Another Tax Loophole

Just image, you are a small manufacturing company, business have been good, but yesterday you received a phone call from a client who desires 50,000 widgets in 45 days. The client is a large account and if you turn the business down, he may never name you again.

Problem: You need to engage more than staff to ran into the manufacturing needs of this customer. AND the client said nil about an advance payment. In fact he mentioned that he would be paying nett 30 once cargo was received.

You need working capital and you needed it yesterday

You sit down down and you begin to think. Well let’s see, it will take much needed clip to apply to the bank for a loan, your married woman endangers to go forth with the children if you refinanced the house 1 more clip for business grounds and your credit cards are maxed out.

As you look around your messy yet effectual office you inquire where you can get the workings capital you need?

Sitting in presence of you is your secretary mailing out invoices. You slowly walk over to her desk and you inquire "What’s the sum amount of bills that we have got outstanding at this very moment?

Your secretary looks on her computer, moves the rat around a few times, chinks a couple of times, and then hits something that brands the pressman start singing. She looks up at you with those "I desire a raise" eyes” and says, "it’s coming out on the printer"

You walk slowly over to the pressman and pick up the sheet of paper. Just when you believe you are ready to read and understand the page another page prints. She states very softly, "the second page will give you the total" You pick up the second page and allow your eyes to coil down to the underside of the page and much to your surprise the sum amount is well over $300,000.

You don't desire to name a Factorization company because, they will dismiss your Invoices and you won't get all your monies Oregon make you?

Your secretary reminds you that all the fees for Factorization the Invoices is tax deductible and in the end the Factorization will cost you nothing. (Your secretary is taking tax social classes at night, something about becoming more than valuable to the company and earning more money) She also reminds you that you can Factor the Invoices and be paid up to 92% of the sum bill amount within 48 hours. Plus, the Broker makes not charge you.

It is at this point that you seek to retrieve why you married your married woman instead of your secretary?

You quickly change from that idea back to who should I call? There are so many Sharks in the H2O and about $200,000 of the bills are Government Contracts.

You cognize you need a Factorization company whose rates are just and who can deal with the eternal paperwork that the Federal Soldier Government necessitates to Factor one of their Contracts.

Needless to say, he called me; the name calling have got been changed to protect the guilty.

Negotiate Your Way Out Of Debt

Eliminating your debt is a intimidating task. What can you make to get out of debt fast? Believe it or not, dialogue along with proper financial duty is your beachhead out of the rat race. Learning how to eliminate your debt might be one of the most of import life accomplishments that you learn because it can convey you felicity and fulfillment. In order to successfully eliminate your debt, you must utilize a combination of self-control, proper negotiating skills, and some hereafter planning.

Here Are Some Tips

1. Chop ‘em up or freeze ‘em. Start by taking all your credit cards out of your wallet/purse and cut them up into pieces. If you’re 1 of those people who do the claim that you might need those credit cards in lawsuit of emergency, then a alone strategy is to freeze your cards--literally. Put the credit card into a paper cup and fill up the cup with H2O and then freeze it. You won’t have got contiguous access to the credit card and it will still work for you in lawsuit of emergencies. Whatever manner you take to get quit of your credit cards, do it a symbolical rite of your committedness to get out of debt.

2. Start life within your means. You’ll be amazed at how much money can steal through your fingers on small day-to-day purchases. Start life within your agency by paying cash for the things that you need to purchase. Start looking for the cheaper items. Remember, trade name name calling make not always compare to being a better product. Big businesses count on the fact that you are going to flip them your money without question, so don’t make it so easy for them. Use vouchers wherever you go. Buy in majority to reduce costs. Learn how to cook. The ways to salvage money are endless. Just retrieve that life within your agency makes not intend you have got got to dwell poor—it just intends you have to dwell smarter.

3. Consolidate all your high-rate credit cards. First check out the upper bounds credit limit and APR on all your credit cards and take the 1 with the lowest APR and consolidate your other credit card balances onto that 1 account. Brand certain that there are no concealed fees associated with the balance transfer. Another manner is to negociate a loan that offers a lower APR than what you are currently paying for and pay off your high interest cards with that loan. Just be very careful about the small black and white because many credit card and loan companies will offer a low introductory APR, but once that is over, they jack up it up through the ceiling.

