You May Be Charged A Fee By The Company

Category: Finance, Financial Planning.

Nowadays there are companies that allow an investor to purchase stocks from the company directly. These are called Direct Stock Plans.

It is perfect according to the Securities& Exchange Commission. It is called DSPP. But it is not required in all companies. The company may require information that you have stocks through employment with the company. The Direct Stock Plan operates in different manner than buying stock through a broker. On the other hand the company buys and sells the stock at a given time. There may be small amount of fee& no commissions are charged for these stock plans.

The investor cannot sell or trade stocks at his will. You may be charged a fee by the company. The broker cannot charge a commission but the investor may always turn the stocks to a broker to sell. It depends on your understanding. If you have companies of your choice, like the Walt Disney Company, Coca Cola or other brand names in the United State. You can implement a Direct Stock Plan to purchase stocks on a regular basis. By accessing the company website you can review the list of stocks in your local library or check out the company in which your are interested.

It is generally called a DRIP. Direct Dividend Reinvestment Plan is another method of investing directly in a company. The High quality feature of this plan is that instead you receiving the dividends, you agree to reinvest the dividends in the company for more stock. If you have a broker you may carryout a similar investment plan with your other stocks& mutual funds. It is a regular Direct Stock Plan with a reinvestment agreement. The major advantage is that company allows a private investor to purchase stocks directly this allows you to set up a pay check withdrawal each pay period for the purposes of the stock plan.

I would suggest you can find companies in which you are interested in& make enquiries with the investor relations. There are many advisory services that you can assist in locating companies that provides direct stock purchase plan. The major advantage of you contacting an individual company yourself allows you to use your own preferences& then do a small amount of leg work. On the other hand you can contact your banking institutions, employer human resource or bill payer to set up the account. The company representative provides you the necessary forms& gives you an individual advice on how to set up pay roll deduction. It will astonish you a good number of companies that allows you to buy stocks directly by setting up a plan. It may be a good option for investing, if you have any solid company that has shown a solid performance.

The possibility ranges include utility companies, entertainment and retail, fast food stocks stocks. The only thing is you lose your time. You will be able to get a long term relationship& also save your commission fees. The time it takes in gathering the information has a big payoff.

Pay Yourself First

Category: Finance, Financial Planning.

Savings. Start now stashing 10% of your income in an" Emergency" savings.

Pay yourself first. Don t use it for anything but real emergencies. Christmas, taxes, insurance, etc. ). Keep a" For Sure" savings account for yearly expenses you know are coming and you can estimate( e. g. Also have a" Buy Stuff" account. Borrowing. If you do, you ll be able to avoid many financial disasters which will face you, and you can avoid borrowing money from high- rate lenders.

Don t borrow money unless you are willing and able to pay it back. Experts recommend you don t borrow for wants, or for things, only for needs that increase in value. Failure to pay debts- on time- causes severe financial, and family problems, emotional. Many lenders will loan you money you can t afford to pay back, especially high- rate lenders. Don t co- sign on a loan unless you are willing and able to pay it back. Co- signing. Often, co- signers end up paying off loans they are unprepared for, and financial hardships follow.

Many lenders do not notify the co- signor before reporting delinquencies or repossessions to the credit bureau. Numerous co- signors now have negative credit ratings because a primary borrower paid late. Compare. Find out who is offering the best deal at that time- look for the loan with the lowest rate( APR) . Before you decide who to borrow from, compare! APR.

It is the standard rate, so we may compare the cost of borrowing. The Annual Percentage Rate( APR) . It is the cost of credit expressed as a yearly rate. Some have been illegally stating other rates such as weekly or monthly rates. When you borrow, always beat 13% APR( consider" 13" to be unlucky when it comes to borrowing) . Compare APR to APR. Beware though, because beating 13% does not always mean you are getting a good deal.

If you pay your bills on time, and you aren t over- extended, you can nearly always find loans or financing arrangements at rates lower than 13% . For instance: the difference in total interest paid on an 11% versus an 8% 30- year, $100, 000 mortgage loan is$ 64, 283( assuming all payments are made as agreed) . A consolidation loan can result in great savings to borrowers if the new interest rate is significantly lower, and if you don t run- up debt similar to what was just consolidated. Consolidation Loans. But beware, because consolidation loans usually result in substantially more money out of your pocket into the lenders . They increase the total debt. For instance, mortgage loans usually involve closing costs.

Many refinances involve reducing the monthly payment, but increasing the length of payback, which substantially increases the total interest paid. Also, remember to keep all of your payments current until the old debt is paid off. Borrowers, who refinance unsecured debt( e. g. credit cards) into a home mortgage, also increase their risk of losing their homes. Too many people have damaged credit ratings, and are in bad financial condition because they counted on money which didn t come when they expected it. Don t spend money before you get it. Expect delays when applying for loans, especially consolidation loans. Desperation.

