It Allows Just About Anyone To Save For College

Category: Finance, Financial Planning.

With higher education tuition increasing at double digit year over year percentages an effective saving plan for your kid s education is becoming much more important than it has been before. This leaves many kids to be faced with obtaining financial aid to pay for a portion of their college education.

Most families will discover that their future higher education costs will be much more than they have saved for their kid s education. The goal of this article is to explore the pros and cons of 4 common investment options when saving for college. It allows just about anyone to save for college. This article will also explore why some of these options are better than other when considering a portion of your kid s education may be funded by financial aid. 529 College Savings Plan: - A 529 college savings plan is a fairly new investment option for college saving. There is a long list of benefits of a 529 college savings plan, but perhaps the most important is that your earnings grow tax free if you use it for qualified education expenses. In the event you do not use the funds for college, you can still withdrawal your earnings, but you will have to pay taxes and a 10% penalty.

Additionally, the maximum amount you can contribute to a 529 plan can go as high as several hundred thousand dollars depending on your State. The penalty will be waived if your child receives a scholarship, or your child becomes disabling or dies. 529 plans can typically be purchased through a broker or mutual fund company, but a disadvantage is that investment choices can sometimes be limited. Uniform Gifts to Minors Act/ Uniform Transfers to Minors Act. (UGMA/ UTA Custodial Account) : - The benefit of a UMGA/ UTA Custodial Account is that there is no limit on the contribution and it is easy to set up at most financial institutions. Since qualifying for financial aid is based on a calculation that considers your kids assets, another big benefit of a 529 college savings plan is that the money in the plan is classified as a parents assets so less that 6% of the value counts against your kid s financial aid eligibility. However, the limitations far outweigh the benefits. If your child is under 14, only the first$ 800 of income is tax free, the next$ 800 is taxed at your child s tax rate and after that there is no tax benefit at all.

The first limitation of a UMGA/ UTA Custodial Account is that these types of accounts offer very little tax advantage. The other big limitation is that the account has to be set up in your child s name. Therefore, this type of account is not advisable for those who may need financial aid. As a result, if your child needs financial aid all of the assets will be reviewed at a 35% rate. Coverdell Education Savings Account( CESA) : - A Coverdell Education Savings Account is very similar to a 529 college savings plan. The account is classified as a parent s asset so less that 6% of the value counts against your kid s financial aid eligibility.

The main difference is that with a Coverdell Education Savings Account you can only contribute$ 2000 per child and to qualify your adjusted gross income must be less than$ 110, 000 if single and less than$ 220, 000 if married filing jointly. In the end, parents should consider planning for college to be a highly important process. Copyright( c) 2005, by Jay Fran. The above 3 alternatives can make this process much more easy and financially sound. This article may be freely distributed as long as the copyright, author s information and the below active live link is published with the article.

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Money And Fun Aren T Necessarily Words That People Automatically Put Together - Finance and Financial Planning Articles:

Money and fun aren t necessarily words that people automatically put together.

Many People Fail To Understand The Importance Of Estate Planning - Finance and Financial Planning Articles:

Many people fail to understand the importance of estate planning.

If You Took Out Index Funds, The Gap Was Almost Two Thirds Of A Point

Category: Finance, Financial Planning.

The financial industry must continue to ask itself, "Why does the public needs us? " I know this question makes many financial advisors feel uncomfortable. Why?

But if we do not continue to ask ourselves this question, we could find ourselves out of a job. Whether we ask ourselves this question or not, others are asking it. What they found does not reflect well upon the financial advisor community. This perennial question of, "Why does the public need stockbrokers and financial advisors" has been raised again by three professors in their paper, "Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry. " In this paper, Tufano, professors Bergstresser, and Chalmers uncovered why consumers pay advisors to choose mutual funds for them. Do Financial Advisors Help Clients Choose Better or Better Performing Mutual Funds? Unfortunately, Tufano and Chalmers, Bergstresser found the reverse to be true. Most financial advisors tell clients that their chosen funds will perform better than direct purchase mutual funds.

