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Archive for the ‘Retirement’ Category

Making money with credit cards

Sunday, July 6th, 2014

Credit card is not only part of our wallet, but also part of our life. Credit cards are double edged swords. If you use it right, it helps you. If you use it wrong, it buries you in pile of debt. I use credit card for all my purchases. I do this not only for convenience but also to easily track my expenses in Quicken. I always pay the credit card balance in full when it is due. Never ever carry credit card debt, that is just very bad for your financial health and credit score.

If you have a habit of using credit card for most of your purchases and paying credit card balance in full when it is due — here is a way to make some money. Apply for credit cards like Fidelity Investment Rewards credit card. These cards pay you 2% cash back for most of your purchases. There is no annual fee for fidelity investment reward card. If you have an account with Fidelity, the reward cash goes directly into your account. If you have rollover IRA with Fidelity, it gets even better! Your cash back will go into your retirement account and grow nicely over the years. If you typically spend $1,000 per month on credit card purchases, you will accumulate $10,729 over 20 years! (Assuming that you earn 7% per year in your retirement account investments)

If you are going to use your credit card anyway, why not make use of your habit to make additional $10,729 into your retirement account?! If you know of any other cash back credit cards, please share with us. If you like this blog post, you will also find our posts about ISIS wallet useful.

Word of caution: Never sign up for reward credit card that charge annual fee.

Do I really need a Financial Advisor?

Saturday, October 23rd, 2010

This used to be a simpler question some years back, but now with the advent of the Internet, the waters have been muddied. Some investors wonder why anyone would have an advisor (and probably pay for it) when you can find out anything you need for free on the internet. Sounds like a slam dunk for the argument for not having an advisor (Stockbroker).

How well do all those content writers who write in those websites really know you? What do they know of your risk tolerance? What do they know about your retirement goals? Since the answer to that question is going to be a big fat no, can you really trust what you are reading on the net? There is so much information on the internet it is a real challenge to know what information is accurate and pertains to you and your situation and what doesn’t.

So how can my financial advisor help me? The more your advisor knows about you the better. He should know all your investments, your investment goals, particularly regarding retirement, and your risk tolerance.

In order for you to make a wise decision not only do you need to know the ins and outs of a particular investment you are considering, you also have to sleep at night after you buy it. A financial Advisor can sift through all the information and present only those things that pertain to you and your particular needs, based on your risk tolerance and investment timeline. The more your advisor knows about you and your situation the better help he will be, so don’t hold anything back.

I used to get asked if it was okay to have more than one advisor and I think it doesn’t hurt to get more than one opinion but remember the old saying, too many cooks can spoil the broth. No matter what position you take on an investment you can easily find five professionals who oppose your decision and five who agree with you. That’s why it is so important that you work closely with your advisor so you can get clear and concise advice that works for you.

Keep in mind, you may not have the time needed to make the best informed decisions, but your advisor will have his finger on the pulse of the market and the economy probably fifteen hours a day or more. If you don’t have that kind of time maybe you should consider working with a Financial Advisor. Just don’t turn your brain off the moment he is on the phone. It should be a team approach with you making the final decisions.

Good luck and happy investing.

Top five retirement tips for young people

Thursday, August 27th, 2009

It’s never too early to start planning for your retirement. The earlier you plan for retirement the more likely you are to be able to live a comfortable life and support your family once retirement time comes. Developing a solid retirement plan is crucial, and it can be done by anyone if they simply stay disciplined.

Top Five Retirement Tips for Young People

  1. Avoid Investing Fees and Expenses- Fees that may seem quite innocent over the short run really end up hurting a retirement portfolio in the long run. Fees and expenses that eat away at your overall return need to be minimized. Loaded funds must be avoided and mutual funds with high annual expenses are a big problem.
  2. Invest Tax Efficiently- Take advantage of things such as the Roth IRA or the Traditional IRA and avoid investments that will hurt you tax wise. Depending on your individual situation a Roth IRA may be better because it offers tax-free withdrawals during your retirement.
  3. Understand the power of compounding returns- It is important to understand just how crucial compounding your returns can be. An individual that understands just how beneficial compound returns is will be an individual that gets started with their retirement planning early!
  4. Plan on Retiring Later- Don’t set your retirement goals on retiring at a young age. As time continues to go by the retirement age is being pushed back, and don’t expect that to change anytime soon. You’ll be making a pretty large mistake if you decide that you should plan on retiring young, since it probably won’t be a valid option.
  5. Take Full Advantage of Company Matching- Employer matching 401k plans are one of the best deals you will ever get. An individual who takes full advantage of the maximum company match will be way ahead of the pack.

