Best Investments Guide For Beginners

Learn The Tactics That Personal Finance Experts Do Not Want You To Know

noreply@blogger.com (Unknown) — Wed, 02 Oct 2013 01:47:00 +0000

You don't have to have a college degree in finance to control your own. If you are willing to use some common sense and learn a few management tips, you can how easy it is to successfully build wealth and live within your means.

Avoid excessive fees when investing. Most brokers have hefty fees for the services that they render. These fees can really take a chunk out of the money you make. So it is best to personally manage your investments. Brokers with unreasonably high commissions and funds that charge a lot for management are both things you should stay away from.

Today is a volatile time; it's wise to diversify your investments. Fund your savings account, maintain your checking as well, and diversify the rest between stocks, retirement accounts and, if possible, gold. By using some of these ideas, or even all of them, you'll be able to safeguard your money.

Never believe that a credit repair organization can guarantee success in improving your history. A lot of companies don't give all the information about their skills for repairing your history. This is not factual because the afflictions of your credit do not necessarily resemble the credit issues of others. No one can guarantee success, and to say otherwise is fraudulent.

Some people spend $20 to $30 each week in lottery drawings hoping to 'win it big.' Instead, invest that same amount of money in a savings account. In fact, you would be guaranteed to increase the amount of your income as time passes rather than simply tossing money to wind.

If Christmas time has typically meant a lot of cash spending, then consider making your gifts instead. You can save hundreds of dollars around the holidays by reducing spending at department stores. Making use of your own creative faculties cuts your costs and protects your net worth.

If debt collectors constantly contact you, then you should know that your debts do legally expire if they are not collected within a certain time frame. Consult an expert about the statute of limitation laws pertaining to debts in your state; you may not have to pay anything depending on how much time has gone by.

No matter who you are, you can save money, develop a budget, and achieve financial stability. Just take these tips to heart and put them to use to build your skills to budget, pay off debt and save for a rainy day.

Useful Information To Know When Considering Personal Bankruptcy Options

noreply@blogger.com (Unknown) — Tue, 01 Oct 2013 01:45:00 +0000

There are few people who expect to file bankruptcy. Situations always change and you are left with the only option, which is bankruptcy, but most importantly you need to understand how to work within this situation. This article will give you some great advice to help decide if filing for bankruptcy is the right option for you.

If filing bankruptcy is in your future, don't waste any savings you may have attempting to pay off your debts. Retirement accounts should never be accessed unless all other options have been exhausted. You may need to withdraw some funds from your savings account, but don't take everything that is there as you will be bereft of any financial backup if you do.

Although you can find many bankruptcy attorneys that are listed in your local Yellow Pages or online, it's best if you can find one through the personal recommendation of a friend, family member or acquaintance. Don't be taken in by some fly-by-night company that exists only to profit from the suffering of others. Check out any lawyer you are considering thoroughly before engaging him or her.

Make sure you are completely honest when filing for bankruptcy. Hiding your assets is never wise. Wherever you file, that court has to be made aware of all details regarding your finances, positive and negative. Keeping secrets or trying to outsmart everyone is not a wise move.

You should not have to pay for an initial legal consultation, and such meetings are great opportunities to ask lots of questions. Most lawyers offer free consultations, so talk to a few before making your decision. Don't hire an attorney who fails to address all your concerns and questions. You don't have to make your decision right after this consultation. Consulting with several attorneys will also help you find someone you trust.

When you do meet with a lawyer make sure that they answer all of your questions and that they do not charge you for consultation alone. You can meet with a few lawyers before deciding on one. Most lawyers provide a free initial consultation. Only choose a lawyer if you feel like your questions were answered. You don't need to decide what to do right away. Consulting with several attorneys will also help you find someone you trust.

If you are seriously thinking of filing bankruptcy, make sure that you contact an attorney. There are many different aspects to filing bankruptcy, and you may not understand everything there is to know. A qualified bankruptcy attorney can guide you through the filing process.

Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. Once you have filed Chapter 7, you, by law, are not responsible for any of your debts that also include your co-debtor. However, creditors can demand co-debtors pay the amount in full.

You will now be aware that a good deal of thought should be applied before bankruptcy papers are filed. If you know what makes sense for you, you can work with an experienced bankruptcy lawyer and get ready to experience a clean financial slate.

Tips That Can Improve Your Personal Finances

noreply@blogger.com (Unknown) — Mon, 30 Sep 2013 01:44:00 +0000

If the state of your bank account is making you nauseous, don't run out to buy some medicine! Just continue on to the article below and learn about different ways to make your financial situation much better. When you have enough financial knowledge, you can improve your situation no matter what the circumstances.

Stay tuned to the news in order to be aware of the global market. A lot of people tend to ignore important world news which can impact their own financial situation at home. You will be able to make better investment decisions and predict the course of the markets more accurately when you stay up-to-date with worldwide developments.

Never sell when you aren't ready. If a stock is earning good money, just let it stay as is. If you have stocks in your portfolio that are not performing well, you may wish to change them up a bit.

Be suspicious of a credit repair company that guarantees that they will be 100% successful in restoring your perfect credit. Such a practice is absolutely illegal, and these companies are likely to run off with your money before doing anything to help you with your credit score. Remember that every credit situation is different, so there is no blanket cure. Companies that promise to completely clean your credit are deceiving you.

