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Archive for January, 2011

There are many valid reasons to consider a 401k rollover.

Costs

While it may not seem like it, you are paying for your funds to stay with your old employer’s sponsored plan.  You just don’t see it.  Fees for employer plans are not very transparent.  While you may not see an actual bill, your employer is probably paying for the administration of the plan through hidden fees assessed on the balances held in it.

I have seen sponsored plans that had these back-end hidden fees and charged the participant a piece for each contribution.  A little here, a little there all adds up.  And the more it is, the less there is to compound for your retirement.

While there are few things that you can control in life and investing, fees are one of them.

In a rollover IRA, you’ll have more choices of platforms which may offer low loads and costs so you can keep more in your pocket.  So control what you can when you can for successful investing.

Choice and Access

While some employer plans may offer a variety of funds which may be top of the line, you’re still limited to the menu selected by your employer.  More often than not this is influenced by the broker associated with the plan.  And this can be influenced by the restrictions placed on the choices by the broker’s company or administrator because there may be an incentive to fill the menu with one fund family.

I’ve seen plans offered through national payroll companies that required more than 50% of the fund choices to be of one particular fund family.  Not every choice in a management company’s fund line up may be stellar so you’re limiting yourself by staying with the old plan.

When you rollover you’ll have a much larger universe to choose from.  (My company has access to more than 14,000 non-proprietary mutual funds with no loads or loads waived).  You’ll typically even have access to individual stocks, bonds, Unit Investment Trusts, Exchange Traded Funds and bank CDs.

Have you ever considered investing in something besides stocks, bonds or mutual funds? Maybe you might want to invest in real estate or buy judgments or invest in a business by being its lender or providing a friend with start-up capital.

Well, you can’t do that with a typical 401k plan.  But you can with a self-directed IRA.  And such an IRA can’t be done through the Big Box financial firms.  There are specialized bank and non-bank custodians who handle such transactions and work through independent financial planners to help their clients learn more about such options.

Risk Controls & Broader Choice of Investment Strategies

While you may have online access to your company-sponsored plan so you can make trades or switches of your funds periodically, there really are no risk controls that you can use given the limitations of the platform the 401k is using.

Let’s put it this way:  Investors make money when they don’t lose it.  At least that’s my working philosophy.  Having options and systems in place means that you stand a better chance of protecting your retirement nest egg.

It’s always easier to not lose money in the first place than it is to try to make up for lost ground.  Your money has to work harder to get back to breakeven much less get ahead for your retirement goals.

Consider this:  If you think that Treasurys or munis are in their own bond bubbles, what can you do to protect yourself through your 401k?  Probably, not much.  But in your own IRA you’ll be able to build a more all-weather portfolio that includes inflation hedges like convertible bonds, foreign dividend-paying stocks, master limited partnerships or even managed futures.  All come in mutual funds or ETFs which offer the advantages of diversification without the tax and cost structures of direct investment options.

Or maybe you want to minimize the impact of another downdraft in the market.  Using ETFs and trailing stop-loss orders you may help protect your gains.  Not an option in your old 401k.

So when you roll your account over, you’ll also have access to professional help, tools and direct management options tailored to your specific needs that you just can’t get within your old 401k.

Things to Consider:

iMonitor Portfolio Program

Money Tools DIY Program

For more information, please call Steve Stanganelli, CFP® at the Rollover Helpline at 978-388-0020 or 617-398-7494.

Check out the website and newsletter archive for more on this and similar topics:  www.ClearViewWealthAdvisors.com.

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Reverse Mortgage Basics

A reverse mortgage is a type of loan that certain eligible homeowners can get to tap into the equity in their home. Unlike traditional loans, they do not require the same sort of underwriting so no income, asset or credit checks are needed.  And unlike a traditional loan, there is no monthly repayment for any amounts borrowed.  Repayment of the loan’s principal and interest starts only after the homeowner dies or the home is sold.

