Janus Capital Group Inc. Announces Fourth Quarter and Year-End 2011 Results

DENVER–(BUSINESS WIRE)– Janus Capital Group Inc. (“JCG”) (NYSE: JNS – News) today reported fourth quarter net income of $35.7 million, or $0.19 per diluted share, compared with net income of $27.4 million, or $0.15 per diluted share, in the third quarter 2011 and net income of $65.9 million, or $0.36 per diluted share, in the fourth quarter 2010.
Third quarter 2011 net income included a net charge of $0.06 per share primarily related to mark-to-market losses on investments. Fourth quarter 2010 included a $0.12 per share net benefit from an insurance recovery, the sale of JCG’s structured investment vehicle securities, the reversal of income tax reserves and the cumulative effect of correcting a hedge accounting issue.
For the full-year 2011, net income totaled $142.9 million, or $0.78 per diluted share, compared with net income of $159.9 million, or $0.88 per diluted share for 2010.
The company’s operating margin for the fourth quarter 2011 was 32.7% compared with 31.3% for the third quarter 2011 and 34.7% for the fourth quarter 2010.
Flows and Assets Under Management
Average assets under management during the fourth quarter 2011 were $149.2 billion compared with $155.9 billion during the third quarter 2011 and $167.3 billion during the fourth quarter 2010.
At December 31, 2011, the company’s total assets under management were $148.2 billion compared with $141.0 billion at September 30, 2011 and $169.5 billion at December 31, 2010.
The increase in complex-wide assets during the fourth quarter 2011 primarily reflects net market appreciation of $11.2 billion offset by long-term net outflows of $4.0 billion. Fundamental equity and mathematical equity long-term net outflows totaled $3.2 billion and $2.2 billion, respectively, while fixed income long-term net inflows totaled $1.4 billion. The decrease in year-over-year assets under management was primarily the result of long-term net outflows of $12.2 billion and $9.1 billion of net market depreciation.
Investment Performance
Relative investment performance in key fundamental equity strategies continues to be challenged, with 38%, 38%, and 79% of mutual fund assets ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively, as of December 31, 2011.¹
Fixed income mutual funds continue to generate strong long-term relative investment performance with 80%, 5% and 100% of mutual fund assets ranked in the top half of their Lipper categories on a one-, three- and five-year total return basis, respectively, as of December 31, 2011.²
Mathematical equity relative investment performance continues to improve, with 75%, 43% and 69% of strategies surpassing their respective benchmarks, net of fees, over the one-, three- and five-year periods, respectively, as of December 31, 2011.³
In addition, 56% of complex-wide mutual funds have a 4- or 5-star Overall Morningstar Rating^TM at December 31, 2011.⁴
Financial Discussion

Financial Highlights
(dollars in millions, except per share data or as noted)
							Three Months Ended								Year Ended
							December 31,				September 30,				December 31,				December 31,
							2011				2011				2011				2010
Average Assets (in billions)							$	149.2			$	155.9			$	162.3			$	160.7
Ending AUM (in billions)							$	148.2			$	141.0			$	148.2			$	169.5
Revenues							$	215.6			$	236.9			$	981.9			$	1,015.7
Operating Expenses							$	145.0			$	162.7			$	670.1			$	734.1
Operating Income							$	70.6			$	74.2			$	311.8			$	281.6
Operating Margin								32.7%				31.3%				31.8%				27.7%
Net Income							$	35.7			$	27.4			$	142.9			$	159.9
Diluted Earnings per Share							$	0.19			$	0.15			$	0.78			$	0.88

