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Category Archives: Finance

Financial Prudence

Spend money available only on what makes the presents some value for you and your family (educational activities for children, joint family vacation, help parents and so on.).

It is a stupid thing to do to spend more money than you earn. This everyone knows, but only a few do manage to make (every second American family has outstanding loans or even several).

Don’t buy stuff that you use only 1-2 times. Give up such purchases, or rent these things.

Agree on a common understanding in the family – how to spend money, what investments you should make.

Forget about buying costly things spontaneously. It can be a women’s luxury watch for your loved one, which she doesn’t need or the same car as your buddy bought. Set aside a final decision about their purchase for a few weeks. If the desire is still here, then you buy.

Avoid excessive greed. People live in order to get pleasure from life, not to save money on every little thing! Pamper yourself more often (within the family budget agreed in advance).

Learn to calmly – without screams and scandals – discuss and solve inevitably arising financial problems.

Protect Assets From Unexpected Events

Life insurance

This is one of the most fundamental forms of insurance – protection for family members if you or your spouse should die. The consequences of death can be devastating to a family in many ways, not the least of which is financially. Keep in mind that there is a financial impact even if either of you are not earning income outside the home. If you are a stay-at-home spouse or volunteer, the role you play at home will need to be filled should you pass away unexpectedly. It’s recommended to have sufficient life insurance in place to replace the lost income and to cover a lifetime of needs for your family.

Disability income insurance

Many people overlook the financial risk of a disabling injury or illness, assuming their health insurance will cover additional expenses. If you incur an injury or illness that prevents you from earning your regular income, disability income insurance helps replace that income. This coverage is often offered by your employer, and most plans offer several levels of coverage as a percentage of your income. Make certain your coverage is sufficient to truly protect all of your income needs in the event of a protracted illness or injury.

Extended care / Long-term care insurance

Costs for in-home care, assisted living or a nursing home can be substantial, even if you have a healthy amount saved for retirement. Extended care or long-term care insurance can be used to address a significant health event, pay for medication or treatment, and can help secure quality specialized care.

Property / casualty coverage

While you’re likely to have auto and home insurance, it’s important to make sure you have enough coverage. Common underinsured areas:

• Look specifically at the following limits in your car insurance policy: personal injury protection, collision / comprehensive, uninsured / underinsured motorists and roadside assistance, among others.

• For your home, consider if you’re covered for home media and computer equipment, adventure equipment (golf clubs, bikes, fishing equipment, etc.), and high-value items like fine jewelry, art, collections, musical instruments or china.

• Take a look at specialty insurance for big-ticket items like boats, ATVs, RVs, collector cars and motorcycles as well as special circumstances like pet, earthquake or flood insurance.

Health insurance

The law now requires that you have coverage for medical expenses. You may participate in an employer-sponsored health plan, or you may obtain individual coverage. If you’ve reached age 65, Medicare can be an option. Also consider if vision or dental insurance makes sense for your family. To get started, add up your total healthcare costs last year, then estimate the amount you’ll need next year. Talk to potential insurance providers (or your employer if they offer these plans) about how insurance could be applied to services like new contacts, required surgeries and procedures, or your teen’s braces.

About Savings Accounts between Investing Accounts

Savings accounts do have great benefits. Savings should be allocations of cash put aside for short term goals. Savings should also be used for personal expenses like loan payments, utility bills, and insurance. Savings accounts should also be used for anything in life that will require a large amount of cash in five years or less. The stock market can fluctuate and losing value of money while trying to achieve a short term goal is counter productive.

There are numerous types of investment accounts. There are a plethora of services offered with both discount brokers and full service brokers. Most people go to full service brokers because they like face to face transactions and customer service while others prefer internet based discount brokers because they don’t value face to face interactions. Since Millennials are tech savvy and don’t have money to be throwing away for steep fees, most young investors go the discount route.

I own an account with a discount broker because I like to micro manage my investments and I firmly believe Millennials should go in this direction as well. Most accounts are free to open, and I highly recommend using TD Ameritrade because of their vast array of pointers and customer service that goes above and beyond most other companies.

Once you’ve found yourself a brokerage firm that you find fit for your needs, its time to determine which account type fits your needs. Account types include a Roth IRA, Traditional IRA, Cash, and Trust. Brokers will offer more sophisticated accounts as well but most new, young investors won’t need to dabble in those right off the bat. Each account has its perks but to start out, a cash account is the most efficient. It’s essentially a bare bones trading account that allows for deposits and withdrawals along with trading abilities.