The more desperate you are, the less likely you are to get a good loan. Don t get desperate for money. Auto insurance. If you fail to keep your insurance up- to- date, you could end up making loan payments for years after your car has been totaled. Keep your auto insurance current. Establish good credit. Inexpensive ways to establish good credit: (1) Obtain a good credit card.

To avoid bad credit, don t borrow too much, and do pay your bills on time. When you charge things, pay off the balance each month- on time- and pay no interest. (2) Establish a revolving line of credit( an empty loan) as an overdraft protection against bounced checks, and don t use it as a loan. (3) Get a loan to buy a car, or etc, or furniture. ) and pay it off within a few months. To avoid late fees( which multiply the cost of borrowing) , pay early, or at least on time. Late fees. Repossessions. Extra principal� less interest. To avoid repossessions and associated fees, pay early or on time, and keep your insurance current.

To pay less interest on loans, pay more than the minimum required payment. Before doing this, make sure your, however lender accepts extra principal payments, and find out what particular procedure you need to follow to ensure your extra principal is properly applied. Even small amounts of extra principal, can significantly reduce the total amount of interest you would otherwise pay over the life of the loan. Bi- weekly payments. For instance, if you make � of your required monthly payment every 14 days( a bi- weekly period) , you pay the equivalent of 1052 payments in an average year. If you get paid weekly, or every other week, paying bi- weekly is a very convenient( almost painless) way to reduce your loan term and interest.

If you don t get paid bi- weekly, or if your lender doesn t like biweekly payments, you can pay the equivalent amount in monthly installments. Contrary to popular belief, the frequency of paying � payments bi- weekly doesn t accomplish much, the real advantage is paying the extra principal( 105 payments, each year, or more) which reduces the term and the interest paid. If you pay 1/ 12 of the sum of 105 payments each month, you will match the bi- weekly advantage( minor rounding differences) . If you are considering signing up for a bi- weekly program, pay close attention to the cost. Also consider the credibility of any company handling your money, some have diverted payments into their own pockets, leaving borrowers to make payments twice( once to a corrupt servicer, and a second time directly to the lender) . Some servicers have large set- up fees and transaction fees.

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Federal Loans Are In Great Demand In The US - Finance and Financial Planning Blog:

No student in modern times is unaware of the benefit of student loan consolidation.

How Much Money Will You Need During Your Lifetime - Shawna Feinstein's Finance and Financial Planning blog:

If making a million bucks were easy, we d all be millionaires. According to the statistics shared by Mike Peterson, co- founder of The American Credit Foundation and author of" Reality Millionaire: Proven Tips to Retire Rich, " most Americans are losing the money- making game.

Travel Insurance

Category: Finance, Financial Planning.

When making a decision on what type of insurance to include or purchase, it always varies depending on your lifestyle and economic status. Several types of insurance that will ultimately protect you and your family and love ones from any unforeseen cost of illness, accidents, death, disabilities and home disasters.

While it is extremely important to have this insurance to get protected from all the uneventful accidents in your life, you have to put into consideration that there is no one type of insurance package that fits- all- your needs. Types of insurance you should consider: Life Insurance. Health Insurance( medical and dental insurance) ; Automobile insurance. Disability Income Insurance. Homeowners or Mortgage Insurance. Liability Insurance.

Long- Term Care Insurance. Travel Insurance. Credit Card Insurance. Loans and Credit Insurance. Business Insurance. Accidental Insurance. Professional Insurance.

The more important insurances like life insurance and disability insurance is a necessity that is virtually a must. Whereas for single person and no dependant, it would be less important to obtain a life insurance, though you might need it at one point. Life insurance for instance is virtually a must for people with a spouse and children. And having disability insurance for a person with a family would protect his or her family from income that would otherwise devastate their families. With life insurance you only collect a payout when you die, which can provide your surviving children and spouse and other dependents with the money and/ or funds necessary for them to carry on with their lives- financially. The amount of life insurance you take out is largely dependent on the size of your family and the income and home mortgage that you carry. That fund would take care of your funeral expenses and is also necessary to maintain their living standards and also help to repay debt and help with your childrens educational costs.

Find those insurance agencies or brokers who offer policies from companies whose financial strength are highly ranked by ranking agencies. Shop around for the best insurance companies that sell those insurance that will fit into your budget and economic situation. Disability insurance and health insurance are both important. Whereas, disability insurance may be more important because of the fact that in case there is something that happens to you, your family will not go through the burden of insufficient fund needed for your everyday needs. Your health insurance is almost always covered by your employer as part of your benefit, but sometimes you will still need to make some upgrades to the existing coverage. You weigh in which of these types of insurance is more important as it relates to your situation.

So, the role of insurance in your financial road map has to be assesses and dealt with accordingly. The listed types of insurance that are essentially needed for protection plays a big role in planning your financial roadmap.

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When You Are Shopping Around For A Bank To Put Your Money Into One Thing You Will Need To Compare Is The Saving Account Interest Rate That Is Being Offered - Finance and Financial Planning Blog:

When you are shopping around for a bank to put your money into one thing you will need to compare is the saving account interest rate that is being offered. Be assured that your money is protected by the government if you place it in a savings account.

