Q: What Is A Hedge Fund

Category: Finance, Financial Planning.

Unlike what it sounds, a managed future is not about a college choice or a personal growth plan.

Unfortunately, many individuals without a finance background may not understand exactly what this is, so let us take a look at what this choice could mean to you. On the world of investment and finance, a managed future is a type of investment choice. Q: What is a Future? Q: Is this something new? A: A future is basically an agreement between the investor( or buyer) to buy something at a set price sometime in the future. A: No. Q: What is a hedge fund?

Futures have existed for more than 30 years, but are sometimes considered an alternative investment due to their lack of popularity among the general population. A: To understand this, you have to understand there are two main players in the futures market. The Hedger will enter a contract to purchase or sell an item to guard against price risk. There is a Speculator and there is a Hedger. A great example of a Hedger is a farmer who will enter into a contract to purchase seed today, but not for shipment in 6 months. The speculator is someone who is not intending to minimize risk, but instead wants to profit from the increase in price.

The reason for purchasing seed today is that the farmer believes the future price of seed will increase in the upcoming months. The speculator is not someone who intends to take physical possession of the commodity, but is in the market only to make money. Q: OK- what does short selling mean? A hedge fund therefore is a fund designed to engage in short selling. A: There are two ways to buy and sell- either LONG or SHORT. For example, the hedger farmer is going to secure a contract to sell his corn at today s prices because he thinks that corn prices are going to drop in the future.

Short buying or selling is focused on commodities that may be over- valued now. Buying or selling long is focused upon commodities that may be under- valued now. Q: What is a managed fund? A speculator may purchase gold contracts today because he believes that gold prices will increase in the future and will sell at the higher price. A: A managed fund is one that has a professional full- time administrator of the fund who is responsible for purchasing and selling futures in order to make money. Q: Are they a safe investment?

Many managed funds are rather secretive and the strategies used by the administrator can vary as widely as their own personality. A: The answer is yes and no. In conclusion, a managed future fund is the perfect way to introduce diversification to your portfolio. It really depends upon the strategy, knowledge and experience of the administrator. But it is also an investment choice that requires some understanding and trust in the fund purpose and the administrator of the fund. If you are interested in this type of fund, take an afternoon and do a little research to find the one that best meets your needs.

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Federal Loans Are In Great Demand In The US - Finance and Financial Planning Articles:

No student in modern times is unaware of the benefit of student loan consolidation. Even if you belong to the second category, do not despair.

What Is A 457 Plan - Deanne Regis about Finance and Financial Planning:

What is a 457 plan? Contributions made to the plan with pre- tax money, and contributions are, earnings tax deferred while under the plan, and contributions are generally made by the employee, although some plans do have contributions by employees as well.

Foreclosures Through Court Proceedings

Category: Finance, Financial Planning.

The news or threat of foreclosure on your home or property could be very devastating for anyone, especially seniors. If your financial situation is stressed out thin, you are definitely under huge pressure to come out with the much needed money.

Knowing the regulations preventing foreclosure could do you a lot of favor. When you are burdened with foreclosure, you need to know the basic regulations preventing foreclosure. The reasons include like poor financial management of an individuals personal finance, decrease income due, loss of employment to loss of a spouse or loss to second mortgage scams and so forth. There are so many possible reasons why one would be unable to pay his or her regular monthly mortgage payments. When most prized possession like real estate property or home is threatened of foreclosure, you need to seek advice from the professionals. Foreclosure procedures vary from state to state. What you need to understand before your lender can foreclose your property, is that you have options.

Some foreclosure are court proceeding and some are non judicial. Here, the lender or creditor will file a suit in a court near the location of the property. Foreclosures through court proceedings. Unless the homeowner or the real estate property owner successfully contested the foreclosure, a judgment will be entered in favor of the creditor or lender. Some states do allow both types of foreclosure, judicial and non judicial. While on a non judicial type of foreclosure, the lenders or creditors simply advertise the home for sale using a legal notice on a newspaper. Now you see why you need to know the regulations preventing foreclosure.

First, get legal advice. Once burdened or threatened by foreclosure on your property, there are steps you need to take as soon as possible. There is the harsh reality of legal process involve in foreclosures. Getting legal help prevent any missed opportunity that may still be available to you. Obtaining immediate legal help could give possible options that may otherwise not be known to you, the average Joe. Do not wait till your legal rights have passed. These programs are mostly available to seniors or the elderly.

