Have you looked at your bank statement lately? Depressing, isn’t it? Short-term T-bonds offer only a slightly better return. And don’t you even think about buying intermediate or long term bonds. If interest rates go up, you’re stuck with a low interest asset which probably won’t even match the rate of inflation. Your next choice is the stock market which has been suffering from a stomach churning roller coaster ride and it doesn’t seem that it will be getting any better.

Where to turn if you are a conservative investor yet need to generate a consistent, positive cash flow? Consider high yield utility stocks. Most utilities, by their very nature, do not have large swings in their prices. Do some research on the stocks listed below. I have selected them because you should always diversify your portfolio over various sectors. Look at their earnings per share, return on capital, see whether analysts recommend buy, sell or hold, how much debt they carry and what their plans are for the future. For example, some states are requiring that public utilities derive a certain percentage of their power from renewable sources. Those standards will impact their bottom lines, either negatively or positively. That should give you a pretty clear picture of whether they will provide a consistently high yield. When you do your research you also want to know if their earnings are projected to increase in 2012.

*Companhia Energetica is a Brazilian utility.

As with all stocks, you should always do your own research before making any purchases. You need to make sure that a business is generating enough cash to pay its dividend. And beware – an extremely high yield is usually a sign that a business is in trouble financially.

Disclosure: The author has no positions in any of the stocks mentioned.

By
Gerri Green

Yes, I’m being facetious. Think of the shape of a dumbbell as an investing tool. Follow me as I give you one way to plan for your financial future.

In case you haven’t noticed, the stock market has been extremely volatile the past 4 years. But out of this volatility has emerged a few interesting trends. Senator Bob Corker, speaking on MSNBC said 88% of the wealth is controlled by the top 10% of the population. On the other end of the spectrum are the growing numbers of people sliding into poverty levels. And fewer and fewer people are classified as middle class. If you analyze these trends and compile them the result is a dumbbell shaped pictograph. A bubble of the rich on one end, the middle class in the middle and another bubble of the poor on the other end.

How can you use this information when it comes to investing your hard earned dollars? Obviously, the wealthy have more discretionary income than they know what to do with. So research stocks like Tiffany’s, Coach, Macy’s, Nordstrom’s, Ralph Lauren and Daimler/Chrysler. All through this downturn, the rich have been patronizing these businesses, thus keeping their stocks from being battered. For example, Ralph Lauren’s Return On Investment is 20.46% year to date.

Now how about all those people who have lost their jobs, their houses, those people who are saddled with mounting debt? Those senior citizens who have to keep on working, if they can. Everyone in this group has to eat, has to live somewhere, and wants to have some form of low cost entertainment. Many companies have taken advantage of this growing market over the past 4 years. Who are some of these companies? First of all, Walmart and McDonald’s should be at the top of your list. Second, Dollar Store, Dollar Tree, Big Lots and Family Dollar. For entertainment I recommend Netflix. They have had financial troubles lately but many analysts feel the company has identified their problems and it is ready for a turn-around. At this point in time I would keep a watch on Groupon as more and people are turning to using coupons in greater numbers. Groupon is also having their share of financial troubles, but if they can remedy their cash flow problems, they will be a good buy. Lastly, I recommend REITS (Real Estate Investment Trusts) that specialize in residential rental properties. This has been a banner year for rental property. People who can no longer afford to buy or maintain their homes are renting apartments in droves. My REIT recommendations are Avalon Bay Communities. They specialize in luxury apartments. Home Properties, Inc. has a 4.55% yield and BRE Properties, Inc. has a 3.19% yield.

Remember, keep an eye on your investments because as the economic environment improves, the yields on these stocks and REITs will no longer give you these same returns. My investing mantra is: “Always have an exit strategy.” What is my exit strategy? I will save that for another article.

Disclosure: I have positions in Walmart and McDonalds.

It’s everyone’s dream to win the lottery, but you have to take some very important steps to keep that dream before claiming your winnings.

1st Step
DO NOT TELL ANYONE This is your first and most important step. Do not tell your children, not your parents, not your closest friend. Obviously, if you are married, you will have to inform your spouse. Why do I emphasize not telling anyone? Because it will not take long for your phone to start ringing incessantly and people knocking at your door. They will all be begging for money and they will all have heart-breaking stories. In fact, several years ago, someone tried to kidnap a lottery winner. Therefore, until you have in place a team of financial professionals, mums the word.

2nd Step
The 2nd step is almost as important as the 1st. Print your name clearly on the back of the ticket-one name only and enter your address and signature. Make several copies of the ticket, both front and back. Keep the copies with you. Then go to your bank and rent a safe deposit box and put your ticket in the box.

3rd Step
The 3rd step is to find a tax attorney. This search will not be simple as most of us have never had a need for a tax attorney. If you have a general purpose attorney, ask him or her for a referral to a tax attorney. Make it clear that you want an attorney that specializes in tax law only. If you don’t have an attorney but have an accountant, ask him or her for a referral. Make sure your request is in confidence. Before you contact the tax attorney, go online to your state’s consumer protection agency and see if the attorney has any outstanding complaints or lawsuits against him/her. Also go to your state’s bar association and research if the attorney is in good standing with the bar association.

Contact the tax attorney by telephone, not email. Create a list of questions you want answered at the meeting. Your list should include the following:
• Should I/we form an LLC, an S Corporation or a C Corporation? All of these legal entities limit your liability in case someone sues you and they have positive tax consequences.
• Should I/we take the money in one lump sum or as an annuity?
• What is the best way to give some of the money to my children/parents/friends and how much?
• How much of my after tax winnings should I spend each year without depleting my principle? (This question may be better answered by a certified financial planner.)
• Could you refer me to a Fee-only Certified Financial Planner?

When you meet with tax attorney, take notes and if you can, take someone with you who you trust. Make sure you understand all the attorney’s answers. If you don’t feel satisfied with the attorney’s advice, get up and leave. You want someone who will have your best interests at heart. You need a top-notch team surrounding you as they will be working with you for a long time.

Remember all this preparation is before you contact the lottery authorities. You want to have all your financial and tax issues in place so you know exactly how you’re going to handle all that money.

4th Step
LEARN TO SAY NO. As you can imagine, you and your family’s life will change. Many lottery winners say they wish they had just done nothing for several months or more, just to get used to everything. Turn to your financial advisors to make informed decisions. You can afford it now. Change your phone number and make sure it is unlisted. Get a post office box for your mail. As I said in the beginning of this article, you will have relatives, friends, strangers, charities, political parties, etc. pressuring, threatening and manipulating you to get some of your money. Just tell them they have to talk to your financial advisors.

Now if you should ever win the lottery, you are well prepared to keep that dream solvent.
Good Luck!!