Managing capital investment is a crucial part as far as your personal finances are concerned. Most people depend on their capital advisors to manage their financial affairs. Nevertheless, handing over that kind of a responsibility can be scary. Hence, it is very important that your advisor is competent and is working in your best interests. Some red flags that investors must watch for before trusting their hard earned money with someone are given below.
Lack of Credentials:
Everyone wants an advisor who is experienced and knowledgeable. One clear sign to know that this may not be the case, is the lack of credentials, especially credible ones such as a CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst). A designation means that the planner has been certified by a professional organization and therefore, has met the standards set by the body. The designation will also give you an idea about exactly what services he or she can provide you. For example; a Chartered Financial Analyst will be in a better position to advise you about overall capital and wealth management and so will a certified financial planner.
Lack of Time:
If your planner does not have enough time for at least one thorough meeting in a quarter year; there is a problem. Financial advice is all about what you want and what your goals are. A lot many things change over a period. Hence, your planner needs to be updated about the same to be able to work effectively towards your goals. If your planner has too little time to discuss your specific situation, there may be other concerns he or she might be compromising on.
Lack of Good Communication Skills:
An advisor, who is struggling hard to explain you the financial strategies or concepts, it could be because he has not understood them himself. You, as a person having an average knowledge of personal finance, may not be able to understand the concepts clearly. But, your planner must! So, if you suspect that your advisor is having problems in communicating, it is better you find someone who knows how to make you understand.
Consider a situation where you are about to undergo a surgery. Most people will feel nervous if the surgeon is not working in an organized manner and has trouble remembering where he kept that anesthetic. Similarly, capital advisors too are expected to be organized and if they are not, they should hire someone who can do the job for them. If your planner does not seem to be well organized or cannot afford to hire someone who is, then you have a potential problem in trusting your financial assets with this person. It may not affect you too much always; but sometimes a small mistake by your planner, due to his lack of organizing skills, can prove to be costly for you.
Promises Too Big To Be True:
Good capital advisors are able to gauge potential returns by judging the risks involved and do not guarantee anything. Any planner promising more than 8% returns on your investment portfolio with certainty is either underestimating the risks or overestimating his own skills. In addition, most high-reward strategies prove to be high-risk ones or do not provide the returns guaranteed initially. So, look out for a potential fraud in such promises and steer clear of such planners.
Any financial consultant who pushes products that pay him a high commission is more of a salesperson. Ethically, capital advisors need to do what is best for the client. If he or she is always pushing you to invest your funds in products that benefit someone other than you, it is worth asking who he or she is really working for.
These above mentioned signs might not be deal breakers. However, if while reading through this checklist, you are nodding your head at more than one point, its high time that you shop around for a new consultant, whom you can trust for managing your capital assets and for planning and securing your future.
Everyone plans on receiving a fixed monthly income after his or her retirement years. If you are looking for good investment opportunities, investing in annuities is a good option, particularly for a financially secure retired life. Annuities are considered as the perfect financial product for retirement savings and fixed periodic income post retirement. As compared to other retirement saving plans, they offers greater benefits in terms of flexible premium payment options, higher interest rates, no contribution limit, tax savings and fixed periodic income.
What are Annuities?
An annuity is a financial contract signed between an annuitant (person investing) and a financial institution. The person who decides to buy an annuity is called an annuitant. The financial institution that sells it is generally an insurance company. The concept of this investment is quite similar to insurance, but there is no coverage involved.
In a contract, the annuitant pays an amount of money to the financial institution through periodic payments or in lump sum. Annuity rates are the rates at which the returns are paid to the annuitant. These returns depend on the rate of return offered on a certain annuity.
Types of Annuities:
Fixed Annuity: Here the financial institution invests money in a fixed fund that offers fixed returns after a specified period of time. Any change in economy or market index does not affect the returns.
Variable Annuity: Here the return amount can fluctuate according to the changes in economy. Returns are higher when the market goes up and vice-versa. Sometimes, there may be a minimum amount agreed upon and paid to the annuitant, if the returns are very low.
Immediate Annuity: Immediate annuities are beneficial for people who are willing to pay a large amount of money upfront. The annuity rates are fixed and payments at made every month. The annuitant does not have to wait for years to receive payments.
