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Show Sunday, February U, 2008 C7 HERALD DAILY THE WALL STREET JOURNAL The Weekly Guide to Managing Your Money mrnm 6 CoinKimi. 2008 Ihw June WSJ.comSunday Make Forever Good Deals for Income Investors By Jane Your J. Kim The interest-rat- cuts e sent yields on bank Where the Yields Are Some options for income-oriente- investors d Stamp s he cost of Conn. He likes DWS post-- 1 ' Plus Fund (PP1AX) beage'is going up a penny cause of its "strong track in May, and that means you record" among peers. may need to buy some one-ceMorningstar's picks among stamps to augment reintermediate-tertaxable maining stamps. But here's another idea: bond funds, meanwhile, include Fidelity Total Bond Start using "Forever" stamps Fund (FTBFX) and Dodge & instead of the usual fare. Tlie U.S. Postal Service cre-- i Cox Income Fund (DO01X). ated the For- Metropolitan West Total Reever stamp in turn Bond Fund (MWTRX) is anOF other popular fund that tends to THE WEEK April 2007 as stick with a way iui tun- issues, Mr. Herbert says, Its annual exsiimers to lock s penses tend to be a bit higher in the price of a than those .'of .the Fidelity and stamp no matter how much, or how often, the price inDodge & Cox funds, although they are still below average for (creases. Postal rates will gen-- i the category, he says. erally go up yearly in the Another option, especially month of May. for taxpayers in the higher' tax V At any time, you can buy brackets: municipal 'bonds." The Forever' stamps 'for the same s yields on some munis have risen price as regular as investors' appetite for thVm stamps, meaning 41 cents behas waned. One recent worry tween now and May 12, when has been the weakened financial rates rise. They're good indeficondition of insurers that guar- nitely, even after postal rates the penny- antee many munis. But instances go of default are rare and the in- stamp hassles and eliminating come munis generate is generthe risk of getting your letters returned for insufficient ally exempt from federal taxes. postage. Juicy Munis The Postal Service says it Marilyn Cohen, president of will have five billion Forever Envision Capital Management, stamps in stock to meet ina Los Angeles investment firm, creased demand before the recommends that investors in May 12 price change. Prices for other mailing serhigh tax brackets ook for muni bonds with yields of at least vices, such as postcards, large 4 that have maturities beenvelopes and packages, will tween 12 and 15 years or less. see raises between one and The Texas Tomball Indepenfive cents in May. Price indent School District, for exam- creases for shipping services ple, issued a municipal bond including Express Mail and Pri(due in 2021) that was recently ority Mail will be announced in the coming months. yielding 4.1 roughly equivalent to a taxable yield of 6.3 Customers can order for a taxpayer in the 35 tax stamps anytime online at bracket. usps.com or by calling fp Short-Duratio- n Federal Reserve's Inc. All Rights Reserved. first-clas- nt YIELD deposit accounts and money-markIntermediate-TerBond funds funds lower, pinching d investors and Dodge & Cox Income Fund v savers. Fidelity Total Bond Fund Still, a few attractive alterMetropolitan West Total Return Bond Fund natives remain. Some small d banks and credit unions are ofCDs (minimum: $10,000) g certififering CD Countrywide Bank: cates of deposit and "reward CD National City: checking accounts." And those willing to take on more risk, Online Savings and Reward Checking Accounts can find attractive deals in Southern Community Bank and Trust: "Maximum Earnings" municipal and corpoWashington Mutual: Online Savings ; rate bonds and in short-- , and Notes: Fund yields as of varying dates. National City CD in limited states. intermediate-terbond muBanks have various requirements to qualify for these rates, tual funds. The average seven-da- y yield fer higher savings yields to cusTreasury obligations have tumon taxable money-markmutomers if they also open a bled in recent months.' Investual funds has slid to about checking account or meet tors have flocked to those sup3.1 from 4.7 in other requirements Earlier er-safe government obligations amid general nervousaccording to iMoneyNet, a this year, Wachovia began ofresearch firm. fering a savings account, ness in the credit markets. The money-fun- d That yield is expected to fall to dubbed Way2Save, that pays a flip side: yields on other types around 2.4 by the end of 5 yield for the first year, plus of bonds have gotten comparaMarch, and even lower if there an additional 5 bonus on the tively more attractive. are further rate cuts, says account balance at the end of Consider Corporates iMoneyNet managing editor the first year. A customer must Connie Bugbee. Meanwhile, link the WayZSave account to a For instance, while the Bankrate.com says the average Wachovia checking account. flight to safety has pushed short-terCDs has yield on Washington Mutual is testyields Treasury fallen to 2.6 from 