Feed on
Posts
Comments

What Are Variable Annuities?

Mar 17th, 2010 by Free Help Finance

Even though people live in the present, it is always wise to plan for the future. On that train of thought, many people use various ways to ensure their retired life, but once in a while they want to know all the available options before making a decision. One such question that sprouts up in these conditions is what are variable annuities?

Although an individual could make a number of plans to ensure a comfortable retired life, no plan offers the amount of security than retirement annuities do. Variable annuity is the legal contract between you and an insurer that is based on the facts that you will either pay a lump sum or installments of payments to the insurer till a certain predetermined date.

That being done, you will then be able to get back your payments along will all the interest or profit they may have gathered during that amount of time or simply agree to accept timely payments that the insurer will pay you as per a pre determined plan. With the variable annuity, you can get to choose exactly which field you wish your payments to be invested, be they some kind of mutual fund or some specific field of business.

You will then be guaranteed a certain amount of payment after a certain amount of time. Of course these payments will be directly proportional with the amount you let your capital lay, the amount of capital you actually invested and other similar things like that.

The variable annuities can either be pre determined to be paid back in a single payment, in small payments as long as you live along with some more to your beneficiaries when you die or for a certain amount of time whether you live or not. Payments will be made to your next of kin in case you are not around. Whichever the case may be however, you can be assured that the way variable annuities guarantee you a comfortable life in the afterwards, nothing else does.

Tags:

Posted in Investing | Comments Off

How to Choose a Life Insurance Agent

Mar 15th, 2010 by Free Help Finance

Choosing a life insurance agent

Whatever image you may have of life insurance agents, whether negative or positive, you should realize that their responsibility to you is to guide you and assist you with all of your specific life insurance needs. They can walk you through the decision process and help you to positively impact the lives of your family members and loved ones for that time in life when you are no longer alive. Therefore, it is critical that you select the right life insurance agent and company to handle your personal needs.

Steps for choosing the best life insurance agent

First and foremost, it is your specific life insurance needs that should be considered when you set out to choose the ideal life insurance agent. Remember that you are ultimately the individual that has to pay for that policy and then benefit from it. Additionally, you need to take into consideration what your finances will allow you to pay for a life insurance policy and how much you are hoping to benefit from that policy. Here are some helpful tips where this is concerned.

Determine how much you can afford to spend on your policy – the life insurance agent you select should be able to assist you with the choices available that will best suit your budget. Therefore, establishing your budget for an insurance policy is most likely your first move when shopping around for an agent and a policy. Take your fixed monthly costs into consideration when establishing your budget. These include:

- insurance (auto, home, and life)
- monthly loan obligations
- monthly mortgage payment (or rent payment if you are not a homeowner)
- Other necessary living expenses (e.g. food and utilities)

The next step is to divide your monthly salary in half. The best case scenario is that one half should cover all of the above expenses and the other half needs to go towards other necessities such as retirement and savings.

Determine your specific life insurance needs – there are 3 basic factors that you need to consider when shopping around for a life insurance agent and policy. These include:

- ensuring that your debts will be paid should you pass away
- income replacement to compensate for the loss of yours
- your dependents needs being satisfactorily met

Your next move will be to find a life insurance agent and policy that facilitates the above primary needs within your budget.

Additionally, you may also want to consider whether or not the life insurance company offers any other products that meet your needs. For example if you are close to retirement and looking for tax free, reliable income then a tax deferred annuity might be right for you, and you may get a better rate if you also work with them for life insurance.

Lastly, you want to consider any intangibles such as the customer service levels of that particular company as well as how responsive that life insurance agent will be. You need the peace of mind that comes with knowing that your policy will handle whatever situations arise as well as knowing that you are never out of touch with that agent should the need arise. The bottom line is that you want to find the ideal life insurance agent, the right life insurance policy, and at a price that fits within the parameters of your budget.

Tags: ,

Posted in Insurance | Comments Off

Are Mutual Funds a Good Investment?

Mar 13th, 2010 by Free Help Finance

The basics of mutual fund investing

Mutual funds are a professionally managed option for collective investment strategies. In other words, you invest your money with a group of other investors in bonds, short-term money market securities, or other financial instruments. The fund is typically managed by an individual who is appointed or hired as a “fund manager” and whose responsibility is the investment of those collective funds in a number of different securities such as:

- bonds
- short-term money market instruments
- stocks

Typically, the need gains or losses are distributed amongst the investors in the fund on an annual basis.