Why Seniors Don T Buy Long Term Care - Dale Simms about Finance and Financial Planning:

In the next few minutes you will learn about a new insurance industry product that provides long term care insurance coverage if you ever need it, but requires no policy, premiums or health qualifications. In my experience, over half the people who shun long term care insurance do so because they feel they will never need it.

You May Still Be Subject To State Gift Taxes - James Geraghty's Finance and Financial Planning blog:

Doris from Minnesota is considering transferring her assets to her son so they won t be lost to Medicaid should she need assisted- living or nursing home care. One of the greatest financial risks seniors face is the rising cost of healthcare, including the cost of custodial care in an assisted- living facility or nursing home.

It S A Promise Of Case That The Business Will Receive

Category: Finance, Financial Planning.

In most businesses, what drives the balance sheet are sales and expenses. One of the more complicated accounting items are the accounts receivable.

In other words, they cause the assets and liabilities in a business. As a hypothetical situation, imagine a business that offers all its customers a 30- day credit period, which is fairly common in transactions between businesses, (not transactions between a business and individual consumers) . It s a promise of case that the business will receive. An accounts receivable asset shows how much money customers who bought products on credit still owe the business. Basically, accounts receivable is the amount of uncollected sales revenue at the end of the accounting period. However, the amount of money in accounts receivable is included in the total sales revenue for that same period. Cash does not increase until the business actually collects this money from its business customers.

The business did make the sales, even if it hasn t acquired all the money from the sales yet. To get actual cash flow, the accountant must subtract the amount of credit sales not collected from the sales revenue in cash. Sales revenue, then isn t equal to the amount of cash that the business accumulated. Then add in the amount of cash that was collected for the credit sales that were made in the preceding reporting period. If the amount they collected during the reporting period is greater than the credit sales made, then the accounts receivable decreased over the reporting period, and the accountant needs to add to net income that difference between the receivables at the beginning of the reporting period and the receivables at the end of the same period. If the amount of credit sales a business made during the reporting period is greater than what was collected from customers, then the accounts receivable account increased over the period and the business has to subtract from net income that difference.

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The Way In Which Asset Allocation Dovetails With Ancient Wisdom Is That It Turns Our Focus Inward Rather Than Outward - Graciela Dino about Finance and Financial Planning:

Advances in investment theory have dovetailed nicely with ancient wisdom to present investors with a new and exciting paradigm for investing. Markowitz.

You Cannot Wait To Leave Your Job And Enjoy Your Life - Virginia Baltimore's Finance and Financial Planning blog:

Let s just say your 5 or 10 or 15 years or so away from when you think your might retire.

The Policy Has A Large Loan - Finance and Financial Planning Articles:

Most people do not know they can sell an insurance policy. Even term insurance, which has no cash value, is a candidate for purchase.

Expectation# 2: I Will Be In Lower Tax Bracket When I Retire

Category: Finance, Financial Planning.

As we baby boomers approach retirement many of us have started to take a much closer look at what we will need in the form of assets if we are to live to the age of 80 and beyond. We all have had expectations of what our accounts might look like and some of us have had those expectations dashed by market corrections or other financial setbacks.

Most of us have been very focused on accumulation of assets up to this point and may not have stopped to consider what the future outcomes might look like. I think it is time that we took a close look at what other expectations we have for the future versus what reality might spring upon us. What follows is a short examination of five areas that each of us should prepare for and a few ideas that might help you improve your chances of success. If we are to be successful in our own retirements we should move toward it with our eyes wide open and our plans firmly in place. Some of this might appear to be doomsday like but I think we will all be better off if we prepare for the worst while expecting the best, so let s dig in. We know that investing in the stock market has produced the best chance of growing our assets at rates that beat inflation and other fixed money instruments over time. Expectation# 1: The stock market will continue to provide above average returns well into the next decade.

If you stay invested you will always get the average market return for the period you are in the market. We tend to see periods of growth and periods of stagnation. One thing we can say for sure about the markets, is that they, though will never go straight up or straight down. In the short- term no one can predict whether you will make or lose money but we know that over the long term( 10 plus years) you will get whatever the markets return. If we want to live comfortably to ages of 85 or 90 we will need more predictable returns than those odds will give us. The danger for us going forward is that when we start taking income from our investments, every negative year will shorten the lifespan of our potential income stream by as much as 5 years or more.

Are you willing to bet that the markets will perform the way you want them to when you get ready to retire? A little research on your part should yield some good choices for those assets you can t afford to lose. I don t think any of us is willing to take that bet and that is why more and more of us are looking for instruments that will guarantee us a minimum return and lifetime income streams with the money we already have accumulated. Expectation# 2: I will be in lower tax bracket when I retire. They all encouraged you to fully fund your IRAs and 401ks because of the current tax deductions and the tax deferred growth with the promise that when you retired you will be in a lower tax bracket. I am sure you have been told this by every planner or investment professional you have ever talked to. I have conducted seminars for over 5 years now where I ask the question of my audience, "do you think future tax rates will be lower, the same or higher" ?