Fourth quarter 2011 revenues of $215.6 million decreased $21.3 million, or 9.0%, from third quarter 2011 primarily due to $13.8 million of negative performance fees incurred on certain mutual funds during the fourth quarter 2011. Fourth quarter 2011 operating expenses decreased $17.7 million, or 10.9%, primarily from lower variable compensation expenses and a continued focus on expense management.
Non-operating items for the third quarter 2011 included $20.6 million of mark-to-market losses on investment securities (net of $2.8 million of mark-to-market losses attributable to noncontrolling interests) and a benefit of $2.5 million for the reversal of income tax reserves following the expiration of statutes of limitations on tax positions taken in previous years.
Capital and Liquidity
At December 31, 2011, JCG had stockholders’ equity of $1.3 billion, cash and investments of $672 million and outstanding debt of $595 million.
On January 24, 2012, JCG’s Board of Directors declared a regular quarterly cash dividend of $0.05 per share. The quarterly dividend will be paid on February 21, 2012, to stockholders of record at the close of business on February 6, 2012.
Fourth Quarter 2011 Earnings Call Information
JCG will discuss its results during a conference call on Thursday, January 26, 2012 at 10 a.m. Eastern Standard Time. The call-in number will be (888) 428-7458. Anyone outside the U.S. or Canada should call (201) 604-5177. The slides used during the presentation will be available in the investor relations section of the Janus Capital Group website (www.janus.com/ir) approximately one hour prior to the call. For those unable to join the conference call at the scheduled time, an audio replay will be available on www.janus.com/ir.
About Janus Capital Group Inc.
Janus Capital Group Inc. (“JCG”) is a global investment firm offering strategies from three individual investment boutiques: Janus Capital Management LLC (“Janus”), INTECH Investment Management LLC (“INTECH”) and Perkins Investment Management LLC (“Perkins”). Each manager employs a research-intensive approach that is distinct within its respective asset class. This multi-boutique approach enables the firm to provide style-specific expertise across an array of strategies, including growth, value and risk-managed equities, fixed income and alternatives through one common distribution platform.
At the end of December 2011, JCG managed $148.2 billion in assets for shareholders, clients and institutions around the globe. Based in Denver, JCG also has offices in France, London, Milan, Munich, Singapore, Hong Kong, Tokyo and Melbourne.

¹ References Lipper relative performance on an asset-weighted basis. For the 10-year period ending December 31, 2011, 80% of the 24 fundamental equity mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending December 31, 2011, 32%, 60%, 78% and 75% of the 37, 35, 32 and 24 fundamental equity mutual funds outperformed the majority of their Lipper peers based on total returns.
² References Lipper relative performance on an asset-weighted basis. For the 10-year period ending December 31, 2011, 100% of the 4 fixed income mutual funds outperformed the majority of their Lipper peers on an asset-weighted basis. For the 1-, 3-, 5- and 10-year periods ending December 31, 2011, 80%, 25%, 100% and 100% of the 5, 4, 4 and 4 fixed income mutual funds outperformed the majority of their peers based on total returns.
³ For the period ending December 31, 2011, 50%, 50%, 67% and 40% of the mathematical equity mutual funds were beating their benchmarks on a 1-, 3-, 5-year and since-fund inception basis. Funds included in the analysis and their inception dates are: INTECH U.S. Growth Fund – Class S (1/03); INTECH U.S. Core Fund – Class T (2/03); INTECH U.S. Value Fund – Class I (12/05); INTECH International Fund – Class I (5/07); INTECH Global Dividend Fund – Class I (12/11).
⁴ For the period ending December 31, 2011, 40%, 49% and 57% of complex-wide mutual funds had a 4- or 5-star Morningstar rating for the 3-, 5- and 10-year periods based on risk-adjusted returns for 43, 39 and 28 funds, respectively. 43 funds were included in the analysis for the overall period.

JANUS CAPITAL GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
						Three Months Ended															Year Ended
						December 31,					September 30,					December 31,					December 31,					December 31,
						2011					2011					2010					2011					2010
	Revenues:
	Investment management fees					$	190.9				$	202.2				$	218.7				$	844.3				$	834.6
	Performance fees						(9.2	)				(3.1	)				18.5					(11.7	)				32.6
	Shareowner servicing fees and other						33.9					37.8					38.5					149.3					148.5
	Total						215.6					236.9					275.7					981.9					1,015.7
	Operating expenses:
	Employee compensation and benefits						62.1					71.2					79.2					294.9					314.5
	Long-term incentive compensation						10.7					16.4					23.3					63.0					83.1
	Marketing and advertising						7.5					6.2					7.8					28.0					35.8
	Distribution						30.5					35.5					36.9					141.7					140.1
	Depreciation and amortization						7.8					8.1					9.5					33.3					39.1
	General, administrative and occupancy						26.4					25.3					23.2					109.2					121.5
	Total						145.0					162.7					179.9					670.1					734.1
	Operating income						70.6					74.2					95.8					311.8					281.6
	Interest expense						(11.7	)				(13.0	)				(15.9	)				(51.0	)				(63.2	)
	Investment gains (losses), net						1.2					(23.4	)				19.9					(21.9	)				24.7
	Other income, net						2.0					1.4					0.5					3.8					1.9
	Loss on early extinguishment of debt						-					-					-					(9.9	)				-
	Income tax provision						(22.4	)				(11.9	)				(31.9	)				(79.4	)				(76.4	)
	Net income						39.7					27.3					68.4					153.4					168.6
	Noncontrolling interests						(4.0	)				0.1					(2.5	)				(10.5	)				(8.7	)
	Net income attributable to JCG					$	35.7				$	27.4				$	65.9				$	142.9				$	159.9
	Diluted weighted-average shares outstanding (in millions)						184.0					184.0					183.1					184.2					182.1
	Diluted earnings per share
	attributable to JCG common shareholders:					$	0.19				$	0.15				$	0.36				$	0.78				$	0.88
	Average Assets Under Management (in billions)					$	149.2				$	155.9				$	167.3				$	162.3				$	160.7