Go to your nearest government or nonprofit organizations or agencies and apply for income maintenance, tax abatement and public assistance programs. You may be eligible for supplemental security income. Contact and talk to your mortgage lender or servicer. This process can also be taken with the help of an advocacy organization. Negotiate with the mortgage lender or creditor. Try to negotiate a temporary or permanent change in the mortgage terms. Work out something with them that may ease up your payment schedules and arrears if any.

Terms like forbearance, or deferral agreements, reinstatement. Reamortization and or capitalization of arrears. The lender may also give a temporary rate reduction or a permanent rate reduction. Extension of the loan period. Make your home mortgage payments a priority. Another step the homeowner can do is keeping your current home mortgage payments.

Skip low priority bill payments like your payday loans, or even your, credit card payments medical bills. A reverse mortgage especially for the elderly would be very useful. Having equity on your real estate property will allow you to refinance your mortgage. Or consider selling the home before your servicer try to foreclose your home. For more information and resources on foreclosure prevention, contact or inquire about the National Consumer Law Center on foreclosures, surviving debt, repossessions, stop predatory lending. Thus, knowing the process or regulations preventing foreclosure can give you a more informed plan of action.

Regulations preventing foreclosure information gives a better chance in dealing with your mortgage foreclosure.

A Company Offers Retirement Benefits For Employees For One Purpose

Category: Finance, Financial Planning.

This is not a given for every employee. That is not the norm any more.

It used to be in the generation that was in the workplace of the nineteen fifties and sixties that staying with a company for thirty or more years and retiring with full benefits was the norm. We cannot just blame the job hopping ways of employees for the change of culture away from going for the gold watch and retiring in a company. A company offers retirement benefits for employees for one purpose. From the corporate side, so many companies have eliminated retirement packages entirely that there is a strong belief of the do it yourself retirement in the working population. That is to aid with retention. So if you can keep those employees all the way through to retirement, that is a real value to any corporate entity. When you have a pool of talented, well trained and energetic employees, that is a corporate resource.

So if your company does offer these benefits to your employees, its important that you take advantage of them in more ways then just sponsoring them. And this may be true in your company that you have a corporate culture of being involved with your employees at a personal level and maintaining that we are family feeling for people who work for you. A retirement package for aging employees sends a message to the employees that the company cares about them and about their families. If that is the case, it makes sense that you would extend that feeling to care for the retirement planning of any employee that you have that shows signs of being a long term value to the company. Remember that an interview is about more than you looking for qualified people. You should highlight the company retirement package as early as the interview with your prospective employees.

It is also about qualify people interviewing you. If a job hunter who is looking for a place to work that they can retire at knows that you have a good plan to help them with their retirement planning, that will draw the brightest and best to your HR department. And that is exactly where the value of a strong retirement package is of greatest value. Your HR department should not let the retirement issues of employees lie idle for very long at all. Hold regular retirement planning meetings to have employees review their level of participation in the program. The more you help your employees plan for and participate in a retirement program, the happier they will be and the more engaged in their work they will be.

This is where you will put in front of the employees your most empathetic HR employees to show genuine interest in the employee retirement issues. And when an employee finally crosses over into retirement, throw a party and go out of your way not only for the company to help the employee transition to retirement but to demonstrate to all employees that the company lives up to its claims to be faithful to employees all the way into retirement. Above all be sure to show particular concern and caring for aging employees. In an economy where so many companies throw people away, your employees will notice that this is not that kind of company. And your faithfulness to retiring employees will result in a rich crop of faithfulness from ongoing employees who stand behind you because you stand behind them from the day they start work in the company all the way through to retirement.

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Debt consolidation is one of the best solutions for those of us who have too much debt.

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It Is Important To Know Where Your Money Goes

Category: Finance, Financial Planning.

Living within your means is a liberating way to live your life.

Living within your means gives you the freedom to save money for special things rather than always scrimping to pay your bills. It means no debt is one of the most common causes of relationship stress. Unfortunately, many people don t live within their means. This happens for many reasons. They live above it, way above it. Maybe they just don t track their expenses, and purchases are made without thinking. Maybe shopping is a misguided form of therapy.

Maybe they re trying to keep up with their friends and family. Whatever the reason, the end result isn t a happy one. It is important to know where your money goes. If you feel that you could do more to live within your means, here are a few tips to help keep your life on track and your financial status right where it belongs: Tip# 1: Keep track of your spending. Once you have an idea of what you re spending your money on, you can begin to control it. A new car depreciates the moment you drive it off the lot.

