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Exhibit 5: Active Investment Strategies

To actively approach the market, CPAs should employ these strategies:

  1. Develop a specific investment goal for your client or employer and establish an investment policy that governs the management of the portfolio.
  2. Review the prospectus of any potential or existing investment to help determine whether the fund’s investment policy matches your understanding and expectations. If the prospectus does not provide sufficient information, dig deeper. Request the “Supplemental Part B Prospectus” (statement of additional information) from the fund.
  3. Incorporate the basics: research, value, buying low and selling high, rather than being swept up in market hype about index funds.
  4. Engage in an active rather than passive approach to investing. Select managers with a defined management discipline that liquidates overvalued stocks in favor of rebalancing in undervalued issues. Avoid the market creep of momentum investing presented by index funds.
  5. Blend the advantages of growth and value styles. These styles tend to balance one another during up- and down-market cycles.

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Maximizing the higher education tax credits

A counterintuitive strategy can save taxes by including otherwise excludable scholarships in gross income.