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Choosing the Right Financial Advisor

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Planning is key!

You finally want to hire a financial advisor. You know this is a vital decision, but you have no idea where to begin. The amount of financial information available is endless and getting started can be frightening. But the process can be easy if you divide it into steps.

Selecting an advisor type:

Almost anybody can refer to themselves as a financial advisor. Let’s begin by reducing the field. There are three basic types of advisors according to how they are paid: commission, fee-only, and fee-based.

Commission: Commission-based advisors (insurance agents, registered representatives, brokers) sell financial products like mutual funds, annuities, insurance and mutual funds, getting commissions on those products. They are often working for big financial institutions and have their Series 6 or Series 7. Because what they are paid is based on what they sell, there is a huge conflict of interest. It’s critical to be aware that the temptation of commission is there and it can play a part in their recommendations for you.

Fee-based: These advisors are somewhat new to the financial industry. Fee-based advisors are usually associated with a broker/agent and like the commission-based advisors, usually hold a license to sell insurance or investments for a commission. Fee-based advising is complex because like the fee-only advisor, the fee-based advisor offers financial planning for a fee. However, the vital difference is they also sell products and get paid commissions. So, there is still that big conflict of interest, because their fee-based recommendations could, and typically do, include buying products they get commissions on.

Fee-only: This is the only type of advisor recommended for complete financial planning and/or asset management. Fee-only advisors possess a fiduciary duty to work in the best interest of their clients. They only make money through hourly rates, flat fees, or a % of the assets they manage.

What Happened to US Savings Bonds?

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There was a moment when billions of dollars in U.S. savings bonds were given for weddings, graduations, birthdays, or just because. Those days are over. After selling billions of dollars of saving bonds every year, the Treasury is selling less than $50 million right now.

An older style EE Bond

What happened to U.S. Savings bonds? The government messed with the interest rate formula, making them unattractive as an investment by fixing rates for the lifetime of the savings bond. Then in ‘12, the government no longer offered paper savings bonds, eliminating their attractiveness as gifts. Furthermore, the Treasury no longer marketed savings bonds, probably due to the fact that the government was getting a big debt by overspending. They didn’t want to bring attention to the fact that it needed to borrow money.

U.S. Savings bonds have had a long and detailed history, beginning with Series A-D bonds, provided in the depression to offer folks an enticement to save correctly. The Series E bond was started in April of 1941 by as a way of financing World War II. These bonds, offered as an American investment, had an initial 10-year maturity and were offered at a reduction of face value. They had an interest rate of 2.9%. During the war, over $35 billion worth of saving bonds were sold to the public, in amounts as small as $25.

When Series EE bonds were a Great Deal

Saving bonds were introduced in the early ‘80s. This was a period of rising interest rates, making buying them more striking. These saving bonds had a lifetime, fixed base rate that was put in place every six months for all bonds sold during that time.   The bonds had a “floating rate” portion of the interest, which altered every six months to stay with the established rate on Treasury notes.

How to Open a Savings Account for an Infant

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As a grandparent, you can help reduce some of your infant grandchild’s expenses by opening a savings account for her/him. Health care and college are just 2 examples of expenses that you can provide assistance with by consistently adding to the savings account. In addition, when your grandchild is older, you can aid in teaching them the value of saving by letting them help manage the account. Many banks provide savings accounts that are purposely tailored for kids.

Contact your bank to find out if it has savings accounts especially for children. Make a note of all incentives and benefits that are available and the requirements and minimal balance necessary to open the account.

Call other banks and inquire about their incentives and benefits to open a child’s savings account. Compare your bank’s incentives with the other banks and pick the one that best fits your needs.

Gather the necessary information to open the account. For instance, you need your grandchild’s social security number. If your grandchild doesn’t have a social security number, ask their parents to apply for one as quickly as possible. There are a few financial institutions that let you open an account for your grandchild without it as long as you give it sometime down the line.

Fill out the application and include yourself and/or the parents/guardians if you want them to be on the account. Even though you can visit a bank branch to open the account, many banks let customers fill out the paperwork online. Moreover, you can pick the date that you want your grandchild to gain access to the account on the application. This is very important because if you set it up for college, you want to make sure he or she doesn’t bother the money until then.