Commissions

Most brokerage firms charge commission fees. There’s no getting around these pests unless your account is through Robin Hood but there is a learning curve and TD’s customer service is worth the $9 per trade commission; at least in the beginning. These commission fees are, essentially, the cost of transferring your cash into a stock purchase which is then put in your account for you to monitor as it grows (or declines). Although some brokers may offer lower trade fees than others, they are often indicative of other aspects like customer service, technology, and trade speeds so it’s not always best to be cheap. On the flip side, full service brokers can charge up to $200 per trade which is far too steep for most Millennials just looking to put a couple hundred dollars away at a time.

Other Fees

The finance and banking industry is really good at hiding fees for unknowing victims. Brokerage firms can charge for inactivity, margin, mutual fund trading fees, and much more. This obviously is a deterrent however, once again, I’ve found TD Ameritrade is the most upfront about their fee structure and it usually doesn’t have any impact on novice traders. Another angle of attack is account minimums which is an obvious roadblock for most Millennials. That being said, TradeKing, USAA, and TD Ameritrade have no minimum.

Protect Retirement Accounts

Investors should always keep a close eye on how much they’re paying, since a fee of 1 or 2 percent can have a surprisingly large cumulative impact on their financial future if it’s charged yearly.

For example, did you know that mutual fund returns in 401(k) plans are normally reported as net returns, meaning that fees for managing your investments are subtracted from your gains or added to your losses before calculating the annual return. Other costs, such as administrative and record-keeping fees, are often divided among plan participants but are not explicitly listed on individual investment statements. This lack of transparency is frustrating for investors.

Investors should also ask detailed questions about how their advisers are being paid. What incentives do they have to steer you into products they recommend? An adviser may operate differently if they’re paid by the hour or by a percentage of the assets they manage, versus if they’re paid extra commissions for certain in-house products. Even if the rule passes, I just can’t believe that institutions are going to stop pushing products down your throat.

People who don’t know the first thing about annuity expenses, load fees, or the importance of a mutual fund’s expense ratio have been held hostage by unscrupulous salesmen.

The truth is that the financial services industry has many caring people of the highest integrity who truly want to do what’s in the best interest of their clients. Unfortunately, many are operating in a “closed circuit” environment in which the tools at their disposal are “pre-engineered” to be in the best interests of the “house.” The system is design to reward them for selling, not providing “conflict-free” advice. And the product or fund they sell you doesn’t necessarily have to be the best available, or even in your best interest.

Start Retirement Financial Planning Now

Retirement Is More Expensive Than You Think

If asked, most people could not tell you how much money they need to have saved so that they could leave the workforce for good. Retirement financial planning suggests the average household will spend just over $40,000 per year when all of its members are no longer working. This amount is for a very conservative lifestyle, with little in the way of travel or other luxuries. Social Security benefits usually only amount to roughly $15,000 per year.

This leaves a significant gap that needs to be made up through savings and investments. With the average American living longer, savings must be increased to ensure that accounts do not run out prematurely. A second aspect that makes leaving the workforce so expensive is the unforeseen costs that people encounter. With an abundance of free time there is an equivalent increase in entertainment costs per year. Medical expenses also increase substantially, to more than $5,000 per year on average. All of these extra expenses are on top of the cost of utilities, groceries, insurance, rent or mortgage, and travel.

In conclusion, retirement financial planning can be tough to prioritize. Most people have many other expenses, and retirement can seem very far away. However, it is not particularly hard to save for your later years. Putting away a small amount now can mean a comfortable life when you finish your career. Furthermore, life after work can be very expensive, with increased expenditures for entertainment and medical issues. Start planning now.

Info of Personal Financial Management

1) Mutual Funds:

Investing in mutual funds can be much more profitable if one is a little more active than most in one’s choices of fund selections.

For example, most people allow their employer-designated financial advisor to choose funds for them.

Unfortunately, many financial advisors are really not that in-depth in their knowledge of mutual fund investing, and often simply choose funds based on the limited selection of funds they have knowledge of, or access to.

Choosing funds should take into account:

1) finding funds with relatively low expense ratios.

2) finding funds that combine:

– stable tenure of management

and

– above average rates of return (for funds in that risk category)

After conferring with colleagues of mine in the past, I learned that, when one does not have adequate financial advice, it is almost always best to invest in an American Stock Exchange index fund, that is called the “Standard & Poor’s (S&P) 500”.

That fund is a passively-managed fund that owns stock in the 500 largest corporations in the United States.