Tip# 2: Buy a used car or at least keep your new car for more than a couple years. Sometimes it depreciates as much as 50% . Tip# 3: Don t be afraid to grocery shop with coupons or stock up on items for sale. A used car already has that depreciation figured into the cost. Personally I love it when the grocery offers" buy one get one free items" , particularly when the items are large ticket items like meats. Tip# 4: Do buy quality clothing items, not quantity.

Not only do I save tons of money but when I can t figure out what to make for dinner, I can just open my freezer and I have options. When you re shopping for yourself, don t make whimsical clothing purchases or follow the latest trend. Spending$ 100 on a pair of jeans that will be out of style next season, or spending$ 150 on a pair of jeans you can wear for five years? What s better? Tip# 5: If you have a credit card debt, develop a plan to get out of it. A phone call to your creditor can usually start the process.

A debt elimination plan begins with reducing your interest rate. Next, stop the charging on those credit cards and get busy paying them down. A great way to manage the process is to develop a monthly budget. Pay more than the minimum balance or you ll never get it done. Your budget will contain your income, expenses including debt and your savings. It is empowering to have complete control over your money and your finances, certainly less stressful than letting your money control you! Living within your means is possible!

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Brokerage Houses Generally Have Subprime And Private Equity Exposure, As Discussed Above - Finance and Financial Planning:

The stock market is gyrating like a yoyo, and with each down stroke it s heading lower.

With A Stafford Loan, There Are Two Ways That It Works - Flossie Friedrichs about Finance and Financial Planning:

Getting to college, saving the money and earning it as you go is only a part of the story. Once the classes have finished and it s time to get out into the real world, it s also time to decide how you are going to handle your deferred student loan into the future.

Nobody Likes To Pay Taxes - Finance and Financial Planning Articles:

Nobody likes to pay taxes. Knowing some simple rules will reduce your tax bill and allow you to keep more of what you inherit.

What Happens To My 401K Money If I Leave Before Retirement

Category: Finance, Financial Planning.

The earlier you start putting money back for retirement, the better your golden years will be.

It can get pretty exciting when you get those statements and you see your retirement fund really start to take shape. And if you have been faithful in participating in your employers 401K plan, you can start to some serious money begin to build up as you realize the vesting of the employer matching funds and you continue to make your contributions month after month. But your career in business can take a lot of twists and turns along the way. But the question comes up then. And sometimes you change jobs for a lot of reasons. What happens to my 401K money if I leave before retirement?

The 401K program is federally monitored and once those funds go in there, they are yours if you are vested in them. The good news is that you do not lose it. But if you move jobs several times during your career which is very common in the modern business marketplace, if you do not take some action, you can end up with retirement money scattered over all of your last jobs which is messy and makes for a nightmare to keep track of. When you first leave your employer to go to another company you are given a couple choices of what to do with your retirement funds. It would be better if you can make your retirement money walk with you so you know where it is and you can keep all of your retirement planning funds in one place so you can take advantage of them all at once when you are ready to retire. One option is to leave them behind to catch up with them decades later when you are ready to retire. You do not need that kind of uncertainty when it comes to your retirement money.

In addition to wanting to keep this important asset with you as you travel from job to job, you have no idea if that employer will even be in business when you are ready to retire. Another option that is offered to you is to cash out your 401k and withdraw the results. For one thing, the laws governing the 401k call for you to pay a large penalty if you withdraw them before retirement age. While this may be attractive if you are between jobs, it is really a bad idea. Not only that, once you take that money out of your retirement funds, it is gone and your retirement planning will suffer a serious set back. Now if you left the last job without a new employer either through termination or leaving to start your own business, that may not be an option. A very good option that is available to you is to roll your current 401K over to your new employer.

If you are looking for a new job and think you will have one in the next year or so, you can leave your 401k money where it is and transfer it later though. But a third option is to roll the 401k money into a tax sheltered privately owned retirement fund. In that way, your 401k continues to accumulate as one fund, not many. You own this account and you usually have an investment management company helping you with the investment and protection of that money until it is time for you to retire. And if you use this option, you can still start with a new 401k fund at your next employer knowing you have a place to put the funds in the event of another change of jobs. This is an outstanding option because that investment company works for you so you call the shots about your retirement money.

And that puts you in the drivers seat which is a very good feeling when it comes to retirement planning.

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The Path To Financial Doesn T Have To Be As Complicated As We Tend To Make It - Finance and Financial Planning Articles:

There will be many terms you will come across during your research that will be somewhat confusing until you get the terminology down. I would like to take this opportunity to encourage you to seek the guidance and advice of a professional financial planner.