The Best Investment Gift for a Grandchild

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Regardless if you have $1 to provide or $10,000, the finest investment gift for a grandchild is to start or give to a 529 savings plan.

“For grandparents who want to help their grandchildren pay for college, these make the most sense. You have a wide range of choices of where and how much you invest, and you can keep control if you want.

More relevantly, your investment increases without tax and qualified withdrawals, for expenses like fees, room/board and tuition aren’t subject to federal or state tax. Some states give a tax deduction if you go with your home-state plan.

In the meantime, saving money in a 529 plan will put little impact on the financial aid. By contrast, if you were to put money into a customary investment account in your grandchild’s name, those amounts would be factored into the expected contribution of the family.

If your grandchild gets a full college scholarship, don’t fret. You can just name another person as the beneficiary. The individual can be of any age and doesn’t have to be a relative.

If you have to cash out, you must pay a penalty, plus state and federal tax on any earnings. This shouldn’t be a deal breaker. The benefits of putting away money in a 529 plan overshadows the possibility that you won’t use the money for college.

There are a few ways to go about giving a contribution to a 529 account. The first is to start a 529 account in your name. You will be the custodian and you can designate your grandchild as the beneficiary. The benefit of doing it this way is control. You can regulate how the money is invested and you can modify the name of the beneficiary at any time.

The Need to Be Flexible in Your Retirement Plan

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When saving for retirement, you’ll want to make a detailed, yet realistic goal. After all, you need to understand how much money you should save. Even if you are young (20s or 30s), having retirement goals are vital, even if later on they may change.

To decide how much money you must save for retirement, there are several important questions that you first must ask yourself:

Where do you want to live? Do you want to relocate?

What type of home or living arrangement do you want?

Are there any hobbies/activities would you like to start?

Do you want to start a small business in retirement?

For these questions, you need to begin thinking about their costs. When doing so, also take into consideration basic living costs, like shelter, food, and transportation. Inflation should be taken into account as well.

A Financial Adviser can get you started

Once you have finished the above steps on how much you need to save for retirement, you will want to increase that amount. You should always save more money than you need. The reason for this is that the simple fact is that there aren’t any guarantees with retirement or an age increase. Your retirement spending plan should take into account flexibility, as there are many occurrences that can come about that call for you to be flexible with your spending.

As stated earlier, inflation should definitely be taken into consideration. The price of goods and services will only keep on rising as you age. Not taking into consideration this rise can make you not have enough retirement money. Online, you can find numerous tools that can help you figure out the approximated inflation rate at your time of retirement. Keep in mind, nonetheless, that these are only approximations. A retirement financial advisor can also give you these numbers, as well as assist you with setting up an accurate retirement plan.

Why Saving for Retirement is Crucial

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Sadly, many folks don’t know the importance of retirement planning. If you are one of these individuals, you need to continue reading on for info that will likely alter your outlook on planning and preparing for your retirement.

The biggest reason you should save for retirement is because it’s your life and livelihood. The amount of money that you put up for retirement will have a huge impact on how your lifestyle. Usually, retirement is the best time to obtain your goals and change your dreams into reality, but you can only do so if you are monetarily ready. If you’re not, you may be anxious about where you will live or where your next meal will come from, as opposed to thinking when is the best time to take a vacation.

Another critical reason you should begin saving for retirement is for your children. Even if you are twenty years old, not married, and no children, you must remember that there may come a time in your life when you have a husband and children. Those who don’t accurately plan and save for retirement put a big burden on their families. As a parent, it is your place to safeguard your children and not cause them to have their own financial difficulties because they have to pay for your retirement expenses.

Saving for retirement can also help guarantee that you’re well cared for. This is vital in terms of health. There a point in everyone’s life when his or her health begins to deteriorate with age. While you may be able to live on your own and care for yourself when you first retirement, there may come a time when you can no longer do so. If that time comes, you should be financially prepared. You should be able to afford the cost of long-term care. The price of long-term care can be high and it should be included in the cost of your retirement. Therefore, you should start saving now for retirement.