4. Invest in your debt. Many people who are stuck in debt still pay quite a spot into their common finances or stock portfolio thought that they will get a higher rate of return. In most cases, this volition never happen. Annual APR’s for credit cards are a humongous 24% Oregon more. I have got yet to see a constantly performing stock or common monetary fund that bends out even 15% on a regular basis. Dainty your debt like a high-interest investment—one where you are guaranteed to earn a huge rate of return. Always set in your debt before you put money into investments.

5. Use a trusted household member. One of the best ways to get out of debt is with the aid of a financially stable household member because they will usually give you the cheapest deal on a loan. Get an IOU understanding in authorship and pay them a predetermined amount every month. Some people take not to travel this path because of pride, but it could be the fastest and cheapest manner out of debt. Just do certain you possess the unity and award to refund your debt to them otherwise you will have got more than problems than just financial ones.

6. Don’t get suckered into taking more than debt. A soiled dialogue maneuver that loan companies like to utilize is to offer you more than than of a loan than you need to pay off your debt, thus adding more debt onto your existent debt. This maneuver plant the same manner as when a kid conveys a isolated puppy home and asks, “Can we maintain him?” The credit companies cognize that there is a great deal of emotional attachment to that extra credit and they are betting that you are going to take that “stray puppy” home with you. Defy the enticement to take that extra credit home with you because it will cause more than problems than it is worth.

7. Kill the smaller varmint first. If you have got respective debt accounts in assorted denominations, then attack the smallest debt first with full military unit and kill it as quick and as painlessly as possible. Once that debt is gone, then utilize the newly freed nest egg from the last debt and apply it towards killing the adjacent largest one, and so forth. This is a simpler and much more than effectual manner of eliminating debt than paying small amounts off of each loan. It also have the psychological benefit of boosting your motive with each progressive success.

8. Stay busy. It’s A known fact that if you have got too much free clip on your hands, you are more than likely to pass money than if you were busy. Take up some recreational activity to maintain you occupied so that you don’t have got that free clip to travel pass your money.

9. Set up an auto-pay system. There is a pathetic amount of money to be made on late charges and finance charges. Credit card accounts spiral out of control because people see that they make not have got any monthly minimums dues and allow it revolve over to the adjacent month. The credit card companies love this because you have got just given them extra money in the word form of finance charges to your account. Always wage more than your minimum to get out of debt. Avoid handing free money over to companies who charge you for late fees by setting up an eft or automatic measure wage system so that you won’t have got to deal with authorship the checks, finding stamps, and mailing the measures every month. Having an automated system do this for you will make certain those measures get paid on time.

What Card to Chose?

Overwhelmed at the large number and assortment of credit cards available today? The following is a summary of the cards out there.

Credit Card
Type A Credit Card enables you to purchase anything up to a certain set bounds that that peculiar card throws before you are required to pay for it. This type of card is similar to a loan, were you are required to pay a minimum monthly amount. This is the "Buy Now Pay Later" concept.

Debit Card
With This card you can purchase good with the money that is already in your account(s). The amount you pass is immediately taken from your account. Some good things about this is that You pass what You have got and will not owe it later, as well there is no waiting for the measure and having to retrieve to pay it. With A Debit card opposed to a Credit card there can be poorer protection in cases were your card is stolen or if there happened to be a charge dispute.

Charge Card
This Card is much like the Credit Card the lone difference is that it must be paid completely monthly. Therefore not allowing flexible wage times, but you are kept up to day of the month paying what you owe regularly!

Cash Card
This Card allows you to retreat cash from an standard atmosphere machine. Like the debit entry card it have got to have a particular pin number that places the user.

Cheque Guarantee Card
This is a card that the bank gives you that warrants the individual you are purchasing from that your check is guaranteed not to resile up to a set bounds on the Check warrant card.

Store Card
This is a type of credit card that is only usable in the supplies indicated or online with the supplies indicated. For Example Sears Card, Esso Card, Wal-Mart Card. There are usually put bounds and these are adjustable per clients individual credit history. Again at the end of the calendar month there is a measure sent out with the declared minimum payment.

This interruptions down what each card basically mathematical functions as and hopefully you can pick the one(s) best suited for Your Personal and business needs.