Four common retirement account mistakes to avoid

Thursday, August 20th, 2009

Your retirement account is something that you should take very good care of, since that is precisely what will help you take care of yourself and your loved ones when you retire. If you are going to make a mistake in investing, you don’t want to let it be inside your retirement portfolio. Here are some common mistakes and how to avoid them.

Four common retirement investment account mistakes to avoid

  1. Speculating inside the account- The retirement account is not a place where speculation should occur at all. Far too many people try to be the hero and use things such as options or other extremely speculative asset classes inside a retirement investment portfolio. Yes you can be more aggressive when you are younger, but that doesn’t mean you should run rampant speculating in such an important investment portfolio. Save the speculating for your regular investment brokerage account.
  2. Using the retirement account like a bank account- Please understand that using something such as a 401k retirement account or an IRA as a bank account to pull money out of for special projects or odds and ends is a terrible idea. The retirement account should stay intact unless the money absolutely must come out for a dire reason.
  3. Not accounting for your goals and age- With a retirement investment account you should always plan specifically for your individual situation and what you will need. As time goes on and it becomes clear exactly what your needs will be you can modify your plan.
  4. Not taking advantage of employer matching- If you have any kind of retirement account with an employer matching contribution you should take advantage of this as much as you can. These company matching 401k plans can be a major boost to your bottom line.

Protect that retirement account and don’t make these huge mistakes with this very important money.

Four tips for building a retirement nest egg

Thursday, August 13th, 2009

The goal of your retirement account should be to build up a retirement nest egg that will provide for your and your loved ones when you retire. You want to make sure that when it comes time to retire you can do so comfortably. Here are four important tips to remember in building that retirement nest egg.

Four tips  to help build a retirement nest egg

  1. Get started early with your retirement account- It’s never too early to start building a retirement account. Often younger people make the mistake of procrastinating when it comes to getting a retirement plan together. Make sure you aren’t one of those people.
  2. Utilize company matching contributions fully- If you aren’t taking full advantage of employer matching contributions that you may have through a 401k plan or some kind of retirement investment account then you are losing out on a lot of money over time. While many think they can’t afford to put money in their 401k plan, the truth is if you have a company match you simply can’t afford to lose out on such a great opportunity.
  3. Avoid dipping into the retirement fund- Far too many people use their retirement account as if it is a normal savings account. Treat the retirement account as a very last resort option since it really is hurting you tremendously if you have to use these funds.
  4. Change your investments as your time frame changes- Too many people open up a retirement investment account and keep the same investments in there for numerous years. While it is often wise to hold things such as stocks for many years, you must also keep up with the changes in your retirement goals. When you are younger your account should be more aggressive and later on it should be more about protecting that capital you have earned.

Building a retirement nest egg should be a very high priority for each of you. Use these tips to help you and your loved ones treasure those years of retirement.

Protecting capital doesn’t mean you can’t earn

Friday, June 5th, 2009

At some point we all reach an age or a stage of our life where we truly just need to focus on protecting capital. There is absolutely nothing wrong with reaching this stage, because it generally means that you have earned income well throughout your years and now is the time you want to protect that hard earned money. The problem that some people seem to have is that they settle for simply protecting capital in an account that is earning nothing, rather than protecting their capital while still earning a small amount of interest. While it is certainly true that protecting capital is a wise choice at some point, it is never a poor choice to receive a guaranteed amount of interest on that sum of money.

Too many people choose to move their capital that they have earned over into a savings account or something that earns virtually nothing, when the option is still there to be using assets such as treasury bonds or certificates of deposits to bring in some more income while still protecting that which you have earned in the past. For many people this means earning some extra money that will be able to go toward one or more of these three things: giving to charity, enjoying retirement, and providing a better life for children and loved ones.

The fact is, with all of the assets available to those who wish to protect capital and earn at the same time, there really is no good excuse for not making this choice. The best news of all is that these investment choices are ones that an informed investor should be able to make without paying for any kind of financial advice. Go to your local personal banker and discuss the options available to you. The next time you think about protecting capital that has been earned, don’t just think about hiding the money that you have earned over time, but rather think about protecting that money and bringing a little extra in at the same time.

Proper retirement planning is pivotal

Monday, April 27th, 2009

By now you have certainly heard about how important it is to plan ahead for your retirement. Some of you may have listened, while others may have scoffed at the notion of doing much in the way of retirement planning because it is simply too far away or you can deal with it later. Those individuals who begin their retirement planning early are certainly getting a big head start on an absolutely crucial part of their finances.