Avoid paying large fees when you invest. Full service brokers levy fees for services they provide. These fees majorly affect your total return. You want to stay away from funds that charge a lot for account management as well as brokers that take excessive commissions.

Instead of maxing out one card, try to use a couple of them. The interest of two different payments should be much lower than paying off a maxed out credit card. Also, this won't damage your score and it could also help you in building it if you could manage two credit cards wisely.

A helpful way of saving money is by eating out less. You will save money by preparing meals at home.

With your new understanding of personal finance, you should have far less fear than before. Keep in mind all the points covered in the preceding paragraphs, plus keep learning how you can improve your financial picture in the future. This is the beginning of a new you; one who is debt free and saving money! Be sure to enjoy it.

The Dark Side Of Extreme Couponing

noreply@blogger.com (Unknown) — Sun, 29 Sep 2013 01:42:00 +0000

We are all seeking to conserve money in these troubled times. Coupon clipping is one method to save money on food and other items. But there is a bad side to couponing. "Extreme Couponing," made popular by a cable Television show, can, for many, become a dark obsession.

Popularized by reality show

"Extreme couponing" is a phrase popularized by The Learning Channel's reality show of the same name. According to TLC, it is a show about "the world of bargain shoppers who have mastered the art of saving. Get tips to help you save Big." TLC first previewed the show in December, 2010. In April 2011, the show began airing. A second season starts this month.

Can couponing lead to hoarding?

The show is not just about individuals who conserve cash though. As Allison Linn of MSNBC points out, it is more about "bargain-obsessed people coupon-clipping for hours, and in some cases even Dumpster diving for more coupons." Linn said that whenever we see individuals clearing the grocery store shelves and then giving a ton of coupons to the register clerk, this is seen. These people start to show their pantry off. They show that they have a years' supply of household goods from the couponing.

Controversy over Television shows

Recently, the show has sparked a backlash from retailers and manufacturers, who see more and more people taking bargain hunting to the extreme.

Bud Miller, executive director of Coupon Information Corp., said "a fairly large number of people are going into stores with really unrealistic expectations."

The trade group Food Marketing Institute warned retailers last month of a rise in fraudulent behavior among coupon users. Behaviors cited integrated intimidating cashiers and attempting to redeem coupons for items other than what they were intended for.

An increase in Sunday newspaper theft reported

Linn explained that newspapers started to be stolen more often on Sunday. This is because of couponers, many believe.

The Sacramento Bee is doing things to prevent theft from taking place, according to Dan Schaub. The papers are being used by couponers. This was clear to him. Wed and Sunday newspapers -- the days that feature coupon inserts -- have been selling easily.

Deception being committed

Jill Cataldo posted an article in April that pointed out troubles with the "Extreme Couponing" individuals. She said that one shopper on the show, J'Aime Kirlew" showed lots of unethical and illegal couponing practices

TLC responded to the controversy in a statement, saying the company takes the concerns seriously and will look to the matter. The end of the statement said: "We look forward to sharing the tips and shopping savvy from all the couponers featuring in upcoming episodes."

Some Tips For Managing Your Personal Finance

noreply@blogger.com (Unknown) — Sat, 28 Sep 2013 01:40:00 +0000

Many people are having a financial crisis in today's hard times. Although getting rich is difficult, there are some methods you can try, to improve your personal financial situation. Read this article to find out what you can do to improve your financial situation.

Consider eating local foods to try to save money when visiting a foreign country. The tourist trap restaurants and hotel eating establishments are probably overpriced. Look online before your trip, and figure out where the local people eat. From local restaurants, you will find more ethnic food for less money.

Never trust a credit repair agency that guarantees your credit history can be improved successfully. A lot of companies out there make vague statements about how they will repair your credit history. This is a ploy to get you to sign up for their service. You can handle most debt consolidation and credit repair on your own. As such, 100% guaranteed results are straight-up fraud.

You personal financial health depends on keeping your debt under control. While education and a mortgage are two worthwhile reasons to go into debt, there are very few other reasons why you should use credit. Borrowing less money translates into paying less money on surcharges and interest.

Change over to a checking account that is free. Certain institutions, like online banks or credit unions, provide free accounts.

One of the more expensive purchases you will make is an automobile. Make sure that you do not spend too much on a car by shopping around at more than one dealership. The Internet is a good resource for good deals on cars.

Opening a savings account can be very helpful in case of an emergency. Put money aside for a vacation you have always dreamed of, or for expenses you are foreseeing such as paying back your student loans.

In summary, though you might not be rich, you can still improve your personal financial situation in such a way that your life is improved. You can be motivated by the thought of an easier lifestyle where your personal finances are easily managed.

How To Create A Financial Plan

noreply@blogger.com (Unknown) — Fri, 27 Sep 2013 05:51:00 +0000

Do you want to be a money overlord rather than a slave to your money? If you have complete control of your finances you will be taking a important step in your life. Get more bang for your buck by making the smartest money management choices.

Develop a better plan for the future by keeping a journal of all of your expenditures. By writing it inside a notebook that can be closed, it might get forgotten because it's not in plain sight. Try using a whiteboard in your den or home office to document your finances. Since the notes will be constantly visible to you, you will stay aware of your fiances.