To be eligible for such a loan, all owners on the property title need to be at least age 62.

For the most part, reverse mortgages, also referred to as RMs, are backed by the federal government through the FHA (Federal Housing Administration) that administers the program.

Myth: The Bank Keeps the House

These types of mortgages have been around for many years (since the late 1970s) and have gone through many changes.

One misconception about these types of loans is that a homeowner loses the house to the bank because of certain terms of such loans when they first came out. In the way way past, banks would take the title to the home.  But that is far from the reality for these types of loans now. The property title remains with the homeowner.

How A Reverse Mortgage Limit Is Set

The amount of money that a homeowner gets is based on current age, life expectancy, and appraised value.  With this information, the bank will determine the credit line or limit that the homeowner can tap.  The lender will apply an interest rate to the amounts outstanding and add it to the balance owed (and subtract the interest accrued from the amount of credit line that is available).  Eventually, when the homeowner dies or moves out of the home then the lender will require repayment.

The total amount that is owed is capped as a percentage of the property value which is assumed to appreciate at a certain rate during the owner’s life expectancy.

A homeowner can move out and sell the property and keep the proceeds above whatever the payoff amount is.  If the homeowner dies and the property passes to his estate, his heirs can sell the property or refinance it and keep it.

The cost for such a loan can be pricey.  Even with recent administrative changes reducing origination fees from the standard 2% of the loan amount, these loans can cost upwards of $12,000 for a $250,000 or $300,000 credit line amount.  Although traditional credit and income underwriting are not required, all the other costs associated with a closing like title work, title insurance, recording fees, mortgage insurance and underwriting are still needed.

Why Would A Homeowner Consider A Reverse Mortgage? Comparing Some Options

Why would a homeowner opt for this? Let’s face it.  Most folks would prefer not to move into an assisted living facility or a nursing home if they can avoid it. So a reverse mortgage is a good option for those who want to age in place in their home.

It provides a cash flow to help support the costs of running the house. And it taps the equity that a homeowner has built up over time that can be used to pay for essentials like medicine or home renovations to make the home safe and useful for an aging homeowner.

Yes, home equity lines or loans are also an option.  They can be even cheaper certainly on the origination side since so many banks offer them with no closing costs.  But the homeowner must make a payment each month even if it is just the interest only that is typically required for the first five or 10 years of the line.  And if the owner doesn’t have the cash to make that payment, then there is the risk of a foreclosure.

As a former mortgage banker, I would see situations where an elder couple would call me after having refinanced the loan several times. Each time they had to incur closing costs and because their income or credit may have slipped they would only qualify for more costly loan terms that could put them at greater risk of losing the house down the road.

Downsides for A Reverse Mortgage

Setting up a reverse mortgage as a line of credit will not jeopardize Social Security benefits and is not counted as an income source for tax purposes. On the other hand, if the homeowner is receiving Medicaid, then it could be counted as an assessable asset that may limit qualification for such benefits.

Some folks who are facing bankruptcy have opted to go the reverse mortgage route.  Jesse Redlener and David Burbridge, attorneys who specialize in these matters, told me of the case where a couple transferred the title from joint ownership (husband and wife) to just the wife.  Then they completed the reverse mortgage process.  And the husband who now owned no other property filed for bankruptcy.  The courts considered this a fraudulent transfer of the property and the assets available for the credit line now became eligible to pay off the husband’s other creditors.

Get More Information From Your Planning Team

The bottom line here is that before making a serious money move you really need to bring in the professionals to help navigate through the minefield.  Actions have consequences and this is an area where a good team of advisers (banker, financial planner, attorney) can help.

For more information on reverse mortgages, you may want to call Bob Irving of First Integrity Mortgage, LLC, a licensed reverse mortgage originator.

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They say white-collar crimes tend to increase in times of economic stress.  This is one of those times.  And it’s all the more important to be watchful.

