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Retirement Planning Tips that Truly Matter

As each New Year begins, we see a deluge of effective recommendations on how to improve financial planning.

If there is anything worth mentioning in the past two decades that we have been dispensing retirement planning advice to numerous people, it is the fact that those who take a proactive stance have achieved positive results while those who failed to protect themselves with sufficient safeguards encountered disastrous results.

With 2017 here, we focus on a few recommendations we consider essential in coming up with an efficient retirement planning strategy.

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Becoming More Savvy in Personal Finance

With the year 2017’s entry, we find ourselves pondering upon what we attained in 2016 and, more importantly, what we need to do in 2017 in preparation for the years ahead of us. Breaking it down into its simplest ideas, our efforts must be toward achieving three essential things: Becoming healthier, wiser and wealthier.

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Effective Financial Strategizing Tips For 2017

What does 2017 hold for us all? With the new administration in place, many Americans are figuring out ways to improve their finances and setting goals for the current year. The fact is that many of these people will fall short of their financial objectives and some will not even get moving at all, neglecting their financial well-being altogether. Start enhancing your financial health in 2017 with these 12 effective tips. Take a good look at what these expert educators, who educate experts to teach other experts and who deal with numerous financial advisors, have to share in order to raise your 2017 financial planning to a higher level. Your journey to building financial security begins with the first important step which is to learn the essential principles.

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Making 2017 the Year to Save: 10 Tips on How to Hack It

Before December comes to an end, most people commonly write down their resolutions for the New Year. And for countless individuals, one of their goals is to "save money". Easier written than done; because in spite of the good intentions, a big majority of these optimistic people fail by the second month of the year and their savings accounts remain stagnant (if not depleted) and their spending fly out of the window.

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Effective Ways to Choose Investments

Here are basic and essential steps to follow in choosing the right investment for your specific needs and goals:

1. Assess your personal needs and goals

Take ample time to consider why you want to invest and what you want to get out of it. Since nobody knows you better than yourself, your goals and your needs, as well as your tolerance for risk, start by analyzing your daily expenses and determine where you can get the money to invest. Online apps can help you do this money fact-finding process.

2. Decide how long you want to invest

When do you need the money you will invest? Soon or much later? Depending on your goals (a home purchase will differ from a bike purchase) your time target will vary and also influence the degree and form of risks you can handle. Here are examples:

Saving for a deposit to buy a house in two or three years will not suit investing in shares or funds since their value fluctuates. Opt for a cash savings account, such as Cash ISA.

Let us say you want to set up a pension fund after in 25 years, investing in short-term assets will not do; so choose long-term options. You will end up better off with long-term investments, except for cash savings accounts, since you can level out inflation and thus achieve your pension objective.

3. Choose an investment strategy

Having set up your needs and goals and considered the risks involved, make an investment plan to assist you in determining the kinds of products that match your plan.

It is always a safe and smart move to invest in low-risk investments, such as Cash ISAs. Next, you may augment medium-risk investments, such as unit trusts which have greater volatility. Go for high-risk investments only if you already have a solid portfolio of low and medium-risk investments. Even so, the risk will be much higher and you must consider the possibility of losing your money.

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How do the Wealthy Invest?

If we knew how the wealthy invest, we can begin setting the stage for our own financial success. Who else can teach us the prudent and secure steps toward increasing our chances of building wealth than the rich themselves who constantly ponder ways to do so? In spite of the fact that the wealthy also make significant mistakes that affect their gains, they remain on top of their game and bring in money, making the envy of many people. That is no accident. With diligence and the ability to get the proper financial advice, they have the knack for succeeding in enhancing their assets.

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What Should You Invest In?

Stocks, bonds, bank accounts or IRAs? How do you choose?

With several types of investments to choose from and also thousands of sub-categories under them, finding the most suitable investment choice can be a daunting task.

First off, the main consideration in any long-term investing decision is the rate of return expected from it. At times though, investing in short-term investment can enhance your wealth even if the returns are not as high as you want them to be. You can select from among these common short-term savings vehicles:

Short-term savings vehicles

Bank savings account: The most resorted to savings medium availed of by people, which provides small returns but better than keeping your money at home where it could be stolen or spent easily.

Money market funds: These funds are a type of special mutual funds that are invested in exceptionally short-term bonds. Money market fund shares are always valued at $1 whereas most mutual funds can have uncontrolled prices. Although they pay higher returns compared to bank savings accounts, they provide lower returns than certificates of deposit.

