Prime Rate Credit

Some say that buying whole life insurance, the type that you pay for dearly every month, but it also returns your premiums (and then some, if all goes right) at the end of the policy term, is a bad idea. The only reason they say it might be a good idea is if you are one of the lucky few who are maxing out all of their other savings and growth avenues, such as 401k’s at work as well as IRA’s, where the growth is going to be much better with less fees and other moneys taken out, than in the low growth of an insurance policies typically very conservative investments.

I have to admit, buying whole life insurance as opposed to term, where you pay much less premium, but do not get any sort of return on your money, did seem like a good idea to me, but upon further examination, I wasn’t so sure. The investment return does seem a bit conservative if you look at it compared to a higher yield of mutual funds and the like that you are typically investing in if you belong to an IRA or a 401k or other similar investments that usually offer some sort of tax advantages, whether it be up front of back end.

So, I would suggest you talk to a fee based counselor on this, since their interest is usually not commission based and their advice is going to be more geared toward what helps you out the most financially, instead of what they want to push or what their manager happens to be telling them to push that week.

When the need arose in my personal life that I financially wanted a stockbroker to assist with investing money, my choice was simple. I went to a stockbroker my parents had used for many years who I knew was honest, helped their money grow and he had a known good track record with them.

The choice is not always that easy and it is imperative to find a high quality stockbroker to invest well for you and keep your nest egg secure and growing. If you do not know, via personal history, any individual brokers, how do you go about selecting one?

There are some basic items to both look for and to watch out for when searching for a stockbroker. One of the better ways to start is to ask friends and relatives for referrals and references. You want to look at and ask about their work history and want to see a long term record of staying with the same firm instead of switching companies all the time.

Another thing you can do when looking for a stockbroker is to check the background of the potential candidate. You can do this by contacting the state Division of Securities by phone or you can go online to nasd.com then click on Investment Information and next click on Check Out Brokers and Advisers.

You may interview several brokers before selecting one that is right for you. Discuss your goals, your tolerance for risk and what you expect from your financial investments. Ask about costs of investing up front and see what the commission base is and expense ratios of doing business.

Once you have found a broker, you can and should keep track of your account via mailed statements and online. You should keep all statements and records and report any mistakes or discrepancies immediately. Keep yourself informed at all times of your personal financial picture.

Seems like there’s been lots of news about insider trading lately huh? Well, this time the accusations are directed at a Hong Kong couple who bought about 15 million dollars worth of Dow Jones Inc. stock about two weeks before a big announcement that Rupert Murdoch’s giant company News Corp. had made a bid to purchase the company.

Many times, when a huge company offers to buy a smaller one, or one of equal size, if the buy offer actually happens, then stockholders get a windfall of cash in dividends or increased stock value because the stock can double, triple, or even more of an increase in value due to the added assets of the buying company.

Insider trading is when someone has knowledge that is not supposed to be public, as is the case here, no one but the companies and certain priveledged “insiders” is supposed to know about this offer, and uses it to their financial gain advantage by buying the stock before the knowledge goes public and anyone can take advantage of it. It’s illegal, and it can land you in a lot of hot water with the governing arm that is responsible for policing the Securities market, the SEC, or Securities Exchange Commission.

The Hong Kong couple could be looking at jail time if convicted, and of course now a lot of that money they allegedly aquired illegally may be used on high priced attorney fees, especially since a lawyer who wants to take on a case this big will have some very big fees. I always wonder in cases like this, who actually leaked the information?

One very important component to investment planning is to learn how to become a saver. If you can not do 10 percent of your income right away, then start small with a 1 percent contribution to your 401 K.

Gradually, as your conditions allow, increase this amount to 10 percent, If you can push past the 10 percent mark and you’re still young, you may afford yourself the opportunity to retire early.

When you take the next step from saving to investing, clearly define what your goals are. Know yourself and know what degree of risk you’re willing to take. If the stock market is too risky for your demeanor, then money market investments may be the best option for you.

If you have some risk tolerance, you may want to put 20 percent into the market and the remainder diversified into more conservative investments. If you go past your risk tolerance, you may give up and change your strategy too readily.

