Browsing Category: "Retirement"
The stock market
Fortunes are made and lost overnight in the stock market. I once heard that over 95% of the people who invest in the stock market actually lose money. It’s a risky game for most of us, but with some research and luck many investors make hundreds of thousands of dollars from investing in the stock market. If you are interested in investing in the stock market, take a minute to read this post. I will give a brief overview of how the stock market works, I will teach you why you should invest, show you how to start investing, and how you can actually profit from investing in the stock market.
How the Stock Market Works
The beginning concept of the stock market dates back to 12th century France. Since then it has grown into a huge business and created full time jobs for millions of people. The stock market is vital to our economy chiefly because it is the most important way for companies to raise capitol for their business. Investors buy stock in a company which gives this company more money to invest to grow the business. Hopefully, the business will thrive increasing the value of the stock, the investor will sale the stock and make money.
Why should you invest in the stock market?
Many people use the stock market to earn extra income or to invest in their future retirement. Almost everyone could use some extra cash, right? From personal experience it is very difficult for the average investor to actually make a lot of extra income from the stock market. In order to earn huge gains from the stock market you have to have a lot of money to invest. Because of the “per trade” fee that investment companies charge you, investors have to purchase large quantities of a stock in order to offset the costs of investments. Also, any gains from the sale of stock are taxed more than personal income tax. I would recommend waiting to do this type of investment after you learn the basics of investing and have your retirement funded.
So, back to the original question, why should you invest in the stock market? Investing for your future retirement is a great reason to learn the ropes of the stock market. Many people don’t realize the importance of having their retirement funded. The earlier you start investing for retirement to more prepared you will be when the time comes. It may also allow you to retire sooner than your friends and co-workers.
So, Ready to start investing in the Stock Market?
Not so fast, investing in the stock market can be risky, know what you are doing before you sign up.
First, learn the lingo of the business. There are many websites online you can research and learn the basic lingo of the stock market. At least learn the basics before you start. It’s just like the rule of reading the instructions before you try to put together furniture. Sure you can jump right in and try to put it together, but you will probably miss a step or do something out of order and the whole piece of furniture is ruined. Take some time to read the stock market instruction book before throwing away your money.
Second, open a virtual portfolio at an online stock market trading website. There are many websites online that let you play the stock market game without investing a dime. You can choose any real stocks you want and they will track your progress over time. You can buy and sales just like the real market. After several months if you aren’t making virtual money odds are you won’t be very successful at the real game either.
Research, research, research is the key to success. Obviously, no one knows exactly how the market will work but if you know what to look for sometimes you can get a heads up over the competition. Key factors such as the company earnings reports can have an impact on the stocks value. You can also watch trends of stocks, sometimes the values of stocks peak at certain times of the year. There are many theories on stock market fluctuations but knowing the inner workings of a company can help you invest smarter.
Now, you have earned some virtual money and done some research on your favorite stocks you are to try your luck at the real stock market. There are many places that will allow you to invest in the stock market: two that I use and recommend are Zecco and Sharebuilder. These two programs do not require you to keep a minimum balance and their fees are very low for investing. Once you choose a place to start investing you must decide your investment goals. Do you want to invest for retirement or invest to make money right now?
I would always suggest to the beginning investor to invest for retirement. My choice of retirement investment would be a Roth IRA. A Roth IRA allows you to invest funds after taxes and those profits can be withdrawn at retirement tax free. A Roth IRA allows you to invest in stocks, bonds, mutual funds or ETF’s. It allows you to have a diversified portfolio and still have complete flexibility of your choice.
If you plan to invest to make money now, you should be aware of what this entails. Any gains you make from stock sales in a year are taxed at a different rate than income taxes. These gains are taxed harder so take this into consideration when investing.
Profit from investing in the Stock Market
Again, I obviously don’t know all the secrets to the stock market. If I did I probably wouldn’t be taking the time to write this article. However, there are some simple rules to follow in order to profit from the stock market.
First, buy low sale high. It’s an age old rule that investors still struggle with today. If a stock jumps in price to a peak, you may want to consider a sale and keep the profits. If a stock drops to a new low you may want to consider buying.
Remain calm. If a stock drops a considerable amount in one day, don’t panic. Unless the company is in danger of bankruptcy the stock price will rise. The best thing to do would be buy more of the stock at the lower price.
Diversify your portfolio. As the ole saying goes, don’t put all your eggs in one basket. If you put all your money into a single stock you are living very dangerous. If anything happens to this company your entire portfolio could disappear. It is a good idea to invest in different types of funds including, stocks, bonds, mutual funds and ETF’s. Spread your money around and even if something happens to a single company you will still make money in the long run.
Watch your portfolio. If you are going to make money you want to keep an eye on your investments. Track their progress over time and make necessary changes to your portfolio. You may need to sale some of your investments that have reached highs and maybe buy more of investments that are at all-time lows.
Change your investments with your lifestyle. As you grow older you should move more of your investments to safer areas of the stock market. Individual stocks are considered extremely risky and should be avoided the closer you get to retirement. Instead consider safer investments such as bonds and CD’s.
Conclusion
There is a lot of money to be made in the stock market and there is a lot of money to be lost. If you are going to play the game be sure you understand the rules. Know exactly where you are putting your money and why. Staying on top of your portfolio will increases your changes of winning with the stock market
Which retirement would you choose
Whether you are looking forward to retirement or dreading your final day of work we all hope to be prepared for the day when it arrives. With the current economy retirement planning has never been more important. There are many different paths to choose when it comes to planning for retirement, the key is to pick the type of retirement you feel is most appropriate for you personally.