Getting Some Perspective On Your Avoidance Habits

It is quite natural for human beingnesses to avoid discomfort. Our encephalons are wired that way. Without thought about it, we'll hotfoot in from the cold. Of course! Without really thinking about it, we'll maneuver clear of person we don't particularly like. Of course! Without thought about it, we'll short-circuit the ________ subdivision of the counter table. Of course! It's the spinach section!

And without really thinking much about it, we'll often avoid full facets of our financial lives. Over the old age I have got met many people who clearly desire financial freedom but, at the same time, don't desire anything to make with money! And so it goes of import for them to see how it was they have got been avoiding money in their lives. At least it goes of import if they really desire 'financial freedom'.

Do you avoid thought or dealing with any of the following things related to money? (If you halt reading this article now, that mightiness be a clue!)

your financial state of affairs generally (where you're at.)

your investments

your cash flow (month to calendar calendar month money management)

your debt

your estate planning (insurance situation)

your tax situation

your spending

your financial state of affairs as it refers to your spouse

If you're avoiding any of these areas, it's probably because the idea of them do you uncomfortable in some way. Unfortunately, turning away doesn't do it 'go away'. In fact, turning away often do things much worse, so all you're doing is placing a larger load on 'your hereafter self'.

Scientists, somewhere, ought to be working on a manner to put hereafter loads on 'some other person' rather than our future selves. (No word on that yet, unfortunately). What we avoid today still be givens to protrude up later in life. If we aren't paying attention to our finances, it will demo in the future. If we're racking up debt today, it will come up home to perch in the future. If we're not doing proper estate planning, person is going to get it in the olfactory organ in the future. These things don't travel away because we're pre-occupied with our shoe laces.

But what a difference a small attention makes! To be on the other side of the avoided issue, knowing it have been taken care of. Knowing we're now steadily increasing our nett worth instead of going in the hole. Knowing our household is taken care of if we die. Knowing we'll open up a gift of nest egg in the future, not a gift of debt. Knowing it REALLY wasn't all that scary once we turned our attention to it and dealt with it confront on.

The first measure to managing the financial issues we're avoiding, though, is to cognize what it is we're avoiding. The 'why' doesn't matter that much. It's because it is uncomfortable. Well, so what! That uncomfortableness will be temporary, and on the other side of it is a real number comfortableness zone. The real number comfortableness zone of knowing things have got been dealt with, rather than the fantasy comfortableness zone constructed by turning away and denial.

It is a great feeling to cognize it is REALLY taken care of.

CYA

You all know what CYA stands for. Of course,
Cover Your Assets.

And everyone does it. You have protection against
losing your car in an accident. You have
protection against being sued from that car
accident. You have locks on the doors to your home
to protect against theft and personal injury.
Question. Do you have a lock to protect from loss
in your retirement portfolio?

Bet you didn’t even know there is one. You sure
aren’t going to hear about it from your stock
broker or financial planner. If there is such a
thing why hasn’t he told me? Maybe it is because
it is too expensive.

No, there is no charge for this type of protection
and your brokerage company will do it. It is free.
Then why don’t brokers and financial planners
provide this as part of their service? The simple
answer is it is too much work. If you decide to
use the service they will then have to watch your
account.

Oh, did he say he was going to watch your account?
Unless your account in seven figures or close to
it you do not appear on his radar screen. The
average broker has 300 accounts. Could you watch
what is going on in each one if you had his job?
It is not possible so there must be a way to
protect your money. Yes, and it is automatic.
When your stocks are going up and you are making
money you don’t want to give back those profits,
do you? Of course not. There is a simple method
known to every broker and financial planner, but
you must insist it is done – or you will transfer
your account to someone who will. Money talks and
he will understand that.

First you must determine what your risk level is.
Are you willing to give back 5, 10, 15% of the
price of your stock when it starts down? If you
say 10% then each week tell your broker you want
an Open Stop Loss Order placed on the closing
price of each Friday (or Monday , Tuesday,
whatever) as it moves higher and not to reduce
that price.

This way he does not have to watch all the
different stocks you have in your portfolio and
you are protected against any big losses. He may
not even want to do this and ask you to place
those orders which you can easily do on the
Internet.

Instead of trying to figure out where or when to
sell your equity you let the price action of your
stock tell you when it is getting weak. There are
many ways of placing Stop Loss Orders and you may
wish to use another method. Many can be found by
using a search on Google by typing in the words
“stop loss orders”. Your library should have books
on the subject.