A portfolio that diversified, composed of stock in that many huge, United States based industrial or informational corporations, is usually a very safe investment.

Additionally, even though I do not believe that many of their labor and environmental practices overseas are acceptable, U.S. based corporations that invest in Chinese (and other East-Asian manufacturing nations) are often highly profitable, so if one has to temporarily sacrifice social ideals in order to earn some money, then those U.S. based corporations are often a good investment.

In the long term, multinational corporations are almost always going to give you the highest rates of return, as they are able to capitalize on ever-shifting politically-created labor-market gaps.

And as long as no workers (particularly children) get hurt, and their workforce is energetically optimistic about leaving the farms and entering the manufacturing sector of their nation’s economy, then investing in multinational corporations can be acceptable.

2) Stocks:

There are a few methods through which one can choose corporate stocks to invest in:

1) Finding stocks in companies that have a high degree of likelihood of increasing their sales (and thus, hopefully, their profitability).

2) Finding stocks that have the lowest Price to Earnings (P/E) ratios.

and

3) Finding stocks that exhibit buyers heavy interest, and are also included in one (or preferably both), of the previous 2 categories.

That being said, on a superficial basis (as of June 5, 2015), I would tentatively assume that:

Apple computer stock is probably overpriced (due to the hyped, and irrational, swarming demand for it’s stock).

And that companies like Samsung (which manufacture products similar to the iPhone and iPad) are probably more fairly priced.

With regard to real estate:

I think, as time goes on, that California real estate is going to represent a great investment, due to a few factors:

1) the climate here is great.

2) huge U.S. based multinational corporations are based here.

Financial Planning Is Important

Gives Financial Security to Family

Raising a family leads to widening of your expenditure. Money for education, basic living, entertainment, vacations and others require a prominent amount of saving beforehand. Becoming financially secure is a result of wise investments and savings. Financial planning will make you invest in lucrative schemes, and helps you become financially abundant. Hence, your family needs are never put on hold.

Manages Tax Payment

Having a clear account of all your expenses, amount of saving and number of investments is good. Besides that, you also get to know the amount of tax, which you are liable to pay as per your income scale. You will never miss tax deadlines, which will save a lot of unnecessary mental stress.

Facilitates Ready Cash Availability

Having your finances in good shape also means, that you have a lump sum amount of hard cash, always available at your disposal. There are certain situations where payment through debit or credit card is not acceptable. In such situations, you will require physical money. Being financially planned will enable you to have this requisite.

Enables Asset Building

With increased financial stability comes your desire to purchase assets. One of the most common asset is a house. When you are well planned, you can easily buy a house and start living under your own roof. It is not necessary that you exhaust all your funds in purchasing house. Most of the people take home loan for property buying. Other kinds of asset include car, an expensive gadget or equipment etc. You can also check out a personal loan from any online lender for purchasing such assets.

Info of Money Transfer Threatens

Money laundering

Sometimes scams are initiated with an email or a phone call, or even an advertisement in the newspaper, offering commission for work with minimal risk. All that is required from the prospect is a laptop, an internet connection and a few hours every week. It might be pitched like an opportunity to work from home or flexible working.

You will be asked to either deposit money to receive initial working kit or receive a hefty payment into your bank account, then redistribute the money overseas (laundering). Whilst the fraudsters may convince you that money is being used for legitimate purposes such as trading shares abroad, or helping a charity distribute funds – you need to be vigilant. Or you could find yourself unwittingly funding criminals or converting someone’s black money into legitimate funds. Further, once you are lured into this by commission, scammers may also try to access your bank account, using the details you have given them.

Don’t respond to such advertisements or give your bank details to strangers. Ever.

Gift card/phishing

This scam usually happens during the holiday season. Consumers receive special promotion or gift card emails that look like it comes directly from an authorised retailer. Unfortunately, the links to the special promotion lead to a replica of the real website. The fake site swarms with malware, virus and phishing worms of all kinds that invade your gadgets to retrieve your financial credentials.

Look out for a small security lock icon at the bottom of your browser or next to the HTTPS in the browser bar when accessing any profiles, user accounts or online forms that ask you for financial information.

Online shopping

There are many fake companies online that sell drugs without legitimate prescriptions, or weight loss products. If an offer seems too cheap/good to be true, it will most definitely be a fraud. So no matter what the seller says, never share your credit card details for payment. Don’t take chances on your health and wealth by sending money to a stranger without proper validation and research.

Be vigilant, check reviews and avoid payments by any means. In fact COD might be better than giving your credit card details on their website.