Invest in a small accordion style envelope and always have it on hand. Put every business card or receipt you receive into this envelope. Keep this information available as a record that you might need at a later date. You never know when you'll need to contest a credit card charge after being charged twice for something.

Paying in full instead of getting into debt is the better option if you can manage it. While certain debts are unavoidable, like mortgages or college loans, toxic debts such as credit cards are best avoided at all costs. The less you borrow, the less you will spend on interest.

Wherever you go, bring along a small envelope. This way, you have a place to store all receipts that you receive. It is important to have a system for saving these for record keeping purposes. They might come in handy in case you wanted to compare them with the credit card statements just to be sure you weren't double charged.

You can save both time and money by buying bulk packages of lean protein. If you end up using everything you bought, you could drastically reduce your expenses. If you cook meals for the rest of the week, it can save you a lot of time.

Don't take a lot of student loans out if you're not expecting to be able to pay them off in the near future. Attending an expensive school for a major you're unsure of may put you into serious debt.

You can learn a lot about how to manage your money by speaking to a friend or family member who is a finance professional. If one does not know anyone that has worked in financial services, a friend or family member who is very good with their finances may be able to offer some help.

In spite of unexpected and miscellaneous expenses that often rear their ugly heads, after you read this article, you will be able to establish a modest savings plan. Be patient with improving your finances as it could take some time. It's kind of like a diet--it's impossible to see results immediately. You will see incremental changes if you simply plug away at it.

Personal Finance Tips, Tricks, And Helpful Advice

noreply@blogger.com (Unknown) — Fri, 20 Sep 2013 23:19:00 +0000

Financial problems can be an overwhelming source of stress and leave many people in a state of depression. You can choose to be different to those. There are some very easy tips that you can use to help with your current finances and save some money. Keep reading to find ways to save your money and improve your financial outlook.

You must learn proper money management. You need to invest your profits as necessary in order to build your business. Finding a strategy that works for you can really help you to stay ahead of the game. You should always invest the same percentage of your profit.

A lot of products will come with a warranty, and chances are, if the product is going to malfunction, it will do it in this time period. Usually, extended warranties are of no use to you.

If you want improved personal finances, avoid debt whenever you can. While you may need to get into debt for mortgages or student loans, try to stay away from things like credit cards. Borrowing less money translates into paying less money on surcharges and interest.

Rather than using a credit card that is close to being maxed out, use two or more credit cards. You will pay less interest on two payments than one maxed out card. That will not hurt your credit as much, and may even help it, as long as you can wisely manage both cards.

You can start to get your finances in order with a good health insurance policy. Most of us get sick or need medical attention sometime in our lives. Because of this, it's important to have good health insurance. You may find hospital bills in the amount of $20,000, or even more. If you don't have insurance, you will be responsible for the entirety of that bill.

If you're not yet 21 years of age and are looking for a credit card, you should know that things have changed recently. Credit cards used to be given to those entering college freely. These days, you must have verifiable income or a cosigner. The requirements for each card should be researched prior to applying.

Credit cards can be a wonderful replacement for debit cards. Once you have applied for, and received your card, you should use it for all of your day-to-day purchases. Often times, these purchases provide great cash back rewards.

Allowing your profits to run is a vital strategy for success in the Forex market. However, you must practice moderation, and do not allow your greed to take over. Set a limit for each trade and abide by it, pulling out when the money has been made.

Now you can see that there are many options for preserving your hard-earned money, and by implementing the tips in this article, you can get closer to having all the financial abundance and security you deserve. Be sure to save a little something each payday, and save it wisely so that it earns interest.

A Brief History of Mutual Funds

noreply@blogger.com (Unknown) — Sun, 08 Sep 2013 13:21:00 +0000

Mutual funds date back to the 1800s, when English and Scottish investment trusts sold shares to investors. Funds arrived in the United States (U.S.) in 1924. They were growing in assets until the late 1920s, when the Great Depression derailed the financial markets and the economy. Stock prices plunged and so did mutual funds that held stocks.

As was common in the stock market at that time, mutual funds were leveraging their investments — leveraging is a fancy way of saying that they put up only, for example, 25 cents on the dollar for investments they actually owned. The other 75 cents was borrowed. That’s why, when the stock market plunged in 1929, some investors and fund shareholders got clobbered. They were losing money on their investments and on all the borrowed money. But, like the rest of the country, mutual funds, although bruised, pulled through this economic calamity.

In 1940, the Investment Company Act established ground rules and oversight of the fund industry by the Securities and Exchange Commission (SEC). Among other benefits, this landmark federal legislation required funds to gain approval from the SEC before issuing or selling any fund shares to the public. Over time, this legislation has been strengthened by requiring funds to disclose cost, risk, and other information in a uniform format through a legal document called a prospectus.

During the 1940s, ’50s, and ’60s, funds grew at a fairly high and constant rate. From less than $1 billion in assets in 1940, fund assets grew to more than $50 billion by the late ’60s — more than a fiftyfold increase. Before the early ’70s, funds focused largely on investing in stocks.

Since then, however, money market mutual funds and bond mutual funds have mushroomed. They now account for about 40 percent of all mutual fund assets.

Today, thousands of mutual funds manage about $11 trillion.

