Planning your Retirement

The most important reason for us to save, budget and invest is to prepare for our retirement. How many of you are actually saving for your retirement? And how many of you have to save just because of mandatory government saving policy? Well, I think many of you. But retirement plan is necessary today as it determines what standard of living you will live when you retire. To do this effectively, you need to define at what age you are planning to retire and what standard of living you want to live. You hope to live with it your kids or by travelling around the globe. If you know your goal, you will be able to find out how much you have to save/invest and for how long?

Most countries have tax break targeted specifically to retirement investments and savings. So it is highly recommendable to take advantage of it because it saves your tax. As tax rate is tied to your income which is higher during the peak employment period but the retirement plans are paid before taxes. So it saves your high portion of taxes. Here are some more tips regarding your retirement plan:

·        Start saving: Start saving money because sooner you start saving, the more time has money to grow. Make saving for retirement a priority. Remember, it’s never too early or late, to start saving.

·         Contribute to your employer’s retirement savings plan: if your employer offers you a retirement savings plan, then stick to it because it will lower the taxes and plus the employer will also contribute to it. Find about the plan i.e. how much you have to contribute and for how much time?

·         Consider basic investment principle: How you can save is equally important as how much you can save. Always put your money in different investments as there is less risk involved in that. You can’t compromise with your future. So it is recommendable to invest money in less risky investments.

·         Don’t withdraw from your retirement savings: If you withdraw money from your retirement saving account, you will lose principal and interest and you may lose tax interest benefits too.

·         Put your money into Individual Retirement Plan: If you are 50 or younger than 50, then you can put you up to $5500 and if you are older than 50, then you can put even more. IRA account provides great tax advantages. Follow this link to know more about IRA account:http://en.wikipedia.org/wiki/Roth_IRA

      Here are some more tips on retirement plans:http://www.forbes.com/sites/lawrencelight/2013/02/04/the-3-best-retirement-tips-of-2013/

      

      Here is what every Canadian needs to know-->

         References:

• http://www.forbes.com/sites/lawrencelight/2013/02/04/the-3-best-retirement-tips-of-2013/
• http://www.dol.gov/ebsa/publications/10_ways_to_prepare.html
• http://www.cartoonstock.com/directory/r/retirement_plan.asp
• http://selfhelpmagazine.com/psychtoons-archive?page=4

Buying a Car

One of the major purchases that people make is a car. It’s the worst asset to purchase because unlike other assets, cars always depreciate its value. How many of you have ever got struck into a bad car deal because you are paying high interest or it’s not according to your use. I think that many of you. It is very common that people purchase those cars which don’t suit their lifestyle.

The first you should determine is what you need the car for? Either you want a car for a reliable mode of transportation or for a status? Is it for your work or for dropping your kids to school? Is it for long trips or for carrying heavy groceries? These factors must be kept in mind when buying a new car. Next is to determine whether you want a need car or a used car. As you all know that a car depreciates 20% to 30% as it crosses the dealer’s driveway. So it is highly advisable to buy a used car as it will give almost same driving experience as a new car will.

 Most of the dealer offers used cars too besides new car. So just go to any dealer just to browse with no intention to buy. The first time you go to a dealership, you shouldn’t be looking to buy. Tell them that you are just looking around because that time you will be under any marketing pressure. Take notes whatever you like and come back after doing some research.  There are lots of websites on the internet that tells what the dealer paid for the car. The figures may not be correct but it will give you an idea on how to negotiate. Most of the dealers have a website on which they offer new and old cars. You can easily get quotes on request. It takes around 2-3 days to get a quote. So always get an online quote of cars that you like and wish to buy because sometimes they give better quoting online than personally asking them. Once you know which car you want to buy, get your all paper work ready. It includes quotes from different websites or dealership so as to negotiate, your credit score if you qualify for a loan and shop for interest rates too. Take quotes from different banks and credit unions. There are very high chances of getting good rates if you shop around. Here are some tips that the buyer should consider:

• ·         Don’t get into leasing. In leasing, you are just taking a car on rent. At the end of lease, you have to return the car with nothing to show for your years of payment.

• ·         Always discuss about one thing first i.e. price of the car. You should first settle the price of the car. Once the price is set, then talk about financing and trade-ins.

• ·         You should always talk about the ‘out the door’ price. Find what you have to write on check because there are many additional charges those dealers may not tell you but when you see your invoice, you see those charges.

• ·         The best time to buy a new is September/October. It’s the time when old model year ends and a new one begin. So dealers don’t want to keep old model cars and they sell them at a lower price.

• ·         Don’t buy any pointless dealership services. Most of the dealership offers you services that look useful when offered but when you actually use them, you will find them worthless.

• ·         Be ready to walk away in negotiation. Dealers don’t want to lose their sale only on few hundred dollars of rebate because few hundred dollars of rebate are better than dead deal. Don’t go back from your words. Just tell them what you are willing to pay and if the dealer is smart, he will come up with the negotiations and accept the deal and try to pull a fast one on the next sucker.

