» Investing the retirement

Investment Tips

admin — Fri, 10 Jul 2009 14:50:10 +0000

It takes capital, time, and professional advice to build a good individual portfolio. Some people are better suited to do this than others. Keeping their money hard at work with good results is not easy, but if people choose to manage their own investments, here are some tips that should prove helpful.

Tip #1: Stay within the comfort zone. To most people, sleep is more important than gambling for a higher return on an investment. Their comfort zone may move toward the conservative in the years ahead.
Tip #2: No one has all the answers. Financial markets are influenced by so many factors that no one can predict beyond an educated guess.
Tip #3: Seek professional help. Make their own decisions. Second opinions are advisable. Refrain from becoming dependent on one advisor.
Tip #4: Work as a team with their life partner. Two heads are better than one. Should anything happen to one of People, the other is better prepared to take over.
Tip #5: Stay current. If changes are required, People will be in a position to take action before they get hurt. People can’t tuck their investments away in a safe deposit box and expect them to take care of themselves.
Tip #6: No matter how much People know about investments, keep learning. What was a good investment last week may be a poor one today. The financial world is constantly changing. If People can’t keep in touch, make sure People have advisors who do.

Professional Money Managers

admin — Fri, 10 Jul 2009 14:49:37 +0000

If their retirement savings is more, people should consider professional money management. A professional money manager will handle their investment account according to their instructions. People will pay a fee for this service, but the benefits may be well worth the cost. The first thing a professional money manager does is help people define their goals and risk tolerance. This information is converted into a long-term strategy that can sustain People through various markets. From this preliminary work, an investment plan is formed that accommodates both their long-term goals and short-term needs, based on their tolerance for risk. A professional manager has the time, training, and temperament to manage their assets successfully—qualities People may not possess. A trained professional takes the emotionality out of investing,
knows the appropriate investment vehicles to achieve their goals, and can manage risk within their portfolio by choosing the proper balance of investment choices. This service will cost from one to two percent of their account balance annually.

When choosing a professional money manager, become acquainted with the management team that will handle their account. Look at how long they’ve been in business, the size of accounts they handle, and their track record. They want someone who handles accounts similar to theirs and has demonstrated success.

Choosing an Advisor

admin — Fri, 10 Jul 2009 14:48:51 +0000

When People decide to engage the services of a financial advisor, start by checking with others for recommendations. Then, schedule meetings with two or three to see which one best fits their needs. Here are some questions to ask on their first visit.

 What are their background and experience?

 What degrees and designations do People hold? Look for someone who holds one of the three designations mentioned earlier. While they are not guarantees of qualifications, they are indicators of education and experience.

 Consult other professionals? Seldom is one person an expert in everything. Expect an advisor to consult with a CPA, insurance specialist, investment advisor, estate attorney, and a tax attorney in developing a comprehensive plan.

 How do People charge for their services? People need to know if there is any chance of advice being tainted with greed.

 What are their typical client’s financial circumstances? People want an advisor who deals with clients similar to People.

Methods of Compensation

admin — Fri, 10 Jul 2009 11:53:50 +0000

Financial advisors are paid for their services in one of the following three ways. It is important to understand ahead of time how an advisor is paid.

Hourly Fee: Fee-only advisors charge for the time spent with a client and working on the client’s business. Total charges can become substantial for a comprehensive plan and implementation.

Sales Commissions: Some advisors offer free planning service with an expectation of making a commission on the investments People select. If People choose this type of advisor, be sure of his or her qualifications and that the investments offered fit their needs.

Combination: Some advisors calculate a fee based on the time spent on their business. Then, the customer may choose to pay the fee and go elsewhere to implement their plan; or, if they buy investments from the advisor, any commissions received are credited to their account. Most people prefer this approach as it offers some savings along with freedom to choose who handles their investments. Good financial planning is a combination of analysis and application tailored to their specific needs and circumstances. It is not a sales approach for marketing investment products. Therefore, customers need to sort out the method of compensation that best suits their situation.

3.10.2 Choosing an Advisor

 What are their background and experience?

 How do People charge for their services? People need to know if there is any chance of advice being tainted with greed.

 What are their typical client’s financial circumstances? People want an advisor who deals with clients similar to People.

Hiring a Financial Advisor

admin — Fri, 10 Jul 2009 11:51:17 +0000

At some point, people will probably need the services of a financial advisor. Depending on their understanding of financial matters, they may need answers to tax questions or a complete saving and spending plan. When they start looking for a financial advisor, they will find no shortage of candidates. However, finding one that meets their needs may be a challenge.

Types of Stock Funds

admin — Fri, 10 Jul 2009 11:48:37 +0000

Stock mutual funds are generally classified as income, growth and income, or growth funds. Income funds invest in common and preferred stocks of established companies that have a history of paying above-average dividends. Growth and income funds invest in the stock of blue chip companies that combine steady growth with good dividends. Growth funds invest in common stock of companies whose earnings have grown faster than the rate of inflation or the general economy and they reinvest most of their earnings in further growth. An easy way to invest in stock mutual funds is to buy an indexed fund.

Reasons for Investing in Mutual Funds

admin — Fri, 10 Jul 2009 11:46:46 +0000

Reasons for Investing in Mutual Funds

Mutual funds appeal to such a large number of investors for many valid reasons.

Here are the ones most often cited.

Diversification

Their investment is pooled with others and spread among a large number of securities. This reduces the potential for any one investment having a significant negative effect on the total portfolio.

Professional Management

Few investors have the time or knowledge to analyze companies and securities, study forces that influence the economy, and assess trends in financial markets. With mutual funds, individual investors gain access to professional portfolio management at bargain rates.
Liquidity

Mutual fund shares can be sold at any time at their current market value. They are subject to market risk.

Convenience

People can add to their mutual fund holdings at any time. Additionally, recordkeeping is simplified by the periodic reports and tax information provided. Withdrawals are also convenient. Many funds will mail the customer a monthly check while others offer check-writing privileges.

Mutual Funds

admin — Fri, 10 Jul 2009 11:44:32 +0000

A mutual fund is an investment company that pools the money of many investors and invests it on their behalf. Based on a fund’s stated objective, the money is invested in stocks, bonds, money market securities, or a combination of these. At the end of 2004, there were about 8,000 mutual funds with 267 million accounts worth in excess of $8.1 trillion in America. All investments have an element of risk. Mutual funds are no different. And, with so many choices, great care should be exercised to find a fund that is right for the people.

Mutual Funds

admin — Fri, 10 Jul 2009 11:43:14 +0000

Guidelines to Reach the Goals

admin — Fri, 10 Jul 2009 11:42:01 +0000

People who experience the most success in saving for a financially secure retirement follow some specific guidelines. See if they are guided by a successful strategy.

 Start by eliminating all consumer debt.

 Set up a regular program to add to their savings monthly. Use payroll deductions, systematic transfers from their checking account, or (at least) marks on their calendar to send in a check.

 Take full advantage of employer-sponsored plans. These plans not only offer tax-deferred compounding, but frequently offer employer matching of all or a portion of their contributions.

 should not spend their retirement savings on other things. If they change employers, roll their retirement savings over into their new employer’s retirement plan.

 before retirement, invest for growth. After retirement, shift into income investments to conserve capital and meet income needs.