3.6 last ing an account in four states down about three percentage CDs have September; five-ye(Washington, Illinois, Texas points since last July, yields on fallen to 2.9 from and Georgia) that pays as investment-grad- e corporate much as 6.5 (or 5.5 in Washbonds have dropped by only V Some Banks Pay More about one percentage point ington) if the customer agrees But savers can still find to deposit money regularly for over the same time, says Tom g 12 months and link the account some CDs, parRicketts, president and chief executive of Incapital, a Chicago to a WaMu checking account. ticularly from financial firms investment bank that specialthat have been facing a credit Some community banks and crunch. As of Friday, for examcredit unions, such as Southizes in underwriting bonds for ern Community Bank and retail investors. The firm, for ple, Countrywide Bank whose N.C., example recently helped unparent, Countrywide Financial, Trust of Winston-Saleis in the process of being and distribute are offering yields as high as derwrite r, bought by Bank of America-w- as 6 on "reward checking acroughly $450 million of CD bonds iscounts" for customers who use offering a with a yield of 4.45, with a their debit cards heavily and sued by General Electric's GE minimum deposit of $10,000. meet other requirements. Capital offering a 4 yield. Short- - and intermediate- In some cases, banks will of- Among bonds, yields on (OziZ m income-oriente- j High-Yiel- higher-yieldin- 4. higher-yieldin- four-yea- triple-A-rate- d jp high-qualit- y first-clas- -. term bond mutual funds can be an alternative for investors who want to hold a diversified portfolio of bonds. Some fund managers say the "spreads" by which yields on investment-grad- e corporate bonds and bonds exmortgage-backeceed those of Treasurys are wider than they have been historically and, in fact, seem too wide given the strong fundamentals of the issuers, says Paul Herbert, a mutual-funat Morningstar. To be sure, bond funds are more risky than bank accounts, since the value of the underlying securities will decline if rates jump or the bond issuers' financial condition weakens. bond funds are But short-terless volatile than intermediate-maturit- y portfolios, which are less volatile than long-terones. "If you're kind of quaking in your boots and coming Out of cash, you may feel more, comfortable with short-terbond funds," says Matthew Tuttle, a financial planner in Stamford, v first-clas- d d ' By Shelly Banjo Email: forum.sunday03(3wsj.com INVESTOR'S CALENDAR SMALL BUSINESS THIS WEEK IN THE MARKET Short Week: Financial mar- kets are closed tomorrow for Presidents Day. Green Sole: Fans at today's NBA Game snag a first look at Nike's new $185 "green" Air Jordan XX3 shoe. All-St- The 100 -- Page If it, the Dow DOW WATCH: While Jones Industrial Average and other stock measures gained last week, returns so far Bother Plan-D- on't considered or have done you've probably been instructed to write a business plan. Perhaps you even bought a business-planninguide walking you through elaborate details of market analysis, sales projections and operational plans. But while there's a lucra-- . you've ,; a business, in 2008 are negative. 13500 Start-U- p .... V g B000 Wall Street Journal Sunday miters regularly contribute to the Journal's 1 ... I HI . . DJIA 12500 weekday "Your Money Matters", personal-financ- e podcast 12000 Listen at WSJ.comPodcasts Wal-Ma- Results: Stores, the world's Wal-Ma- rt rt est retailer, announces 11500 tive : larg- " v Jan. I Feb. how-t- exDrug pected to rule this week on the use of Genentech's Avastin in combination with chemo- therapy to treat breast cancer. Inflation Watch: The consumer price index, a key inflation gauge, is out Wednesday. LAST WEEK Yahoo Action: Yahoo re- jected Microsoft's, takeover bid and was discussing a busi- - THE WALL STREET Paul D.Bell President, Partner Businesses (212)659-121- 2 P&ul.Bclldowjones.com Drug Okay: The Food and Drug Administration approved Abbott Laboratories' Simcor, expected to be a top selling cholesterol drug." By Kelly K. Spors the Insurer Angst: Bond insurer Financial Guaranty Inratsurance lost its triple-ing from Moody's and is proposing to split in two. Important Questions Retail Rebound: Seasonally adjusted retail sales rose in a surprise after De- cember's drop, but partly reflecting high gasoline prices. ...Or Not? Best Buy cut its earnings forecast, citing a y sales slowdown. post-holida- JOIMI Mil. Lawrence Rout, Senior Editor Lany.Routwsj.com David Crook, Editor David.Crookwsj.com Mark Pope Director, The Journal Report & Karen Damato, News Editor Special Projects Karen.Damatowsj.com (212)597-586- 8 Mark.Fopedowjones.com Mark Tyner, Art Director Mark.Tynerwsj.com Steven A. Townsley Telephone: (609) 3 Steven.1bwn8leydowjones.com 520-40- email: sundav03wsj.com 4300 Route 1 North South Brunswick, N.J. 08852 Corporate Headquarters For a Special Journal Subscription Offer, Call: 200 Liberty Street New York, N.Y. 10281 All OF THIS 100-pag- Some entrepreneurs