• ·         If you find yourself trapped in a bad deal, then immediately give up the deal. As you have 5-10 days to cancel your deal, you may cancel that if you are unsatisfied. 

       How to check a car if it's new when buying a car-->

       References:

• http://www.bankapproved.ca/news/what-car-should-i-buy-how-to-choose-a-car-that-s-right-for-you/9
• http://abcnews.go.com/Business/10-car-buying-gotchas-avoid/story?id=20320840
• http://editorial.autos.msn.com/10-tips-for-regret-free-car-buying
• http://www.youtube.com/watch?v=i-SKfw7XnWY

Investing In Stocks

As it is now booming economy, this is right time for investors to take stocks of where they are and where they want to be. Investing in shares is a great way to earn money besides your business or job. You should be very clear about your investments whether you want it for a long term or for a short term, less risk involved means low profit or high risk involved etc. and investing is not for those who can’t bear losses. Let’s take a poll, how many of you have ever got in trouble just because of investing in shares at wrong time or investing in wrong company? I am pretty sure many of you. Here are some useful tips that will help you in making wise decisions while investing:

Warren Buffet on How to invest in Stocks?-->

• ·         Review your financial statements: First thing you should do is review all your financial listings i.e. your assets, income, liability and expenses. Compare all your income and assets with your expenses and liabilities to come up with a debt and equity ratio. This information will help you in making your financial plan that is long term. So it is advisable to do it very honestly as money you can’t get your money back easily in long term.  And never ever invest money that you took on loan.

• ·         Decide your goal: You should decide first whether you want investment for a long period or a short period and the risk factor involved. Investments with high risk often give high return on investment whereas a low risk investment gives low interest.

• ·         Keep it Simple: Keeping in investing is not stupid. Don’t trade too often, or focus on irrelevant data points and don’t try to predict the unpredictable because that can let you into some trouble.

• ·         Diversify: There is no better way in long term to distribute your risk over stocks of different companies. However, by diversifying your investment, you may not get very high return on investment but that it will decrease your risk factor. It’s true that single stocks or individual sectors may give you fantastic rate of return but we can’t deny the risk factor. Now, it’s upon your capability, how much you want to earn at how much risk?

• ·         Do regular check: After investing in a company, now it’s your homework or job (however you takes it) to keep check on company. Stocks are not merely things to be traded, the represents the ownership interest in company. So behave like an owner of the company. It means reading and analyzing financial statements of the company, weighing the competitive advantage, predicting the future trends.

• ·         Buy shares at right time: When prices of shares are low, that’s the right time to buy shares. If you let share price alone guide your buy and sell decisions, you are letting the tail wag the dog. It’s the mentality of some people that they buy stocks just because their prices have recently risen and some people sell their stocks because their stocks recently performed poorly. When stocks have fallen, they are low, that’s the right time to buy them and when they are skyrocketed, sell them. Don’t wait till last moment in greed of more appreciation of your stocks.

• ·         Be aware of Brokers: How many of you deal with a stock broker when dealing with stocks. Just remember that people who sell investments products make money by doing so. Their advice may not be correct every time. So just don’t take action any action on their advice. Do your research and analyse whether to sell, buy or hold a stock. Always go through company’s most recent financial reports. Don’t buy any investment that you don’t understand. Stock brokers may ask you to increase your investment limit as to get high brokerage fee. 

·         Don’t go beyond your limit: You should have enough money in order to have roof over your head and food to eat. Investing is a side business unless you are a professional investor. So don’t go beyond your limit when investing. Pay yourself first. Make sure that you have enough money to cover any unexpected expense because investments may be for long term. So invest only that money that you extra. 

       Here are some more tips on investing-http://news.morningstar.com/classroom2/course.asp?docId=145666&page=2&CN=sample

        

      References:

• http://www.cartoonstock.com/directory/s/stock_market.asp
• http://www.sec.gov/investor/pubs/takingstock.htm
• http://www.sec.gov/investor/pubs/takingstock.htm
• http://news.morningstar.com/classroom2/course.asp?docId=145666&page=2&CN=sample

      

Personal Budgeting

Have you ever made a budget for your expenses? If not, then start it from today because in today’s unpredictable world, you never know what unexpected expenses may come where you may have to cut your gas, food or any other expenses  to cover that expense, That expense may be home repair, healthcare etc. You must have or ever had money saving mom who always saves money by negotiating or by cutting general expenses. I don’t want to you to be like that because it’s very difficult for young generation to negotiate or cut their expenses. But one thing that we all can do is make a budget. It may be weekly, monthly or yearly. It depends on how frequently you get paid.

The first step of budgeting is to track your all incomes and expenses. Gather all your bills, bank statements, paychecks etc. Everything that shows money going in and out. If you wing without a budget, you spend money on unnecessary expenses and you pass the opportunity to save money.  You should have a financial goal for what you are saving money. It may be for a vacation or new car because you are saving money every month and it’s for a long term that is sometimes hard to reach. Your personal may look like:

There are various types of budgeting method. You may use simple budgeting method, jar method or pay yourself first method.

