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Using
U.S. Government STRIPS (zero coupon U.S. Treasuries) you can
give a Conservative Account the growth potential of an Aggressive
Investment Account.
The difference between the guaranteed face value of the STRIPS
at their maturity date (which you can choose to be anywhere
from1 to 30 years) and the discounted price you pay for them
at the time you implement this strategy, is the amount you
can aggressively invest in a diversified portfolio of quality
growth stocks and/or long term options (Leaps)
Past performance has shown that a diversified portfolio of
quality growth stocks and long term options has the potential
of increasing considerably in value before the maturity date
of the STRIPS Worst case scenario:
--If the stocks and /or options in the portfolio lose
value, (even ALL of their value) the portion invested in STRIPS
at the date of their maturity returns 100% of the original
investment! - (their face value). Please study illustrations
on reverse side.
Thus this STRIPS/STOCKS/LEAP OPTIONS Strategy allows you to
execute an aggressive growth---possibly very profitable strategy
in a conservative account while giving you the peace of mind
that in the worst of cases you conserve intact your original
investment.
The three illustrations on the below show how you can implement
this strategy with an investment of $100,000.00.
For investments other than $100,000.00 all figures will be
proportional to the percentage of these to an investment of
$100,00.00.
All figures in these illustrations are based on credit market
conditions as of February 14, 2001.
Please call our Private Client Services Group adviser for
specific proposals that fit your financial needs for:
- educational, IRA, other retirement accounts
- other life events for which you’ll need funds in the future
Illustration 1 - Two Years Time Frame
$100,000.00 initial investment With $90,000 (90%) of the original
investment principal, you acquire $100,000 face value U. S.
Treasury STRIPS maturing in 2 years.
The remaining $10,000 you invest in a diversified portfolio
of quality growth stocks and long term options. (Our Private
Client Services advisers will help you choose these).
In the worst case scenario that the stocks and options lose
all their value, at the end of the two years from the starting
date, when the STRIPS mature, you will receive from the U.
S. Government $100,000 -- which is your original investment!
Illustration 2 - Five Years Time Frame
With $75,000 (75%) of the original investment principal, you
acquire $100,000 face value U. S. Treasury STRIPS maturing
in 5 years.
The remaining $25,000 you invest in a diversified portfolio
of quality growth stocks and long term options. (Our Private
Client Services advisers will help you choose these).
In the worst case scenario that the stocks and options lose
all their value, five years from the starting date when the
STRIPS mature, you will receive from the U. S. Government
$100.000 -- which is your original investment!
Illustration 3 - Ten Years Time Frame
With $50,000 (50%) of the original investment principal, you
acquire $100,000 face value U. S. Treasury STRIPS maturing
in 12 years.
The remaining $50,000 you invest in a diversified portfolio
of quality growth stocks and long term options (Our Private
Client Service advisers will help you choose).
In the worst case scenario that all these stocks and options
lose all their value, in the year 2013 when the STRIPS mature
you will receive from the U. S. Government $100,000 -- which
is your original investment!
You can implement this strategy using different time frames
ranging from 1 year to 30 years
Be Good to Yourself!
The definitive advantage of this strategy over investments
in mutual funds annuities or working with portfolio managers
is that once you establish it you do not incur additional
yearly administrative charges, which reduce the return on
your investments.
In the case of mutual funds and annuities these administrative
charges run yearly anywhere between 1% to 3% of the value
of your investment. On a 10 year horizon, these charges reduce
your investment return on an initial $100,000.00 investment
by between $10,000 to $30,000 Implementing this simple strategy
you'll no longer be locked in underperforming overpriced funds.
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