How to Find the Best Retirement Plan

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A retirement plan is a necessity if you’re to take pleasure and benefit from the time you’ve decided to retire.

More often than not, folks aren’t bothered about retirement plans. They just pass the time and think that retirement will ultimately take place, with or without retirement plan.

What they don’t realize is that creating a retirement plan is the most critical thing any working individual should deal with. What lies ahead is never too obvious for people who don’t have solid retirement plans.

What Is Retirement Plan?

Retirement plans are types of agreement that give people a nice amount of money by the time they have reached their retirement age. These amounts are enough to recompense their continuous struggle for existence even if they are no longer working or getting the kind of income they used to make before.

In many cases, retirement plans are provided by government, employers, trade unions, or some financial institutions such as insurance companies.

In essence, there are only two major types of retirement plans: defined contribution and defined benefit. These plans are categorized according to how the compensations are resolved.

Defined contribution denotes retirement plans that will give disbursements according to the amount of contributions that the benefactor has paid.

On the other hand, defined benefit refers to a particular type of retirement plan, wherein the disbursements are based on the flat rate as computed from the employee’s membership years and the amount of income received while employed.

Considering these facts, not all retirement plans are considered equal. Therefore, it is best to analyze your status and decide what type of retirement plan will work best for you. You need to think about some important factors to help you with your decision, like lifestyle, dependents, and monthly budget. But one way or another, you should be thinking about your retirement plan now. Don’t wait until retirement to try and deal with this.

How to Get Real Wealth

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Many folks think that the way to true wealth starts with a big money making opportunity. This is just partly true. While a great wealth building opportunity does manifest from time to time, they are few and far between. Many people who get true wealth are those that budget intelligently, work hard, and don’t live as if they were wealthy.

The way to true wealth starts with determination. When you decide to amass wealth, you will be wealthy, even if it doesn’t happen right away. Determination creates will power, hard work, and pinching pennies. However, determination isn’t enough.

The next step on the path to real wealth is having a plan. The possibility of finding that get-rich quick scheme that everyone talks about getting millions from is quite slim. You need to have a plan for a rewarding career path, business, or money-making opportunity. You also need to have a plan for investment. Planning is the best way to get the level of wealth you are seeking.

Real wealth is about budgeting and investing. Don’t spend all the money you earn. Save some until you have enough to invest. This is much easier than it sounds. When you have gotten to a lifestyle that is comfortable but not excessive, stop boosting your lifestyle. Instead, put the money away into a savings account or money market account until you got enough to invest and try to amass real wealth.

You could invest in low risk, high return investments like money market accounts, or you could invest in stocks. Moreover, you could invest in new and up-and-coming companies that seem quite promising. These are sometimes referred to as penny stocks and is one of the top ways to invest your money and accrue real wealth swiftly. Investing the money that you don’t spend is the finest and safest way to get true wealth.

Want to Start Investing Your Money? Here’s How

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If you are eager to get going on your investments, you can do so right away without knowing a lot about the stock market. Begin by being a careful investor with a low risk tolerance. This will offer you a way to let your money grow while you study more about investing.

You need to start somewhere!

Begin with an interest-bearing savings account. You should have one and if you don’t, you should. You can open a savings account at the same bank that you have your checking account at. Typically, a savings account should provide between 2 – 4% on the money that you already have in the account.

It’s not a lot of money, unless you have a million dollars in that account. However, it’s a start, and it is making money.

Also, invest in money market funds. This can be done through your bank. These funds offer higher interest payouts than normal savings accounts and work much the same way. These are short term investments, so your money isn’t tied up for long periods of time. However, this is your money earning money, so…

Certificates of Deposit are also good investments with zero risk. The interest rates on CD’s are usually higher than those of savings accounts or money market funds.

You can select the length of time on your investment and interest is paid consistently until the CD becomes mature. CD’s can be bought at your bank, and your bank insures them against any loss. When the CD reaches maturity, you get your original investment and the interest that the CD has earned.

If you are just beginning, one or all of these types of investments is the best starting point. Again, this will get your money to start making money for you while you learn more about investing in other places.