·         Simple budgeting method: In this method, you just keep track on each expense and try to reduce expenses in the next budget. Expenses may be Food, gas, travel, electricity, water, entertainment etc. and whatever is left with you is your saving. In this way, you keep track on all of your expenses and incomes.

·         Jar method: In this method, you keep a jar or an envelope for each expense and put money in each jar or envelope accordingly. And you use that money over the period. And the money you are left with is your saving. How cool is that but sometimes it’s very hard to follow this method because prices may go up. Then you have to take out money from your saving.

·         Pay yourself first method: in this method, you take a part of money from your income as a saving and use the rest of the money to cover your routine expenses. This method is a very good method as it teaches youngsters how to spend money wisely.

     Here is a reason why we should follow a budget:

     

       Believe me you can't do this to save money. Must watch this-->

I know it’s little hard to follow a budget. Okay, let’s take a poll, how many of you can strictly follow a budget. If not many, then I have a couple of another way to help you yo reduce your expenses or increase your saving. It’s on you, how you take it?

·         You can save money on your food by taking a ready-made shopping list at a grocery store and buy according to your list. This will save you a lot of money if you look at figures over a long period because you won’t realize much saving on a single grocery bill.

·         If you go to vacations every year, then plan that in advance by saving money for that and by making a booking in advance. Don’t be dumb by going on vacations on a debt and by making an immediate booking.

·         If you have some debt and at the same time you have money in your saving account or any other investment because I may sure that you will be paying more interest than you are earning.

·         Do you have a mommy who collects coupons in a box and saves a huge amount of money. Get in a habit of collecting coupons because they save a lot of money.

·         Prepare to minimize your bills. Cut your expenses where you think it’s unnecessary. Start by looking at your bills and see where are you wasting your money. For example, you may be paying an annual fee on your credit card or your saving account and then you may switch to other bank where there is no fee.

More tips to save money-->http://stayathomemoms.about.com/od/moneymatters/tp/living-on-a-budget.htm

 Resources:

http://stayathomemoms.about.com/od/moneymatters/tp/living-on-a-budget.htm

http://www.investopedia.com/articles/pf/11/prepare-for-a-financial-crisis.asp

http://www.cartoonstock.com/directory/b/budgeting.asp

http://www.youtube.com/watch?v=v09bbQIk0rQ

Improving Credit score by Credit Cards

Are you facing financial crisis or have ever faced it? Well financial crisis is a very wide term and is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. But we can use this term at a personal level too. When we are in a lot of debt and we don't have enough income to pay off the debt, then we are in financial crisis. There can be a number of reasons of getting into financial crisis. Some reasons are those on which we don’t have any control like job loss, illness, car accident or something that is beyond our control. And some are on which we have direct control like budgeting problem, debt payment, high interest rate etc. Have you ever thought of the consequences of what will happen if you are paying your credit card bills on time or if you are paying high interest rate on your mortgage? If not, then I highly recommend you to talk to a financial planner.

Making least payments

 If you are paying your credit cards bills on time or you are making a least payment, then the possibility is very high that the bank will ruin your credit history. Most of the people don’t have enough knowledge about cards. It’s not their fault, it’s the bank that sometimes smart and don’t tell the customers about the terms and conditions.

Using your credit card to full limit

If you have a credit card and let’s suppose you have a maximum limit of $1000 and you are using that credit card till $900 or more, then your credit history is not going to be favorable. One more thing that sometimes banks don’t disclose is an annual fee. Some credit cards charge you an annual fee which is not disclosed when you are shopping for a credit card. So whenever you opt for a service always read all terms and conditions.

More limits, more spending

It’s psychological that the more you have, more you will spend. So credit card companies take advantage of it by allowing you more credit limit. So when they call you about increasing credit limit, don’t say just “Yes!”  Think several times whether you have enough disposable income to pay your bills on time because if you have more capacity than you will spend more.

Never using your credit card

Some people treat credit card as a poker game. If you don’t play, you don’t lose. It’s the mentality of some people which is not right. Although it is advisable you pay off the credit card bill to avoid interest but not using your credit card will act as a backfire when it comes to your credit score. It shouldn't be like this that you are not using your credit card at all but charging any small to it may keep stable or improve your credit score.

Bunch of credit cards

Never ever own a bunch of credit cards. Owning cards of multiple brands can lower your score. You should own a maximum of three credit cards because everyone doesn’t accept Visa, MasterCard or American Express. So you can own these three different credit cards. Don’t take a hit at your score by applying for a credit card you know you probably won’t qualify for.

Pay off your debt if possible

If you have cash standing in your savings account and you have some debt too. Let’s say a car loan of $5000, then try to pay off your loan because you are paying more interest on your loan than you are earning on your saving account. This will improve your credit score too.