Deferred Annuity: Deferred annuities are specifically used by the employed class. Here, an annuitant pays a specified amount of money for an agreed period of time. After this period is over, they start receiving monthly payments.
Equity-Indexed Annuity: This is a mix of fixed and variable annuities. The principal amount stays protected whereas the interest can vary according to changes in market index.
Getting the Best Rates:
While investing, it is important to compare the annuity rates offered by various companies. The rates depend upon the type of annuities, government policies as well as market condition. Doing an elaborate research of the various options available is the best way to go about it.
There are many websites that provide charts containing detailed information on annuities. These sites also provide a rate table to compare rates, and a calculator that helps to calculate the returns you will receive on investments. Doing a comparison of the rates offered by various companies.
Just as you go to different people for different things, such as a plumber to sort out your plumbing issues or a cardiologist to check your heart problems, you need to go to the right people for the right things. Imagine the chaos if you ask your plumber to measure your heartbeats! So you get it, right? So where do you go if you are looking for financial advice? You go to a professional, Certified Financial Planner of course.
In order for you to get capable hands to handle your finances however, there are three things absolutely vital for the process. As dumb as this sounds, they are:
- Find or shortlist some planners from a larger pool of candidates
- Choose one who fits your needs to the ‘T’
- Negotiate the terms and go on and hire him/her.
While these 3 steps appear to be quite simple, there is a lot happening between the lines there. Getting these 3 steps on track is easier said then done. Hence, to get a Financial Planner CFP to work on your side, we have devised a much simpler 5-points guide. Have a look and you’ll find that these steps will indeed help you find a man you’d stick with through the long term and beyond.
Point Number 1: Understanding the Personality of Your Advisor
Everyone looks for the knowledge base of the professionals when working with them while fewer people check for the way they function and fewer still look at the professional’s personality. Getting a personality match between yourself and your planner will really go a long way towards mutual respect, trust and relationship building.
For example, if you as a client are uncomfortable with choosing between options, sometimes because you are truly not aware of what they entail; and your planner prefers to lay out all the options for investments out on the table for you to choose from, you two aren’t the best fitted personalities. For a long-term relationship wherein both you and your planner are aware of your needs and have the mutual trust to make calls based on that, you really need to find someone who makes more directives than options.
Point Number 2: Potential for Planned Investments
You’d be surprised at just how many a financial planner CFP have lost out on giving their clients the full benefit of their investing potential, out of the failure to make planned investments. There are to many who get swayed by the ‘current flavor’ product that everyone seems to be buying up on.
A truly good advisor on the other hand, makes planned allocations and sticks with these plans. He or she will always have your investment objective in mind, whether it is Retirement Planning, insurance or wealth building. All plans will also factor in other parameters such as your risk appetite, liquidity requirement and time horizon.
Point Number 3: Advisor’s Professional Expertise
You need to ascertain whether your planner is a general planning expert or if he or she has an area of expertise that you can capitalize on. If you have one particular financial goal or objective in mind, choosing a financial planner that specializes in that area can serve to be in your best interests.
Point Number 4: Look For Pro-Activity
Look for pro-activity in your chosen advisor. Even a layman who knows nothing in depth about financial investments can spot a losing investment and divest the asset off himself when he starts making significant losses. So what we need from the financial planner CFP, is pro-activity in staking allocation stands in the right instruments and at the right time.
Point Number 5: Cross Knowledge for Tax Laws
A good advisor will be aware of the tax laws that are applicable to you specifically and your state in general. However, a truly great financial expert will save you a lot of time, money and inconvenience by actually doing a bit of tax planning for you. When it comes to making money, we all know how important that is, right?
Well, hope these 5 pointers help you find the most capable of experts to manage your money. Good luck!
Life insurance plans should ideally only be purchased when you find that you need them. Getting policies for any reason other than this one, whether it is to save tax or as a favor to an agent friend, is definitely not in your best interest.
So here’s the deal on how to go about picking the best Insurance policy for yourself. Let’s break it down in 5 easy steps.