Even If The Underlying Index Goes Up 10% , Your Return Will Be Lower - Finance and Financial Planning Articles:

Equity Indexed Annuities( EIAs) have become the hot product of late. I ll discuss these alternatives in the next two articles.

Educator Expenses - Clare Uchida's Finance and Financial Planning blog:

How many times have you done your taxes, and a week or a month later realized you forgot a deduction? In my experience, these are the top 5 missed deductions.

Crude Oil Spread Betting, 21 Jan 08

Category: Finance, Financial Planning.

Spread Trading, 23 Jan 08. Capital Spreads Account holders have found these levels comfortable enough to take out new long positions expecting a possible attempt at the$ 100 level in the coming weeks.

Crude Oil prices remain depressed( to the extent that they are still only in the high$ 80s rather than the$ 90s) . With inventory data out at 15h30 today, the oil markets will be closely watched. With Crude Oil beginning to slip we might expect some breaking of ranks in OPEC as producers try to sell as much of the black stuff at these high prices as possible. Crude Oil Spread Betting, 21 Jan 08. In the final account there is not much love lost or agreement between the Oil producing nations( apart from a general dislike of the US) . Crude Oil Spread Betting Comment, 18 Jan 08. So unless there is some increased political tension traders are beginning to put a toe into the sell side for a change.

Crude Oil is weaker( although up a tad this morning) as the lack of any actual bad news weighs on the long positions. To the upside the obvious target remains$ 100 but the March contract high is actually just around$ 98 and there is growing resistance to moves above$ 97 Crude Oil Spread Betting Comment, 14 Jan 08. We seem to have found some support at$ 830 in the Brent Crude Oil March contract but if this goes traders will be eying the crucial$ 830 level which held once in November and twice in December. As mentioned last week, Crude Oil Spread Betting is struggling at the top end of the range as supply continues at the higher end and political friction seems somehow to be not as bad as feared. Will this be a year of falling gas prices? This morning Brent Crude is called a few cents higher at$ 930- $935 and we are now some$ 8 off the highs of the New Year.

We must now watch for a series of supports at$ 830, $820 and$ 84If we break these and close lower then the oil bears may finally have something to get their teeth into. The bulls however will be hoping for: a) some US/ Iran dispute, and/ or. b) a renewed problem in Nigeria, and/ or. c) a renewed problem in Pakistan, and/ or. d) some sign that the world economy is not indicating a slowdown.

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You May Still Be Subject To State Gift Taxes - Finance and Financial Planning Articles:

Doris from Minnesota is considering transferring her assets to her son so they won t be lost to Medicaid should she need assisted- living or nursing home care. One of the greatest financial risks seniors face is the rising cost of healthcare, including the cost of custodial care in an assisted- living facility or nursing home.

Federal Loans Are In Great Demand In The US - Finance and Financial Planning Blog:

No student in modern times is unaware of the benefit of student loan consolidation. Even if you belong to the second category, do not despair.

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Find An Independent Pensions Transfer Advisor

Category: Finance, Financial Planning.

If you re considering a pension transfer, then these tips could help you in the transfer process.

Pensions law and regulation is so complex and changes so rapidly, that you really do need good advice when it comes to transferring your pension. Find an Independent Pensions Transfer Advisor. An independent advisor isn t tied to any particular product, and has access to all the information you need to make an informed decision. They can check the current value of your existing pension and compare it to the performance of other similar schemes on the market. In addition, they will be aware of the latest changes to the pensions regulations, ensuring that your transfer falls within the rules. Don t transfer your pension without consulting an expert. Each pension scheme has a different level of benefits.

Check Benefit Levels. Whilst some are very generous, and you want, others are not to be sure that you are transferring to a pension that has equally good, benefits than your, if not better current scheme. Growth Levels. Your pensions advisor can help you to check benefits levels and talk you through which are the most important to hold onto. If you are transferring a pension, there may be a period where the new scheme needs to grow to the size of your original pension fund. Nominations. For this reason, you should ask your pensions advisor to check growth levels to see which funds are likely to return your investment to its current level the quickest.

Make sure that you can nominate one or more beneficiaries for your pension scheme and that the pension fund manager will honour your nomination. To make sure that your pension goes to the people you want it to, your nominations need to be accurate and, you should reinforce, if necessary them in your will. If you die before retirement, your pension entitlement will be paid to your nominated beneficiary or to your estate. Retirement Age. If you are intending to retire early, ask your pension advisor to check the value of your existing scheme and the scheme you want to transfer to. If you are transferring your pension less then 10 years before retirement, make sure that your new scheme gives you the same rights as your old one. This will help you to ensure that you have a good income on your retirement.