JANUS CAPITAL GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
									December 31,					December 31,
									2011					2010
	Assets
		Cash and cash equivalents							$	360.0				$	373.2
		Investment securities								312.0					296.1
		Other assets								185.0					251.6
		Property and equipment, net								36.9					44.1
		Intangibles and goodwill, net								1,750.0					1,761.8
			Total Assets						$	2,643.9				$	2,726.8
	Liabilities and Stockholders’ Equity
		Debt							$	595.2				$	799.8
		Other liabilities								281.1					333.5
		Deferred income taxes								421.7					410.3
		Stockholders’ equity								1,345.9					1,183.2
			Total Liabilities and Stockholders’ Equity						$	2,643.9				$	2,726.8

UNAUDITED CONDENSED CONSOLIDATED
CASH FLOW INFORMATION
(dollars in millions)
								Three Months Ended															Year Ended
								December 31,					September 30,					December 31,					December 31,					December 31,
	Cash provided by (used in)							2011					2011					2010					2011					2010
		Operating activities						$	74.3				$	47.8				$	101.4				$	224.6				$	246.6
		Investing activities							(33.1	)				116.0					(18.0	)				21.7					(148.0	)
		Financing activities							(10.6	)				(103.9	)				1.8					(259.5	)				(50.1	)
	Net change during period							$	30.6				$	59.9				$	85.2				$	(13.2	)			$	48.5

JANUS CAPITAL GROUP INC.
ASSETS & FLOWS BY INVESTMENT DISCIPLINE
(dollars in billions)
			Three Months Ended												Year Ended
			December 31, 2011				September 30, 2011				December 31, 2010				December 31, 2011				December 31, 2010
Growth/Core (1)
	Beginning of period assets		$	47.3			$	58.5			$	58.3			$	60.9			$	60.9
	Sales			1.6				2.9				3.3				10.7				12.4
	Redemptions			3.4				4.7				6.0				18.7				18.6
	Net redemptions			(1.8	)			(1.8	)			(2.7	)			(8.0	)			(6.2	)
	Market / fund performance			4.2				(9.4	)			5.3				(3.2	)			6.2
	End of period assets		$	49.7			$	47.3			$	60.9			$	49.7			$	60.9
Global/International
	Beginning of period assets		$	18.6			$	26.1			$	26.2			$	27.9			$	23.8
	Sales			0.9				0.8				1.9				4.8				6.0
	Redemptions			1.6				2.2				2.1				7.7				6.3
	Net redemptions			(0.7	)			(1.4	)			(0.2	)			(2.9	)			(0.3	)
	Market / fund performance			0.5				(6.1	)			1.9				(6.6	)			4.4
	End of period assets		$	18.4			$	18.6			$	27.9			$	18.4			$	27.9
Mathematical Equity (2)
	Beginning of period assets		$	38.0			$	45.5			$	42.4			$	44.1			$	48.0
	Sales			0.7				1.0				1.0				4.5				4.4
	Redemptions			2.9				1.7				3.6				9.5				14.9
	Net redemptions			(2.2	)			(0.7	)			(2.6	)			(5.0	)			(10.5	)
	Market / fund performance			4.1				(6.8	)			4.3				0.8				6.6
	End of period assets		$	39.9			$	38.0			$	44.1			$	39.9			$	44.1
Fixed Income (1)
	Beginning of period assets		$	18.6			$	17.2			$	14.5			$	15.3			$	10.3
	Sales			2.9				3.8				2.1				10.7				8.5
	Redemptions			1.5				1.7				1.5				5.8				4.5
	Net sales			1.4				2.1				0.6				4.9				4.0
	Market / fund performance			0.6				(0.7	)			0.2				0.4				1.0
	End of period assets		$	20.6			$	18.6			$	15.3			$	20.6			$	15.3
Value (3)
	Beginning of period assets		$	17.0			$	21.0			$	17.8			$	19.8			$	15.0
	Sales			0.9				1.2				1.7				5.3				7.7
	Redemptions			1.6				1.8				1.5				6.5				5.5
	Net sales (redemptions)			(0.7	)			(0.6	)			0.2				(1.2	)			2.2
	Market / fund performance			1.8				(3.4	)			1.8				(0.5	)			2.6
	End of period assets		$	18.1			$	17.0			$	19.8			$	18.1			$	19.8
Money Market
	Beginning of period assets		$	1.5			$	1.5			$	1.6			$	1.5			$	1.7
	Sales			0.2				0.3				0.2				1.0				0.8
	Redemptions			0.2				0.3				0.3				1.0				1.0
	Net redemptions			-				-				(0.1	)			-				(0.2	)
	Market / fund performance			-				-				-				-				-
	End of period assets		$	1.5			$	1.5			$	1.5			$	1.5			$	1.5
Total Company
	Beginning of period assets		$	141.0			$	169.8			$	160.8			$	169.5			$	159.7
	Sales			7.2				10.0				10.2				37.0				39.8
	Redemptions			11.2				12.3				15.0				49.2				50.8
	Net redemptions			(4.0	)			(2.3	)			(4.8	)			(12.2	)			(11.0	)
	Market / fund performance			11.2				(26.5	)			13.5				(9.1	)			20.8
	End of period assets		$	148.2			$	141.0			$	169.5			$	148.2			$	169.5
Total Excluding Money Market
	Beginning of period assets		$	139.5			$	168.3			$	159.2			$	168.0			$	158.0
	Sales			7.0				9.7				10.0				36.0				39.0
	Redemptions			11.0				12.1				14.7				48.2				49.8
	Net redemptions			(4.0	)			(2.4	)			(4.7	)			(12.2	)			(10.8	)
	Market / fund performance			11.2				(26.4	)			13.5				(9.1	)			20.8
	End of period assets		$	146.7			$	139.5			$	168.0			$	146.7			$	168.0
Each line has been rounded on the schedule individually to increase the accuracy of the amounts presented. Therefore totals and subtotals may not foot.