When you look at our country s current level of debt along with the future liabilities for our major entitlement programs( which we will look at next) I think you too will be hard pressed to think your taxes will even stay the same going forward, let alone reduce. I can count on one hand the number of people who said lower or the same. Whatever your current tax bracket is, can you imagine living on less than you are today? The reality is that during a 20 year retirement, if you have accumulated all of your retirement assets in tax- deferred accounts, you will pay 10 times more in taxes than you saved in taxes over your lifetime, assuming no tax increase. If your income stays the same and your deductions disappear because your kids are gone and your home is paid off, what chance do you have to reduce your tax burden? Every increase in taxes going forward will mean you will need to take more money out of your savings to maintain the same lifestyle.

This product is known as equity indexed universal life. One way to solve this dilemma is to start funding a private tax- free retirement plan using an insurance product that is linked to a market index and designed to provide maximum cash accumulation with a minimum death benefit. Here again, a little research on your part will reveal multiple, high quality companies that currently offer these products. The reality is that both of these programs are in trouble and will only get worse as the 80 million baby boomers enter retirement. Expectation# 3: I can count on Medicare and Social Security to be there for me like it was for my parents. Ask anyone under the age of 40 if they think Social Security will be there for them and you will soon see that this reality is already well entrenched in our culture. By one account, it is predicted that by 2019 Medicare will consume 24% of all tax receipts and by 2042 it will consume 51% of all taxes collected. 1 You might think universal health care will solve this problem.

The facts are that 60% of current retirees say that 50% of their income currently comes from Social Security, 34% say that it is 90% of their income and 22% say that it is 100% of their income. Unfortunately, Medicare is a form of universal health care and anything that will replace it will be burdened by the same reality of baby boomers living much longer in retirement than their parents ever did. The bottom line is that benefits will need to go down, we will need to wait longer to be eligible and taxes will need to go up to pay for the massive increases in cost that will result from the higher usage figures projected. As for Social Security, it is predicted that the Social Security trust fund will begin be tapped into in 2018 and be completely depleted by 2042 If we had made changes to this program years ago we might have been able to extend it but I don t see any congress willing to touch this problem until it is too late. We are going to have to become responsible for our own retirement planning and should these promised benefits materialize for us we should feel lucky if we can plan an extra night on the town every month. This might well be true but then you must ask yourself, what is my life expectancy? Expectation# 4: I will live to my normal life expectancy.

When Social Security was instituted the average time spent in retirement was 3 years. Statistically speaking, if you are a single male age 65 you have a 50% chance you will live to age 85 and a 25% chance to live to 9If you are a single female age 65 you have a 50% chance you will live to 88 and 25% you will live to 9If you are a married couple age 65 one of you has a 50% chance to live to 92 and a 25% to live to 9 If these numbers don t get you thinking about how long you will need for your money to last consider this. Many of us today will spend 20 to 30 years in retirement. One of the fastest growing age groups in the United States are those people over the age of 10There are currently over 27, 000 people over 100 and that number is sure to grow as the baby boomers begin to age. There is no doubt about it. Expectation# 5: I will stay healthy well into my final years.

We are much more conscious of our health and taking care of our bodies and minds than any generation in the history of the world. However, all of this has come at a price and that price needs to be calculated into our future income needs. We are finding new ways to combat disease and to stave off illness as well as to treat conditions that would have killed us only a generation ago. According to a study by Fidelity Investments, a retired couple without employer- sponsored health insurance can expect to pay$ 215, 000 for out- of- pocket health care costs like premiums and co- pays. These numbers also assume you live to your life expectancy and not beyond. Moreover, this number does not include significant costs like long- term care, which isn t fully covered by Medicare.

Last year these costs rose by 5% and we do not know what kind of increases we may see in the years ahead. If we add in home health care and long- term care into this equation we can easily double the numbers above and put a further strain on our already over taxed retirement funds. As we have outlined above, Medicare costs could easily rise by double digits in the next 20 years. One thing you can do about potential long- term care needs is to purchase a long- term care policy from one of the many experts in this field. The numbers aren t pretty but there is no need to despair. What you can do to prepare. Whether you have years to prepare for retirement or you are already there you can create a plan to succeed and prosper in your own retirement.

You will need to be in investments that can give you predictable returns without the threat of market downturns. To summarize let s go over the realities again: Investment directly into stock market investments can leave you at the mercy of the markets and geopolitical events. Taxes will probably be going up over the next few years and into your retirement. Government entitlement programs will take a larger and larger share of the tax revenue in the future and future benefits may well be reduced or eliminated. It would be best to use your tax- deferred retirement plans early in your retirement and it may be prudent to move them to tax- free instruments at your earliest opportunity. Start taking responsibility of your future income needs by using instruments that can give you market based growth in a tax- free environment. Create plans that will provide income streams you cannot outlive.