For a person who is working or cannot take the
time to follow the market this is the best way to
protect your investments. Consider it a lock on
your profits. Go back and see how this would have
worked if you had done it for the past 5 years.
You would be money ahead.

CYA – cover your assets.

Exchange Traded Funds

They call ‘em ETFs.

There are hundreds of them.

The mutual funds don’t want you to find out about them.

Why?

Because they beat the socks off mutual funds in
so many categories. The expense ratios of most
mutual funds runs about 1.5% and many are much
higher. To buy a mutual fund you must wait until
the end of the day to find out what price you
paid. Many mutual funds have instituted
redemption charges should you decide to sell out
early. Early is whatever definition they want to
apply and could be a year out, maybe more. The
fee at this time is about 2% for many funds.

Fund managers tell you it is to discourage
overnight trading that adds to their expenses
and therefore penalizes shareholders, but that
is not true.

The two most popular ETFs are SPY and QQQ. SPY
is composed of the stocks in the SP500 Index
with 500 stocks and it is priced every few
minutes. It can be bought and sold any time
during the day. The mutual funds who tell you it
is too expensive to price their funds more than
once a day are either lying or stupid. ETFs
prove that. And that same logic goes for short
term trading.

The investor buys and sells ETFs the same as
any stock. The big brokerage companies charge
high commission whereas investors who place buy
and sell orders with discount brokers will find
commissions around $7.00 to $15.00 to buy or
sell. That charge is for one ticket and not per
100 shares. The commission is the same for 100
shares or 1,000 or more shares. Big Wall Street
firms charge many times this for the same
execution.

You can do research on ETFs just as you do on
mutual funds. If you want to determine what
stocks an ETF manger holds they will tell you in
their prospectus. What you want to know is what
Sector the ETF represents. The internal
structure does not change often as does the
stock ownership in a regular mutual fund.

At this time there is one drawback to buying
and selling certain ETFs. Do not place Market
Orders when buying and selling most ETFs unless
it trades more than 250,000 shares each day. As
with stock there is a Bid and Offer Price. In
thinly traded issues where the ETF has a volume
of less than 50,000 shares daily the Spread can
be as high as 20 cents and many times more. In
these issue it is suggested Limit Price Orders
be entered. If the last trade was $20.50 the Bid
could be $20.40 and the Offer $20.60. A market
buy order would be filled at $20.60 and a sell
order at $20.40. It is best to place a Limit
Order at $20.50 and most of the time these will
be executed at the Limit Order price. Stop Loss
Orders are also poorly executed in low volume
ETFs.

Over the next few years as more and more
investors discover these advantages they will be
buying ETFs in preference to both load and
no-load mutual funds.

Credit Cards -- What You Should Know

There are a batch of inquiries about using credit cards. Here's some of import points for you:

A quick expression around on the Internet this morning time shows that more than than 9 million people in the United Kingdom make not pay off their credit card balances each month. (The rules of what follows are the same in the USA, or wherever you are right now.)

The average balance left outstanding is over £1000. The interest charged on such as as a balance changes according to the card, but we have got seen rates of up to 29%!

When you bear in head that banks are offering somewhere in the part of 3% interest on account balances, it's easy to see how such a antic amount of money is turned over within the banking and finance industry!

Consider a card with an average outstanding balance of £1000: with an interest rate of 19%, this could take over 20 old age to pay off at minimum payment levels! On a balance of £1000 at 19% for 20 years, you'd pay back a sum of £3889.

Credit cards are a tool designed to do a net income for those who issued them. They are not provided for your convenience! The lone manner it do sense to utilize a credit card is to only utilize it up to a point at which you can pay the full balance each month.

In other words you are using it to access money you already possess, and not using it as a word form of loan. To utilize a credit card for a loan is going to be some of the most expensive credit you will ever encounter.

I cognize that life isn't always easy, and some people will state they need to utilize a credit card to get by. This is the worst place you could be in, and it is really of import that you make something about your financial fortune if you are in this position. Continuing along that way will steadily and inexorably lead to financial disaster.

Nobody said it's easy! But I would be doing no service at all if I avoided the facts, even if it's not what everybody desires to hear.