Additionally, there have been three basic types of investment funds here in the US since 1940 including:

- closed-end funds – a collective fund which offers a limited amount of shares
- open-end funds – referred to as mutual funds in the US
- unit investment trusts or UIT’s – investment companies that offer a fixed securities portfolio which are unmanaged

The advantages and disadvantages of mutual funds

If you’re just getting started in the investment game, you have probably asked yourself “Are mutual funds a good investment?” We can definitely tell you that when you look at all the other investment securities on the market, mutual funds are extremely low in risk compared to others such as bonds, short-term investments with higher risk, and stocks. Consider the advantages of mutual funds:

- Diversified portfolio offers greater earnings potential
- Excellent liquidity means that you always have access to your funds
- High degree of affordability compared to other investments
- Your investment is professionally managed

Naturally, whenever you are considering any type of investment, you always want to weigh the advantages against the disadvantages. Along with the advantages of investing in mutual funds, there are three key disadvantages that you need to consider before making your move in the market:

- The price of your shares is always clouded with uncertainty
- You have no control over your shares as the funds are handled by a fund manager responsible for investing your money properly
- You have to pay annual fees, sales charges, and other associated fees

So as you can readily see, there is much to consider before investing in a particular fund.

Factors that distinguish mutual funds from other investments

The following is a list of beneficial factors that distinguish mutual funds from other funds out there as well as other investments:

- Shares are purchased from the actual fund and not other investors who use the NASDAQ or the NYSE
- Share purchase prices usually include all associated shareholder fees
- When you sell your shares it means you are selling them back to that particular fund
- Creating new funds to accommodate new investors and be sold specifically to them is commonly practiced
- An SEC registered investment advisor is normally the individual that is appointed as the fund’s manager

Make sure when you are contemplating investing in mutual funds that you take the above into consideration along with the advantages and disadvantages mentioned in the prior section above.

Tags:

Posted in Investing | Comments Off

The Common Risks of Investing

Mar 11th, 2010 by Free Help Finance

Investing in the stock market has always been a matter of speculation and luck by chance. The entire stock market trading and its processes are guided by simple rule of thumb- greater risks, more returns and lesser risks, less returns. Hence, both ways, the investors are going to lose something and also gain something. Be it monetary or psychologically.

Benefits involved in risky stock market investments

Stock market investments are very turbulent and uncertain in nature. At one point of time, they can make you the king while at some other point; you can be rendered a beggar. These risky investments contain the caliber of doubling, tripling or even quadrupling your original sum. This is because risky investments are more open to speculation and hence get more attention and attraction of visitors. The wealth of one loser becomes the fortune of another investor.

If you want to yield huge amounts in a less time span, risky investments are the best option, provided they are monitored and played judiciously. Bearing more risks, they demand greater attention and prudent decisions at the appropriate time. What happened during the recent economic turmoil is obvious to every one. The market was full of ups and downs and only those investors survived who had a careful watch over their investments. Their risk appetite earned them a great amount of luck and affluence.

Drawbacks involved in risky investment strategies

Luck does not favor every one and at all times. You can be psychologically handicapped and domed if you have invested in risky strategies. The major drawback in such investments is that you cannot be assured of any result or gain or loss till the exact timing of ripening of investment. So, in a way, you are meandering in a jungle of uncertainties.

Risky investments can also cast a huge loss upon you if you had been ignorant and careless in tracking and monitoring them. As already mentioned, a single wrong act of yours regarding risky investments can make you lose all that you have earned with lots of efforts and saved with great care.

Wrong anticipations and flawed calculations also increase the chances of losses in risky investments. Risky investments can make a person investment averse if he has lost heavily in stock market, thereby reducing the overall turnover of the stock market trading.

To be very honest, risky investments are meant only for those who have nothing to lose even if they suffer losses at the stock market. Those who are investing the entire saving of their lifetime into risky investments should give it a second thought. Though it can increase their money at a fast pace, but the chances of them turning into beggars suddenly can also be not undermined.

If there are some regular income sources, then risky investments are welcome, otherwise it is better to avoid them, take this advice. Even the betting principle states: “invest where you have probable chances of winning”. Why should you play with your money and health when there are better options available!