Step 1: Choose The Type First
If you have decided that you need insurance protection because you (a) are the breadwinner with financial dependants or (b) have loans and liabilities that may be a burden on your family after your death then Term Life Insurance is the best contract for you.
Under this contract, you need to pay in a certain premiums over a fixed term period and you and your family get covered for a certain period. The disadvantage of this however, is that, once the fixed term is over, the policyholder does not get any of his money out.
If you dislike this idea very much, you can choose investment plus coverage options in the form of traditional endowment policies, ULIPs (Unit Linked Insurance Policies) or even some money back policies. These policies however are quite a bit more expensive than traditional term life insurance policies when the installments you pay in can be as high as 10 times more.
Step 2: Choose The Company
Once you are done with short listing the product you want to purchase, you should turn your attention to short listing from amongst the companies that actually sell that particular product. These contracts are more often than not, long term ones wherein you will be paying these companies with a significant amount in total premium, so it really does pay to be extra prudent. Bear in mind that most term life insurance policies do not have exit options or have rather taxing exit procedures.
Step 3: Choose The Features
Features such as the following must be understood and detailed out before you go ahead with your policy purchase:
- Death and Maturity Benefits
- Any Guaranteed Returns
- Quotes in Comparison to Other Similar Policies
- Premature Exit Provisions
- Extra or Additional Charges
- Costs of Switching Funds
- Other Terms and Conditions, such as lapses in premiums, etc.
Step 4: Look at Performance Indicators and Portfolio Allocation
When you go for the investment cum insurance type of products, taking a calculator to the various fund performance indicators such as NAV (net asset value), etc. becomes kind of vital. Ideally, 3 years of NAV and portfolio allocation data should be analyzed for each fund and you can do these analyses based on the periodic allocation and results statements that the company sends you. Try not to read to much in the short term annualized percentage figures that the statement shows you.
Step 5: Analyze the Expense Ratios
Again, with the types of products that require active fund management, looking at the expense ratios is also vital. These charges and ratios can drastically change your return outcomes. Joint investment plus insurance products always have these extra charges and costs attached to them and the expense ratios can help you compare what you are gaining or losing compared to other similar instruments.
Good luck with following these 5 easy steps guide to picking the ideal insurance product.
Though there are several informal definitions for the term ‘Structured Settlement’ however, we shall start with a more formal one. The term is used to denote monetary arrangements that result in a claimant receiving periodic payments of some sort. The payments are simply structured into smaller installments of a single lump sum amount.
Settlements that are settled in this manner are the result of certain Investments such as an annuity. These sorts of arrangements may also result from a successful lawsuit in which the plaintiff can either choose to get such a periodic installment or receive a lump sum once off payment.
Salient Features of These Financial Payments:
- As mentioned earlier, these periodic monetary flows can either results from a successful lawsuit or arrangements such as Annuities. If you have chosen this payment alternative, you will be receiving a steady flow of money for a preset period of time.
- If you will be receiving a lump sum amount of money in a while and you think that you may not be needing that amount then, you can get your consultant to negotiate a installment payment system for you. This way, you can benefit from the steady income flow without having to worry about a lump sum amount getting unnecessarily spent.
- Usually, is a court grants you lump sum settlement for a grievance, it is more than likely that it is tax free. However, if you have an insurance claim fulfillment of a lump sum amount of returns from investments, you can make the payment completely tax free by setting up a structured settlement plan either for your lifetime or for a number of years.
How Does This Work?
There are specialized brokers known as ‘structured settlement’ brokers who consult on pre-settlement cases for a standardized commission that is paid by the annuity or insurance issuing company. Various different financial projections are made by these experts, which take into account parameters such as the term of years you are considering, lifetime payments, etc.
Negotiations for when to start the cash payments can also take place wherein you can choose to start payments after 10 or so years. In fact, negotiations for these are quite flexible and you can indeed lay down your requirements or terms before you sign over any agreement.
Before you sell your lump sum receipt for a structured periodic settlement, you need to ensure that you are completely aware of the mechanics, the rates and the applicable taxes. It is important to get rid of the original policy however, as it is only then that you can claim the tax benefits and hence the sale is necessary.
When you sign such an agreement, what happens in reality is as follows:
- The party is supposed to be paying you the lump sum amount pays the company giving you the structuring option instead of you or your lawyer.