The pensions industry is competitive and one of the key areas where pensions schemes compete is the management fee. Management Fees. This fee is usually applied annually and is calculated as a percentage of your funds. Review. Many people choose to transfer their pension in order to obtain a lower management fee, so you should make sure that the scheme you choose has a management fee you are happy with. If you are considering transferring your pension, ask a pensions advisor for a review of your current situation. Administration.

Once you have transferred your pension, it may be worth asking for a regular review, particularly as you approach retirement age, so that you can be sure that your pension is working for you. You will need to ensure that you have all the paperwork relating to your existing pension scheme before you transfer. Similarly, when you get the paperwork for your new pension scheme, keep it in a safe place so that you can access it easily when you are coming up to retirement. This paperwork is important when it comes to any contact you have with the company operating your pension scheme, and your pension advisor will need it in order to effect the transfer. Target Income. Talk to your pensions advisor about your desired target income, which will help them to work out the payments you need to be making into your new pension scheme.

If you are transferring your pension scheme when you are still a long way from retirement, you may want to look at the level of contributions you are making.

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A new market opportunity in the bequeathed market has emerged as Baby Boomers seek to establish a strong legacy in the eyes of their loved ones.

Why Seniors Don T Buy Long Term Care - Finance and Financial Planning:

In the next few minutes you will learn about a new insurance industry product that provides long term care insurance coverage if you ever need it, but requires no policy, premiums or health qualifications. In my experience, over half the people who shun long term care insurance do so because they feel they will never need it.

This Scholarship Needs No Explanation - Finance and Financial Planning Blog:

Scholarships are a great way to pay for college education. Thankfully, there are scholarships that rely on other kinds of distinction.

ProFunds Group Has A Number Of ETFs Designed To Perform This Way

Category: Finance, Financial Planning.

Exchange traded funds are index funds which have advantages over open- end index mutual funds.

There are a number of reasons, which we ll discuss, for investing in index funds( Exchange Traded Funds or mutual funds) but let s start with the fact that the S& P 500 index beats 80% of all actively managed funds. (And, an index fund has lower expenses than an actively managed fund, further enhancing its net return. ) If you can invest in an index fund and be in the top 20 percentile of fund returns, that s a pretty good place to start. ETFs trade all day long on the stock exchanges, may be purchased through any broker, have lower fund expenses than mutual funds, and have less likelihood of generating unwanted taxable gains than mutual funds. You can construct a well- diversified portfolio entirely out of ETFs. Exchange Traded Funds enable you to diversify into assets which you may not otherwise feel comfortable owing because of expertise, risk and/ or liquidity issues. There are Exchange Traded Funds for almost every type of investment you can imagine. They are well- suited for investing in exotic areas such as currencies and commodities. One of the most attractive features of Exchange Traded Funds is their ability to provide you with greater liquidity than if you were to directly own their underlying investments.

Of course, they re great for sectors such as small cap or international stocks. Take municipal bonds, for example. Minimum investment size can be another problem. Most Muni issues trade infrequently and the transaction costs for the individual investor are substantial. Munis typically have a$ 1, 000 denomination and trade in large blocks. You can buy as little as one share of an ETF( generally less than$ 100) during market hours and at the same cost as for a stock.

ETFs are the answer to all these issues. You can hedge an investment and/ or lock in gains using ETFs. Investing on margin can magnify your returns and your losses. Unlike open- end mutual funds, Exchange Traded Funds can be bought on margin and shorted. The ability to short enables you to make money when something goes down in value. However, to paraphrase TV commercials, these strategies should only be employed by a professional driver on a closed course.

Think shorting the dollar or home building stocks. It s also important to note that you don t have to short an ETF if you think an asset is going to decline in value. ProFunds Group has a number of ETFs designed to perform this way. You can probably find an ETF which is structured to generate an inverse return to that asset. So, for example, if you think the Chinese stock market will decline, you can purchase a ProFund which should increase in value if you re right. One S& P 500 ETF may weight its stock holdings by market cap, another may weight them all equally.

All ETFs, even those which track the same index, are not the same. This will result in different returns. Since most indexes are not strictly defined, think technology versus S& P 500, there will be a variety of different investment strategies employed. Two ETFs which track the technology sector may hold different stocks and/ or in different weightings. Different strategies to mimic an index are not good or bad, but they may have different risk levels and will produce different returns. You need to know what you re investing in.