Notes:
(1)		Growth/core and fixed income assets reflect a 50%/50% split of the Janus Balanced Fund between the two categories.
(2)		Represents all assets managed by INTECH Investment Management LLC. Year-to-date 2011 gross sales and redemptions exclude the transfer of $1.1 billion within mathematical equity strategies in the first quarter 2011.
(3)		Represents all assets managed by Perkins Investment Management LLC.

Data presented reflects past performance, which is no guarantee of future results. Due to market volatility, current performance may be higher or lower than the performance shown. Call 877.33JANUS (52687) or visit janus.com/advisor/mutual-funds for performance, rankings and ratings current to the most recent month-end.
Janus Capital Group Inc. (“JCG”) provides investment advisory services through its primary subsidiaries, Janus Capital Management LLC (“Janus”), INTECH Investment Management LLC (“INTECH”) and Perkins Investment Management LLC (“Perkins”).
“Complex-Wide Mutual Funds” means all affiliated mutual funds managed by Janus, INTECH and Perkins. “Fundamental Equity Mutual Funds” means all mutual funds managed by Janus or Perkins that invest in equity securities. “Fixed Income Mutual Funds” means all mutual funds managed by Janus that invest primarily in fixed income securities. “Mathematical Equity Strategies” means all discretionary managed accounts (not mutual funds) that are advised or sub-advised by INTECH.
Mutual fund relative performance analysis shown is for each Fund’s initial share class: Class T, S or I Shares in the Janus retail fund (“JIF”) trust and the Institutional or Service Shares in the Janus Aspen Series (“JAS”). These share classes may not be eligible for purchase by all investors. Other share classes may have higher sales and management fees, which can result in differences in performance.
Investing involves risk, including the possible loss of principal. The value of your investment will fluctuate over time and you may gain or lose money. A fund’s performance may be affected by risks that include those associated with non-diversification, non-investment grade debt securities, high-yield/high-risk securities, undervalued or overlooked companies, investments in specific industries or countries and potential conflicts of interest. Additional risks to funds may include those associated with investing in foreign securities, emerging markets, initial public offerings, real estate investment trusts (“REITs”), derivatives, short sales and companies with relatively small market capitalizations. Each fund has different risks. Please see a Janus prospectus for more information about risk, fund holdings and other details.
Lipper performance on an asset-weighted basis is calculated by taking all funds and assigning the assets under management (“AUM”) in each respective fund to either the 1st, 2nd, 3rd or 4th quartile bucket based on each fund’s respective Lipper relative rankings. The total AUM of each quartile’s bucket is then divided by complex-wide total AUM to arrive at the respective percent of AUM in each bucket. Lipper, a wholly-owned subsidiary of Thomson Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Funds not ranked by Lipper are not included in the analysis.
The Overall Morningstar Rating^TMfor a fund is derived from a weighted- average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating^TMmetrics. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating^TM based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages). The Morningstar Rating^TM may differ among share classes of a mutual fund as a result of different sales loads and/or expense structures. It may be based, in part, on the performance of a predecessor fund. Morningstar does not rank funds with less than a 3-year performance history.
Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call JCG at (800) 525-3713 or download the file from www.janus.com/info. Read it carefully before you invest or send money.
Funds distributed by Janus Distributors LLC.
Certain statements in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” “forecast” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. These statements are based on the beliefs and assumptions of Company management based on information currently available to management.
Various risks, uncertainties, assumptions and factors that could cause future results to differ materially from those expressed by the forward-looking statements included in this press release include, but are not limited to, risks specified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 included under headings such as “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other filings and furnishings made by the Company with the SEC from time to time. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. Many of these factors are beyond the control of the Company and its management. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except for the Company’s ongoing obligations to disclose material information under the applicable securities law and stock exchange rules, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
http://tourism9.com/    http://vkins.com/