Tags: , ,

Posted in Investing | Comments Off

Roth IRA Investing Tips

Mar 8th, 2010 by Free Help Finance

If you’ve been thinking about your financial future and how to make it more secure, you should consider investing in a Roth IRA. An IRA is an Individual Retirement Account and a great choice for solidifying a person’s financial future. Investing in one is not as difficult as you might think. However, there are some steps to consider before getting started and we have them listed here.

Get an early start – remember that compounding interest over the long-term is a powerful financial ally. For example, if you wait 5 years to get started, it would mean that your nest egg could be up to 25% smaller.

Open a 401(k) account first – if your employer matches your contributions in that 401(k) plan, you should do this before opening your Roth IRA account.

You can still contribute for last year – usually, you can contribute to an IRA account up until you file your taxes. In other words, you have until April 15th each year to contribute for the prior year.

It’s never too soon to start – Roth IRA accounts have no minimum age requirements. However, you do have to be earning taxable income. So even if you’re a minor, you can still open an account.

You aren’t too old either – even if you’re no longer in your 20’s or 30’s, it’s never too late to open your account. Interestingly enough, even if you are over the age of 50, you are allowed to make what is called “catch up” contributions each year of up to $1,000 over the allowable limit.

Your money will not be trapped forever – contrary to many beliefs, you have access to your money whenever you want it, even though you may still be contributing to your Roth IRA account. Additionally, since your money has already been taxed, in many situations, you won’t incur any early withdrawal penalties.

Do some shopping first before making your decision – either your local bank or another financial institution probably offers these types of retirement accounts. However, no two are alike and you need to do some comparison shopping in order to find the one that best suits your financial needs.

Make this a financial priority – a Roth IRA account is one of the best retirement savings plans you can invest in. If you need to think about either funding your child’s education or starting to save towards retirement, we recommend you give retirement the utmost consideration as there are numerous options for financing an education.

Convert your regular IRA to a Roth IRA – despite the fact that this type of IRA came into being long after the traditional type, the Roth type has more advantages, especially if you are older. These IRA’s grow tax-free throughout the lifetime of the account.

Diversify your investments – as the old cliché goes, “never put all your eggs into one basket.” Most financial planners will tell you to diversify your investments. You should open a Roth IRA account to supplement whatever retirement plans you may already be contributing to.

Tags: , ,

Posted in Investing | Comments Off

Finding The Best Performing Mutual Funds

Mar 6th, 2010 by Free Help Finance

Lots of people might want to know everything there is to know about the best performing mutual funds. However experts advise not to do so. There is a proper reason that exists, as there are no yardsticks that can actually fathom the prospect of success at the same time assessing the future presentation of the funds. In case a person attempts to look at the records history of the mutual funds in order to guess the future performance is kind of akin to take a look back and see what lies ahead that is virtually impossible.

There are several companies that assess the mutual funds and then each of them actually give several ratings, all of which are based on a particular criteria. The aforementioned criteria are usually in the exposition, that are the funds from the past performances over the last decade or so and all of them are to be noted. That particular observation is duly utilized and then the best performing of the mutual funds are properly marked. However, this technique hasn’t actually proven receptively effectual. If this were the case what should a hard working as well as a careful investor do and more importantly how would he move about his entire business.

Morningstar is perhaps the most popular amongst all the companies that are trying to rate the funds. Thankfully this company lives up to its name and assigns stars to each of the funds and the highest is the five stars strictly reserved for the best of the performers the poor ones only get just one star. In case there are a few doubts raised about any of its decision, then the judges involved in the funds all lean on the past records and this scheme is naturally faulty.

There is yet another company that also indulges to dabble in this hard task is the LLFR or the Lipper Leader Fund Ratings. The LLFR doesn’t actually assess all the funds and the worth is based upon the performance of the past as much as they rely on analytical formulas. They do a factor on the past performance, and all of them actually utilize the five criteria that exist and all of which are about the total return, consistent return, preservation, tax efficiency and also the expense so as to charge the funds. However, all the investors have to register with Lipper in order to obtain the rankings of the funds.

Business Week is yet another well name in the mutual funds sector and alongside with other business journals assess each and every of the existing mutual funds rates on an annual basis.

It tends to publish the “Mutual Fund Scorecard” in their magazine on a yearly basis, even though it is also available online in their website, which is rationalized each and every month of the year. On the website, one can find a handful of reviews that can be quite helpful when deciding on the best investment.