Certificate of deposit (CD): You can also open a CD, a special account made at a bank or another financial body which has an interest rate often at par with short- or intermediate-term bonds, depending on the CD’s deposit duration. The depositor receives regular returns on interest until the account matures, at which time the original amount deposited is returned together with accumulated interests incurred. Oftentimes, certificates of deposit through banks are insured to a maximum of $100,000.


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Learning How to Invest (Part 2)

Planning and setting objectives

Investing is a long-term process, like planning a long vacation. Ask yourself these questions before you embark on this endeavor:

• What is your destination? (What financial goals do you have?)
• How long is your vacation? (What is your time frame in investing?)
• What should you bring along? (What investments forms will you choose?)
• How much gas do you need to use? (How much will you invest to achieve your goals? How much can you invest a regular plan?)
• Do you have stopovers on the way? (What short-term financial expenses do you have?)
• How long is your vacation? (Will you have to retire using your investment?)
• If you run out of gas because you frequently stop to rest and drive through the night, you are bound to spoil your vacation. So it is if you do not save enough money, if you invest haphazardly or fail to invest at all.

Answer these questions judiciously and honestly. Muddling through this process of self-examination and preparation will cause you to see the finer points of investing which requires a lot of number-crunching. Calculate accurately how much a college education will cost and how much you will need during your retirement years. It will not only be satisfying to know that you can actually attain your destination, you will also remain aware of what you must do along the way in order to fulfill your future goals.
In case you are panicking because you consider numbers to be a great challenge, do not be alarmed. There are user-friendly online interactive calculators which can assist you estimate your financial goals. As we said, the more realistic and detailed your figures are, the greater the chances of setting and realizing viable goals.

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Learning How to Invest (Part 1)

What is investing all about? How do you start?

If you have decided to enter the world of investing, learning how to invest must now dominate your time and focus. Two steps will help you on your way.

Initially, you need to rebuild your financial outlook to prepare yourself in investing. After that, learn the technique of investing, for example, how to open a brokerage or a mutual fund account. These basic steps will launch your course to a meaningful and productive investment life.

Defining investing

In essence, investing involves spending your time, effort and resources to attain a higher objective. For instance, you spend weekends with a social group to do charitable work, use your talent in the arts to create works of beauty and value or apply your profession in your job or your business to earn a living. In the same way that you do these things hoping to gain valuable rewards, you likewise invest your money in a bond, mutual fund or stock with the goal of achieving material benefits in the future.

Specifically, investing requires putting your money into what is called a "security" -- a term which refers to anything that is "secured" by other assets. Bonds, stocks, certificates of deposit and mutual funds are some forms of securities you can choose to invest in.

You can select from various methods of investing -- some of which you may be familiar with from watching TV or browsing the Internet. You see a neatly-dressed, overly optimistic lad who stares at you onscreen, seated on a porch in Malibu Beach and fully hyped as to how amazingly easy it is to make big bucks in no time at all! Amusing, it all seems. For if it was really that easy, everyone would have learned the technique to such foolproof method. Unfortunately, only those promoting such wealth-building schemes seem to make money – and at the expense of many disappointed gullible takers.

So, here is the better option for you: Instead of spending $25 on the hardcover EZ Secrets to Untold Billions book and $500 for the EZ Seminar, invest it in yourself once you have gained the fundamental secrets to investing here.

Eradicate your debts now

Now that you are eager to go ahead and start investing once you learn how to, you certainly would want to know the next step. But rein in your enthusiasm for a while. Hold your horses while you check if you are really ready to take the ride of your life in investing. Now that you see the possibilities opened to you through the magic of compounded returns, you have to protect yourself from the same trap which you could be unwittingly locked in. Do away with high-interest debts that you may have at the present.

By the exact same law of compounding rates that will make your investments increase, you can rapidly incur hundreds of dollars in debt over time from a dollar. Having such an enormous debt as you invest would negate all your efforts in investing and saving your money. You will be better off as you are paying off your debt first, than risking your money and exposing yourself to greater danger. Hence, it is wiser to get rid of any high-interest debt first before you consider investing, although some low-interest or tax-advantageous debts can be tolerated.