Plan to outlive your own life expectancy. There are many instruments on the market today that provide living income benefits you cannot outlive and that can be funded with both taxable and tax- deferred assets you now own. Purchase a long- term care policy that will pay for future needs at home and in care facilities. Expect to stay healthy but plan for the probability that you will need to spend more on heath care in the future. One thing you can do right now is to get educated and speak with a professional advisor, preferably one who carries the CERTIFIED FINANCIAL PLANNER designation. Remember, by planning for the worst while expecting the best, you will be the ultimate winner and your retirement years will be all you have dreamed they would be.

The sooner you take action the greater your success will be.

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Why Seniors Don T Buy Long Term Care - Finance and Financial Planning Articles:

In the next few minutes you will learn about a new insurance industry product that provides long term care insurance coverage if you ever need it, but requires no policy, premiums or health qualifications. In my experience, over half the people who shun long term care insurance do so because they feel they will never need it.

But What Exactly Is A High Certificate Deposit Interest Rate - Finance and Financial Planning:

If you are interested in making money from your existing money, but you are not too fond of possibly losing it all in the stock market, then you should instead turn your attention to certificate deposits.

The First Is A Medical Power Of Attorney - Ingrid Grimley about Finance and Financial Planning:

Few topics confuse investors more than figuring out what estate- related documents they need.

However, If You Decide To Quit Your Policy, Your Cash Value Can Be Paid In Cash Or Paid Up Insurance

Category: Finance, Financial Planning.

Whole life insurance, also known as cash value insurance is a basic and consistent type of permanent life insurance which remains in effect your entire life at a level premium. A portion of your premium goes into a reserve fund called cash value that builds up over the years your policy is in affect.

This life insurance is a good choice for you if you do not expect your life insurance needs to diminish over time. Your reserve fund is tax deferred and you can borrow against it, until you withdraw it. You may also have the option of a single premium paying all of the premiums at once with a single lump sum. The premiums must generally remain constant over the life of the policy and must be paid periodically according to the amount indicated in the policy. Your cash values will grow to equal the amount of the death benefit when you turn to age 10 Although, whole life insurance is very expensive, and if you are on a limited budget, you may not be able to afford all the insurance coverage you actually need. Also death benefit will never decrease if you do not borrow against it. But the plus point is that the death benefit is guaranteed as long as premiums are met.

Whole life insurance policys returns will fluctuate with the markets and will usually follow returns available from other investments like equity mutual funds. Whole life insurance is most suitable for you, if you want to use it as a tax and estate planning vehicle, accumulate cash value for a childs education or retirement, provide money for, pay final expenses a favorite charity, fund a business buy and sell agreement and provide key person protection. However, if you decide to quit your policy, your cash value can be paid in cash or paid up insurance. Before buying the whole life insurance, you need to think carefully about choosing your level of coverage. This would be a tragic error with whole life insurance policy because defaulting on premium payments can mean policy cancellation and the loss of your entire investment. Too often people make the mistake of insufficiently covering or even worse, financially overextending themselves. So be careful and make sure you pick a life insurance policy that has a guaranteed cash value starting at the very first year, choose the one with the highest cash value in the very first year, consider participating insurance policies which can pay dividends, increasing your policys value by boosting both the total cash value and the death benefits, and beware of any insurance policy that levies surrender charges when you cancel.

If you ever need to stop paying premiums, your policy lets you use the accumulated cash value of the life insurance policy to pay the premiums, thus keeping your coverage current.

This Is Probably The Best Reason To Not Want To Be Rich

Category: Finance, Financial Planning.

You would think everyone would want to be rich, if they could be.

Why? After talking to quite a lot of people, I ve found that there are a significant number who do not want to be rich. Here are my ten reasons why I think people are not interested in being rich. This is probably the best reason to not want to be rich. They are contented. They are happy where they are. For these people, there truely is more to life than money.

They have enough for their needs and feel that they are living fulfilling lives. There was this story about how a very rich man retired to a village and watched a poor fisherman catching his meal for the day. Why would I want to do that? He advised him to get a net, invest in a bigger boat, hire some people to help him to catch more fish, so that he could export the fish to people around the world, make lots of money, and be like him. The poor fisherman asked. They have a higher calling beyond the need to feel secure with money.

Then when you are rich, you can retire to a little village and do nothing but fish all day, came the reply. There are those who are perfectly prepared to give up riches in order to accomplish a higher purpose. I once came across an advertisement for a get- rich product that warned that this product was not for those who liked travelling to work and working long hours when they could be permanently on holiday. They actually like their jobs and find that it gives them meaning in life. I assumed that obviously people would then select to buy the product! They are simply too busy either with their jobs or family to have time to think about how to get rich. But then I have found that many people actually like their jobs and have no idea what to do with themselves if they had so much money they were permanently on vacation!