Another unwise usage for a credit card is to get a cash advance from an standard atmosphere machine. whereas with purchases on the credit card there is an interest-free time period up until the adjacent payment is due, there is no such as period of saving grace for cash withdrawals. Use a debit entry card instead.

And be aware of the deal with shop cards. These tin typically carry some of the highest interest rates around. Any nest egg are often have got got wiped out by the fact that you are encouraged to purchase more than then you otherwise might have, and even if they are genuinely savings, they are typically dwarfed by the sum interest when the balance is not paid in full.

Use your credit card wisely, usage it to your advantage, and get on the right side of the credit card game.

Does Your Financial Plan Belong in a Cartoon?

Beep beep! When you were a kid, didn’t you love those cartoons? You know, the 1s where the luckless prairie wolf would chase the rapid small bird? Road Smuggler always got away, and Trickery E. Coyote always got pulverived.

I don’t cognize about you, but I often felt bad for poor Trickery E. Coyote and his ill-fated Acme contraptions. After all, he worked hard and always followed directions. But in the end, he inevitably ended up crushed by the awkwardness of his ain plan.

The same thing haps to investors, even flush investors. After perspiration slugs by working hard, saving and investing, they often neglect to attain their financial ends and get clobbered by their poor planning.

Are you person who children yourself into believing you just won’t retire? That you’ll just zip up around and maintain chasing your earnings for the remainder of your life? (As unsympathetic as working forever may sound, add this to your grounds not to follow that plan: According to Henry Martin Robert Nestor, principal of retired person services with Vanguard Group, about one-half of recent people left the work force early because of poor health, buyouts or layoffs. Even if you desire to or need to, you may not be able to go on working.) This psychotic belief is a small like the minute when Trickery E. hangs in mid-air before plummeting to the underside of a ravine.

My advice: Either get it together now, or human face the acrimonious option of moving in with the children and dining on Alpo for your retirement cuisine.

So what can you make now?

First, get a clear apprehension of how much money you need to back up your lifestyle. And don’t give me any fancy footwork here. Don’t guestimate your monthly spending. Come up with the existent number.

It’s easy to happen out, too. Just delve out your last 24 bank statements. Each statement will sum up the sum of the amounts you withdrew from the account. This is the amount you pass monthly. Since the numbers will change calendar calendar month to month, add the sum for the 24 calendar months and watershed by 24. This volition be the amount you pass every calendar month on average. Higher than you thought, right?

And don’t state me that you’ll pass less when you retire. It’s not true. When you retire, you’ll have got nil but clip on your hands. How make you believe you’ll pass that time? By disbursement money, of course! You’ll travel and you’ll travel out to eat more than often. My friend, don’t presume you’ll be disbursement less. If anything, presume you’ll pass more than money once you retire.

Let’s bend to income. Please understand that a sensible and sustainable backdown rate from your investings is four to five percent adjusted for inflation. That agency if you have got $1 million invested, you can safely retreat $40,000 per year. Take that figure, add your societal security and other passive voice retirement pension income to determine what your sensible income is going to be.

Your adjacent measure is to Google “retirement planning calculator” sol you can happen a assortment of online free calculators. Input Signal the information you calculated from the two anterior stairway to determine if you are on track. If not, here are two tips that tin aid hole your plan:

1.Just because you can tap into your individual retirement account accounts at age 59-1/2 doesn’t mean value you have got to. Chances are, you’re going to dwell a batch longer than you think. It’s not unusual for folks to dwell into their 1890s and beyond. If you detain taping your retirement accounts, you give them a greater chance to grow, and you reduce the clip they have got to bring forth income for you. It’s A dual win!

2.Use a defensive strategy when it come ups to investing. Recognize what Trickery E. Coyote never seemed to: What travels up must come up down. According to 60 old age of research, a bear market come ups along every 3.3 old age and the average loss transcends 27 percent. It won’t take many of these bear markets to get you off the golf game course of study and on to the Costco welcome mat! Take defensive action to avoid ruinous loss! I wrote a great deal about this in my up-to-the-minute book, “Why Smart People Lose A Fortune,” but if you desire my achromatic paper summarizing how you can potentially protect yourself against ruinous loss, electronic mail me at neal@wealthresourcesgroup.com.

Don’t get surprised by some fatal flaw in your financial planning. Take these stairway now to dodge the bowlder that may hang overhead.