- With this payment, the company now assigned with it purchases a life insurance policy from its parent company.
- Though it is the company that will hold on to this policy, you will actually be receiving the periodic payments that arise from it.
- As you will merely be receiving timely payments, the tax code does not consider you to own anything and hence this special provision saves you on your tax liability.
- Such arrangements also have asset protection clauses and spendthrift advantages. In essence the longer the term you choose, the slower the tax deferrals play out.
- Unfortunately, these arrangements cannot be changed once they are signed and sealed, so be careful with allocating every penny you have to them.
These settlements are extremely beneficial if you understand their importance. A knowledgeable financial expert can be hired to help you understand and implement them.
So, are you someone who is ready to invest for your post-retirement life? Is the wide array of choices dazzling you and confusing you? Does anyone have the opportunity to retire without owing a huge amount on their multiple liabilities? If answered yes, he/she’s perhaps one of the luckiest retirees. As per the AARP, majority of the baby boomers have crossed this age, not concentrating on their savings. After witnessing the way in which the recession wiped off the Retirement Savings within the nation, this is being considered as the worst time to retire for the seniors. Reports suggest that over the past few years, a large number of individuals who were born during the period which is called the ‘baby boomer period’ saw a rapid decline in their finances and were also confronting a large amount of debt obligations.
For more information on consolidating debt, please visit here: http://www.debtconsolidationcare.com
Build a nest egg that’s large enough – See through your retirement investment choices:
Building a big nest egg is the dream of most retirees but very few are able to achieve this dream. As you’ll be spending the rest of life on a fixed income, you have to ensure investing your hard-earned dollars in the assets that will offer you maximized benefits. Here are some lucrative choices that you ought to consider before taking the plunge.
- The 401(k)s are the best way to save for retirement
Irrespective of being a twenty-something or a thirty-something or even a forty-something, the most common question is “When should I start saving money for retirement and what are my choices?” Well, 401(k) is one of the simplest and highly beneficial retirement plan vehicle, especially for all those who have started out early. Through a 401(k) plan, you can exercise direct control over the amount of money that you want to invest in this plan and you can set up this amount so that the employer takes a certain percentage off from your paycheck to save in this account. Any amount of money that is invested in this retirement plan is tax-deferred. The money will be extracted from your paycheck ‘pre-tax’ and you may only have to pay taxes when the money is disbursed. This is one of the most user-friendly options when it comes to the young who have started the noble job of investing for the retirement.
- The IRA’s a celebrated investment vehicle that must be included in a smart man’s portfolio
As long as you’ve earned income, you can start off with a Roth IRA account, irrespective of your age. It’s a super-easy task to open such an account with a bank and you won’t be charged any kind of charges or maintenance fees for this account. You’ll just require your SS number, the name and address of your employer, your savings and checking account number and bank routing number. You’re allowed to back money out of the Roth IRA account at any time, at any age and for any reason without having to go through any tax penalties. As per an investment expert, a Roth IRA offers more investment options than your company 401(k).
Should the seniors say “No” to stocks?
Safe investments are something that should be preferred by a senior investor and when it comes to the stock market, the same cannot be said about it. Stocks are highly volatile and while they have the capability of making someone rich, they can even bring a person down from riches to rags. You have to be immensely careful while investing in the stock market and a single mistake can take a toll on your financial life. So, when you’re above 55, it is certainly not recommendable to invest your money in the stock market.
The baby boomers must be preparing for a happy retired life that excludes debts and any kind of liabilities. We all know that debts mar our financial growth and more so, when you’re on the verge of losing your job. Stay within your means; stop using your credit cards; stop borrowing money to pay off debt and save money rigorously to maintain a financially secured retired life.
Medicare is an insurance program that helps people manage their expenses mainly towards doctor bills, hospitalization costs and prescription drugs. Several other related medical services are covered under these programs. These policies are categorized into 4 parts or groups. These plans are meant to help people who are 65 or older and those below 65 with some specified disabilities. It also includes people of all ages with permanent kidney failure that requires dialysis or kidney transplantation.