They found that investors suffer by paying on average 6 percentage points in front- end load fees, as well as higher annual marketing costs in the form of 12b- 1 fees. In a recent year, not only did investors pay about$ 15 billion in sales charges and 12b- 1 fees, but they spent an additional$ 24 billion on management fees. They also found that the financial advisor recommended funds underachieved as compared to the direct purchase mutual funds. Think about this, these investors spent nearly as much paying advisors to find the funds as they did to the money managers to manage the funds. Did they? With this being the case, financial advisors had better do a great job finding funds for their clients.

Investors who bought directly from the mutual funds earned almost a half a percent higher than those that had advisor recommended funds. But wait there s more! If you took out index funds, the gap was almost two thirds of a point. These differences were calculated before accounting for 12b- 1 fees. So Why Do Investors Use Financial Advisors to Pick Their Mutual Funds and Investments? When included, funds bought directly beat advisor recommended funds by almost a full one point.

The average mutual fund investor is higher educated and wealthier than the average consumer. I believe one of the authors of the study to be charitable when he hypothesized that advisors bring a service to their clients by taking the emotion out of investing. So it can t be because they don t think they re capable of doing it themselves. Though when you look at the data, it appears that investors using advisors chase short- term returns as much a self- directed investors. This study uncovered yet more unflattering details. And yes, it was found that advisors are as likely to chase short- term returns as anyone. It found evidence that brokers usually recommend funds with higher loads.

It doesn t take a rocket scientist to figure out why too many advisors do this. So not only do advisors generally not pick the best mutual funds, they also recommend underperforming funds with a preference to higher sales loads. The question is, what as an industry are we going to do about it? Every change starts with one person. What You Can Do as a Financial Advisor to Change How People Perceive You. How much research are you doing for your clients?

Are you providing service equal to the amount of extra fees a client pays for the funds you recommend? Whether consciously or unconsciously, are you recommending funds with higher fees? Only you can answer these questions. Studies like" Why does the public need stockbrokers and financial advisors" are going to come around, become distributed and get publicized more often. We are in the information age. You might as well get used to it.

The public does not mind paying fees. As financial advisors we need to step up to the plate and start doing the right thing by our clients or we re going to find ourselves out of business, one advisor at a time. What they do mind is an advisor not disclosing the fees. Instead, we should fully disclose them and explain to our clients why our advice is worth it. If we think we are worth the fees, then as financial advisors we should feel no need to hide the fees. The public knows that we do not have a crystal ball that enables us to find the best performing mutual funds going forward. There is an ever so slowly growing trend toward full disclosure vs. casual disclosure by advisors in the financial industry.

But the public does become suspicious when all the funds we choose have higher than average expense and sales charges. Another movement gaining speed is that of formal fiduciary relationships with clients. I hope you join me as part of this trend of full disclosure and fiduciary responsibility, for everybody s sake. Both these movements assure a long and profitable partnership between advisors and their investor clients.

Start- Up Loans

Category: Finance, Financial Planning.

Knowing the correct type of loan to ask for is essential in getting the bank to approve your desired loan.

Also, business owners have several types of funding choices, based on various factors about your business. Banks have many different loans available and it is necessary for you to have a written business plan in place before approaching the bank of your choice. Some of the programs available through the Business Credit Services are below. These loans are secured by collateral. Types Of Business Loans( Explained Basically) Secured Working Capital Loans. The lender will take a security interest in your property. Most lenders will require collateral to secure a small business loan.

If you do not pay the loan back the lender has the right to seize your collateral. Lenders will not lend you more than 100 percent of the value of your collateral and will usually only lend you 60 to 80 percent of its value. As the name implies, these are loans that are not secured by any collateral. Unsecured Working Capital Loans. Credit cards, while not technically loans, are the most common example of unsecured debt. It is very. very rare to find a lender willing to give you an unsecured loan for a new business. The lender is loaning you money based on your reputation and credit worthiness.

Because you have no track record for them to work from. Loans for the new or start- up businesses. Start- up Loans. Commercial Real Estate Loans. Business Acquisitions. Commercial Real Estate loans with fixed or variable terms.

Loans to acquire an existing business. Accounts receivable serve as collateral for short- term working capital loans that you ca obtain fast and cost effectively. Accounts Receivable Factoring. Merchant Account Cash Advance. Franchise Start- up Loans. Up to a$ 50, 000 advance against regular occurring monthly merchant credit receipts.