Tags: , ,

Posted in Investing | Comments Off

Paying Off Credit Cards In Full

Mar 4th, 2010 by Free Help Finance

In these rocky economic times, both banks and consumers are scrambling to protect themselves. Our credit card accounts can be an important aspect of our financial well-being, and proper handling of them, as well as lessening our indebtedness is critical.

Credit card companies, aggressively lessening their exposure, are reducing credit limits, closing down accounts without warning, and increasing interest rates (any of which can cause your credit rating to decline). Low credit ratings, late payments and high balances all trigger alarms for them, and could have serious repercussions for you. The best way to protect yourself from this is to pay off the balance. But there are some steps you can take to protect your credit rating, while you’re doing that.

First of all, stay away from debt consolidation loans. Even though your total monthly payment may be decreased, the companies that offer these loans are in it to make money for them. The actions they recommend will often leave you with a destroyed credit rating, which could take several years to rebuild.

If you have sufficient cash available in your savings or retirement fund, simply make a lump sum payment, and retire the debt completely. Even paying a penalty for taking money out of a retirement plan can sometimes be more cost-effective than paying the accrued interest on the card balance.

If you can’t manage that, then first pay the balance down as much as you can, and then make double payments each month. NEVER pay only the minimum amount, as this has very little effect on the balance, and in fact, may even increase it.

It is advisable to avoid making the already nervous credit card companies any more so. For instance:

• Pay early, or on-time, NEVER late.
• Avoid seeking other cards – every credit check can affect your credit rating.
• Don’t signal your intention to pay off the balance – just do it. You can estimate additional interest since your last statement, and make any adjustment later.
• Always pay more than the minimum. The credit card companies are interested only in good risks, and paying only the minimum doesn’t inspire confidence.

As a footnote, NEVER cancel a credit card, until AFTER you have paid it off, as cancellation will almost always result in the card company raising your interest rate – usually to 30% or more.

Tags: , ,

Posted in Credit | Comments Off

Saving Money Wisely

Mar 1st, 2010 by Free Help Finance

Believe it or not, saving money is not as difficult as what many individuals say it is. It is just a matter or disciplining yourself and saving money wisely in the process. The harsh reality is that many individuals are still living on a paycheck-to-paycheck basis without establishing any kind of a savings plan. The following information will hopefully enable you to start saving money for unexpected future emergencies or events.

Develop a budget and stick to it – take all of your monthly bills including your food, rent, utilities, and other critical living expenses into consideration when you do this. If you can set aside only 5% of your paycheck, you will be surprised at how much this adds up on an annual basis.

Dump the home phone if everyone has a cell phone – what is the point in having a landline anymore anyway? Dump those mega-minute family plans, especially if it is not a rollover type of plan and there are unused minutes left each month. We recommend the pay-as-you-go plans and to stop running up your used minutes by making unnecessary phone calls.

Prepare a weekly dinner menu and go grocery shopping accordingly – you should only be purchasing enough food to cover each individual meal as well as avoiding cooking for an army and throwing out leftovers that never get eaten. This helps to get a handle on your spending habits.

Get over the idea of always having to purchase the top name brands – in most instances, those high priced name brands are no better than the lesser known brands. Doesn’t it bother you to know that you are a sucker for the marketing schemes out there? Even though it may seem undignified and beneath your standards, purchasing second-hand items is not going to kill you.

Try to avoid spending excessively in order to keep up with the Joneses – there’s a good possibility that you’re going to be disappointed if you keep trying to look as good as your neighbors who spend excessively. Appearances are like other material objects – they mean absolutely nothing and you are just throwing money away when you pursue that kind of lifestyle.

Instead of driving, sometimes you should consider other options for getting from point A to point B – try riding a bicycle, carpooling, taking the bus, or even walking instead of driving your car to go shopping or to work. It costs you more in fuel to drive to the mall by in your vehicle compared to not being lazy and either riding a bicycle, taking the bus, or just getting off your butt and walking.

It’s not necessary to have 500 TV channels with a cable or satellite TV plan – chances are you’re only going to watch 20% of those channels at the most – probably far less when it comes down to it. If you enjoy watching movies, consider renting them from a movie rental company or purchasing previously viewed copies for less money. Again, this is a matter of disciplining oneself and not being concerned about appearances.

Tags: ,

Posted in Saving | Comments Off

Futures Trading Explained

Feb 27th, 2010 by Free Help Finance

Futures trading is a form of investing that involves buying a commodity at today’s price but acquiring them at a later date. Futures trading can be a lucrative investment and if you are looking for investment opportunities then having futures trading explained to you can be of a great benefit. Many people have made substantial sums by investing in futures trading.