They have enough on their plates just trying to find enough hours in a day to make ends meet and have no interest in taking away anymore of their meagre rest time. Most would rather they suddenly won the lottery tomorrow and expect it to solve their financial problems instead of taking the time and effort to learn more about how to manage their money wisely, so that they can be financially free. They are too lazy to take action. They are too cynical to believe that everyone can become rich, if they learnt how. They figure maybe an earthquake would flatten the investment property they just bought. They think the stock market will crash tomorrow if they buy today. They think businessmen are crooks.

They are afraid of losing. The list just goes on and on. They are so paralysed with the fear of taking any potential risk, even though it is calculated, that they would not even consider parting with their money to allow it to work harder for them. They get into the action when it is too late. They are too greedy. They see how others have made a lot of money and greed sets in as they jump in. They are simply ignorant.

They always want that little bit more and never learn when to cut losses or take profits. They have never been taught that anyone has the potential to be rich, that there are ways many ways( legal, if I may add) of getting rich. They would much rather their spouses, company or government takes over the job of their financial planning and look after them for the rest of their lives. They just need to be educated. 1They are overly dependent. These are the ten reasons I have come across!

Free Checking Accounts Are Fairly Easy To Procure

Category: Finance, Financial Planning.

No wonder so many of us run from discussions on financial matters, and spend too, ignore our bills much money, as if in rebellion. Last year, the Employee Benefits Research Institute released the results of a study concluding that the majority of Americans are unprepared for retirement, are not saving enough for it, and have unrealistic expectations about how much they will need to live comfortably in their golden years.

It s scary out there. Texas is no exception. Being one of the millions in debt myself, I can understand this. With its high poverty rate, and even higher rate of those going without health insurance, it s lucky many can get through day- to- day life. The rising cost of housing, food. -- even clean drinking water- - can drive anyone with a limited income to distraction. As usual, knowledge and simple planning gave me hope. I decided to stop changing the television channel with every new disastrous financial report, and to start researching, when an investment counselor said to me with matter- of- fact conviction, "You know, young adults now just may need a million to retire. " After the initial( and expected) incredulous gasp, I decided gulping air wasn t going to do me much good.

Here are a few tips on digging yourself out of the panic. Most of us have at least one of them. Checking and Savings Accounts: The first step in building a sound financial future is practicing money management skills with both checking and savings accounts. Keeping track of their balances is an entirely different matter. At one point, it was common for financial institutions to charge monthly fees for the privilege of stashing money with them, but the banking industry rakes in so much profit from successfully luring their customers into other investments that it s just not necessary anymore. Free checking accounts are fairly easy to procure.

The theory is that if one has a free account with a particular financial institution, there s a good chance that person will return to that institution for other investments as his or her income grows- - investments that will make both the customer and the bank happy. Texas abounds with students- - students needing any freebies they can get- - so it shouldn t be difficult to find a bank offering free checking and savings accounts, especially in cities like Dallas, and Austin, Houston. By all means, take advantage of this. Look for a checking account without a minimum balance requirement, and one that doesn t, of course, charge monthly fees. Keep track of your balance. Free checking accounts are not usually interest- bearing, so put only enough money in it every month to cover your monthly bills, plus a little padding. The greatest risk with these accounts is the astronomical overdraft fees most of them charge.

The average APY( Annual Percentage Yield) on low- balance savings accounts hovers somewhere just around 5% , but at least it s something. Once all of your bills are paid at the end of each month, stash extra income in an interest- bearing savings account. Short to Middle- Term Investments: Once you feel you ve established a healthy pattern of money management- - no overdrafts, a properly balanced ledger, and all bills paid in full- - start looking into other investments. Money Market Accounts: Money market accounts are great investments at any age, but they re particularly advantageous for beginning investors simply because there are no penalties for withdrawing any amount at any time, no waiting period to continue investing( you can, deposit money at, likewise any time) , and the funding is usually only a check away. Most of the time, you ll need at least$ 5000 to invest in other types of accounts, at least initially, and, look for those with better APYs than your current savings account, but will not inflict penalties for withdrawing funds whenever you need them. There are several types of money market accounts, so be sure to investigate the minimum investment required, and restrictions on, interest rates each before making any commitments.

The result is a fluctuating interest rate that is almost always at least a few percentage points higher than that of a standard, low- balance savings account. Money markets work by pooling investments from thousands of contributors into an assortment of( usually short- term) funds from municipal bonds, to stocks. According to USA Today, non- bank money market funds are currently at about 5% APY. Interest rates are fixed, are usually comparable, rather than fluctuating to money market accounts and can be purchased at a bank or other financial institution, including many sites online, for terms as short as three months. Certificate of Deposit: Certificates of Deposit, or" CDs" have been around longer than the replacement for the tape cassette. Of course, the longer the term you lock in, the higher the rate you will obtain under most market conditions In other words, whatever interest rate you lock in at the beginning will remain the same throughout the course of the investment.