What if a company you were wanting to work for offered a particular type of retirement program. Would this have any affect on your decision to take a job with this company?
Two popular choices among many companies are defined benefit or a defined contribution plan. Both of these plans are still in use today by employers. If you were given the option which would you prefer?
A defined benefit plan (DB) is like a traditional pension or fixed pension. Usually, the employee is guaranteed for the rest of their life and sometimes even the rest of their spouses life, a set monthly amount of money upon retirement. This amount is determined by factors such as years of service and their salary while working. This benefit may also include additional perks including health insurance and a cost-of-living increase each year. A defined benefit plan is popular among government agencies.
A defined contribution plan (DC)  is a retirement plan where the employer usually promises to contribute to the plan, but does not guarantee there will be any certain amount of funds available upon retirement. Examples of defined contribution plans include 457, 401(k), and 403(b) plans.
There are pros and cons to both types of retirement plans. Traditionally defined benefit plans offer much better retirement benefits, however in return salaries and wages are typically lower. Likewise, employers who offer defined contribution plans pay higher wages but don’t guarantee any funds available at retirement.
There are many factors I would have to consider before chosing a retirement benefits package if given the choice. Obviously, the percentage the employer offered to a defined contribution plan would have a great impact on my choice.
Second, many companies seem to be moving away from traditional pension plans. New employees aren’t offered the same plans older employees were offered years ago. The original retirement packages are much more taxing on the company than they originally assumed. So it appears pension plans are on the way out.
Finally, I think I like to have more control of where my money is placed. It’s my future and I feel involved more in the decisions. Most defined contribution plan have a variety of fund options available for investment. You also have control of how much money to put in these funds and can move funds around as you choose.
So, personally I would choose a defined contribution plan given the option. You have more control of your money and you typically earn a higher income while you are working. This means if you budget correctly during your working years you can save more for retirement years.ÂÂ
Always keep an eye on your 401K
Staying up to date with the value and performance of your 401k retirement funds is very important. For some people it becomes an obsession and this is just as unhealthy as never checking on the performance, there is however a good mix. Most 401k programs send out quarterly performance statements and this is a great time to track the winners and losers.
Tracking the winners and losers show which fund values are high and which are low. Remember the old financial statement, buy low and sell high? Same holds true for your 401k funds. If a fund has performed well for the past year maybe it’s time to sell off some of that balance and buy another fund that has a good long term track record but has had a bad year.
If you are approaching the age of retirement in the next few years you may want to thoroughly examine your balances and do some detailed calculations about how much money you will need in retirement. It may even be a good idea to speak with a financial advisor about your options. If the past few years have shown poor performances you may want to consider working another year or so before calling it quits.
Keeping up to date with your 401k and retirement accounts will secure your financial future. Don’t be afraid to ask a professional financial advisor for advice. Spending a few dollars now could save or earn you a few thousand dollars in the future.
Late start on retirement savings
How old is too old to start saving for retirement? Most of us know that the earlier you start saving for retirement the easier it will be and the better off you will be when you are ready to retire, but what if you’ve waited till your 40 to start? What if you are 50, 60 or even 70 and haven’t saved a dime for retirement? Don’t worry it’s never to late to start.
Honest Financial Adviser
How to find an Honest Financial adviser
Finding an honest financial adviser is the most important part of preparing for retirement. It doesn’t matter if you make $10,000 or $1,000,000 per year you should use a financial adviser. You may think you are the best person to manage your money, but let’s face it, you are always busy, usually lazy and are the world’s worst procrastinator. Before finding a financial adviser you need to understand their function and how they are compensated for their hard earned work.
Good real estate investment ideas?
Before you take your good real estate investment ideas and spend your life savings think carefully about the consequences. Over the past several months several hundreds of thousands of families lost their homes due to rising interest rates and a gloomy economy. Millions of investors are watching their retirement savings plunge with no signs of relief.
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Securing your child’s retirement
Securing your child’s retirement
It may sound like a strange idea, especially when a very small percentage of us have our own retirement secured, but just imagine how you could change your family tree forever! The only problem with the concept is that most people are too greedy or selfish to actually follow through with the plan.
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Good news, Our economy is going down?
Good news, Our economy is going down?
If you haven’t noticed, the US economy is taken a huge turn for the bad. Stocks have tumbled and the over the past three days The Dow Jones industrial average has fell nearly 515 points. It’s a little scary to think that many stocks, especially those in the financial sector may continue to fall even more over the next few months. Why is this good news?
Three ways to Increase 401K Contributions without hurting your budget
Three ways to Increase 401K Contributions without hurting your budget
You know you need to either start contributing to your 401k plan or increase the amount you are contributing but where do the funds come from? It can be hard to pull money out of your normal budget to invest for retirement especially if you are a little older. The more financial responsibilities you have in life the harder it is to take any money out of pocket each month or week. Here are a couple of solutions to this problem….
Contribute to your 401K
Contribute to your 401K
Planning for retirement is one of the most important financial decisions you can make. There will always be debates over which investments are better and how you should save your money, but one fact will always be agreed on and that is to start planning and saving early. There is nothing better than having time and compounding interest on your side.
 Many times people ask if it is better to contribute to your employee sponsored 401K program or contribute to a Roth IRA. The simple answer to this question is if your employee sponsored 401K program offers any type of match benefit then you should take advantage of this free interest. However I would suggest only contributing the maximum amount that they match.