Make each dollar you invest work for you; this is a mantra you can trust to protect you. This is because each dollar you keep from the hands of full-service brokers or financial professionals will build more wealth for you, as you will soon see.

Reward yourself first of all

To succeed as an investor, you must make investing an integral part of every day. That may sound difficult or tedious; but not really. You must realize that the act of buying something, say a cappuccino, will influence your daily finances as much as acquiring a home-equity loan to cover your credit-card payments.

That is not to say that you must act like a miser who cannot get a good night’s rest over a missing penny in her books. If you reward or pay yourself first, you need not worry so much.

Since you already spend valuable cash for such essential things as gas, water, electricity, credit cards, cable TV, phones and wifi access regularly, why not be the first to get your own precious money – be on top of that list! Keep a certain amount of cash as saving or self-investment each time you get your monthly or weekly check; and go on along as merrily as you can while that money grows over time.

We recommend that you stash away as much as you can; with at least 10% of your annual salary of your gross pay as a reasonable target. Without neglecting your liabilities, you may surprise yourself how much you can save over time. Unless you do it, you will never find out. Of course, the higher the target you set for yourself, the more savings you will create. Save a little; it will come in handy when you need it. The only future you can look forward to is that one you secure for yourself today.

Make good use of online banking and brokerage-service providers. You can set up regular automatic money transfers from your checking account to your savings account (or vice-versa) or from any investing instrument you prefer. Discover how you can live on a lot less than what you spend now; start with discarding some luxuries or any unnecessary trips to the mall or the bar. You will notice a significant difference within a month or two. If you think the sacrifice is not worth the money you saved; then spend it on a trip to a dream destination and see how saving can alter your life in radical ways.

It is never too late to start saving. If you have practically nothing left after all the bills payment, try to reduce the amount you set aside regularly. Maybe the timing is not right for you yet if you find out you cannot afford to squeeze in even a piggy bank. No worries; wait till you are in a position to do so.

Active and passive methods of investing

There are two primary methods of stock investing: active and passive management; and they differ on how stocks are chosen, not on how you choose your verbs. Active investing involves selecting stocks yourself or you can ask your brokers or fund managers to pick the stocks, bonds, and other forms of investments. Passive investing requires you to let your holdings follow an index which a third party makes.

In general, stock investing means active investing. Although it seems preferable over passive investing, active investing does not always turn out to be better. Over the long-term duration, most actively-managed stock mutual funds have not reached the level of the S&P 500 Index, the dominant standard for index funds.

Because of that, some investors choose an alternative to "active" investing. A lot of people prefer passive investing as they are satisfied with a return close to that of a major stock index. You may choose to follow other indexes, such as the Russell 2000 for small-cap stocks, the Wilshire 5000 for the broad market as a whole, and other global indexes.

Speculating versus investing

Perhaps, you may have heard of a close friend who struck it rich with options. Or you may have had moments of lucky streaks in the past where you won a sizeable amount of cash from a raffle or lottery. Why should you then enter into a long and slow process of investing your money which can only bring you a double-digit gain and not bundles of cash right away? Investing demands years of patience before you can finally reap the good harvest. What if you cannot wait that long?

Life does not always bring sunshine and roses when you want it to. We all know that. You will not become a celebrated investor like Warren Buffet if you match the performance of the S&P 500. Neither will losing your savings on some speculative gamble make you a hit overnight nor being in a bankruptcy court after you lose all your other assets later on.

If high-stakes gambling is the thrill you seek, plus all the appurtenant live shows and glittering lights, you are no different from those stock market gamblers who lose their money on apparently legitimate pursuits. We live by the axiom that investors "gamble" each time they put money in a venture they do not understand.

It happens to so many people. They overhear a story from their doctor’s plumber talking about a company named Sweet Pipes at a garden show. "This stock will fly like a rocket in a few months," he whispers. If you rush home and tell your broker to buy 200 shares, you might as well be in Las Vegas!

What business is Sweet Pipes engaged in? Tobacco or garments? Have you any information about its main competitor Bronze Arches? How much did it make last quarter? You need to know a lot more about the company before you toss your precious money to it. Ample study and evaluation can save you a lot of money and anguish.

Speculating, in the end, is a sure way of losing the potential value of your dollar to build lasting wealth for you. It leads you to think of the great gain you can achieve right now while failing to do so, more often than not. On the other hand, your patience in investing can assure you of attaining your goals eventually.
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