Below Are The Benefits Provided by The Different Parts of This Program:
- Part A: This takes care of the expenses towards inpatient services for acute care when the person is hospitalized or is recovering under nursing care. It also covers short-term healthcare at home. Some chronic illnesses such as heart attacks, kidney failure and cancer need hospitalization and intensive care for several days to weeks. These illnesses also mean repeated visits to hospitals, due to complications. And every such visit puts an additional burden on the patient’s pockets. Part A of this program, by covering these expenses, can help people to avail the treatments and to maintain their health without worrying much about how to manage the expenses.
- Part B: This covers the outpatient services such as doctor’s treatment, when not hospitalized. The Medicare Benefits of this part include lab tests, some essential medical equipments, home visits of doctors and some preventive measures.
- Part C: This is also called Medicare Advantage plan. These are managed by private insurance companies. These plans cover prescription drugs and vision or dental care. People have to pay an extra premium for availing the benefits under these plans.
- Part D: These are also called Medicare Prescription Drug Plans. These plans are provided by private insurance companies. The coverage of this group includes prescription drugs. Their premium varies depending on the drugs covered. As the age increases, the person becomes increasingly prone to developing diseases like hypertension and diabetes. These diseases need continuous treatment with antihypertensive and anti-diabetic medicines that are very costly. Part D covers these prescription drugs and provides great Medicare benefits to people by easing their healthcare expenditure. Besides several generic medications, under some specified terms, this group allows people to buy some branded drugs also.
How to Increase the Benefits Provided by Medicare?
People should know that Medicare does not cover everything. So, they may need to purchase a separate health insurance with a commercial service provider to cover the difference between the contribution of the original plan and the actual expenses of the medical services availed. The policies mentioned below can help them for this purpose.
- Medicaid: Medicaid is a separate program that helps patients with low incomes to pay their health expenses.
- Medigap Policy: This helps to pay for expenses that Medicare doesn’t cover. This adds to the Medicare benefits provided by the original policy and reduces the financial burden on the patient.
What can be a greater benefit than availing the medical services to maintain your good health without having to bother about how are you going to pay for it? At an old age, the sources of income start dwindling; but the expenditure on healthcare rises. The rising cost could be due to the illnesses that come with old age and also due to the rising prices of essential drugs and doctor’s services. Every person needs financial assistance to manage the reverse directions of the income and expenses. A Medicare insurance policy is the best aid for people to manage this problem.
There is one insurance type out there that is quite simply overshadowed by other coverage types such as life insurance for example and yet, most people only realize how valuable it really is after they miss out on its eligibility. Disability Insurance (DI) is a coverage product that provides supplementary income to a worker in case he is temporarily or permanently unable to work due to an illness or mishap.
The definition of disability may differ from policy to policy. The Social Security Administration runs these policies and it is extremely essential for people, especially women, to know about them as they can help women maintain some sort of income earning even when they are unable to work, such as when they are pregnant.
Salient Features of These Plans:
- These programs are often state mandated, such as in California State, and they offer partial wage replacements for the times when you cannot work.
- Most of these disability insurance policies are affordable as they are funded through payroll deductions from the employees themselves.
- People who are eligible under these programs can have short term benefits for compensation of lost wages when they are unable to work for them.
- Most of these schemes are not automated and it is as simple as filling an online form to check for coverage eligibility and apply for one.
- You can take the help of an expert to understand about eligibility, how to file a claim and about the benefit amounts before you enroll for a policy.
What’s In It For Pregnant Women?
As this scheme is in reality an insurance on one’s income, its importance at the time of pregnancy (when most women lose valuable work hours) cannot be highlighted enough. Like with most of these contracts, the idea only holds value if you apply for it before the event that gives you the temporary disability occurs. As in, if you apply for it after to get pregnant, the pregnancy is viewed as a pre-existing medical condition, so conditions such as whether you qualify for it or the cost at which you get your coverage can be gravely different than anticipated.
Yet, if you do already have an existing disability insurance and you have just found out that you are indeed pregnant, here’s what the policy can do for you:
- Usually, as in, in the case of normal pregnancies, a woman can get monetary benefits for up to 4 weeks before delivery and up to 6 weeks after. If the doctor certifies that you require a longer recovery period, such as post a C-section delivery, the period for insurance may be increased.