Things You Need To Evaluate Before You Start Investing In Mutual Funds

noreply@blogger.com (Unknown) — Wed, 04 Sep 2013 23:09:00 +0000

The single biggest mistake that mutual fund investors make is investing in funds before they’re even ready to. It’s like trying to build the walls of a house without a proper foundation. You have to get your financial ship in shape — sailing out of port with leaks in the hull is sure to lead to an early, unpleasant end to your journey. And you have to figure out what you’re trying to accomplish with your investing. Let me emphasize that mutual funds are specialized tools for specific jobs. I don’t want you to pick up a tool that you don’t know how to use. This post covers the most important financial steps for you to take before you invest so you get the most from your mutual fund investments.

Pay off your consumer debts best investments

Consumer debts include balances on such items as credit cards and auto loans. If you carry these types of debts, do not invest in mutual funds until these consumer debts are paid off. I realize that investing money may make you feel like you’re making progress; paying off debt, on the other hand, just feels like you’re treading water. Shatter this illusion. Paying credit card interest at 14 or 18 percent while making an investment that generates only an 8 percent return isn’t even treading water; it’s sinking!

You won’t be able to earn a consistently high enough rate of return in mutual funds to exceed the interest rate you’re paying on consumer debt. Although some financial gurus claim that they can make you 15 to 20 percent per year, they can’t — not year after year. Besides, in order to try and earn these high returns, you have to take great risk. If you have consumer debt and little savings, you’re not in a position to take that much risk.

I go a step further on this issue: Not only should you delay any investing until your consumer debts are paid off, but also you should seriously consider tapping into any existing savings (presuming you’d still have adequate emergency funds at your disposal) to pay off your debts.

Review your insurance coverage

Saving and investing is psychologically rewarding and makes many people feel more secure. But, ironically, even some good savers and investors are in precarious positions because they have major gaps in their insurance coverage.

Consider the following questions: best investments

Do you have adequate life insurance to provide for your dependents if you die?
Do you carry long-term disability insurance to replace your income in case a disability prevents you from working?
Do you have comprehensive health insurance coverage to pay for major medical expenses?
[Have you purchased sufficient liability protection on your home and car to guard your assets against lawsuits?

Without adequate insurance coverage, a catastrophe could quickly wipe out your mutual funds and other investments. The point of insurance is to eliminate the financial downside of such a disaster and protect your investments.

In reviewing your insurance, you may also discover unnecessary policies or ways to spend less on insurance, freeing up more money to invest in mutual funds.

Figure out your financial goals best investments

Mutual funds are goal-specific tools and humans are goal-driven animals, which is perhaps why the two make such a good match. Most people find that saving money is easier when they save with a purpose or goal in mind — even if their goal is as undefined as a “rainy day.” Because mutual funds tend to be pretty specific in what they’re designed to do, the more defined your goal, the more capable you are to make the most of your mutual fund money.

Granted, your goals and needs will change over time, so these determinations don’t have to be carved in stone. But unless you have a general idea of what you’re going to do with the savings down the road, you won’t really be able to thoughtfully choose suitable mutual funds. Common financial goals include saving for retirement, a home purchase, an emergency reserve, and stuff like that. In the second half of this chapter, I talk more about the goals mutual funds can help you to accomplish.

Another benefit of pondering your goals is that you better understand how much risk you need to take to accomplish your goals. Seeing the amount you need to save to achieve your dreams may encourage you to invest in more growth-oriented funds. Conversely, if you find that your nest egg is substantial, given what your aspirations are, you may scale back on the riskiness of your fund investments.

Determine how much you’re saving best investments

The vast majority of us haven’t a clue what our savings rate is. By savings rate, I mean, over a calendar year, how did your spending compare with your income? For example, if you earned $40,000 last year, and $38,000 of it got spent on taxes, food, clothing, rent, insurance, and other fun things, you saved $2,000. Your savings rate then would be 5 percent ($2,000 of savings divided by your income of $40,000).

If you already know that your rate is low, nonexistent, or negative, you can safely skip this step because you also already know that you need to save much more. But figuring out your savings rate can be a real eye-opener and wallet closer.

Examine your spending and income best investments

If you’re saving enough to meet your goals, you can skip this step and move ahead. For the rest of you, however, you need to do some additional work. To save more, reduce your spending, increase your income, or both. This isn’t rocket science, but it’s easier said than done.

For most people, reducing spending is the more feasible option. But where do you begin? First, figure out where your money is going. You may have some general idea, but you need to have facts. Get out your checkbook register, credit card bills, and any other documentation of your spending history and tally up how much you spend on dining out, operating your car(s), paying your taxes, and everything else. When you have this information, you can begin to prioritize and make the necessary trade-offs to reduce your spending and increase your savings rate.

Earning more income may help you save more to invest if you can get a higher-paying job or increase the number of hours you’re willing to work.

Watch out, though: Many people’s spending has a nasty habit of soaking up increases in income. If you’re already working many hours, tightening the belt on your spending is better for your emotional and social well-being.

Maximize tax-deferred retirement account savings best investments

Saving money is difficult for most people. Don’t make a tough job impossible by forsaking the terrific tax benefits that come from investing through retirement savings accounts. Employer-based 401(k) and 403(b) retirement plans offer substantial tax benefits.

Contributions into these plans are generally federal- and state-tax-deductible. And after the money is invested inside these plans, the growth on your contributions is tax-sheltered as well. Furthermore, some employers will match a portion of your contributions.