For most of us, our personal identities extend beyond just our name.  In many ways we are also our online profiles and our credit, too.

Identity Theft: A Growing Problem and Cost to All of Us

Right now, there are scammers out there trying to steal not just what you own but trying to steal you.  Identity theft is a real problem and a drag on our economy. The Federal Trade Commission (FTC) estimated in 2006 that more than 3.6 million households affecting over 9 million people were victims of identity theft. One study noted that the cost to consumers was nearly $57 billion dollars (that’s with a ‘B,” folks) in 2005.

And according to the Government Accounting Office (GAO-02-363, March 2002), this costs the federal government (and us taxpayers), too.  The average cost for a financial crime investigation is about $15,000 for the Secret Service, more than $11,000 for the US Attorneys and nearly $20,000 for the FBI.

I have a client whose niece works for a regional office of the FBI who has sent out around this notice for a new twist on a “phishing” scam.

Watch Out for Folks Gone Phishin’

Phishing is where the scammer posing as a legitimate company or authority tries to get an unwary consumer to divulge valuable personal information like a Social Security number, account number or other details like a date of birth.

The Jury Duty Hoax – A Twist on An Old Scam

In this latest reported scam, the FBI has confirmed that scammers are calling and posing as “jury duty coordinators” saying that an arrest warrant has been or will be issued for failing to show up for a recent jury summons.

If you protest that you never received a notice, the “coordinator” will ask for your Social Security number, date of birth and address so that he can verify the information and cancel the arrest warrant.

Most of us are sufficiently deferential (or even scared) of the court system so the scammers are relying on us to simply roll over and give them what they ask for on the phone.  In some cases, the “coordinator” uses intimidation and bullying tactics to get you to comply.

Once you give them your information the scammers have hit the jackpot.

So far this type of phishing scam and fraud has been reported in eleven states including Illinois, Ohio and Colorado.

So be wary of unsolicited calls asking you to provide your Social Security number and other personal identifying information.  No legitimate government agency or business you deal with will ever ask you to just give them your stuff.  They may ask you to verify what they have (if not ask them to read out what they have).  And if you’re ever unsure, ask for the website and a call back number so you have time to check it out independently.

So protect yourself and others you know by letting them know about this scam.

Go to the FBI website to check out details on this and other scams.

And if you ever suspect a scam, you can also check out the website for the Federal Trade Commission as well.

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Do you want to clear a room or stop a conversation fast?  Talk about life insurance.  Mention life insurance to someone and the reaction is something like hearing nails across a chalk board. Folks will either run for fear that you’re going to try to sell them something or their eyes will glaze over.

Most folks don’t want to talk about it.  The topic is boring.  And it’s kind of weird to talk about death.

Heck, when I speak with folks about planning, the inevitable phrase I hear in the conversation is “If I die …” as if they have found some secret to living forever.

So assuming that you’re not featured in the Vampire Diaries, there is a very high likelihood (about 100% give or take 0%) that you may die someday. So it only makes sense to consider life insurance as part of your overall planning.

Life Insurance Through Work Is Only A First Step

Most folks will get some insurance through their employer.  It’s cheap. It’s fast. There’s no medical exam.  It’s simple.

And as I’ve said time and again, there’s always a simple solution to every problem.  (In this case, employer-sponsored group life insurance). And as I’ve also said before, simple solutions are probably wrong.

Now don’t think that I’m saying that the group policy that you get and pay for through your paycheck is wrong.  It’s a good start.  But there’s more to proper life insurance planning than simply figuring a multiple of your salary.

How Much Life Insurance Is Needed?

The reason for any insurance is to cover the costs of risks that we are either not willing or don’t have the resources to cover ourselves.  That’s true whether you’re insuring a car, a home, your life or your paycheck.  So first you need to know what it is that you’re covering.

