” basis, while notes and bonds are issued at face value.  The discount works as follows: if you purchase a $1,000 treasury bill, you would pay $900 and get back $1,000.  The interest is $100 but computed on an investment of $900.  This represents a return of 11.11%.

Tax-Deferred Annuities:

Single Premium and Flexible Premium Deferred Annuities offer the benefit of:

  1. Safety of principle (Fixed Annuity) or a hedge against inflation (Variable Annuity).
  2. Tax-deferred accumulation of income
  3. Tax-favored income tax treatment upon retirement

A Fixed (Guaranteed) Annuity:

These annuities pay a guaranteed interest rate, as specified in the contract.  All contributions grow tax-deferred until withdrawn, typically at retirement, and limited annual withdrawal privileges are allowed for liquidity.  Annuities also can provide monthly payments for life which begin immediately or at a future date.  In a fixed annuity, monthly payments remain level throughout life.

Fixed Index Annuity:

This annuity combines the investment opportunities of variable annuities with the guarantees against loss of a fixed annuity.  These annuities allow the policy owner the opportunity to determine where their cash is placed.  These policies offer a number of different options as to where the money is placed.  These include but are not limited to:

  1. Participation in the S&P 500 index with no loss on negative performance and participate in the positive returns.  Based on monthly, one year or multiple year strategies.
  2. Some policies provide options to invest in other indexes such as: Dow Jones, Bonds and international
  3. guaranteed one year interest rates (similar to bank CD’s),

Variable Annuity:

This annuity has a value and a rate of return determined by the performance of the underlying securities in the variable account.  The amount of the initial and the subsequent monthly payments will depend on the value of “units” held at the time of each payment.  Values are not guaranteed as would be the case in fixed annuities, but there is a potential hedge against inflation.

Permanent (Whole) Life Insurance:

It is generally recognized that life insurance is purchased to protect the family from financial hardship in the event of a family member’s death to meet estate liquidity or business needs.  Additionally, life insurance may be viewed as an investment with significant tax advantages (under current tax laws). Death benefits are received income tax free and policy cash values accumulate on a tax-deferred basis.  Additionally, loan provisions (fixed or variable) allow for the borrowing of policy cash values.  Such borrowing can be for any purchase and substantially reduce the cost of life insurance by utilizing the loan provisions to pay all or a part of premiums as they come due.

Universal Indexed Life Insurance:

These life insurance policies have a guaranteed death benefit to the beneficiaries and also build cash value.  The cash value is linked to a stock market index, such as the Standard & Poor’s Index or NASDAQ also there is usually an option of a guaranteed interest account.

The cash value will not decrease in value due to market conditions.  There is a fixed minimum guarantee that prevents the cash from decreasing due to stock market losses and only participates on the positive returns of the market. They also have a cap on the rate of return, regardless of how well the index does. The cash can only appreciate and will not decrease in value unless the owner withdraws funds.

Universal Variable Life Insurance (VLI):

A variable life insurance policy is similar to a whole life policy, except with market-based funds as the underlying investment for the cash value. Any contract that provides variable benefits must state that the dollar amount of the benefit is not guaranteed and will vary according to the investment’s per­formance. The policy owner assumes the risk for making the investment choices.

Variable Universal life offers a guaranteed minimum death benefit. The higher the return on the underlying investments, the greater the death benefit and the policy cash values will be.

There are basically two types of variable life insurance:

1. Scheduled premium VLI, which requires a level periodic premium to be paid to keep the policy in force. The insurer guarantees a minimum death benefit equal to the initial face amount of the policy regardless of how the separate accounts perform. Policy loans are limited to 75% of the policy’s available cash value.

2. Flexible premium VLI, which closely resembles a variable universal life policy.

Municipal Securities:

These are securities issued by government agencies or subdivisions thereof.  The three common methods of purchasing municipal securities are in the form individual issues, fixed unit investment trusts and municipal bond mutual funds.

The fixed unit investment trust is an entity formed to purchase diversified selection of municipal obligations.  Shares (units) in the trust are sold to investors, allowing investors ownership in a group of municipal obligations and diversified portfolio which reduces risk.  The trust is generally held to maturity with little or no trading in the underlying securities.  All income from the municipal bond trust is free from Federal taxation and in some cases from state tax and local as well.  These tax yields may be significantly greater than the taxable yields that are currently available from the other investments.

Municipal bond mutual funds are open-ended funds which purchase, sell and manage a portfolio of municipal bonds.  The active management would generally result in less price fluctuation than would occur in a unit investment trust.

Mutual Funds:

These are open-ended investment accounts continuously selling shares to the public, representing ownership in a portfolio of securities.  The concept of mutual funds is that many investors with similar goals combine their resources in order that they obtain investments in a large number of securities (diversification reduces risk) managed by professionals.

There are many types of mutual funds including stock, corporate bond, balanced, municipal bond and specialty funds.  Stock funds invest primarily in common stock an may be broken down further into aggressive growth funds, growth funds, growth and income funds, and income funds depending on objectives and investment strategies.  Bond funds are generally of three types:

  1. U.S. government
  2. investment grade corporate bond funds
  3. High yield bond funds emphasizing in medium and lower rated bonds

Balanced funds combine stocks and bonds in one fund with the objective of preserving capital.  Municipal bond funds invest in Municipal securities providing the investor with tax exempt income.  Specialty funds may invest in gold, silver, commodities, international securities or any other specialized area.