Some investors make the common mistake of neglecting to take advantage of retirement accounts in their enthusiasm to invest in nonretirement accounts.

Doing so can cost you hundreds of thousands of dollars over the years.

Fund companies are happy to encourage this financially detrimental behavior, too. They lure you into their funds without educating you about using your employer’s retirement plan first because the more you invest through your employer’s plan, the less you have available to invest in their mutual funds.

Determine your tax bracket best investments

When you’re investing in mutual funds outside of tax-sheltered retirement accounts, the profits and distributions that your funds produce are subject to taxation. So the type of fund that makes sense for you depends, at least partially, on your tax situation.

If you’re in a high bracket, give preference to mutual funds such as tax-free bond funds and stock funds with low levels of distributions (especially highly taxed capital gains). In other words, focus more on stock funds that derive more of their expected returns from appreciation rather than from distributions.

If you’re in a low bracket, avoid tax-free bond funds because you end up with a lower return than in taxable bond funds.

Assess the risk you’re comfortable with best investments

Think back over your investing career. You may not be a star money manager, but you’ve already made some investing decisions. For instance, leaving your excess money in a bank savings or checking account is a decision — it may indicate that you’re afraid of volatile investments.

How would you deal with an investment that dropped 10 to 50 percent in a year? Some of the more aggressive mutual funds that specialize in volatile securities like growth stocks, small company stocks, emerging market stocks, and long-term and low-quality bonds can quickly fall. If you can’t stomach big waves in the financial markets, don’t get in a small boat that you’ll want to bail out of in a big storm. Selling after a big drop is the equivalent of jumping into the frothing sea at the peak of a pounding storm.

You can invest in the riskier types of securities by selecting well-diversified mutual funds that mix a dash of riskier securities with a healthy helping of more stable investments. For example, you can purchase an international fund that invests the bulk of its money in companies of varying sizes in established economies and that has a small portion invested in riskier, emerging economies. That would be safer than investing the same chunk in a fund that invests solely in small companies that are just in emerging countries.

Review current investment holdings best investments

Many people have a tendency to compartmentalize their investments: IRA money here, 401(k) there, brokerage account somewhere else. Part of making sound investment decisions is to examine how the pieces fit together to make up the whole. That’s where jargon like asset allocation comes into play. Asset allocation simply means how your investments are divvied up among the major types of securities or funds, such as money market, bond, stock, international stock, and so on.

Another reason to review your current investments before you buy into new mutual funds is that some housecleaning may be in order. You may discover investments that don’t fit with your objectives or tax situation. Perhaps you’ll decide to clear out some of the individual securities that you know you can’t adequately follow and that clutter your life.

Consider other “investment” possibilities best investments

Mutual funds are a fine way to invest your money but hardly the only way. You can also invest in real estate, invest in your own business or someone else’s, or pay down mortgage debt more quickly. Again, what makes sense for you depends on your goals and personal preferences. If you dislike taking risks and detest volatile investments, paying down your mortgage may make better sense than investing in mutual funds.

Reaching Your Goals with Mutual Funds best investments

Mutual funds can help you achieve various financial goals — saving for retirement, buying a home, paying for college costs, and so on — that you can tackle with the help of mutual funds.

As you understand more about this process, notice that the time horizon of your goal — in other words, how much time you have between now and when you need the money — largely determines what kind of fund is appropriate:

If you need to tap into the money within two or three years or less, a money market or short-term bond fund may fit the bill.
If your time horizon falls between three and seven years, you want to focus on bond funds.
For long-term goals, seven or more years down the road, stock funds are probably your ticket.

But time horizon isn’t the only issue. Your tax bracket, for example, is another important consideration in mutual fund selection. Other variables are goal specific, so take a closer look at the goals themselves.

Remember: Mutual funds are just part of the overall picture and a means to the end of achieving your goals.

The financial pillow — an emergency reserve

Before you save money toward anything, accumulate an amount of money equal to about three to six months of your household’s living expenses. This fund isn’t for keeping up on the latest consumer technology gadgets. It’s for emergency purposes: for your living expenses when you’re between jobs, for unexpected medical bills, for a last-minute plane ticket to visit an ailing relative.

Basically, it’s a fund to cushion your fall when life unexpectedly trips you up. Call it your pillow fund. You’ll be amazed how much of a stress reducer a pillow fund is.

How much you save in this fund and how quickly you build it up depends on the stability of your income and the depth of your family support. If your job is steady and your folks are still there for you, then you can keep the size of this fund on the smaller side. On the other hand, if your income is erratic and you have no ties to benevolent family members, you may want to consider building up this fund to a year’s worth of expenses.

The ideal savings vehicle for your emergency reserve fund is a money market fund.

The golden egg — investing for retirement

Uncle Sam gives big tax breaks for retirement account contributions. This deal is one you can’t afford to pass up. The mistake that people at all income levels make with retirement accounts is not taking advantage of them and delaying the age at which they start to sock money away. The sooner you start to save, the less painful it is each year, because your contributions have more years to compound.

Each decade you delay approximately doubles the percentage of your earnings that you should save to meet your goals. For example, if saving 5 percent per year starting in your early 20s would get you to your retirement goal, waiting until your 30s may mean socking away 10 percent; waiting until your 40s, 20 percent; beyond that, the numbers get troubling.

