This trainer needed financial training: Cassandra Mack learned to look beyond today for a solvent tomorrow.Social worker, entrepreneur, author, public speaker--Cassandra Mack was a lot of things, but "investor" wasn't one of them. That changed after a chance meeting with a childhood friend, Ivory Johnson, director of financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against at the Scarborough Group, an investment advisory firm in Annapolis, Maryland “Annapolis” redirects here. For other uses, see Annapolis (disambiguation). Annapolis is a city in the United States of America with a population of 36,408 (July 2006 est.), the capital of the State of Maryland and the county seat of Anne Arundel County. . "We grew up together," says Mack. "Ivory told me that I needed to start investing. What's more, having my own company [would allow] me to cut my taxes while I put money away for retirement," says Mack, who in 2000 started a human relations human relations npl → relaciones fpl humanas consulting company, Strategies for Empowered Living, which provides training to human services organizations. "I didn't do any real investing then. I had a small bank account and that was about it." Today, Mack has a six-figure retirement account, a college fund for her 2-year-old, and a plan for the future. New York-based Strategies for Empowered Living is set up as an S corporation, so the company's earnings flow through to Mack's personal tax return, without being taxed at the higher corporate rate. Those earnings, in turn, can be sheltered from tax by a simplified employee pension (SEP 1. SEP - Someone Else's Problem. 2. (tool) SEP - A SASD tool from IDE. ) plan. The paperwork is minimal, and the money she invests in her SEP plan reduces the taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. she reports to the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. , to New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of State, and to New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Tax-deductible contributions to a SEP can be as much as 20% of self-employment income, to a maximum of $44,000 in 2006. "In the three years since I've set up this plan," says Hack, "my account has grown to about $120,000. I try to make monthly contributions of $500 so it's like paying any other bill." Mack's account has grown not only because of regular contributions but also because of appreciation within the investment accounts. "Cassandra's SEP plan is invested in stock funds," says Johnson. She's investing with a long-term horizon, and stocks have been outstanding long-term performers. "About 65% is invested in U.S. stocks and 35% is overseas," says Johnson. "That's a fairly large allocation to international stocks, but I think there's lots of opportunity in foreign companies now." Johnson is especially upbeat about India. "It's the largest democracy in the world," he says, "with a highly-educated work force. U.S. companies are outsourcing work there so Indian companies are likely to do well." Of the 35% of Mack's portfolio that's invested overseas, about 5% is in emerging markets such as India. Small- and medium-sized foreign companies account for another 5% of Mack's portfolio. "We're hoping to own the next Comcast in Taipei or the next Jiffy A fraction of time that has numerous interpretations depending on who uses it. It may refer to one computer clock cycle, one nanosecond, one millisecond or one AC power cycle. There may be others. See nanosecond. 1. Lube in Bangalore," says Johnson. "On the domestic side, I have been increasing her exposure to energy companies." Although Mack's SEP is fully invested in stocks, she has conservative holdings, too. "Ivory told me that I should keep some cash, in case of an emergency," she says, "so I have a money market fund." With a balance around $15,000, this low-risk cash reserve can provide her with several months of spending money, if needed. Mack's new priorities include saving for college for her son, Briston, and funding her retirement. She has opened a college fund for Briston with $5,000 stowed away thus far in Vanguard's New York 529 plan. |
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