In the case of life insurance, it’s usually a good idea to figure out how much money your family needs to maintain their current standard of living if you and your income are no longer part of the picture.  Then add in any large expenses to cover.  Typically, this would include an amount to pay off any mortgages and loans and even college funding or other similar expected obligations. Net out the amount of other insurance and investments available and this will give you an idea of the amount of insurance coverage to get.

The amount of insurance that one needs throughout life changes with circumstances.  This is why it’s critical to include an insurance needs analysis as part of your regular financial planning progress reports.  This is why I use a particular tool from ESPlanner that helps project the amounts of coverage needed over time.

Insurance as An Asset Class to Reduce Risks

Now I’ve said that insurance is an asset class.  Why?  Well consider this.  When you invest, you’re likely to spread your money into different types of asset classes:  stocks and bonds of large, small, US and foreign companies.  This is the basis of diversification: don’t put all your eggs in one basket. You do this to help reduce risk.  In this case, you’re trying to reduce the risk of having your investment wiped out by spreading your bets to other sectors of the economy and even parts of the world.

Like asset diversification, insurance is also a risk tool.  In this case insurance is there to replace things that you may not have the cash or investments to cover on your own.  Or maybe you feel you’d be better off investing the cash and earn a return on your money that will hopefully increase the resources you need for your lifestyle whether now or in retirement.

Think of it this way.  You could hit home run after home run picking stocks but what happens if you or your family are hit with an unexpected loss?  You’d have to dip into your savings and investments.  You’d need to sell those winning stocks.  You’d probably incur huge capital gains and have to pay taxes on it.

Life insurance is there to cover living expenses, replace in some small way the loss of income if you or your loved one dies and it does this for the most part tax free to the beneficiary.

And you can carry over the idea of diversification to insurance.  Just like mixing up the kinds of stocks or bonds you own, you can carry insurance from two or more insurers.  You do this by having your employer-sponsored group plan plus something you pay for on your own separate from your employer.  You can further diversify by mixing up the kinds or terms of coverage dividing some between term and permanent type policies.

Kinds of Life Insurance: Term vs Permanent

Insurance comes in two basic varieties: term and permanent.  Term insurance has a fixed premium for a fixed time period.  It’s great for covering specific risks for a defined time period (i.e. a mortgage, college costs).  Permanent life insurance has many flavors but in essence the key is that some of your premium that you pay is used to build up cash value.

Now for those who are unhappy with the stock market, you may want to consider some of the benefits offered by permanent life insurance.

  • The value is guaranteed. You’ll always know how much you have. And the insurer is required to credit a minimum amount to your value each year.
  • You receive dividends and their tax-free. Policyholders will receive dividends that increase the value of their account.
  • You can access the cash value at any time. Unlike going to a bank for a loan, the insurer will give you access to your account’s cash value with very little delay. You pay no penalty when receiving the cash as long as you repay yourself.  And if you set up the account properly, you can build up enough cash value to tap into for anything from buying a car to buying a home to funding retirement without paying a penalty or taxes.  (This is described by some as the Infinite Banking Concept where you become your own banker).

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We’ve all heard of horror stories of someone stealing a credit card or hijacking your identity online to “party like it’s 1999” and leaving you with the bill.  It’s become a cultural cliche and even popularized in TV sitcoms and commercials.

But it’s anything but funny when a scam is played on you.  So prepare to protect yourself and your credit.

Credit is vital in this economy.  We depend on it to get us through the day.  It’s part of our identity (and the credit reporting bureaus know it and charge lots of money to sell soci-economic demographic data to marketers keen on target marketing.)

And in a time when banks and lenders of all sorts are skittish about lending and getting burned, it’s all the more important to maintain a good (if not great) credit score.

The difference between a credit offer and interest rate for someone with a 780+ FICO score and someone with “only” a 700 can be 0.25% on a mortgage, maybe more for an auto loan.  Doesn’t sound like much but believe me when you’re making that payment each month you’ll appreciate the lower payment resulting from the reward you get for great credit.