Student loans: Pay them down or start an emergency fund?

Student loans are above $50,000, but there are ways to balance saving with paying down debt. See questions No. 2, 3, and 5 for advice on student loans.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries.
1. Investing in light of default
2. Debt eradication
3. Loans or emergency fund?
4. Repetitive questions
5. What’s next on my path?
6. Time for a financial advisor?
7. Polite hygiene advice
8. Wedding and financial planning
9. What are readers like?
10. 2012 predictions
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Trent Hamm
The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.

Recent posts

How long does it take for you to stop dating checks and other documents with the previous year after the calendar flips?
I’ll admit that it will probably take me most of January to get used to writing 2012.
Q1: Investing in light of default
I have a small IRA, with half in a mutual fund, which has topped out, and the other half in two stocks which are near to bottoming out, from a lag factor associated with recession and reinvestment.
I anticipate a currency devaluation as an effect of renegotiation or default on national debt limits. Would overseas money markets be a safe place to stash funds from the sale of the mutual while I wait for it to drop so I can repurchase it? If you believe that our debt problems will negatively impact overseas money markets, what is an alternate spot, exclusive of index funds, which will drop as the market does?
- Monica
I don’t think I would trust overseas money markets more than domestic ones, as I think a lot of economies are facing some sort of currency devaluation due to the ongoing economic conditions.
I also wouldn’t bank my entire plan on market timing, particularly when you’re making moves based on a sense of a fund having “topped out” or “bottoming out.” If I were you and I moved forward with this plan, I’d set some thresholds on when to buy back in. For example, you might want to say that you’ll buy back in after three months if either the value of the fund is down, say, 15% or it matches the value you sold it at.
Don’t worry about what the absolute top of the market is or what the bottom is – worry about making money for yourself.
Q2: Debt eradication
I’m a 22-year old student who will graduate with a B.A. in December. I took out some federal and private loans to pay for school. I saved for the past year and paid off the private loans while in school. I’ll be left with $16,000 at 6.8% when I graduate. I have no other debt and a 3-month emergency fund ($6,000). I plan to make payments well over the minimum to pay this balance off in 2 years or less.
Is this a good thing? The more I research credit and credit scores, it seems that a relatively low-balance loan isn’t a bad thing to keep around for ten, even fifteen years. However, having a positive net worth is my #1 priority. Should I be making aggressive payments or simply using that money to pad my retirement and savings while keeping the loan around? While paying the loan aggressively I’ll still be contributing 15% of my net income to an IRA. I have one credit card with a $500 limit; never carried a balance. I pay bills on time every month. I currently rent. A house isn’t on my to-do list, and I’ll buy a car outright if I get one in the future. Is it enough to build my credit without a credit card balance, mortgage, car payment, and (soon) no student loan?
- Belinda
I don’t think the value of having a 6.8% student loan (in terms of your credit score) is worth the financial cost of having to pay 6.8% interest on the balance every year. If it’s within your means without causing other financial troubles, I would pay it off sooner rather than later.
Given that you do have a continuing line of credit in the form of your credit card, your credit report won’t go completely empty after you pay off the student loan. I would consider using the card regularly (and paying off the balance) and being open to moderate raises in your credit limit.
You’re doing very well. Keep along your current path and you’ll continue to do very well.
Q3: Loans or emergency fund?
I’ll graduate from grad school this May with $25,500 in federal subsidized loans (spouse and I also still have $27k combined undergrad debt at 5.3%). I haven’t technically needed these loans for the last year of school but because they’re subsidized I’ve been storing the money in a rewards checking account earning about 3%. It will be around 12,000 total in November when the subsidization ends and 6.8% interest kicks in. This is the extent of our short-term savings/emergency fund right now (my spouse and I are also saving for retirement). So, since we are looking to save for life’s big things in the next few years (car, family, and house, probably in that order), and we don’t have a defined emergency fund amount, I wonder how much of that 12k should we pay back immediately? We’re currently steadily employed though I’m seeking new full-time work in my desired field instead of my current part-time job. We have roughly $1000 extra/month to put to good use on student loan repayment and savings (we’re a pretty frugal couple), but I’m not sure what the best combination would be. We have to pay minimum $400/mo on our student loans. Is it best to pay more on student loans and postpone more emergency/car/baby/home savings? Is it best to pay back the entire $12k “savings” (which is really borrowed money) and start our “real” savings from scratch? I’m lost and confused and would be interested in your and your readers’ opinions. 