When deciding where to invest your assets, consider not only the return on investment, but the risk factors involved. The asset classes are as follows, starting with the safest to the most risky.

The first asset class is the cash or money market, which includes T-bills, certificates of deposit and commercial paper. Next in asset classes comes bonds, which are also called fixed income. Bonds may be short term, intermediate or longer.

Be wary of junk bonds as they are high risk.

Next in asset classes are the domestic equities, which includes S + P 500 and the companies of the New York Stock Exchange. The last equity asset class is the international large companies and small companies.

When building and keeping an investment portfolio, keep in mind that you are investing for the long term goal.

Remember the principle of the higher the expected rate of return, the higher the risk. Diversify your portfolio according to your unique goals and clarify where you need to be for retirement years.

I recently was advised to open up an IRA account, and I really couldn’t be happier with it. It’s basically a savings account that is tax exempt until I cash it out at a certain age, and all the money that goes into it each year will reduce my taxable income by that amount.

That is actually the primary reason that I did it, was so that I could keep that money and not put it in Uncle Sam’s hands, whom I already thought was getting quite a bit from me at that point! Also, I wanted to take advantage of one of the government’s best tax breaks and have my money work for me instead of me working so hard for my money all the time, the typical schpiel, but it’s true.

I got my first statement in the mail, and after about two months, I must say I am more than delighted with the return on my money thus far, and do plan on making several deposits this year so that my money can really build in this account and I can reap the benefits of this awesome tax break as well as awesome investment opportunity. It’s a no brainer, kind of like airline credit cards and gas credit cards, you get something for nothing (if you pay your balance every month that is!)

The only rule I’m aware of is that you can’t invest more than 25% of you income for that year, and that’s the limit that they place on it so that people don’t get too crazy with it and invest over 50% of their income in order to strictly reduce their taxable income. Coming up with the money for it, especially if it’s 25% of your income, can be very tricky, especially if you’re also planning on paying a big tax bill, but if you can, it’s definitely worth it.

Think about it, you’re going to have that money building in an account that you won’t touch for a very long time, and you can still get it out if you need, but there will be penalties, and you will be taxed on it I believe.

Also you need to keep in mind that it’s not a “dollar for dollar” tax credit, but rather it only reduces your taxable income by that amount, so don’t go thinking if you start one for $10k that it will save you that much on your taxes, it will only save you a fraction of that amount on your taxes. A tax advisor can explain it though if you thought it was something you’d like to pursue.

We all work hard to attain and maintain our financial assets, whether it is our home, our vehicles, our savings or retirement plans. With many different life scenarios, these assets we have worked so hard for, can be lost quickly due to divorce, illness or financial difficulties.

You can find out about a number of legal methods to shield your assets with the help of good legal counsel. Since state laws are complicated on this subject, the assistance of a good lawyer is a necessity.

One method of asset protection is a real transfer, in which you sell or give property to other people. There must be a valid reason for it and the transfer must be done long before a creditor makes a claim.

Transfer of property between spouses can give some asset protection. The laws and degree of protection vary from state to state so make sure you are familiar with your state’s legal status on this issue.

For businesses, incorporation can provide more asset protection. In this situation, all financial records of the corporation are maintained separately from the owner’s.

“Spendthrift” trusts are another mode of asset protection. With this method, the beneficiary is unable to reach the assets. The same principle therefore applies to the creditors.

Certain types of retirement plans cannot be reached by creditors. An ERISA Qualified Retirement Plan or a KEOGH cannot be reached by either an employer’s or an individual’s creditors. IRA accounts protection from creditors varies again from state to state. So check which laws apply in your individual location.

After working so hard to acquire our homes and other assets, it’s worth investigating the best way to protect them for our unique life situation.

OK, second time’s a charm. For some reason the first time I wrote this post, it didn’t save - ARGH, the wonders of the internet. Ok, I wanted to talk a little about the incredibly addictive investment and stock picking show on Fox called Bulls and Bears. I would compare this show to the stock and investment enthusiast’s version of an NFL pregame show. There’s plenty of ego, plenty of schmaltzy banter and plenty of good old fashioned entertainment to be had.

But more importantly, watching this show, you’ll actually learn something, and likely be able to add some stocks to your watch list, or even to purchase immediately if you’re convinced the particular analyst that is recommending it knows what he/she is talking about in this instance.