Some ETFs also use leverage to enhance their returns or structure there holdings to magnify any gains( thus, also losses) of an index. To understand how a specific ETF works, visit its website and read its prospectus. Also, there will be, within five years more money invested in ETFs than in open end index mutual funds. Within five years most investors will have at least one ETF in their portfolio. The advantages of Exchange Traded Funds- liquidity, transparency and lower expenses, to name a few- will force changes in open end mutual funds. Happily, the investor will be the winner in the competition between these two investment vehicles.

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Finding a good estate- planning attorney is vital for the success of your estate plan.

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Their Attorney Was A Generalist - Finance and Financial Planning Articles:

Ned almost lost the farm that had been in his family for 8 generations! Make sure you don t make the same mistake Ned did.

How Much Money Will You Need During Your Lifetime

Category: Finance, Financial Planning.

If making a million bucks were easy, we d all be millionaires. According to the statistics shared by Mike Peterson, co- founder of The American Credit Foundation and author of" Reality Millionaire: Proven Tips to Retire Rich, " most Americans are losing the money- making game.

Right? Take 100 people at age 20 and fast forward them to retirement. That s not even great or independent . Only five percent of them will be financially okay. Just okay. Let s take another step, at the point that you manage your finances and income so you re no longer in the red, but actually have a little money left over at the end of every month. In fact, most people lose in rounds one and two. "There are different levels to financial freedom, " says Peterson. "The first level of financial freedom is when you decide to take control of your finances.

Eventually we get to what I call ultimate financial freedom. There are certainly many related causes for our society- wide tendency toward money blunders. I define that as, where you have enough money put away in investments that are spinning off enough of an income for you that you no longer have to go to work. " The real key to getting started according to Peterson is that people need to make a decision to be responsible for their own finances. Lack of financial education in schools is certainly a factor but Peterson thinks the real problem is closer to home. Once you commit to getting started, begin with rounds one and two below: Round one is all about looking- really looking at your finances. As an adult, there is no reason someone can t go to a local library and tap into the wealth of information available and teach himself.

How much money will you need during your lifetime? Now consider how much you ll earn. Consider vacations, a child s wedding, cars and then, a house add a million because you d love to have a million someday and you will need something to retire on. If you continue earning the same amount you currently do, how much will you earn over your working lifetime? Without conscientiously managing your money, the discrepancy will get worse, not better. There s a discrepancy there for most people and it s easy to see why people who don t pay attention are loosing the money game big time. Since most people don t just buy a house with cash, they ll actually be paying a lot more than the asking price.

The great thing about money is that there are lots of ways to make it. That goes for anything purchased with credit. Of course, there are at least as many ways to spend it. Round two is about finding your own pot of gold with the 10- 15% of your spending that doesn t buy you very much and putting it where you need it most. "I ve been teaching classes in financial management for years, and I have never met anyone that couldn t find this extra money in their current budget, " says Peterson. Riches, is not about, cautions Peterson how much you earn, it s about how much you re saving and how well that money is working for you. Start by writing down all of your monthly expenses.

To get more exact numbers, you need to actually track your spending for at least 7 days but preferably a month. Most Americans can t account for 10- 15% . Write everything, even the loose change vending machine purchases, down. That will come next as you fund an emergency savings account. Don t change your spending habits just because you re tracking it this time around. The first two steps really do keep most people from winning.

If numbers aren t your thing, there are online calculators and other free resources on Reality Millionaire s book website that can help set realistic goals. Once you ve committed to controlling your financial future and you ve found a little extra money in your budget, you ll have the energy and excitement to move on to building an emergency fund, planning your debt repayments and starting to invest. Ultimately, how far you go, and what you do are up to the attitude you start off with. In real life, unexpected costs are common and it is easy to lose confidence, patience, but through persistence, and above all, you can achieve, education and practice your dreams of being debt free and have a million dollars in your bank accounts and investments.

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So. What Is Cash Flow Planning - Finance and Financial Planning:

You ve heard it a million times- cash can make or break a business. In fact, many PROFITABLE businesses fail because of cash flow issues.

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How many times have you done your taxes, and a week or a month later realized you forgot a deduction? In my experience, these are the top 5 missed deductions.

Where To Focus Your Alpha Energy

Category: Finance, Financial Planning.

A current theme among Wall Street wealth managers is for individual investors to have index funds as their core holdings and to focus the remainder of their assets in high alpha investments, which will produce returns not correlated with the market.