- Danika
If I were you, I would establish a new emergency fund and fund it with enough money to provide three months or so of living expenses for you and your partner. I would then use the remainder to pay off your highest loan and then use the subsequent $1,000 per month toward minimum payments and whatever loan has the highest interest rate.
I would count that 6.8% loan as already having that rate and make “payments” on that debt to a savings account. Then, when the subsidization ends, I’d pay the entire balance of that savings account to that 6.8% loan.
In terms of balancing emergency protection and a path toward debt freedom, I think this is a very good plan.
Q4: Repetitive questions
I’ve noticed that there are a lot of consistent shall we say themes in your reader mailbag questions. Student loans come up a lot for example and so does retirement. Why repeat so much?
- Shaun
The reason these stories show up so often is because they’re the type of concerns that cause people to really start thinking about their finances and because they are so common among people. A lot of people leave college with student loans and they worry about paying them off.
I use a lot of these types of questions because there are a lot of variations in the story and because it’s a genuine concern that a lot of people out there have.
I try to choose questions that reflect the whole of the questions that I receive. I do often pick out specific interesting ones, but I also see from my email inbox that I get a LOT of questions about student loans, so I cover those questions.
Q5: What’s next on my path?
I’m now fortunate to be in a position where I’m (finally) earning a great wage at a company I have no intention of leaving anytime soon, living in a city (NYC) that I love, and living well below my means.
It’s been drilled into me for years that paying off your credit card(s) and building a healthy emergency fund are the first foundation steps to a healthy financial life. I’ve accomplished both (finally!), and have $0 credit card debt (only one credit card), and $11,000 in savings. I still have outstanding student loans, which I’m paying back and contributing more than the minimum on each month – these are at a very low interest rate, and the total repayment each month comes to $350. Paying off one would save me about half of that amount as the payments are pretty much equal between the loans.
I’m also putting $12,000/year into a 401(k), and am planning on continuing to contribute $1,000/mo into my savings account for the next 9 months – until it reaches $20,000. Since I live in NYC, I plan on renting for quite a few more years and I’m planning ahead for when I’ll want to move (moving into a new apartment here typically costs $4-5,000 upfront in costs for my price range – first month’s rent, last month’s rent, possibly a broker’s fee and a security deposit). 6 months of my bills (if I were laid off) comes to about $15,000, and that’s my emergency fund savings goal since I don’t have close family in the area and wouldn’t want to have to move due to prolonged unemployment. The $20,000 goal for this year assumes that I’ll want to move within the next year, which is a possibility (but not set in stone).
I’m not in a hurry to change my plans right now as I still have a bit of time left to contribute to my savings account, but I’d like to have some solid steps in place when I get there.
So – what comes next? It seems like after the savings account, credit card and retirement account are all healthy (or being contributed to healthily), that any number of options open up. I don’t get an employer match on my 401(k), so it’s 100% my own money in there, and I’d like to max it out for a few years, due to not being able to contribute anything in my younger 20′s (4 years of working w/o the spare $$ to contribute). But, I’ll still have a good amount of money that I’m now putting into savings left over after maxing out my 401(k), and I want to make sure I’m investing it wisely, if that’s even the right first step after this.
Are there any recommended steps after this point, or does it depend on the individual and their goals?
- Jill
It really comes down to goal-setting more than anything else.
Simply put, there is no general right way to invest. There are only good ways to invest to help you reach a specific goal. If you don’t know what you’re saving for, you’re probably going to save in an inopportune manner.
Let’s say, for example, that you decide to start investing in stocks because you heard they have a great return, not because you had any goals in mind. Let’s say you make this decision in January 2008. In December 2008, you decide to buy a house because you got pregnant and you decided you needed a house for that child. Your money has now lost 40% of its value.
You would have been far better off in a savings account had you incorporated the idea of buying a house in the next one or two years into your plan.
Spend some time thinking about where you want your life to be in five years or ten years. Where are you headed? Your investment choices should really follow that.
Jill also had a follow-up question.

