Prime Rate Credit

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.

My best friend had her first child about two and a half years ago. She’s extremely financially responsible, I’d say probably the more fiscally responsible than the two of us actually. She began putting away money for her baby almost from the moment he was born. And it wasn’t easy either, because she is a full time nurse and her husband works managing a bar.

While they make what’s considered “pretty good money” by today’s standards, that almost isn’t enough any more. With the rising housing costs, and general inflation, it seems even people who make a good living have fallen behind the eight ball lately, and it’s hard to do anything other than just get by paying the bills in this modern day economy.

More parents need to take their cue from her, and no matter how hard it may seem to just sock away that little bit of money evey month for your child’s future education or whatever they may choose to endeavor, it sure will help your child and you out a lot when they actually go on to higher education, if this is what they choose to do.

Just this year alone, college tuition went up a record amount, and as I reported before, the amount of financial aid stayed the same, so the cost of college tuition is actually outpacing the financial aid available to college students now. Hopefully this will get better, but statistics show financial trends like this only generally continue to get worse.

Save, save save, because you never know what the future may bring, and it could be a lot less painful today to save that couple of bucks than it will be tomorrow paying that high cost of education.

Not only that, make sure you put it in a nice, higher yield money market or something that keeps pace with inflation, don’t just tuck it away in the matress where it’s not earning any money. You’ve got eighteen years, and you could gain a substantial amount of interest during that time.

I remember hearing this financial term back in college - I never heard it in high school unfortunately, where they should have taught students a little more about handling money and investing wisely though. It has the air of an accounting term to it, doesn’t it? Well, it does have to do with accounting, and financial planning.

A fiduciary is someone, usually a financial adviser with credentials of some sort (not always though), who another individual (the client) has taken up and hired as someone who is basically in charge of their money, and many times in their financial future.

It is someone who has been hired by an individual to make judgment calls that are in the best interest of the client. Integrity may enter in as a good adjective to describe the ideal fiduciary.

At least, this is what the term fiduciary used to mean. It has been somewhat revised by the industry recently to come more into the current time and reflect more of what it really means to be a fiduciary for someone in this current financial environment.

Supposedly a new rule allows “registered representatives to be exempt from fiduciary responsibility, but the financial advice they do give must be incidental to whatever financial transactions they are faciliating for the client.

In other words, it somewhat relieves these individuals from the fiduciary title, and therefore some of the responsibility to do what’s right for the client (good thing for consumers? no).

Well, I knew it was only a matter of time before hackers began targeting another more popular and increasingly lucrative market in their n’er to well scams to steal people’s money online by hacking their credit card numbers and personal information and many times stealing identities so they can drain your accounts.

Now, apparently hackers are targeting the online investing community. I’ve notice increasing attempts by both my 401k company’s website and my independent investment firm’s website, Sharebuilder.com, have put security measure in place to make sure you are not at risk from hackers.

They want you to make sure you exit your browser after you log out of your online session with the financial site, as well as take precautions against fraudulent emails from hackers saying they are the company in an attempt to get you to log in to some fake site and tricking you into entering important information that if in the wrong hands could wreack havoc on your financial accounts.

According to the SEC, or the Securities and Exchange Commission, these hackers are going even further now, illegally trading millions of dollars in stocks and other tradeable investments, and they are costing the industry a lot of money.

It’s the same story again and again, also with credit cards - how often do you hear about friends having their credit card info ripped off and getting charged for things they never bought? It’s enough to make you only get those prepaid credit cards sometimes! The companies aren’t the only ones losing on this internet stock trading hacking going on either, the consumers are, but the companies are saying they are tracking it and refunding consumers money where it is due.

I always thought money market accounts were kind of a waste of my time - and money, and that my money could possibly be working harder for me in some other sort of fund or investment, but I still needed the liquidity of something like a money market - something I could “cash out on” fast if I needed to, or something that would be minimally painful to get my money out when I needed it.

Well, I was wrong about money markets. My Paypal money market fund, of all things, is performing pretty darn well for being a relatively low interest yielding fund.

It’s up to almost 5% interest earned right now, and that is not half bad for an account that would just be basically “sitting there” doing nothing and accumulating no interest virtually if it were in a regular savings bank account or a checking account.

If you’re interested in putting your money in something that yields a little more interest build up than a traditional savings or checking account, and you need your money to be available for withdrawal quickly, I recommend you look into a money market account - maybe try Paypal or Sharebuilder, the two that I have my money in. They are both performing to my pleasant surprise better than I thought they would!

I actually did this once, borrowed money against my 401k retirement account, but I only did so because I needed a quick $1,000 for a personal emergency, and I knew that when I paid myself back I’d being paying myself interest rather than paying some lending company my hard earned money in interest.