In traditional finance, return not correlated with a broad market index, such as the S& P 500, is referred to as alpha. A quick digression for those of you who aren t familiar with alpha and beta. The return which is correlated to the market is beta. You can t outperform the major indices, so don t waste your time. An index fund should have the same return( positive or negative) as the index it mimics. (One of the controversies surrounding some ETFs is their performance has not tracked their underlying index. ) The theory behind Alpha and Index Funds is multi fold: the major indices are a good place for an investor to be, both from a risk and return perspective. Find those investment niches with high alphas to increase your return and reduce the overall risk in your portfolio. They will tell you something about the correlation and diversification of your portfolio.

Even if you don t subscribe to this theory, you might find it an interesting exercise to review the alphas- - every investment has one- - of your current holdings. Where to focus your alpha energy? The Wall Street pros also recommend stock fund mangers who have unique strategies and can demonstrate a high alpha relative to the market( and, positive relative performance, of course) . Investments in real estate, and energy are, commodities less correlated with the stock market( although I ve never thought commodities were suitable for individual investors) . Ask your investment adviser for suggestions. Alpha and index fund investing makes a great deal of sense.

The alphas for individual mutual funds( and individual stocks) are available from some brokers and online premium services. You know what to expect in terms of risk and return when you invest in an index fund. Picking high alpha investments, which by their nature are less correlated with the stock market, should reduce the risk/ volatility of your portfolio and, depending upon the investment, provide above market returns. Having a portion of your portfolio in index funds leaves you free to concentrate your investment time and energy( think alpha waves) on those investments which can make a difference.

The Interest Rate Will Change Your Mortgage Interest Payment Each Month

Category: Finance, Financial Planning.

When you decide to buy a home, getting the best possible loan is important.

How you can keep your monthly mortgage payments down? It can save you thousands of dollars. These are the different components of the loan that can affect your monthly mortgage payments. The rest of the price is how much you will finance with the lender. Down Payment: The down payment is how much cash you will put down up front. For example, if the purchase price is$ 300, and you are, 000 putting 20% down, that means you will be putting down$ 60, 000, and the loan amount will then be$ 240, 00The more money you can put down, the lower your monthly payment will be.

Also, you usually get a better interest rate when you put down at least 20% , so that helps out as well. Basically, the less you finance, the less will be amortized over the life of your loan. Loan Life: The number of years the loan will be amortized over affects the monthly payments. Typically, the longest term is 30 years. The longer the life of the loan, the less you pay each month because it is spread out over a longer term. Of course, the longer the term, the more total interest you will pay, so be sure to weigh that in as well. This is the rate they are charging you for borrowing the money.

Interest Rate: One major variable that will differ between lenders is the interest rate. The interest rate will change your mortgage interest payment each month. For a$ 240, the payment including, 000 loan just principal and interest at 5% would be$ 1, 51At 0% , it is$ 1, 59A$ 80 difference per month does not sound like a lot, but over 30 years, that is$ 28, 80 Property Taxes: Property taxes are added into your monthly cost of owning a home either by escrowing it with the lender or by you saving to pay it at the end of the year. The higher the rate, the more your payment. The area where your property is located will influence this more than anything. Insurance Rate: Similarly, the higher the insurance rate, the more you will pay per month.

The higher the tax rate and higher the appraisal values, the more dollar amount you will pay each month. This is mostly affects houses that are in special insurance areas that need more coverage, like flood zones or hurricane areas. If you get some insanely low interest rate from one lender that seems completely out of whack from the other quotes, this might be because they are quoting you a rate with points. Points: Points are paid by the Borrower in order to buy down the interest rate. A point is equal to 1% of the loan amount, and you pay this point as part of your closing costs. Buying down your rate will lower your monthly payment.

So for example, with a loan for$ 240, one point would, 000 be$ 2, 400 and that point might buy your interest rate of 5% down to 25% .

Have You Considered Real Estate Mutual Funds

Category: Finance, Financial Planning.

Income is hard to come by these days. The bond market is in disarray, credit spreads are widening( meaning the price of existing bonds is declining) and there are serious liquidity issues( which also impact value) .

Treasuries are yielding less than 5% . Have you considered Real Estate mutual funds? Now, let s be clear on this. Many have current yields in the 5- 8% range( primarily REIT- Real Estate Investment Trust- funds) . These are equity funds and equity funds carry greater risk, and have greater volatility, than bond funds. (Of course, investors in subprime mortgage funds have found out that debt funds are not without risk! ) However, equity funds also offer the potential for increasing income and capital appreciation. I selected two top performing funds: CGM Realty and Cohen& Steers Realty Focus I( Cohen& Steers are the godfathers of real estate funds) .