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Ziegler Closes $59 Million Covenant Retirement Communities Financing

CHICAGO, IL–(Marketwire -12/29/11)- Ziegler, a specialty investment bank, is pleased to announce the successful closing of a tax-exempt bank direct purchase for Covenant Retirement Communities (CRC). The direct purchase was completed by JP Morgan Chase and was structured as two series of bonds, $15,830,000 of Series A Bonds and $43,335,000 Series B Bonds, for a total aggregate par amount of $59,165,000 (Series 2011 Bonds).
The Series 2011 Bonds were the first multi-state issuance for the Illinois Finance Authority. The Illinois Finance Authority passed legislation allowing it to serve as a multi-state conduit issuer in July, 2010. The CRC financing is the first financing that has been approved and closed under the multi-state legislation. Ziegler, the IFA, and CRC are very excited to be the first transaction of what hopes to become a great resource to other multi-state providers. “The Illinois Finance Authority is proud to play a role in our State’s first multi-state conduit transaction. Governor Pat Quinn and the Illinois General Assembly recognized that multi-state conduit issuance authority is an important tool to both retain and create jobs in Illinois. The IFA is pleased to work with Ziegler’s professional team and, importantly, Covenant Retirement Communities, on this groundbreaking project,” said Chris Meister, IFA Executive Director.
Proceeds from the Series 2011 Bonds were used to refund the outstanding Series 1999 (MI) Bonds, Series 1999 (CO) Bonds, Series 2004 Bonds, and Series 2006 Bonds, as well as provide CRC with more than $6 million of new money to pay for capital improvements for several CRC campuses in Colorado, Illinois, and Michigan. In addition to the issuance of the Series 2011 Bonds, Ziegler also worked closely with Covenant Retirement Communities on the replacement of two letters of credit for the Series 1992 and 1995 Bonds. Both the Series 1992 and 1995 Bonds will be secured by letters of credit from JP Morgan Chase.
Covenant Retirement Communities, Inc. (CRC) is an Illinois 501(c)(3) eligible corporation that owns and operates a system of continuing care communities offering the full continuum of care, in association with the Evangelical Covenant Church. The corporate office of CRC is located in Skokie, IL with facilities located in California, Washington, Connecticut, Florida, Illinois, Minnesota, Colorado, and Michigan. CRC currently has 14 communities with more than 4700 independent living, assisted living, and skilled nursing units and is #5 on the LeadingAge Ziegler 100, a list of the largest not-for-profit senior living providers in the nation.
As one of the nation’s leading underwriters of financing for non-profit senior living providers Ziegler offers investment banking, financial risk management, merger and acquisition services, investment management, seed capital, FHA/HUD, capital and strategic planning as well as senior living research, education, and communication. Don Carlson, Managing Director and Vice Chairman at Ziegler, commented, “The IFA multistate legislation provided a very cost effective and efficient process which allowed CRC to issue bonds to refund prior issues in Colorado, Michigan and Illinois and to fund new projects in each of these states as well. This transaction will further strengthen CRC’s conservative capital structure, which will allow them to continue to provide the highest level of service to their residents. This transaction was truly a success on many fronts.”
For further information on the structure and use of these issues, please see the Official Statements for the Series 1992 and Series 1995 Bonds located on the Electronic Municipal Market Access system’s Document Archive.
For more information about Ziegler, please visit us at www.Ziegler.com.
About Ziegler:
The Ziegler Companies, Inc. (Pinksheets: ZGCO.PK – News) together with its affiliates (Ziegler) is a specialty investment bank with unique expertise in complex credit structures and advisory services. Nationally, Ziegler is ranked as one of the leading investment banking firms in its specialty sectors of healthcare, senior living, religion and education finance, as well as corporate finance and FHA/HUD. Headquartered in Chicago, IL with regional and branch offices throughout the U.S., Ziegler creates tailored financial solutions including bond financing, advisory, private placement, seed capital, M&A, risk and asset management. Ziegler serves institutional and individual investors through its wealth management and capital markets distribution channels.
Certain comments in this news release represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. This client’s experience may not be representative of the experience of other clients, nor is it indicative of future performance or success. The forward-looking statements are subject to a number of risks and uncertainties, in particular, the overall financial health of the securities industry, the strength of the healthcare sector of the U.S. economy and the municipal securities marketplace, the ability of the Company to underwrite and distribute securities, the market value of mutual fund portfolios and separate account portfolios advised by the Company, the volume of sales by its retail brokers, the outcome of pending litigation, and the ability to attract and retain qualified employees.
This communication does not constitute an offer to buy these securities. The offering is made only by the Official Statement and through an appropriately registered representative. The Series 2011 Bonds may not be appropriate for all investors. Market value and/or accrued interest will fluctuate during the period held, and, if sold prior to maturity, the yield received may be more or less than the yield calculated at the time of purchase. Discounted yields herein are gross yields to maturity. Discounted bonds may be subject to capital gains tax, rates of which will vary, so investors should consult their own tax advisor with regard to their personal tax situation. Interest on municipal bonds may be exempt from federal income tax but may be subject to tax for residents of certain states. For bonds designated AMT, taxes may exist for certain investors. Ziegler will sell these bonds on a principal basis.
The corporation or its officers, directors, stockholders, or members of their families may at times have a position in the securities mentioned herein and may make purchases or sales of these securities. Not all call or put information is identified in the description above. Please be sure to discuss any special features with your Financial Advisor before deciding whether to invest in these securities.