This brings me to my tale of woe for today.

Check Your Credit Reports Regularly

I’m kind of obsessive about maintaining my credit and paying bills on time.  I’m no stranger to disputing charges.  I check my credit report regularly.  If you don’t you should.  And you can do it for free.  Just go to www.annualcreditreport.com which is a site offered in conjunction with the Federal Trade Commission.

The FTC has set up the site to help consumers get a copy of their credit report for free each year.  Since there are three main credit bureaus to which virtually all creditors report:  Trans Union, Experian and Equifax.  You can get a free report from each of these reporting agencies.

Once you log in and verify yourself you can choose which bureaus to compile your report.  The best tip I can suggest is to stagger your requests.  Order one report from one bureau and then order another free report from a different bureau three months later.  And then repeat three months later with the third and final bureau.

Why go through the trouble?  Well, each bureau will more than likely have the same information as the others.  Not always but most times.  So you can basically monitor your credit for free by staggering your requests throughout the year.

So while there are services out there offering “free” credit monitoring services (and they have really catchy jiggles), you can do it yourself for free.

The Robo-Call That Started It All

So what happened to me?  Well I started getting “robo-calls” in December from a “Kelly Smith” of ER Solutions located in Renton, Washington.  Kelly had a wonderful British accent.  Her sister must reside as one of the voices in my car’s GPS.  Kelly asked me to call her.

Now, I’m a married guy (and Spencer’s dad if you can’t tell in the pictures posted here) but it’s certainly flattering to have a woman with a sultry voice ask you to call her even if it is just a business call.

So I call the young lass.  While I don’t get her on the phone, I do find out that ER Solutions is a nationwide collection agency.  I’m told this by the message I receive from the robot attendant when I call. While not pleasant, I’m sort of used to calling collection agencies.  In my past life I used to own and run a credit reporting agency that produced credit reports used in mortgage lending or property rentals.  So calling these kinds of companies was a necessary chore every now and again to verify the legitimacy of something that appeared on a consumer’s raw credit data file.

But in this case, I’m calling for me. Now once I get past the shock that I’m calling a collection agency on an account that supposedly belongs to me, I try going through the frustrating voice mail tree.  Ultimately, I get to a point where I’m asked to leave a message but before I can another message tells me that the “mailbox is full.”

Not one to be stonewalled, I do my best to find out more about this company. I search online and find another phone number.  I call it with the same result.  I do this over the course of a couple of days.  But despite the time of day or day of week I am unable to ever reach a live attendant or leave a message.

I do more research.  I check the government records at the Secretary of State’s office for my state (Massachusetts) and the corporate HQ (Washington).  I file complaints with the Washington Office of the Attorney General and with my state’s regulator for collection agencies, the Massachusetts Division of Banks.  I also go online to the FTC and use their online complaint process at www.FTC.gov. I send a certified letter to the company demanding that they verify the debt per my rights under the law.

In my research I find several websites that have posts from many irate consumers who have had dealings with this company.  All of them report various kinds of abuse.  Many show how seedy collection agencies try to scam consumers by trying to collect on fictitious charges, using abusive tactics in their calls and ignoring any inbound contact with the consumer.  You can check out the consumer reports on this company online at Ripoff Reports, Complaints Board and Complaints.com.

In many cases the stories sound like mine.  It’s either a fictitious debt or a debt that was in dispute with a creditor that should not have been turned over.  But being big faceless corporations that they are, one hand doesn’t know what the other is doing.

Without any help from my British friend at ER Solutions, I tracked down the problem.  Since the folks at ER Solutions never answer their phones and never provided any account reference in their call, I checked my free credit report that I got from http://www.AnnualCreditReport.com.  I found a cryptic reference to Verizon Wireless, my cell phone carrier.

One Computer Glitch Leads to Another

After a long and frustrating runaround I found the problem.  I had transferred my old individual wireless account to a new family plan account with Verizon.  This was supposed to be seamless but it was apparently not.