Futures trading can benefit both the buyer and seller of the commodity that the futures trading pertain to. This can also be a of a great investment benefit to those that are willing to speculate on futures. Futures investing involve a marketplace that consists of buyers and sellers who are interested in a particular commodity.

A commodity is an item that is bought and sold. Commodities typically fall into several categories. These categories include Metals, such as gold and silver or livestock such as hogs, live cattle and pork bellies and other commodities such as corn, soybeans or wheat.

The marketplace of a particular commodity such as wheat may take place in different locations throughout the country, such as commodity markets for Wheat in New York and in Chicago. When a speculator is interested in a commodity they need to determine what market area they are interested in. They they need to find out what the price of the item was at that marketplace. Then they need to speculate at what the price of the commodity will be in the market.

The buyer and the seller involved with the commodity deal in contracts. Contracts of a commodity consist of a set quantity of this commodity such as wheat selling at 5,000 bushels per contract. The contract between the buyer and the seller predetermines the price the commodity will sell at a later time. This locks in the price for future delivery of the commodity.

As a result of the contract the buyer is required to buy the amount set in the contract and the seller is required to deliver the amount specified in the contract. This contract can be transferred and both parties have the right to pass this obligation to another party any time before the contract expires.

This is where the investment potential comes into effect. Lets say a buyer of a contract purchases a contract at a set price and they are able to transfer the contract to someone else being willing to pay a higher price they can then make a profit on the contract. For example if a contract of wheat was to sell initially cost the buyer $50 and they are able to sell it for $80 then they have made $30 on that contract.

A speculator can make money by anticipating what price the contract will sell at and purchase low then sell at the higher price of the contract before delivery. The entire purpose of this process is to provide buyers and sellers of these commodities with a common place to sell and buy their goods. The idea of purchasing the contract before delivery gives the seller of the commodity a set price that they have sold future goods at therefore giving them a sense of security on the commodity.

Tags: ,

Posted in Investing | Comments Off

How to Open a Roth IRA for Children

Feb 24th, 2010 by Free Help Finance

What is a Roth IRA?

An allowable retirement investment vehicle that many people use and is based on United States tax law is a Roth IRA or Individual Retirement Account. The late Delaware US Senator, William Roth, was the primary legislative sponsor of the measure that was passed to create these types of accounts, hence the name “Roth IRA.” Be aware that there are significant differences between this type of IRA and others that are available.

Many people do not realize that you can open a Roth IRA for anyone in your family, including your children. There are a few requirements which may need to be met when opening an account, depending on which family member it is that you are opening the account for. To get a better idea as to how advantageous or disadvantageous this is based on who the beneficiary is, you should visit the IRS website and investigate this.

The rules governing opening up a Roth IRA for a child

In answer to the question as to whether or not you can open up a Roth IRA account for your child it basically comes down to one thing. Unless your child is either a child actor or a TV performer, chances are you cannot open an IRA for your child. Despite the fact that this is not a hard and fast rule, you should probably consider opening some other type of savings plan for your children.

Typically, a Roth IRA account can only be opened for a child that has earned income. Additionally, any unearned income resulting from an investment or a savings account typically doesn’t count towards this requirement. Conversely, for those children who can qualify for this type of IRA, they will be far better off with this option than with a traditional IRA account. Since their income is no doubt smaller than most others, they won’t benefit that much from contributions to a traditional IRA which are tax-deductible.

There are a number of ways in which a child can earn an income such as finding a part-time summer job, babysitting, or having a newspaper route. Since babysitting and lawn mowing jobs usually do not result in the child receiving a W-2 for wages earned, accurate record keeping is imperative. You’ll want to list the amount of the payments received for those services rendered, the dates that they were paid for said services, and who the employer was. Any other facts pertinent to the child’s earnings should be listed as well.

Maximum allowable contributions

The allowable maximum contribution to any Roth IRA account is $4,000 annually. Your child has the option of contributing their entire annual income to their Roth IRA account or $4,000 each year, based on which sum is the lesser of the two amounts. So if your son or daughter only earns $3,500 per year, they are allowed to contribute every penny of that income into their Roth IRA account. Just consider the qualifying criteria mentioned above.

Tags: ,

Posted in Investing | Comments Off

Older Posts »