A popular approach in the mutual fund industry is the “family of funds” approach.  A family of funds is an organization with several funds having different objectives and investment strategies.  The benefit of investing with the family of funds is the accompanying exchange privilege.  This enables the investor to alter his/her investment strategy to meet changing economic conditions or personal objectives by switching from one fund to another at little or no charge.

Bonds and Common Stock:

Basically, there are two ways you can participate in the business of a corporation.  You can lend it money (a bond), or you can buy ownership (stock).

The benefits of stocks are:

  1. No income tax is due on a company’s reinvested earnings, whereas tax is due on dividends received.

The benefits of bonds are:

  1. Offer competitive current yields
  2. Lock in current yields for a number of years

Real Estate:

Individuals invest in residential real estate, apartments or commercial real estate (office complexes, healthcare facilities, low income housing, shopping center, etc.) with the intention of managing and renting the properties for income. Other opportunities are undeveloped land that is believed destined for growth.

These types of investments are usually used by wealthy investors because of the risk inherited in these investments and require the ability to manage the properties and secure financing on favorable bases.

Real Estate Investment Trust (REITs)

A REIT is a corporation whose business is real estate. Using a pool of money raised from investors, the REIT purchases or, less frequently, the mortgages on buildings. A REIT has a management team that’s responsible for overseeing the day-to-day operations is profitable. Among other things, that means the REIT is focused on producing a steady stream of revenue for its investors.

REITs are designed to provide a stream of income, tax benefits and the possibility of growth through appreciation of the underlining investments.

REITs can be:

An Equity REIT that buys rentable property. Its income is derived from the rent it collects.

A Mortgage REIT buys the mortgages on rentable property, either of a specific type such as hotels, or a broad range of properties. Its income is derived from mortgage payments.

A Combination REIT owns both rentable property and mortgages on rentable property.

There are two types of REITs:

Publicly Traded:

  1. Share purchase by individuals and institutional investors
  2. Active secondary market
  3. Positive correlation to traditional investments
  4. Affected by market forces

Non-traded:

  1. Shares purchased traded by qualified investors
  2. No formal secondary market
  3. Negative correlation to traditional investments
  4. Tend not to be affected by market forces

Equipment Leasing:

Accredited or Qualified investors purchase share of equipment leasing units through Direct Participation Programs (DPP) to put money into the equipment that is being leased and benefit from the steady income the lease generated. Investing in equipment leasing programs generally is for a term of 8 to 12 years, divided into three phases.

Offering Period (about 2 years)

  1. Investor’s money is pooled by the DPP sponsor
  2. Equipment to be leased is purchased
  3. Diversified purchases reduce risk
  4. Provide long-term income
  5. Capitalize on growth in new industries
  6. Offer diversification
  7. Help reduce portfolio volatility

Operating Period (about 5 years) objectives is to generated income

Liquidation Period (about 3 years) leases mature and equipment is sold or re-leased

  1. Provide inflation and recession hedges
  2. Are non-correlated to stock and bond markets

 

Workshops

Anthony J Pettola Jr, CLU has provided continuing education credit workshops for insurance agents and client professional advisers since 1996. These workshops provided an overview of the concepts and products addressing the various planning concerns of their clients.

We offer interactive client workshops on many topics that are designed to provide a basic understanding of the products and services needed to address the challenges in their desire to provide family and business financial security, employee benefits, retirement and elder planning, business continuation and executive planning and estate planning.

Family Planning Workshops

Our family planning workshop includes an overview of contingency planning, children education funding, elder planning and much more.

Business Planning Workshops

The business planning workshop includes an overview of employee benefits programs, retirement plan options, executive fridge benefits, business continuation and succession planning and the challenges of the various options.

Retirement Planning Workshops

In our retirement planning workshops, we discuss the various health care needs in the senior years, income resources, services resources, when is the best time to start planning and the necessity to make it a family affair.

Estate Planning Workshops

Our estate planning workshops, discuss the importance of Wills, Power of Attorney, Health Directive, use of Trusts, as well as estate transfer cost and other programs.

Professional Adviser Referral

We have the ability to provide competent professional adviser referrals in most planning areas.

 

 

 

 

*All investments have an element of risk, (be it loss of capital or buying power) and the potential of return/growth. Carefully consideration should be used according to the appropriateness to investment for every investor regarding their goals and risk tolerance.  

*Variable and investment products are subject to investment risk, including possible loss of principal. Before investing, carefully consider the investment objectives, risks, limitations, charges and expenses of the product and its underlying investment options. This information can be found in the product and investment option prospectuses. Prospectuses can be obtained by calling my office. Please read carefully before investing.

 

 

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Securities and investment advisory services are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and A.J. Pettola & Associates are not affiliated. Additional products and services many be available through Anthony J. Pettola, Jr. or A.J. Pettola & Associates that are not offered through AIC. Securities products are limited to residents of STATES; Pennsylvania, New Jersey, New York, Delaware, Maryland, Florida, Indiana, Massachusetts, New Mexico, Kentucky, North Carolina, Virginia and West Virginia. This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your Registered Representative. Read it carefully before you invest or send money. A representative from A.J. Pettola & Associates will contact you to provide requested information. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.