Investment Product Definitions

Mutual funds

Mutual funds are investment vehicles made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by professional money managers who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. Investing in mutual funds involves risk, including possible loss of principal. Value will fluctuate with market conditions, and the fund may not achieve its investment objective.

Stocks and bonds

A stock is a type of security that signifies ownership in a corporation and represents a claim on the corporation’s assets and earnings. A bond is a debt investment in which an investor loans money to an entity (corporation or government) at a fixed interest rate. Stock investing involves risk, including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise, and bonds are subject to availability and change in price.

Annuities

Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. An annuity is a contract between you and an insurance company; you put money into the contract and, in return, it can potentially provide a lifetime income stream during your retirement years.

There are many different types of annuities, but the potential common benefits among all annuities are that they (1) help individuals accumulate money for retirement through tax deferral and (2) potentially provide monthly income that may be guaranteed to last for as long as they live.

Withdrawals prior to age 59½ may be subject to tax penalties, and surrender charges may apply. Variable annuities are subject to market risk and may lose value. Guarantees are based on the claims-paying ability of the issuer. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal.

Alternative investments

These are investments that do not fall into the categories of stocks, bonds or cash. Hedge funds and real estate are common alternative investments and can be used to add diversification. Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital proportion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not protect against market risk.

Insurance

Life insurance creates a protection against loss of income if the insured passes away. The named beneficiary receives the proceeds to help safeguard them from the financial impact of the death of the insured. The goal of life insurance is to provide a measure of financial security for your family after you die. Guarantees are based on the claims-paying ability of the issuing company.

Business support

Insurance: Businesses, like individuals, should plan for the unexpected. We can help you with business insurance such as key-man insurance, buy/sell agreements and more.

401(k) plans: Let us help your business with a free benchmarking study of your 401(k) plan. With experienced wealth advisors available to meet at all our branches, we can bring a local feel to the support and guidance we provide to business owners and participants.

Income planning

Income planning is an important part of preparing for a successful retirement. Our wealth advisors can help you answer questions like:

• When should I draw on my IRA funds?
• How will my income keep up with inflation for the next 25 years?
• How much can I spend without running out of money?
• When should I retire?

There are concerns unique to each family, and our experienced wealth advisors can help you plan for your specific situation.

Social Security benefits

Understanding your Social Security benefits and the impact of your decisions is an essential part of retirement planning. Many members ask questions like:

• When should I begin social security?
• Will Social Security still be around if I wait to start drawing it out?

Our wealth advisors will help you answer questions like these when strategizing your comprehensive retirement plan.

Medicare & health insurance

With the rising cost of health care, a plan for retirement must include health coverage. Medicare has many changing parts and plans, which our experienced wealth advisors understand and can help members evaluate each year. Considering health care costs is a necessary part of planning for an income that will last through your retirement.

Insurance planning

Insurance is a financial safety net to provide protection in the event of your death or inability to work. There are many life insurance options and solutions. Determining the coverage that is right for you involves the consideration of your unique circumstances and financial goals. Our wealth advisors can evaluate each option and help you determine which may fit your needs best. Guarantees are based on the claims-paying ability of the issuing company.

Long-term care

Many individuals discover, while taking care of an aging family member, that long-term care isn’t an issue they want to leave to chance. Whether you’re starting to plan for the possibility of long-term care or considering it as a likely eventuality in the coming years, financial options are available for many circumstances. The wealth advisors at Mountain America can assist you in evaluating the risks and advantages of the various long-term care options.

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