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Ziegler Closes $8M Financing for the YMCA in Pabst Farms, WI

CHICAGO, IL–(Marketwire -12/05/11)- Ziegler, a specialty investment banking firm, is pleased to announce the successful closing of Young Men’s Christian Association (YMCA) at Pabst Farms, Inc. in Oconomowoc, Wisconsin. The net proceeds of the 2011 Series Bonds will be used to pay four outstanding bank notes that were originally used for the purchase of the land and construction of the Pabst Farms facility.
The YMCA was originally founded in 1926 as the YMCA of Waukesha County. The YMCA built and began operating its first facility in 1965 at North Silver Lake Street in Oconomowoc. It operated at that location from 1965 to 2002. In 2003 the YMCA opened its new facilities on 23 acres of land at 1750 Valley Road in Oconomowoc. The two level, 115,000 square foot facility is located within the 1,600-acre residential subdivision commonly referred to as “Pabst Farms,” which acts as an anchor to present and future growth for the Oconomowoc community.
Dave Schlosser, Managing Director at Ziegler, stated, “Management for the YMCA initially had considered refinancing the outstanding bank debt with tax-exempt bonds, however they were drawn to our taxable bond proposal due to the simplicity of the structure. With the Ziegler taxable bond structure, there was no call protection on the long-term bonds and much fewer compliance and legal issues involved. The end result was a more flexible long-term structure that met the needs of the organization better than the usual cookie cutter tax-exempt solution.”
Since our founding in 1902, Ziegler has become a recognized leader in providing mortgages, loans, and other financing solutions to not-for-profit organizations nationwide. Ziegler is privileged to serve America’s large and small not-for-profits as well as many religious organizations, schools, colleges, and universities.
For further information on the structure and use of this issue, please contact Ziegler at (800) 366 -8899 for a copy of the Official Statement.
For more information about Ziegler and please visit us at www.Ziegler.com.
About Ziegler:The Ziegler Companies, Inc. (Pinksheets: ZGCO.PK – News) together with its affiliates (Ziegler) is a specialty investment bank with unique expertise in complex credit structures and advisory services. Nationally, Ziegler is ranked as one of the leading investment banking firms in its specialty sectors of healthcare, senior living, religion and education finance, as well as corporate finance and FHA/HUD. Headquartered in Chicago, IL with regional and branch offices throughout the U.S., Ziegler creates tailored financial solutions including bond financing, advisory, private placement, seed capital, M&A, risk and asset management. Ziegler serves institutional and individual investors through its wealth management and capital markets distribution channels.
Certain comments in this news release represent forward-looking statements made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. This client’s experience may not be representative of the experience of other clients, nor is it indicative of future performance or success. The forward-looking statements are subject to a number of risks and uncertainties, in particular, the overall financial health of the securities industry, the strength of the healthcare sector of the U.S. economy and the municipal securities marketplace, the ability of the Company to underwrite and distribute securities, the market value of mutual fund portfolios and separate account portfolios advised by the Company, the volume of sales by its retail brokers, the outcome of pending litigation, and the ability to attract and retain qualified employees
This communication does not constitute an offer to buy these securities. The offering is made only by the Official Statement and through an appropriately registered representative. The Series 2011 Bonds may not be appropriate for all investors. Market value and/or accrued interest will fluctuate during the period held, and, if sold prior to maturity, the yield received may be more or less than the yield calculated at the time of purchase. Discounted yields herein are gross yields to maturity. Discounted bonds may be subject to capital gains tax, rates of which will vary, so investors should consult their own tax advisor with regard to their personal tax situation. For bonds designated AMT, taxes may exist for certain investors. Ziegler will sell these bonds on a principal basis.
The corporation or its officers, directors, stockholders, or members of their families may at times have a position in the securities mentioned herein and may make purchases or sales of these securities. Not all call or put information is identified in the description above. Please be sure to discuss any special features with your Financial Advisor before deciding whether to invest in these securities.

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