- As pregnancy is neither a long term disability, nor a majorly devastating one, you can expect your benefits to be somewhat limited; in the sense that you are only eligible for the actual period that you are incapable or unable to work and nothing beyond that.
- If you make any claims on this contract, ensure that you do so only after you have suffered your wage loss and your doctor has confirmed that you are unable to continue with your usual work completely. If the doctor permits you to work for limited hours however, your benefits from the policy will be partial too.
- Your eligibility for making any benefit claims through these contracts depends on several factors such as your occupation and age, prior history with pregnancies and of course your job requirements. For example, if you work as a work-from-home online writer, the fact that you can indeed comfortably work, though for limited hours, will factor in on the benefits you are eligible for.
- When Disability Insurance compensations are a substitute for unemployment compensation, there are not taxable, but there are cases when these benefits are taxable. Talk to an expert to understand the cases that make them taxable and the rate at which they are taxed.
To sum it up nicely, this insurance contracts are extremely beneficial for working women who wish to start families some day, but do not wish to make this happy occasion curtail their incomes. Just make sure to talk to the right expert and understand your policy quote, the eligibility criteria and the benefit terms before you go ahead with getting one.
Your financial health is just as important as your physical one, though most of us only realize this a bit too late. The best way to stay financially healthy to not get in a muddle in the first place, and the best way to not get into a muddle is by strictly observing the ‘DON’T’ rules listed below. You don’t need a consultant to help you follow these, as they are fairly simple and just need you to be aware, alert and vigil about what you do with your finances.
Simple DON’TS for Your Good Financial Health:
- Keep ‘Credit’ Out of Your Lives
Someone has rightly said – “Credit cards are to financial health what cream is to physical health”. In an ideal scenario, it is best of you stay away from credit cards altogether. However, if you must use them and in today’s online world, they have become a bit of a necessity, use them only for emergencies. Make sure that you switch over to debit cards when you shop at stores or pay your bills. Other things pertaining to that credit card of yours are:
(a) Try not to have more than one credit card, after all, the more the cards the higher the temptation to use them.
(b) Any good Financial Advisor CFP will tell you that if you do use credit cards, make sure that you pay your bills in full and at one single time (on time).
- Don’t Take Your Mind Off Inflation
You should know by now that inflation creeps up on your silently and has the potential to erode your asset financial values significantly. Even when you make investments in instruments such as Fixed Deposits, the interest you earn might indeed lag behind the inflation run. So in essence, the real value of the money you earn out of even your most prudent decisions might actually be lower than you expected it to be.
- Don’t Delay Investment Decisions
It is really simple math to know that when it comes to investing, the earlier you start the better it is for you. Every Certified Financial Planner swears by the power of compounding which is beyond your wildest dreams if compounded over a longer period.
- Don’t Sabotage Your Retirement Funds
Make sure that you not only build a corpus for your retirement but also keep it till you really need it. There will always be temptations to take some money out of this and use it for those irresistible urges like a holiday abroad or a child Harvard fee but be sure to resist them. If you need the money, pull it out from elsewhere, but don’t you dare touch this fund. If you succeed, you are a dream candidate for any financial advisor CFP.
- Be Careful When Playing the Markets
If you are one of those people who think that betting of the markets is the best way to ensure that you beat inflations, you need to know that the markets can beat you too. Flirting with the volatility of the markets without a safe proportioning of debt and equity investments can spoil the party in the grandest of ways. Enlist the help of a financial advisor CFP and listen to what he has to say, most times, it really pays to be sensible.
- Don’t Be Miserly With Your Insurance
Don’t treat insurance as a tax saving device, treat it with respect for it helps you in times of unforeseeable financial strain. Don’t skimp on it for it is truly a vital investment of your money. Don’t forget to consider other tax saving tools while you’re at it.
- Never Cash Out Your 401k
Resist that itch to cash out your 401k for it will hurt more than you think. Rather than making temporary monetary gains, the best thing to do is ensure that your 401k money moves with you when you shift jobs. Trust me, you won’t regret it.
Good luck with following these, they’re simpler than you think, especially when you actually start following them.