Online vehicle sales

Criminals often attempt to hide behind the names of reputable companies such as eBay Motors and other well known brands by having replica websites, with just a slight change in the domain name. If you really want to initiate purchase of a vehicle, find out if both the seller and car ownership details are actually legitimate.

Do not send money to a complete stranger. Check for reviews online about the website, and spend time researching. Best bet – buy cars offline.

Lottery/sweepstakes

Legitimate lotteries will never require people to pay money upfront. How often do you receive a text or an email, saying you won something (money or a prize)? These scams usually request you to send money to pay for taxes, customs, or any administration fees for the collection of the prize.

About Asset Protection

Plans are all encompassing, whereas protecting your home entails protecting a single asset. Though it is good to protect a single asset, one must keep in mind “flow through” liability. Liability can be passed or transferred just as proceeds, profits and cash revenue can be passed and transferred.

Personal liability is different from business liability, but it is possible to mix the two. However, it is also possible to compartmentalize or separate liabilities and this is a main objective of asset protection plans. A skilled planner will understand the options available for specific circumstances.

Oftentimes, it is beneficial to go offshore, which may increase security and privacy, in addition to providing interesting planning opportunities, such as greater rates of return on investments and asset protection. All of these considerations are built into an asset protection plan.

Do you need Asset Protection? The emotional hurdle is as to whether or not you think you need Asset Protection. The first question is, do you own anything? If you do, you are someone who should understand the basics. This is the reason we have provided this educational and informative guide.

Whether or not you need Asset Protection depends on whether or not you own any assets. If you do, you are vulnerable to many of the potential entities, such as creditors and judgments that can potentially attack your assets. It was once thought that only the rich needed to protect their assets. New tools and techniques are available and are widely used, in estate planning, through insurance products and pension etc., to practice asset protection.

It is a simple fact that nine out of ten lawsuits filed and litigated in the world occur in the US. If you have assets, you are most likely a target. When your assets are visible, you are the bull’s eye. You and your belongings are what litigators refer to as “deep pockets.” Even if you create a stealth lifestyle, your assets are discoverable by a motivated creditor.

The core goal of Asset Protection is to set up your business affairs in such a way that raises the bar for the professional takers. It does not mean that a person ignores his debt obligations. It means that a person will control his debt obligations, and your asset protection plan is in essence a proactive step in performing self-help tort reform. You in fact will control your assets and your life, instead of the courts.

Asset Protection does not give you the authority to commit fraud or engage in illegal behavior. There is a legal strategy and systematic planning that occurs when you protect your assets from creditors. This plan is specific to your assets and your financial situation and must comply with the IRS and the law.

Online Payment Systems

By making online payment of your bills, you save a lot of postal expense. An average household spends about $70 per annum towards postal expense. It also helps eliminating the payment of late fees against bills that don’t get paid in time. Missed payments can result to paying:

  • A higher rate of interest
  • Overdue charges or late fees
  • If the payment remains unpaid for long, you may get classified under ‘collection status’

CONVENIENT

You can manage your debts quite conveniently by having an automatic system for making online payments against bills that need to be paid every month or week. You can specify the amount and the date of making the payment, and the system will automatically withdraw funds from your account and pay to the designated party, thus eliminating the chances of making late payments, or the checks getting lost to save you from penalties; it saves your time as well. That makes it the most reliable way of ensuring that all your regular bills are paid in time.

What should users look out for?

The execution of electronically concluded transactions is always associated with slight risks. Though negligible, the probability of such risks is on the increase, mainly due to the development of very refined hacking techniques.

For quite some time, a significant issue has been of a technique called ‘phishing’. This technique involves sending a cleverly designed fake message by way of a web page popup or an email that makes send the details of your personal account to a wrong person. Such messages often seem to be genuine, but swindle unsuspecting consumers who aren’t vigilant.

How to Safeguard Yourself from Scams

Here are some steps to avoid getting cheated online:

  • Frequently change your passwords. Your password should have lower and upper case letters, along with certain symbols to make its guess too difficult.
  • Do not ever entertain any email that asks for the details of your personal account, howsoever genuine the mail may look to be.
  • Keep checking your online account regularly to realize any suspicious activity that may occur.
  • Delete mails received from unknown senders. Should you get prompted to open them, don’t click on any of the links provided there. You may be exposing your computer to the risk of attracting some viruses. Even if you consider the mail to be genuine, it is recommended that you type the given address on your browser and not to click on that link.