4 Steps to Take in Your Race to Riches

Anyone who have ever run in a race cognizes that every lap counts. A mistake early tin military unit you to work hard to catch up, an error late tin pass over away cherished clip and energy. Things are no different with your finances. The determinations that you do early volition have got permanent deductions to your peace of head and financial security. This article volition concentrate on countries that will aid you get your finances on the right terms in your race to riches.

Beginning Your Race

Many people begin the first lap of life with exhilaration and optimism. You’ve just settled into a occupation and you’re excited about the prospects of your career. You’re ready to utilize your money to make an constituted life, ascent your car, purchase a new home, start a household or simply keep your independence. It’s A relief to finally have got the finances to purchase things that you once dreamed of. But obstructions can quickly appear. School loans, mortgage payments and a whole series of measures suddenly turn exhilaration into confusion. You inquire yourself, “If I’m making a good income, why are things so tight?” With so many picks and responsibilities, finances suddenly look to be spreading thin. Here are some financial tips to assist you voyage the first lap.

1. Live by a budget – This is one of the most helpful exercisings anyone can do. Make a listing of fixed and discretional expenses. Plan for variable disbursals such as as travel, gifts and home improvements. Position yourself as a measure and set aside money each calendar month into a nest egg account. Work on edifice a cash reserve. Wage off credit cards monthly. Although you may have got a steady income now, see the consequence of a occupation loss or drawn-out illness and its impact on your household finances.

2. Establish goals - The old adage of “If you take at nothing, you’ll hit it every time” is especially true with finances. Take clip to make a written program that have SMART ends – Specific, Measurable, Achievable, Relevant, and Time bound. Define financial ends in classes of short term (1-3 years), medium term (4-10 years) and long term. Set aside clip to regularly reexamine your advancement and set your course of study of action as necessary.

3. Educate yourself – With all of your new duties take clip to learn about your options. Don’t end up doing what your parent or best friend did just because you don’t desire to take clip to research what’s best for you and your situation. Get resources from the internet, benefits department, or bookstore. Take a finance course of study or engage a professional to assist you. Don’t be afraid to inquire a batch of questions. There are plenty of resources to turn to.

4. Save for long term ends now – Buying a new car next twelvemonth may look to be more than of import than economy for retirement 35 old age from now. But usage clip to your advantage. See this: If individual A saved $2,000 at the end of each twelvemonth from age 25 through 35 into a 401k or individual retirement account (total of $20,000) and individual Type B saved $2,000 per twelvemonth from age 35 to 65 (total of $60,000), who would have got more than money at age 65 assuming an 8% annual return? Person A stops up with $291,547 while Person Type B ends up with $226,566. Surprised? It’s true. Save early and salvage often.

How to Avoid Hiring the Wrong Financial Advisor

Imagine this. You walk into your physician’s office for a routine exam. You visit with the doctor for about 15 minutes and, thankfully, everything is okay. But then something strange happens: The doc gives you a prescription for a problem you don’t even have, saying, “Just take it. You’ll need it.”

As you prepare to leave, you offer the clerk your insurance card, and the clerk stops you dead in your tracks. “Mrs. Johnson, good news! You don’t need that anymore. In fact, all your visits are free! But from now on, you must buy all your medications from us. And, by the way, the pills the doctor just prescribed for you are $215. Will that be check or charge?”

You probably wouldn’t feel too comfortable seeing a doctor like this. Amazingly, though, these are the exact conditions under which most people work with a financial advisor. And the real shocker is most people don’t even realize it.

For example, if your primary financial caregiver is an insurance agent, she’ll always suggest you buy life insurance or an annuity, regardless of your financial needs. This happens because life insurance agents are licensed to sell only insurance-based products. Why would they recommend something that wouldn’t earn them a commission? Don’t hold your breath waiting for the insurance agent to suggest a no-load fund, for example. You could end up on a ventilator.

Consider now, if you will, the stockbroker. This person works on commissions, too. As long as you buy and sell, these people rake in the cash for themselves. Have you ever noticed that your stockbroker comes up with lots of buy and sell ideas around the holidays—along about the time all of us need a little more cash? I wish I was only kidding. Have you ever heard of a surgeon who recommends an operation for every ailment? If you know a stockbroker, you have met that surgeon’s financial professional equivalent.