Specialized financing reserved for the franchises of recognized, franchises, typically nationally known. Loans to small businesses from private- sector lenders( banks, etc. ), which are guaranteed by the SBA. SBA Business Loans. The SBA has funds for direct lending or loans to small businesses with long- term, fixed- rate financing for major fixed assets, such as land and buildings. A pre- arranged amount of credit based upon existing inventory, A/ R and POs or up to$ 200, 000 in business credit based upon credit worthiness with no collateral. Lines Of Credit.

Equipment Leasing. Hard Money Equity Loans. An easier way to find financing for your equipment needs and obtain tax benefits at the same time. Loans available that are typical hard to obtain from a local bank lender. If you have existing equipment, sell it and then lease back the equipment. Equipment Sale- Lease Back.

Essentially you get cash for your equipment and then lease it back. Loans for home or commercial construction. Construction Financing. Business Only Loans. Residential Equity Lines. Loans can be obtained in the business name without the use of personal credit as long as the business can justify the loan amount and ability to pay it back.

Lines of credit secured by the equity in your home. So study before heading to the bank and it will help you with many of the questions you will have. There are also short- term and long- term loans with the above.

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Advances in investment theory have dovetailed nicely with ancient wisdom to present investors with a new and exciting paradigm for investing. Markowitz.

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Saving Money is the key to financial freedom. Inside many people simply feel that life is for living now, not for sometime never in the future and anyway they already contribute to a 401k.

So- What Does Retirement Mean For Them - Finance and Financial Planning Articles:

I propose that we throw out the term" retirement" and replace it with" The Harvesting Phase" .

Don T Give Your PIN To Anyone- Not Even The Police Or The Credit Card Company

Category: Finance, Financial Planning.

The new Chip& Pin credit card system has been officially in use for several months now, but in some cases you ll still be able to sign rather than use your Chip& Pin.

You ll also still be able to sign for your purchases if the merchant doesn t yet have a Chip and PIN reader, or at many overseas merchants. Specifically, if you are disabled and cannot enter a PIN, you ll still be able to sign for your purchases as you always have and the cashier will compare credit cards with your signature as always. As of February 14, all credit card, 2006 customers should be have and be using the new Chip& PIN cards that have been issued since late 200The Chip& PIN card is meant to make credit card purchases more secure and cut down on credit card fraud, a goal that is already happening, who report that, says APACS credit card fraud was down by 13% between January 2005 and February 200In order to fully benefit from using Chip& PIN cards, though, it s important that you follow some safe- use rules for your new card. Choose a safe PIN. - No more than two numbers in sequence. - No more than two of the same digit. - Don t use easily found personal data like your full birthday. - The safest PINs are randomly generated numbers, but you can make a PIN that s easy for you to remember and hard to guess by combining two numbers that have personal significance to you. Don t give your PIN to anyone- not even the police or the credit card company. Try something like the street number of your first house and the day your youngest son was born, for instance.

Stand so that no one can look over your shoulder or read the keypad. Be careful when entering your PIN at the till. Safety isn t the only thing you should take care with when it comes to credit cards. Before you apply for any credit card, compare credit cards online to be sure that you re getting the best credit card deal for your situation. Start being careful from the beginning when you choose a credit card. When you compare credit cards, be sure to read all the fine print in the card member agreement to avoid any surprises from unexpected fees and charges when the account comes due. Depending on your situation, you may not qualify for the best credit card rates and fees.

Some points to compare when you re deciding on the best credit card are: - APR( Annual Percentage Rate) - Annual fees if any. - Late payment charges. - Method of calculating interest. - Rewards for using your credit card to shop. If you ve had trouble with your bills, you may be, for instance offered a bad credit credit card with a higher rate of interest than the typical rate( the APR that is offered to at least 75% of those that qualify for credit with that company) . As with any other kind of credit card, there are many companies that offer the so- called bad credit credit cards. If that happens, don t think that you have no other choice. Just as you would with any other credit card offer, be sure to compare credit cards against each other to make sure that the one you choose is the best credit card offer that you can manage. Taking care up front can save you money over the long run.

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There s an old adage in the brokerage community that you should speculate for growth, not for income. The point is that you should take risk with investments which you expect to increase in value, i. e. , stocks, but not with investments made to generate current income, i. e. , fixed income securities.

You May Still Be Subject To State Gift Taxes - James Geraghty about Finance and Financial Planning:

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.