The primary disadvantage of CDs lies in the substantial penalties inflicted if the investor withdraws his or her money before the allotted time. Once you ve invested in a CD, you cannot continue, however adding to the same one during the life of that investment, until renewal- - which is one reason you may want to go with a shorter term. The average APY for a six- month CD is currently 59% ; for a one- year CD, 77% ; for a five- year CD, 96% , although some banks may offer better deals. Health Savings Account: Health Savings Accounts, or HSAs were created by a 2003 Medicare bill, without a doubt, and are, worthy of consideration for many individuals and families. CDs are a good idea if their current APYs are higher than contemporary money market accounts, and you don t expect to- - or perhaps don t trust yourself to- - handle the money for a while. HSAs strive to address the growing problem of underinsured Americans( Texas knows this well, with over 25% of its population going without any insurance) by allowing investors to save for qualified medical expenses and future retirement health expenses, on a tax- free basis.

HSAs provide incentives for saving towards healthcare, and a bit of financial padding in case of disaster. These accounts are only made available to those with qualifying high- deductible health insurance policies, and are a great choice for many young, middle- class Americans. The major disadvantage is that penalties are inflicted if the money is withdrawn for unqualified expenses prior to the age of 6 Retirement Accounts: The types of retirement accounts available to Americans are too numerous to mention, and are highly dependent on employers in most cases. The first, and most important thing to do, is to check with your employer to see if, retirement plans are, or what offered. Entire sections of libraries and many websites are dedicated to this subject. Some companies offer employee benefits, including flexible 401( k) plans and matching funds. However, rather than briefly attempting to delve into the plethora of accounts that may, be available to, possibly you, this article will focus on an account available to all, regardless of employer. -- the Roth IRA account- which has become increasingly popular since becoming law in 1997.

Look seriously into these options. Now, IRAs have been around for some time, but traditional IRA accounts require funds going in, to be taxed, and coming out. Considering that IRA interest rates are compounded, this could( and is intended to) add up to quite a bit over several decades. This means that whatever dividends or proceeds an investor earns over the years will be taxed upon withdrawal. Roth IRA accounts, on the other hand, do not tax funds upon withdrawal. A Traditional IRA, on the other hand, is not taxed going in, but is subject to tax coming out, at whatever rate of income will apply to you at that time- - the assumption being that you will withdraw most of this money during retirement, when you will not have other earned income driving up your tax rate, .

Funds invested into the account are considered taxable income going in, but the compounded interest or proceeds can accumulate tax free, until the age of 59 1/ 2, at which point they can be withdrawn without penalty or taxes. This means that whatever your Roth IRA account balance statement is, is the amount you have for retirement, free and clear. If an investor begins an IRA account in his or her twenties, and contributes a modest amount every month( possibly matched by an employer) , principle and compounded interest could conceivably yield a million or more dollars over four decades. No more taxes. The way to think of a Roth IRA, as opposed to a Traditional IRA, is that you are paying taxes on the seeds instead of on the crop. Maybe retirement is possible.

Now, that s something to think about. See, that wasn t so hard. There s a good chance you re missing something you have the funding for- - right now, sitting in a no- , or low- , interest- bearing account. Respect yourself( and your anxiety levels) enough to seriously investigate financial opportunities. If you have any kind of steady income, financial security should be within your grasp. Just take a deep breath, and start acting, open your bills like the adult you always dreaded you d have to be someday.

A comfortable retirement is in your future. Taking care of your financial responsibilities can have a positive effect on your anxiety levels, and overall health, sense of security. Being aware of your health, and what you can do to safeguard it, will certainly affect you as you age, and eventually your wallet as well.

Even If The Underlying Index Goes Up 10% , Your Return Will Be Lower

Category: Finance, Financial Planning.

Equity Indexed Annuities( EIAs) have become the hot product of late. I' ll discuss these alternatives in the next two articles.

I believe you can easily find other alternatives that will bring a better return, without locking up your money or levying hefty surrender penalties. But first, you should understand two things: your purpose for investing and how EIAs work. For simplicity let's consider two objectives- -stability and growth. Know why you' re investing. If you are primarily concerned about protecting your investment and earning a stable rate of return then your main objective is stability. It's unlikely that your objective will be 100% stability or 100% growth. On the other hand, if you are concerned about protecting yourself from rising prices, building a retirement nest egg or growing your wealth then your primary objective is growth.

Usually it will be a combination of the two. On the other hand if you' re 75, stability may be more of an issue for you. For instance, if you' re 55 years of age and preparing for retirement, perhaps you' d want about 40% of your portfolio invested in'stable' investments such as bonds or CDs, and 60% invested in equities such as stock mutual funds. You still want to plan for inflation, but your objective is very different from a 55 year- old. Maybe you' ve been told EIAs are the perfect answer. You might have 70% in stable investments and only 30% of your money in equities.