Despite paying through Verizon’s One Bill bundled service, the wireless side of Verizon had a wrong address for me. While they had no problem confirming where to send my new phone, they didn’t bother to correct an incorrect entry in their billing system tied to an address I haven’t had for more than 8 years.  While I had been told that the old account would be merged with the new account, the faceless phone rep was very wrong.

So while the family plan account was being paid in full each month, a statement for the old account with a charge for the new phone I bought was being mailed to a defunct address.  And even though I would call and speak with customer service from time to time no one bothered to mention that there was anything outstanding despite my inquiries.

Protect Yourself

Protect yourself by vigilantly monitoring your credit report and disputing erroneous and false information quickly.  Don’t simply roll over and pay the amount without verification.  Often when someone is going through a loan process an underwriter will require that old debts get paid off before closing on the loan.  While good for the lender this is bad for you and your credit score. Since credit scores are skewed toward the most current activity, paying on a disputed amount will likely result in a hit to your score as the creditor or collection agency updates the record with the payment activity.

As the veteran cop on Hill Street Blues would say after morning roll call, “Be careful out there.”

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Recently, I had to deal with a derogatory item appearing on my credit report that was reported in error.

Besides being frustrating to deal with it can be time-consuming but necessary in order to preserve your credit rating.

A credit rating is usually best represented by a three-digit credit score ranging from a low in the 400s to about 820 or 850 depending on the credit bureau. This score has become all the more important as more lenders, credit card companies, retailers and banks rely upon them when granting credit.

But oftentimes the data file from which the credit score is derived contains inaccurate or outdated information.  And it is up to a consumer to make sure that such inaccurate or old data references are corrected or removed.

All too often, creditors and collection agencies make mistakes in their reporting. So it is important to fight to protect your credit history and score.

  1. Know your legal rights under the Fair Debt Collection Practices Act
  2. Write a letter demanding verification of the debt:  A consumer does not have to prove that the debt is his.  The burden of proof is on the creditor and collection agency. Send a certified letter (return receipt requested) to the creditor and agency demanding proof of the debt. While they are verifying they cannot pursue further collection action – including any harassing phone calls.  Debt validation is discussed in Section 809 of the Fair Debt Collection Practices Act.

Here’s a sample letter that I have used:

DEMAND TO VALIDATE

“Per the Fair Debt Collection Practices Act, I am requesting written validation of this alleged debt, which includes:

– a copy of the original signed contract with my signature
– validation of the original “Date of Delinquency” for this alleged debt
– validation of the “Date of Last Activity” for this alleged debt

Per the Fair Debt Collection Practices Act, the burden to validate the debt falls on the debt collector. It is not my responsibility to validate this alleged debt for you.

Either validate this alleged debt or remove it from my credit files and stop attempting to contact me.

If this notation is not removed, I will have no choice but to take legal action per my rights under the Fair Debt Collection Practices Act.

Receipt of this letter is being officially time-stamped by the USPS. Refusal to validate will be officially documented.”

For Complaints You Consider to be Malicious, Frivolous and a Possible Scam

“I also have filed complaints with the Attorney General of your state because of this harassing activity and will take further actions if this frivolous and erroneous notation is not removed from my credit file.”

Also consider contacting the licensing authority for collection agencies in the state where you reside.  And don’t forget to check out the complaint procedure at the Federal Trade Commission website.

Using A Professional Credit Repair Service

Too often this debt validation and dispute process can be frustratingly time-consuming.  Sure you can do it yourself.  You can do almost anything yourself (like changing your car’s oil) but not everybody does which is why there are plenty of other service business out there in the world to help you fix your car, mow your lawn, deliver your baby or do your food shopping. It’s a matter of how much is your time worth. Ask yourself if you really have the time, energy or know-how. This is where specialists who deal in handling the process can come in and play a valuable role.