Taking advantage of saving and investing in tax-deductible retirement accounts should be your number-one financial priority (unless you’re still paying off high-interest consumer debt on credit cards or an auto loan).

Retirement accounts should be called tax-reduction accounts. If they were called that, people might be more excited about contributing to them. For many people, avoiding higher taxes is the motivating force that opens the account and starts the contributions. Suppose you’re paying about 35 percent between federal and state income taxes on your last dollars of income. For most of the retirement accounts described in this chapter, for every $1,000 you contribute, you save yourself about $350 in taxes in the year that you make the contribution. Some employers will match a portion of your contributions to company-sponsored plans, such as 401(k) plans — getting you extra dollars for free.

On average, most people need about 70 to 80 percent of their annual preretirement income throughout retirement to maintain their standard of living.

If you haven’t recently thought about what your retirement goals are, looked into what you can expect from Social Security (okay, cease the giggling), or calculated how much you should be saving for retirement, now’s the time to do it.

When you earn employment income (or receive alimony), you have the option of putting money away in a retirement account that compounds without taxation until you withdraw the money. With many retirement accounts, you can elect to use mutual funds as your retirement account investment option. And if you have retirement money in some other investment option, you may be able to transfer it into a mutual fund company.

If you have access to more than one type of retirement account, prioritize which accounts to use by what they give you in return. Your first contributions should be to employer-based plans that match your contributions.

After that, contribute to any other employer or self-employed plans that allow tax-deductible contributions. If you’ve contributed the maximum possible to tax-deductible plans or don’t have access to such plans, contribute to an IRA.

Tags: investing, investments, mutual funds, insurance, retirement, best investments
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20 Rules for Successful Investing

noreply@blogger.com (Unknown) — Wed, 04 Sep 2013 14:08:00 +0000

✓ Saving is a prerequisite to investing. Unless you have wealthy, benevolent relatives, living within your means and saving money are prerequisites to investing and building wealth.

✓ Know the three best wealth-building investments. People of all economic means make their money grow in ownership assets — stocks, real estate, and small business — where you share in the success and profitability of the asset.

✓ Be realistic about expected returns. Over the long term, 9 to 10 percent per year is about right for ownership investments (such as stocks and real estate). If you run a small business, you can earn higher returns and even become a multimillionaire, but years of hard work and insight are required.

✓ Think long term. Because ownership investments are riskier (more volatile), you must keep a long-term perspective when investing in them. Don’t invest money in such investments unless you plan to hold them for a minimum of five years, and preferably a decade or longer.

✓ Match the time frame to the investment. Selecting good investments for yourself involves matching the time frame you have to the riskiness of the investment. For example, for money that you expect to use within the next year, focus on safe investments, such as money market funds. Invest your longer-term money mostly in wealth-building investments.

✓ Diversify. Diversification is a powerful investment concept that helps you to reduce the risk of holding more aggressive investments. Diversifying simply means that you should hold a variety of investments that don’t move in tandem in different market environments. For example, if you invest in stocks, invest worldwide, not just in the U.S. market. You can further diversify by investing in real estate.

✓ Look at the big picture first. Understand your overall financial situation and how wise investments fit within it. Before you invest, examine your debt obligations, tax situation, ability to fund retirement accounts, and insurance coverage.

✓ Ignore the minutiae. Don’t feel mystified by or feel the need to follow the short-term gyrations of the financial markets. Ultimately, the prices of stocks, bonds, and other financial instruments are determined by supply and demand, which are influenced by thousands of external issues and millions of investors’ expectations and fears.

✓ Allocate your assets. How you divvy up or allocate your money among major investments greatly determines your returns. The younger you are and the more money you earmark for the long term, the greater the percentage you should devote to ownership investments.

✓ Do your homework before you invest. You work hard for your money, and buying and selling investments costs you money. Investing isn’t a field where acting first and asking questions later works well. Never buy an investment based on an advertisement or a salesperson’s solicitation of you.

✓ Keep an eye on taxes. Take advantage of tax-deductible retirement accounts and understand the impact of your tax bracket when investing outside tax-sheltered retirement accounts.

✓ Consider the value of your time and your investing skills and desires. Investing in stocks and other securities via the best mutual funds and exchange-traded funds is both time-efficient and profitable. Real estate investing and running a small business are the most time-intensive investments.

✓ Where possible, minimize fees. The more you pay in commissions and management fees on your investments, the greater the drag on your returns. And don’t fall prey to the thinking that “you get what you pay for.”

✓ Don’t expect to beat the market. If you have the right skills and interest, your ability to do better than the investing averages is greater with real estate and small business than with stock market investing. The large number of full-time, experienced stock market professionals makes it next to impossible for you to choose individual stocks that will consistently beat a relevant market average over an extended time period.

✓ Don’t bail when things look bleak. The hardest time, psychologically, to hold on to your investments is when they’re down. Even the best investments go through depressed periods, which is the worst possible time to sell. Don’t sell when there’s a sale going on; if anything, consider buying more.

✓ Ignore soothsayers and prognosticators. Predicting the future is nearly impossible. Select and hold good investments for the long term. Don’t try to time when to be in or out of a particular investment.

