Dear Friends and Family,

We like to use August as a time to review 401(k)s and retirement plans held outside of Katz Family Financial. The funds in these plans tend to be placed on autopilot and at times neglected. This review allows us to examine the performance and make any rebalancing suggestions. We invite our clients to fax their current elections and list of available investments to 1-301-542-0033.

Some notes on diversification and inflation:

1. Social Security is an inflation-protected fixed income security. A $20,000–$25,000 annual benefit is roughly equivalent to a $700,000 30-year Treasury bond.
2. Historically, countries with debt levels like ours have a 95% chance of substantial inflation and rising interest rates.
3. Inflation-Protected Bonds currently yield about 0.8%. Congress may also revise these programs to reduce the deficit.
4. Gold speculation requires getting both the entry and exit right—very unlikely.
5. Historically, common stocks are the best inflation hedge, especially those with long-term dividend growth and high safety ratings.

Sincerely,

Katz Family Financial