There are several stock analysts, financial analysts and stockbrokers that make regular appearances on the show, all with their own views, sometimes of which agree with other analysts, and some of which completely clash. And therein the fun of watching this show lies. You get to see agreeing and conflicting views regarding the future of certain stocks.

It’s genuinely fun, and more importantly you educate yourself and you come out of it not feeling like you just wasted a half hour of your time, but rather “invested” in yourself and your knowledge of the stock market today, the movers and the shakers, and how you can possibly build a future of wealth and stability. Very cool. What more could you ask for? This show is on at 10 am where I live on the Fox network.

Money markets are an excellent alternative to often very low return savings accounts, especially, if like me, you are saving for something and want your money to earn a little more in return than a lousy 1 or 2%, which is the typical APR earned on savings accounts held at traditional savings and loan banks.

Money markets are also a great alternative because they are still easily liquidated when they are needed, versus say something like a stock or bond that may not be as easy to extract when you are ready to buy a home or make that big purchase you’ve been saving up for. Some of the services that offer money markets can be found online right now, and are offering as much as 5% returns and even a little higher, depending on the markets.

If you are looking at a savings account of over $5k, you are looking at a fairly decent return on your money with a money market! I would highly suggest looking in to the money market account, it may be well worth your time, especially if you are saving for a year or more, you might just build up a nice tidy sum of interest!

Talk about everyone’s worst nightmare. Can you imagine, saving for your retirement for 25 or even 35-40 years, having a huge balance in your retirement account, and not even believing that you actually accomplished saving this much money, the most money you’ve ever had at your disposal.

Then, imagine, one morning, you wake up, you check your retirement account balance, and it’s all gone, not a penny of it is left. And you know that you did not withdraw that money. Well, apparently 401k and retirement fund theft is now the latest scam for thief hackers to prey on hard working people now.

Think about it, retirement funds are the best way for a hacker to get large sums of money at once, and the security measures in place currently for someone to drain an account without red flags being raised, frankly needs work to me, for accounts with such high balances and so much for hard workers to lose (their life savings, try). I just read a story about a man who saved for 25 years, and had close to $200 thousand dollars saved for his and his wife’s retirement, which they planned to start enjoying in the next few years.

He checked his account one day and the whole account had been drained by some savvy hacker who covered their tracks by changing his deposit account, extracting all the money, then changing the payment account back to his account number. His story had a happy ending, because the investigation actually yielded them the crook and they were able to recover the funds (the generous company even offered to honor any market gains he would have recieved had the money never been stolen.

But not all these stories will have such a happy ending. The problem is, right now there are not really any backup plans or insurance plans in place for retirement accounts, protecting people from ruthless scum who would just invade and deplete an account overnight.

In other words, if someone hacks your credit card information, you can deny the charges, and you are actually insured against credit card fraud, whereas with this type of identity theft, the companies are not required to reimburse you for anything. Like I said, it’s a good thing that this guy had a happy ending, but this could indeed have turned very ugly.

Again, a little off the credit card and prime rate offers topic, but I just subscribed to the free website that you may have seen ads for before if you frequent financial news sites at all, called MotleyFool.com. It’s this really cool website that kind of explains investing in laymen’s terms and really gets your mind going to places you never thought possible with what you can do with your money and how you actually can learn to invest your own money with some research and practice at picking good stocks and other short and long term investments.

The really cool thing is that when I signed up for my free “subscription” to the Motley Fool website, I got an offer to recieve two free weeks of Investor’s Business Daily which is a paper that is supposed to be very good for doing your daily research on what’s going on in Wall Street, and also just to keep abreast of the important financial news, including what the Fed’s gonna due with interest rates and other general interest money topics that we should all really be keeping on top of, since some of it directly affects our financial well being and financial lives.

I’ll let you know once I start receiving the paper. I’m hoping that I have time to read it! I also hope it’s easy to cancel with no catches if I decide it simply isn’t being put to good enough use for me to keep reading it and getting it in the mail. I’ll keep you posted! Oh yeah, I also got a free two week trial for their online version of the paper, I think it’s called Investors.com or something like that.