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Living Trusts have become very popular and are being heavily promoted to seniors. That is the question.

Step One- Your Income

Category: Finance, Financial Planning.

Are you tired of sleepless nights when all you can think about is how can I fix my credit score? Most of us fail from time to time to handle our credit correctly.

If so, I will let you in five easy steps which could just keep your head over the stormy water. This might lead you to some hectic times. But every one can control his life and in few simple steps you can see the light at the end of the tunnel as well. You might find your- self and your family in chaotic financial situation. Step one- Your income. This should include: your income, bank savings with interest, property which bear, funds fruits, etc.

Create a list of all the income sources you have. Sum these sources to one solid number. Step two- Your spending. This number will be the ground to all future calculation. Create a list of your spending: food, school, bills, cables, your gardener, hobbies, house- keeper, mortgage, leisure culture, etc. The better you break it down the better you will be able to analyze it in the coming steps.

Now, it is very important to include each and every activity which consumes money. Step three- Rank your spending. As a rule of thumb the things you do not enjoy- bill, etc usually are, mortgage located at the mast have section. Rank your spending from most important must have to I can afford to give- up . Leisure culture, eating out- sides and all the other fun activities usually belong to the I can give- up section. Now, this is the most crucial step in the whole process, remove all the expenses from the bottom of your list, until your earnings exceeds your expenses by$ 5It is extremely important that at this stage you will recheck if you can really live without the item you are about to cut off. Step four- Cut over budget expenses.

If you have seconds thought regarding one of the items simply re rank your list of expenses, then come back, step four to step five. If you completed all the above steps you now have an extra$ 50 every month. Step Five- Use extra money to fix your credit. This must be used to cut down your payments. Point your new health plan to$ 50 a month. Work a payment plan with all the credit payments you currently have. Use your extra$ 50 to pay for your financial solution.

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Their Attorney Was A Generalist - Finance and Financial Planning:

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.

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Many people fail to understand the importance of estate planning.

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So What Is A Bad Credit Credit Card

Category: Finance, Financial Planning.

When your credit is bad, card issuers don t want to give you a credit card.

It s a catch- 22- you need a way to show that you can pay your bills, and unless you show that you can pay your bills, no one is going to trust you. When you can t get credit, it s hard to rebuild that all- important credit history. It s a shameful situation, but bad credit isn t something to be ashamed of. If you ve had trouble with credit in the past and want to repair your history, bad credit credit cards are one of the tools that can help you put your things back on the road to recovery. It s something to be fixed. It can help you rebuild your payment history upon which much of your credit rating is based.

There are many reasons that you might have bad credit. So what is a bad credit credit card? If you ve had trouble paying off accounts before, the record of your late and missed payments ends up on your credit record. When you have bad credit card issuers are understandably wary of granting you further credit. When you apply for finance, the card issuers check your credit record to see if you re the type of person who typically pays bills( as well as finding out many other things, like if you have enough income, and where you live) . At the same time, there s money to be made in extending you finance, and these companies aren t well known for shying away from an opportunity to make money.

How do bad credit cards help you repair your credit? It presents them with a dilemma, and the solution to that dilemma put less emphasis on the risk with high interest rates on the repayments which offsets the risks of lending money to people who don t have excellent credit. Generally, when people look for a credit card, they re looking for low interest rates. In fact, usually reserved for, the best offers those folks who ve never missed or been late with a payment, sport APRs in the single digits these days. Most applicants wouldn t even think about taking a card with an APR above 12- 15% . Most people would consider options with APRs above 17% to be bad credit cards. Most won t offer you cards at all.

When you ve been in debt and are trying to recover your good credit, issuers aren, though t going to offer you their best rates. When no one will let you borrow money, it s a little difficult to prove that you can pay it back, yes? Despite higher interest rates averaging 39% if you borrow a little each month, but pay it off completely each month you ll re- establish yourself as a reliable borrower and your credit rating will improve. When you re in that situation the solution is bad credit credit cards. Of course, the key to using cards as tools that get your credit back on track is in the way that you use them. Pay off the entire account each month. These are the basic rules to repair your credit: Only charge what you can afford to repay within a month.

Pay the account as soon as it comes in each month so your payments are never late. Needless to say, some bad credit cards are better than others. Be sure that your payments are being reported to the credit reporting agencies. Before you apply, take the time to compare rates and fees and choose the option that is the best for your needs.