They' re sold as delivering both stability and growth. It seems that an EIA will help you meet both objectives. Salespeople say you can participate in the growth of the stock market without the risk, while always earning a minimum of 3% . Upon closer examination, you will see, though that it doesn' t do either very well. Let's put that in perspective. EIAs are said to provide stability because they provide a minimum return of 3% .

In return for that 3% minimum you are required to keep YOUR money in the investment for many years, or else pay a penalty that in some cases could be the equivalent of over 3 years worth of return! If interest rates increase during those 7 to 12 years, you will be unable to take advantage of them. Moreover, that 3% minimum doesn' t change over the long length of the investment. Imagine how you would feel if you knew you could be earning 5% or 7% in a CD or government- guaranteed bond, but you were stuck in an EIA paying 3% ! So let's take a closer look at the growth offered by an EIA. The stability an EIA provides just doesn' t measure up.

Typically, your investment choices are limited to the S& P 500, or a bond, NASDAQ- related index. If these indexes go up 25% or 50% like they did in 2003, you may only earn 10% to 12% . But EIAs place a limit on how much you earn. EIAs only allow you to only participate in a portion of the index's return, or they have internal charges of 1- 2% . This makes sense when you realize the insurance has to earn back the enormous commission it paid the agent. Even if the underlying index goes up 10% , your return will be lower. The insurance company can' t pay a 3% minimum in the bad times AND allow you to get 100% of the return in the good times.

Don' t stack the deck against yourself. So, in an EIA, you bear the risk of investing in the stock market but don' t get all the return. When you invest in equities you should have access to thousands of choices, and get all the return. No matter how you need to split your portfolio between stability and growth, there are much, believe me better ways to manage your money. The bottom line: why trap yourself in an investment that greatly limits your upside potential and shackles you with outrageous surrender penalties, all for a measly 3% promised return, while your agent walks away with a 10 or 12% commission? I' ll talk about them next week.

Should You Trust Or Not Trust

Living Trusts have become very popular and are being heavily promoted to seniors. That is the question.

Should you Trust or not Trust? Read on to learn some simple guidelines that will help you know whether a Living Trust may be right for you and how to go about getting one if needed. As a result, any assets' owned' by the Trust at your death avoid Probate and can pass to your heirs simply and easily. A Living Trust is considered a separate legal entity much like a corporation. It also provides for the management of your assets if you become incapacitated. Even though the Trust is considered a separate legal entity, you retain complete control over everything you own. Living Trusts can be complex documents that allow you to precisely detail your wishes or they can be a straightforward means of handling your estate.

In fact, a Living Trust can allow you to control assets from the grave. It won' t' hide' your assets from Medicaid should you need to go into a nursing home. A Living Trust will not protect your assets from lawsuits or creditors. It won' t automatically eliminate all estate taxes, though it can help eliminate some and reduce others. Living Trusts are being heavily promoted through seminars. And a Living Trust only controls those assets that are' owned' by it, so unless you re- title your home in the name of the Trust, the Trust will, for instance not protect it from having to go through Probate.

If you attend one, you may come away feeling that everyone needs a Trust. Although many people will benefit from one, they are not for everyone. That's not true. Take' Lily' , an 82- year old widow from LeHigh Acres, Florida who recently called me. That is completely untrue. She was being pressured to get a Trust after attending one of these seminars. "If you don' t get one, you will have to pay thousands of dollars in taxes when you die, " the salesperson told her.

In fact Lily didn' t need a Trust at all. She had already named beneficiaries on her bank accounts and IRA, so these assets would avoid Probate when they passed to her heirs. Lily's assets consisted of a few small bank accounts, an IRA at a brokerage firm and a modestly priced condominium. The only asset that would be subject to Probate was her condo. Sometimes there can be a gift- tax issue when transferring ownership of an asset to a child. Lily has a good relationship with her kids, so she can title the condo in their names.

I almost never recommend adding a child's name to your home, but in this case it makes sense and she shouldn' t incur any tax liability. There are a number of off- the- shelf computer programs that provide all sorts of legal documents, powers of attorney, such as wills, contracts, and Living Trusts. Another option for Lily was to set up a Living Trust on her own. Trusts created using this software may not have all the special features of those costing$ 2, 000, but most people don' t need them anyway. They used an inexpensive software program to put together their Trust. Anne and her husband in South Carolina set up a Living Trust this way.

It's critical that you have an attorney review it when you' re finished. Even if it is to handle the transfer of your real estate at death, the time you take now will make things much easier for the loved ones you leave behind. Their local attorney reviewed it, made sure everything was as it should be and only charged them$ 10 If you are able to do this, then there isn' t any reason not to have a Living Trust. There are, several situations where, however it pays to go ahead and have a professional draw up a Trust for you. Professional help should be sought if you want to have incentives to financially motivate your heirs or if you want them to receive their inheritance over time instead of all at once. These include your estate being worth more than$ 5 million, having children that are handicapped or disabled, or having children from a previous marriage.