get so caught up in polishing their written plan, they lose k issight of sues, such as whether they have actual people clamoring to buy their product and who will sell it. Sometimes, the product can't be manufactured and sold at a price that will make a profit. But it shouldn't take a d planyear of ning to figure that out. Mr. Bygrave and a few of his colleagues were so curious about the value of written business.plans that they analyzed 116 businesses started by Babson alumni make-or-brea- who graduated between 1985 and 2003. measures Comparing such as annual revenue, employee numbers and net income, they found no statistical difference in success be' tween those businesses started with formal written plans and those without. The study concludes: "Unless you need to raise external start-u- p capital from institutional sources or business angels, you do not need to write a formal business plan." Other research has come to similar conclusions. Columbia University professor Amar Bhide analyzed Inc. magazine's 1989 list of the g 500 private businesses and found that 41 of them didn't have any business plan, and 26 had rudimentary plans. He found that many opportunities need to be pursued quickly and to take advantage of them you can't wait for the planning process to be completed. fastest-growin- long-winde- Director of Sales (212)597-573- merits of lengthy planning and selling their business-plannin- g expertise a growing body of research suggests that some entrepreneurs spend way too long e polishing 50- - or business plans when they should be out in the marketplace selling their product or service. "It doesn't take a year of planning to figure out whether someone is going to buy your product," says William Bygrave, a Babson College entrepreneurship professor. "All you have to do is start selling it." January Stocks Rise: The Dow Jones Industrial Average rose 1.4 last week and the Nasdaq Composite Index advanced 0.7. For the year to date, they are down 6.9 and 12.5, respectively. Vice ness partnership with News Corp., parent of The Wall Street Journal's publisher. o books and business coaches preaching Source: WSJ Market Data Group results Tuesday. Drug: The Food IandCancer Administration is soft- ware, 2008 fourth-quart- indus try of WEEK'S EDITION IS AVAILABLE ON OUR FREE WSJ.comSunday WEB SITE Dumping the Plan Many business plans get tossed out the window the day after launch, because the plan wasn't grounded in reality. Traditionally, when a business plan has been esis sential is when a start-upitched to potential investors. But even that's changing. Many venture capitalists and angel investors now say an effective slide presentation or executive summary can be more effective than written plan. a often base Investors their decision to invest on their trust in the people running the business as much as the idea itself. "Most venture capitalists base the decision on a conversation or 10 PowerPoint slides," says Guy Kawasaki, a Silicon Valley venture capitalist and creator of AllTop.com. Too often, he says, entrepreneurs try to pitch venture capitalists with projected sales forecasts that show a large upward trajectory, when "we know it has no relation to the truth." p Flexibility Is Crucial But for certain, much of the real planning happens once you start selling and hit realities you may not have anticipated. And it's important to recognize when there's a flaw in the plan and be willing to change directions or ditch plans altogether when they're clearly not working, says Tom executive director of n Kin-nea- r, the entrepreneurial studies institute at the University of Michigan. A business plan should just be a compass, he says, pointing entrepreneurs in the right direction before starting their business. Too many entrepreneurs get Forget About Planning? So ditch the planning altogether? Not so fast. -' While the formal written plan itself may not be worth much, the planning process can be very helpful in honing strategy and dodging potential calamities. Just don't spend too long on it. :.: Mr. Kawasaki says entre- preneurs should spend ho more than a few months planning and writing a plan of less than 20 pages. He recommends addressing three key questions: Who's going to make it? How are we going to sell it? How are we,going to service it? "The most important thing they should do is ere- ate a prototype" of their product, Mr. Kawasaki says. "Spend your time creating prototypes, not plans." The value of the planning is it forces you to go through the various scenarios and troubleshoot hypothetical problems or roadblocks. You can address, for instance, what sales channel will be most lucrative and the most opportune sales price decisions that have to be made before you hit the market. i, wrapped up in perfecting their written plans, which he says shouldn't take more than a few weeks to write. "No business plan has ever survived contact with the marketplace," he adds. Kelly Spors covers small business for The Wall Street Journal. Email: kelly.spors(3wsj.con |