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

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

Many People Fail To Understand The Importance Of Estate Planning - Finance and Financial Planning Articles:

Many people fail to understand the importance of estate planning.

The Definition Of A Market Correction Is A 10% Decline

Category: Finance, Financial Planning.

The Dow, S& P and NASDAQ are touching their lows for the year, down some 8% - 9% . A 20% decline is to be expected if there is a moderate recession or the expectation of one.

The definition of a market correction is a 10% decline. Are we headed for a recession? Housing, jobs account for, and related 10% of our total employment. Let s review the economic facts. Single family housing starts fell 3% in October and permits dropped 6% , to the lowest levels in 15 years. (You can see the ripple effect on the earnings of Home Depot and Lowes. ) New housing starts have fallen for almost two years. On top of this, the value of existing homes is declining, creating a( true) feeling of less wealth and limiting the use of home equity loans to monetize residential real estate.

Every time in post- war history housing has declined for two years, it has been accompanied by a recession. Even if the equity is there, home- related lending standards are tightening, making it harder to get home- equity and new home loans. Is this a vicious circle? Tight credit keeps buyers out of the market further slowing new home building and existing home sales. Add to this some$ 350 billion of adjustable rate mortgages which are due to adjust in 200 Most( all? ) of these mortgages will adjust upward. Under the best case scenario, this will take money out of consumer s pockets. Many are two year adjustable mortgages which are arriving at their first adjustment- from that attractive low rate to a healthy premium over LIBOR.

The worse case is much worse. But wait, the Fed can, you say solve this problem by lowering interest rates. Thus far, tightening credit has been limited to the residential market but we now see signs of it spreading to auto loans and credit cards. It s true, the Fed Funds rate can be reduced and interest rates should follow( although not necessarily LIBOR- based loans) but a rate cut will not impact lending standards. The Fed is predicting modest growth for 2008, in the 8% - 5% range( the low end suggests the economy is operating at dangerously close to stall speed) , and continued growth beyond. If financial institutions keep tight lending standards, its the same as a tight money policy regardless of what the Fed does.

There are economic bright spots: exports, technology and farming. (Although, let s also not forget the potential for high energy prices to disrupt the economy. ) Black s Friday s retail sales were encouraging and inflation is in check. Strong exports and technology sector sales cannot overcome a slowdown in consumer spending. However, the consumer accounts for about 70% of the economy. Economists like to point out the resiliency of the U. But, it doesn, in this instance t mean we will avoid a recession, it means we ll come out of it and keep growing afterwards. S. economy and they re right. The problem with recessions is that they re hard to predict.

We won t know we re in a recession until we can see it in the rear view mirror. The old saying is that the stock market has successfully predicted ten of the past five recessions. By then we ll be in it or, coming out of, hopefully it. Is this the capitulation which signals a market bottom or will there be another 10% downward movement to reach the 20% decline typical of recessions? The stock market is in its second major correction of the year and sentiment is decidedly negative. The honest answer is- who knows?

So, let s look at the risk/ reward for stocks and bonds and make some decisions. But, that s not an acceptable answer for an investor who needs to know what to do with his or her money. The S& P is currently selling at about 15x estimated 2008 earnings. A market selling at under a 15 price/ earnings ratio is attractive. This is a reasonable valuation. Even if 2008 earnings estimates are 10% too high, the market moves from being undervalued to fairly valued. So the risk/ reward is 10% downside. 20% upside.

If we avoid a recession, earnings and multiples suggest a 20% market rise. This is why long term investors should stay in the market. As for fixed income investments, let s use US Treasuries as our proxy. Focus on the companies doing the best- large caps with foreign sales. You certainly want to stay away from riskier bonds until the credit mess sorts itself out. Why subject yourself to the uncertainly of inflation and other risks over the next decade for such a low return? Five year Treasuries currently yield 5% ; 10 year yield 0% .

These aren t attractive yields given money market fund and bank deposit rates in the 4% -plus range. You re better off in cash than bonds.

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Throughout the ages, people of all races have desired, luxury, and searched for. The desire for luxury is entirely natural, and people have found hundreds of different ways to pursue it.

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It is fairly common knowledge that money matters can be simplified and controlled with a budget. It is not a really hard task, but one that many people avoid.

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