You may want to REALLY think about this before you do it though. Depending on how much you’re thinking of borrowing, and what that borrowing is for, along with the specific guidelines of your 401k, you might be paying early withdrawal fees and penalties, as well as taxes at year end on that money you borrowed since it is no longer in your 401k, and sheltered against federal taxes.

Like I said, it’s something to really consider. Do you really need the money, or can you get it elsewhere for a good rate? Definitely check into your 401k fund’s guidelines for borrowing money, and see if the benefits outweigh the risks before you proceed.

I never really understood what the difference was between a Roth IRA and a traditional 401k or other long term investment fund, and I guess it all has to do with taxes (yay - love taxes, they’re so easy to understand).

Here it goes : The biggest different between a Roth IRA and a 401k is how you are taxed. On a Roth fund, you are taxed up front, which means if you anticipate being in a higher tax bracket at retirement time, you are better off with a Roth IRA.

This way, you pay lower taxes up front rather than getting taxed at much higher rates at retirement, when you’re in that higher tax bracket.

Just another thing to consider. Most financial analysts will tell you to shake it up a little - put some in a Roth IRA, and some in other funds, to diversify.

Hey - I posted this article I wrote about something that is very near and dear to me, since I am a Generation X’er, as they call them, so I wanted to post it here too for you to read. It’s really about how my generation, who is now in their late twenties and early thirties, needs to really educate themselves better on saving for the future and not living beyond their means, which I’ve seen so much of in myself and amongst my peers. Enjoy!

Generation X is that age group that is just now starting to reach its late twenties and early thirties. Gen X’ers, as they’re called sometimes, are increasingly demonstrating a lack of financial knowledge and budgeting know-how unfortunately, and it’s really going to hit them hard in their golden years when they’re ready to retire. I’m actually in the Generation X age group, and I have seen too many examples of this generation being financially irresponsible, and financially uneducated.

So, why are Gen X’ers so carefree with their money, and what price will these young jetsetters pay down the line?

It’s been said that the baby boomer generation also was not prepared for retirement. This is the age group that was born in the 1950’s during or right after WW II and became a part of the 60’s hippie generation. The same was said about them, that they were not preparing themselves adequately for down the road, and they “lived in the moment” too much without worrying about saving for their future and ensuring a peaceful, worry free retirement.

Many of those baby boomers now are scrambling to make up for lost time, investing their money aggressively so that in the next ten years or so when they reach retirement age, they’ll be more equipped to individually deal with retirement, rather than rely solely on Social Security, which many believe simply won’t be reliable in the future. Not to mention, Social Security provides only a pittance of “security”, financially speaking.

The lucky baby boomers will have an inheritance of some sort to look forward to from their parents, since their parent’s generation consisted of people more equipped for retirement, who’d been investing or saving for a long time for their golden years. Us Generation X’ers may not be so lucky though, and many among us are spending record amounts of money on credit cards and “bad debts” that will take years upon years to pay off, and which also easily racks up thousands of dollars in interest. All of this adds up to our inability to save money, and puts a huge dent in our future net worth.

Heck, most Gen X’ers, even the oldest ones who are now in their 40’s, owe more money than they’re worth (in other words, their financial obligations outweigh their financial assets). Our parents, who are most likely baby boomers, as said before, are not as well prepared and do not have as high a net worth usually than the generation before them, so we should be seeing a decline in inheritances when Generation X gets to be retirement age.

That means that it’s up to us to seize control over our financial future. Do you know how many of my peers have the opportunity to participate in a 401k retirement program with matching employer contributions, who don’t? Let’s just say it’s a lot more than it should be. These Gen X’ers are making a huge mistake, in that they are not getting the tax benefits of having a pre-tax 401k, nor are they getting “free money” from their employer. Essentially, they are throwing money away, as well as not saving for their future!

Not only is it akin to “throwing money away”, it is also going to dramatically reduce the net worth of any Gen X’er when they retire. You see, due to the principle of compound interest, the earlier you begin saving can have an enormous, mind boggling impact on the bottom line when you reach retirement age. Saving just one year earlier than you would have many times can result in THOUSANDS UPON THOUSANDS of dollars in missed retirement money.

Compound interest is the principle of interest (money), being paid on the original (principle) amount of an investment, as well as on the interest that accumulates on that principle amount. So essentially what you end up with under the concept of compound interest is money on top of money being earned on an original investment amount over the years. The longer you invest, the more this money continues to “build on itself”, hence the principle of “compound interest”. In other words, invest earlier and you will be amazed by the difference it will make in your overall investment strategy and the end result of your investment endeavors.

So, does Generation X still have a chance at pulling itself out of lagging retirement planning? Sure. But the time is passing every day, and those days add up to thousands of dollars in the end. So please, if you’re a Gen X’er and you’re reading this, don’t wait! Start investing now. You’ll be amazed at what you can do if you just put your mind to saving for your future, and you’ll also experience greater peace of mind for the future of you and your family.