A reputable firm will follow the requirements of the Credit Repair Organizations Act which dictates the rights consumers have when dealing with credit repair organizations. They will provide you with a written agreement detailing their services and not do any services until you have completed a three-day cooling off period to change your mind. Most firms will work on a “pay-for-performance” arrangement meaning you only pay for the accounts successfully deleted.

Just avoid the firms that promise the moon.  No agency can get rid of references to legitimate liens, bankruptcies or judgments. (Sure, they can help get rid of outdated references that still appear after the statutory time limit – for example bankruptcies may remain on for up to 10 years). No agency can create a new identity for you. No legitimate agency can charge you money for credit repair services before completing the promised services (note: legitimate companies may charge for other non-credit repair services per the agreement such as consumer education or other counseling).

You can find more information at the Federal Trade Commission website.

For help with credit repair you may want to check out this firm:  Valley Credit Repair and Credit Coaching.

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The other day I was contacted by Evan Lips, a reporter from the Lowell Sun who was doing a timely article on financial planning tips for the new year.

He had spoken to other financial planners and investment representatives and he had a wide range of opinions provided by them.  These included ways to manage credit to savings to kinds of investments to use for a retirement account.

Because everyone is at a different place in his or her life, some of these tips may not really help now. For instance, how you take money out of retirement accounts when retired is a tip that is less important to someone recently graduated looking to pay off student loan debt.

But there is something common that really can help anyone of any age.

Number One Tip for 2011 and Beyond

So my Number One tip for any consumer of any age:  Control What You Can and Leave the Rest.

What do I mean?

Consumers are usually their own worst enemy.  Too distracted by daily affairs, it’s easy to become overly focused on the news of the moment.  And this can lead to an emotional reaction that can otherwise sabotage long-term financial health.

Things You Can Control

1.      Investors have control over certain things: Their emotions (and reactions to the crisis of the day), investment expenses, asset allocation and amounts they save.

2.       Investing is long-term but the financial media is fixed on short-term crises of the moment.  Be mindful of that and try to tune out the noise.

3.       Your mom was right: Live beneath your means and you’ll have extra cash to save; build up your emergency reserves (minimum 3 months of fixed expenses for married couples working; 6 months for couples with one-earner and nearer 12 months for someone with variable income).

4.       Pay yourself first.  Make it automatic. Have a portion of your paycheck directly sent to a high-yielding savings account.

5.       You can lower your investing expenses and improve your diversification by using Exchange Traded Funds.  ETFs are investments that can trade like stocks but represent a broad basket of investments.  (Sort of like an index mutual fund but with even less expense). If you have less than $100,000 to invest and are looking for efficient core holding for global stock diversification, consider something like the OneFund® ETF from US One at www.usone.com (ticker symbol: ONEF) which is composed of 5 other ETFs from Vanguard and costs less than 0.35% per year while providing 95% exposure to 5,000 large, small and medium-sized companies throughout the world.

6.       Develop good money habits: Reconsider that fancy coffee or fast-food lunch and pocket the savings for a more meaningful goal (i.e. vacation, paying off debt, down payment for a house).

7.       Pay off your debt by snowballing payments.  This technique will help you see progress toward paying off debts.  Start with the ones with the lowest balances and pay above the minimum.  Then when this debt is paid in full apply the amount you were paying toward the next debt.  Eventually, like a snowball rolling down hill, you’ll be applying all these payments in large lumps toward the highest balance debt.  And this will help accelerate paying the debts off and lower your interest expenses.  Then when everything is paid off you can direct this toward your emergency reserves or investing goals.

8.       Position yourself to qualify for more student financial aid: Skip the allowance and put your kid to work.  See my post on this here.

Want Some Low-Cost Globally Efficient Ways to Invest?

What is an ETF?  Go to https://moneylinkpro.wordpress.com/?s=exchange+traded+fund or http://www.investopedia.com/terms/e/etf.asp

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