✓ Minimize your trading. The more you trade, the more likely you are to make mistakes. You also get hit with increased transaction costs and higher taxes (for non-retirement account investments).

✓ Hire advisors carefully. Before you hire investing help, first educate yourself so you can better evaluate the competence of those you may hire. Beware of conflicts of interest when you consider advisors to hire.

✓ You are what you read and listen to. Don’t pollute your mind with bad investing strategies and philosophies. The quality of what you read and listen to is far more important than the quantity. Find out how to evaluate the quality of what you read and hear.

✓ Your personal life and health are the highest-return, lowest-risk investments. They’re far more important than the size of your financial portfolio.

Tags: investing, investments, traiding, market, investing in stocks, investing in mutual funds

Investing In Your Career

noreply@blogger.com (Unknown) — Tue, 03 Sep 2013 14:37:00 +0000

What’s your most valuable asset? It’s your income-earning potential, either your career or profession.

In my work with financial counseling clients over the years and from observing friends and colleagues, I’ve witnessed plenty of people succeed in their careers. What did they have in common? They invested in their careers, and you can and should do the same. Some time-tested, proven ways to do that include:

✓ Networking: Some people wait to network until they’ve been laid off or are really hungry to change jobs. Take an interest in what others do for a living and you’ll benefit and grow from the experience, even if you choose to stay with your current employer or in your chosen field.

✓ Making sure that you keep growing: Whether it’s reading high-quality books or other publications or taking some night courses, find ways to build on your knowledge base.

✓ Considering the risk in the status quo: Many folks are resistant to change and get anxious thinking about what could go wrong when taking a new risk. One of my clients walked away from a six-figure job with a prestigious firm and opened his own business in which a number of his relatives and friends thought he had lost my mind. Now he is glad he didn’t allow their fears and worries to dissuade him!

Tags: career, networking, education, business, four quadrants

Starting Right To Financial Success

noreply@blogger.com (Unknown) — Mon, 02 Sep 2013 14:09:00 +0000

Finding a good job is a dream come true to most graduates. Being young and full of hope, a newbie in the work force is looking forward to a financially rewarding career. But your job is no guarantee of future financial success. It is your attitude and financial mindset that determines your financial success. Here’s how to start on the path to financial success when you first enter the job market:

✓ Avoid consumer credit. The use and abuse of consumer credit can cause long-term financial pain and hardship. Shun making purchases on credit cards that you can’t pay for in full when the bill arrives. Here’s the simple solution for running up outstanding credit card balances: Don’t carry a credit card. If you need the convenience of making purchases with a piece of plastic, get a debit card instead.

✓ Get in the habit of saving and investing. I’m often asked, “At what age should a person start saving?” To me, that’s similar to asking at what age you should start brushing your teeth. Well, when you have teeth to brush! So I say you should start saving and investing money from your first paycheck. Try saving 5 percent of every paycheck, and then eventually increase your saving to 10 percent. Ideally, you should put your savings into retirement accounts (through an automatic deduction) that offer tax benefits, unless you want to accumulate down-payment money for a home or small-business purchase. (You’re probably not thinking about buying a new home or retiring, though, if you’re just entering the job market.) If you’re having trouble saving money, track your spending and make cutbacks as needed.

✓ Get insured. When you’re young and healthy, imagining yourself feeling otherwise is hard. But because accidents and unexpected illnesses can strike at any age, forgoing health insurance coverage can be financially devastating. When you’re in your first full-time job with limited benefits, buying disability coverage, which replaces income lost because of a long-term disability, is also wise. And as you begin to build your assets, make a will so that your assets go where you want them to in the event of your untimely passing.

Get started to develop the attitude and mindset that guarantees financial success.

Tags: financial success, savings, saving, investing, insurance, credit

Identifying Common Financial Mistakes To Avoid It

noreply@blogger.com (Unknown) — Sun, 01 Sep 2013 12:59:00 +0000

If you take a survey on people, you will be surprise to find most of them are financially illiterate or has poor financial IQ. I hope this post will enlighten you and help reduce your chances of making common financial mistakes. Lack of financial knowledge is exposed and reflected in the beginning of costly money mistakes such as:

✓ Spending excessively and accumulating consumer debt: Too many young adults leave home being experts in spending without having learned much
about living within their means and saving and investing. Many things may tempt you — the never-ending stream of gadgets and electronics, cars, restaurants, bars, nightclubs, new clothing, concerts, sporting events, and so on. Check out my post about reducing your spending on items you don’t need (coming soon).

✓ Defaulting on loans or other debts: This problem is often the consequence of the preceding problem of spending too much and accumulating too much debt. Being overwhelmed with debt, which may be exacerbated by a job loss or unexpected expenses, can cause folks to fall behind on their loans or other debt payments. See my post on paying down debts (coming soon).

✓ Experiencing failed relationships that damage your credit rating and financial health: You know what they say about love being blind sometimes, right? Well, one of the things many twenty-somethings don’t think about when in a relationship is how the things they’re doing are going to work out or not work out should the relationship fail. Sharing bank accounts and bill paying may not present glaring problems when everything is going well, but you can quickly end up with a tarnished credit report should your love boat run aground. See my post about relationships and money (coming soon).