Real Estate mutual funds cover a lot of territory and you want to make sure you know how your fund invests. Take a look at their holdings. The Cohen& Steers fund s largest holdings are all US REITs. CGM s biggest holdings include two international mining companies, two real estate brokerage companies and one Real Estate Investment Trust. Both are excellent funds but they have very different investment strategies. The moral to this story is that you have to drill down into a funds portfolio to make sure it s right for you. (In addition to looking at the stocks it owns, be sure to check to see if the fund uses leverage to enhance its return. ) Income oriented investors should focus on REIT funds( although I ve avoided REITs that invest in mortgages for the time being) .

CGM is more capital appreciation oriented where as Cohen& Steers is more income oriented. REIT stocks, have declined more, in general in price during the current market correction than has the Dow or S& P 50Some argue that Real Estate Investment Trust stocks were overvalued. Historically, this has been a good entry point. Whether or not that was true, many high quality REITs are now yielding in excess of Treasuries. Of course, many high quality Real Estate Investment Trusts are still yielding in the 2- 4% range, so the correction in the REIT market may not be over. On balance, this appears to, though be a good time for income oriented investors to own REIT funds. And, one of the drivers of REIT stock prices- buyouts by private equity firms- may be ending.

Pick a good fund and you ll get high current income and an investment whose value and income stream will increase over time.

The Policy Has A Large Loan

Category: Finance, Financial Planning.

Most people do not know they can sell an insurance policy. Even term insurance, which has no cash value, is a candidate for purchase.

There are companies that will pay you more than the cash value. This transaction is called a life settlement. They are not new. Life settlements have been on the scene since 1995. While the purchase is facilitated by an insurance company, the buyers typically are pension and institutional funds which hold the policies in their investment portfolios. The policy has outlived its usefulness. 78% of all insurance is purchased for family protection. Here are three common reasons why a person would sell their insurance policy.

Families with children insure the breadwinner( s) until they have had the time to build up an estate or an adequate 401( k) plan to provide for the family, pay off a mortgage and educate the children. However, later in life these needs may have disappeared. Most people have been there and done that. The house is paid for, the kids have been to college and your 401( k) plan has a balance ten times greater than your life insurance face value. Buy a boat, take an extended vacation or go down to the dealership and plunk down cash for that car you have always wanted. Rather than continue to pay premiums, or surrender it for its cash value, you can sell it for more than the cash value.

The policy has a large loan. First, at some point you simply took a maximum loan against your policy. There are three common ways a policy can acquire a large loan. It could have been to satisfy an emergency, take advantage of an investment opportunity- any number of things. Second, you could have taken a modest loan years ago and never paid anything toward the principal. But the loan was never repaid. Every year, you received a, however bill for the interest due.

What happens is that the interest gets added to the loan. If you are like many people, this goes in the round file and you never pay the interest. So what is originally simple interest turns into compound interest. That's when you get the letter from the insurance company telling you that to keep the policy in force, you need to come up with some astronomical amount of money. Over time, the loan and the unpaid interest can consume the entire cash value. But that's not the worst of it.

Worse yet is the fact that there is no money in the insurance policy to pay the tax( remember it lapsed for lack of premium payment and/ or lack of any remaining values) . When you call your agent to see what your other options might be, he or she informs you that if the policy lapses, there will be a gain( cash value less premiums paid) that the insurance company is required to report to the IRS. So you are going to have to come up with the tax from someplace else. You own Universal Life and interest rates have declined. I don' t think you would consider getting this information one of your better days. Getting this news is another bad day at the mail box. How this occurs goes back to when you bought your policy.

This time the letter from the insurance company says that in order to keep the policy in force, you have to come up with more than you could get for your first born. One of the major factors in determining the premium for a given face amount of Universal Life is the interest rate assumption made in the original proposal. You could have bought your policy during this time frame. Remember the double- digit interest rates? Most insurance agents would have suggested using a lower interest rate assumption to be conservative. The sale of your insurance policy averts all three of these problems. However, interest rates have declined to even below these play- it- safe assumptions.

In the first case, you don' t have to pay any more premiums for coverage that is no longer needed. And in the third, the probable lapse of the policy due to the fact that the premium to maintain the coverage is off the charts is offset by the cash received via a sale. In the second, the problem you have with the loan disappears and is replaced by cash.