Why is retirement planning so important? When you retire you will need to be able to take care of yourself and your family while not bringing in as much income as before. This is why it is so important that you build up a retirement nest egg. The nest egg will be funds that you do not tap into until you reach retirement age and you and your family need the money to live your everyday lives. The truth is as you get older it can be much more difficult to earn much from your investments for two basic reasons; you don’t have as much time, and you are unclear exactly when you will need the money.

Some are able to do a great job of planning out their retirement finances by themselves, but others need the help of a professional retirement planner. Even if you need to shell out some money for the best retirement planner, it will be well worth it in the long run. Investing for your retirement is a full-time job and saving money for retirement can be quite difficult, which means that sometimes you need that extra help from a professional.

Whether you decide to go it yourself or find a retirement planning professional, make sure you make planning out your retirement priority number one. In the long run you’ll never make a better investment!

Don’t stop using a 401k or Roth IRA

Tuesday, March 24th, 2009

The benefits of using retirement plans such as a Roth IRA or a company sponsored 401k are huge. Many companies match 401k contributions now, and some of the best company matching contributions are as much as 2 to 1. The concern I have now is that so many people hear stories about how many people have lost their entire retirement savings in the stock market, or are badly hurt because they invested in stocks or mutual funds. I certainly hope that investors around the world don’t decide to get away from contributing to retirement plans and tax free distributions from the Roth IRA.

As an informed investor you must understand that you are in control of exactly what you hold in those retirement portfolios. There is no need for you to feel like you are boxed into any kind of investment, because there are so many options out there that can help you get to where you want to be. If you need financial advice seek a top retirement planner for guidance on what to put into your retirement portfolio, but certainly don’t forget to diversify.

Remember those who have been hurt the worst are those who have had their entire 401k in company stock. Having a little in company stock is fine, but never let yourself be boxed in by putting your retirement plans on the shoulders of one company. Also remember that retirement portfolios can hold safer investments such as treasury bills, certificates of deposits, and money market savings accounts.

There have been plenty of people lose a large amount in their 401k or IRA plans, but if you take the proper steps to diversify your portfolio you can minimize your risk. Please don’t stop using these plans which are extremely helpful in the long run if they are used in the proper way.

Recession and its effect on retirees

Monday, March 2nd, 2009

Each and every person is effected by a severe economic recession like the one we are currently experiencing, but not everyone is effected in the same types of ways. Retirees are a group that are hurt quite badly by a recession for several reasons. Retirees count on their retirement funds to fund a large portion of their income, and depending on exactly what type of assets they have in those retirement plans they may be down a great deal from their levels of just a year or two ago.

Retirees are also hurt by the effect on the health care industry on state by state basis. Many state’s are currently running huge budget deficits, which is forcing them to make many cuts, which could include some of the retiree’s health insurance for their family members. This is something that is unlikely for most, but its certainly plausible. Dwindling health benefits is the last thing retirees can afford as they try to make every last penny work hard for them. Need another negative effect of the recession on retirees? There is one final big one, the fact that interest rates are now at zero and money market and certificate of deposits aren’t earning hardly anything. This is very important to retirees, because they frequently use these as options for growing their retirement cash, but it’s hardly an attractive option right now.

The bottom line is that retirees are pinched quite badly by the recession. Many programs that retirees rely on so frequently will be questioned and possibly cut from the budget because of the poor standing of both the federal and state budgets. Retirees need to make every effort to recession proof their retirement portfolio and see a registered retirement planner during these times. It would be prudent to delay any large purchases and find any way possible to save a few bucks here and there. Desperate times call for desperate measures, and that is exactly where we are for many retirees.

Can you keep your benefits after employer’s bankruptcy

Friday, December 19th, 2008

Today, automakers got the life line from the government. It might save them and their employees. Other companies that went bankrupt recently were not lucky. Hundreds of thousands of workers lost the jobs because the companies entered bankruptcy. What will happen to the pension, 401k and health benefits of the employees if their companies are bankrupt?

Pension plans of bankrupted companies can’t be touched by creditors by federal law. Pension Benefit Guaranty Corporation insures the pension plans.

401k plans are also shielded from creditors by federal law. However, there is no insurance for 401k plans. If you made some poor choices in your 401k plan of if you have invested heavily in your (bankrupted) company’s stock, your 401k will suffer.

If the company files for Chapter 7 bankruptcy, your health benefits will be gone immediately. You will have no health insurance coverage at that point. However, if a company files for Chapter 11 bankruptcy, the health benefits will still continue for the employees. If health benefits are taken away from the employee, he/she should still be eligible for COBRA although the premium will be lot more expensive. If your spouse is working, it’s better to add yourself to your spouse’s health plan rather than opting for COBRA.

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