✓ Falling behind on tax payments and violating tax laws: Filing your annual tax return and making quarterly tax payments if you’re self-employed aren’t enjoyable tasks. In fact, you may find these chores downright intimidating and stressful. But if you fail to complete them correctly, or complete them at all, you could get socked with hefty interest and penalty charges and possibly do some jail time in the worst cases. Check out my post for a complete discussion of paying taxes(coming soon).

✓ Making poor investments: You work hard to earn money and then to save it. So you should do your homework to ensure that you invest it well. Don’t rush into making an investment you don’t understand because you have a lot to lose. There are plenty of slick-talking salesmen who will sell you an investment that helps to line their pockets but not yours. You also don’t want your money sitting around for years on end in a low interest bank account, which is what happens to folks who don’t know how to invest their money. Check out my post for more in-depth information about investing your money (coming soon).

✓ Neglecting to secure proper insurance coverage: Most people, especially the young ones, don’t spend a lot of time thinking about risks. After all, most teenagers and twenty-somethings are healthy and energetic. So things like health insurance or disability insurance seem unnecessary and for older folks. The good news is that insurance costs less when you’re younger because you’re less likely to suffer a major illness or disability than someone decades older than you. Check out my post about insurance (coming soon).

✓ Being taken and duped by biased and/or shoddy advice: Many companies and people have something to sell. Some of what they’re selling is good stuff, much is mediocre, and some is downright awful. You don’t need to pay high commissions or end up in the wrong type of investments or insurance.

Knowing Your Net Worth

noreply@blogger.com (Unknown) — Sat, 31 Aug 2013 11:58:00 +0000

Having a sense of what you own (your assets) and what you owe (your liabilities) is important because it provides some measure of your net worth, financial security and your ability to accomplish financial goals such as buying a home, starting a business, or retiring someday.

What Is Net Worth

Your net worth is quite simply your financial assets (for example, bank and investment accounts) minus your financial liabilities (debts such as loans and credit card debt).

When I say your monetary net worth, I’m not talking about personal possessions. Your car, stereo system, television, computer, and other personal items all have some value, of course. If you need to sell them, you could get something for them on eBay. But the reality is that you’re unlikely to accumulate personal items with the purpose of later selling them to finance such personal goals as buying a home, starting a business, retiring, and so forth. After all, these things are investments that would decline rapidly in value after purchase.

First you need to figure what you own to know your net worth

Financial Assets

To calculate your financial assets, get out your bank statements and investment account statements, including retirement accounts and any other paperwork that can help you.

You may have only one or two accounts, and that’s fine. Add up all the values of these accounts to find out what you own.

It’s perfectly normal for most folks under 30 to be just starting out in terms of accumulating assets. This article is going to help you change and improve your asset and net worth.

In addition to excluding personal property and possessions because folks don’t generally sell those to accomplish their personal and financial goals, I would also probably exclude your home as an asset if you happen to own one. You can include it if you expect to downsize or to rent in retirement and live off of some of your home’s equity.

Now, I do have one exception to something that isn’t generally thought of as a financial asset, which you may or may not want to include in this category. Some people have valuable collections of particular items, be they coins, baseball cards, or whatever. You can count such collections as assets, but remember that they’re only real assets if you’d be willing to sell them and use the proceeds toward one of your goals.

Next determine what you owe to compute your net worth.

Financial liabilities

Most people accumulate debts and loans during periods in life when their expenditures exceed their income. I did that when I went through college. You may have student loans, an auto loan, and credit card debts. Get out any statements that document your loans and debts and figure out the total of them all.

Getting the difference

After you total your financial assets and your financial liabilities, you can subtract the latter from the former to arrive at your net worth.

Most folks in their 20's have a very small or negative net worth.

There’s no point wringing your hands over the results — you can’t change history. But you can change the direction of your finances in the future and boost your net worth surprisingly fast. You have to figure your savings rate and plan how to increase it.

To help you compute your networth, please find the download link of the personal net worth calculator below:
Personal Net Worth Calculator

Tags: net worth, assets, liabilities, networth calculator

Understanding The Importance of Savings

noreply@blogger.com (Unknown) — Fri, 30 Aug 2013 10:54:00 +0000

The Importance of Savings

To accomplish important personal and financial goals such as buying a home, starting a business, traveling, and retiring someday, most folks need saving money. Some exceptions do exist, such as those fortunate people who have trust funds or inherit significant enough sums that they don’t need to save money from their work earnings. But the vast majority of people must save in order to accomplish their goals.

You can’t effectively save up for a long-term goal if you don’t know what your savings rate is. When I worked as a financial counselor and taught adult education money-management courses, I was struck by how few people knew the rate at which they were saving money. Most people can tell you what they earned from their work over the past year, but few folks really know what portion of their employment income they were able to save. That’s because to have an accurate idea of this percentage or savings rate, you really need to do some analysis and calculations.

The math isn’t that complicated, but it does require some time and effort, especially if you haven’t been tracking your spending or net worth over the past year. In the following sections, I explain a couple of different ways to calculate your savings rate over the past year.

Netting your income and spending

The first way to determine your savings rate is to tally your employment income and expenses over the past year. By subtracting your total expenses, including taxes, from the past year from your employment income, you can arrive at net savings.

The employment income part of the equation is simple for most folks — it’s simply the total amount of your paychecks from work. But unless you systematically track your spending, that piece of the puzzle is a lot more work to figure.

Tags: savings, savings rate, saving