Please understand that stockbrokers can also be insurance agents. They wear two hats, but the common denominator is payment by commissions. They are not compensated for giving you what you need most, which would be ongoing financial advice.

The alternative to commission-oriented advisers rests in fee-based and hour-based advisers—professionals who make their money by looking after your financial well-being, not by selling you products. Just as you want to see a doctor to provide ongoing advice about your health, this is the kind of adviser you want if you’re interested in protecting your financial health. Yet working with a fee- or hour-based adviser rather than a commission-based adviser is no guarantee that she’s in it for more than the quick buck. To select the right adviser, you still must ask a few questions.

First, ask advisers how they are compensated. If the answer is commission, I suggest you move on. Ask what kind of investments they recommend to people in your situation. Ask if they ever recommend no-load mutual funds or no-load life insurance. If not, why not? Perhaps the most important question is, “What is your investment strategy?” Find out if the adviser uses some method to protect you from catastrophic loss in the market. As I’ve mentioned in this column before, the average bear market comes along every 3.3 years and the average loss is 27%. Any financial adviser worth her salt should have some strategy to protect against this very real threat to your financial well-being.

I must point out that, after 20 years in this business, I’ve met several insurance agents and commission-based stock brokers who work hard for their clients and are honest. But why play with bad medicine? Just as you wouldn’t go to a doctor who works on commissions, I suggest you migrate toward advisors whose greatest interest is keeping you financially healthy.

Should You Worry About Terrorism Before You Invest?

You may remember that following the 9/11 attacks, the stock market closed for respective days. It re-opened on 9/17 with the Dow down 7%.

That was it for one couple I know, Virgin Mary and Frank. The attack on the country, coupled with the attack on their personal finances, was too much. They were worried terrorism would drop our economic system and stock market like the Titanic, so they sold all their market investments.

Was it the right move?

Nope. In less than two months, the state of affairs changed drastically: Within 53 days, the market recovered all it had lost. And by the end of the year, the market was 12% higher than it had been when Virgin Mary and Frank had bailed out. Now their top problem was not having a strategy to get back in. In their uncertainness and confusion, they became paralyzed by fearfulness of making the incorrect move again.

You’re well aware that September 2001 was not the first clip the U.S. weathered calamity that directly impacted investors. Among other events, we’ve been through a depression, World War II, the Cuban missile crisis and an assassinated president.

Yet the stock market have continued to thrive.

Despite market resilience, a batch of people lost a batch of money. It might be alluring to believe that if investors had been more than informed about what was happening geopolitically, they could have got headed off personal financial devastation. But that’s A chump punch. Now that we can be acutely aware of every bend and turn in the world, makes it do sense to put based on international political and military posturing? Not if you desire to do money.

Here’s another example. Shell-shocked, Janice met with her financial advisor in March of 2003. She’d seen the market army tank through the hideous bear market from 2000 through 2002. She’d read sordid narratives of corporate theft that cost investors millions and, in many cases, their retirement. She was worried by accounting scandals. And, of course, there was this problem in Iraq.

Janice was convinced that any 1 of these events could intend catastrophe for her investments. In her mind, all of these things happening at the same clip meant certain financial catastrophe. Demoralized, Janice sold all her holdings. And from an emotional standpoint, you couldn’t incrimination her.

But from March of 2003 through the end of 2003 the Dow rose 32%. Janice missed out completely.

Our market have survived everything thrown at it. Unfortunately, we’ll most likely always have got a crisis to overcome. The current terrorist problem could be with us for many years, and that’s certainly a human tragedy. However, no 1 can revoke the business cycle. There will always be companies that do great merchandises and high profits. Those companies will expand, and the value of those companies will grow. If you have shares in those companies, your wealthiness will expand.

Even though the human race can be a scary place, history uncovers that calamities end up as just blips on the investment microwave radar screen. Political and military catastrophes have got never dealt a death blow to our financial markets. In fact, the longest clip they ever took for recovery from a military attack was nine months, back in 1941 after Pearl Harbor.

People lose money in tough modern times when they don’t have got a coherent, predetermined strategy for entry to and issue from the market. If you desire to turn your assets safely, disregard military and political events. Establish a program for purchasing and merchandising based on what the market states you, not the nightly news. Then allow that program order your determinations rather than be swayed by your emotions, which will be understandably strong in modern times of stress. But if you desire to endure any storm, you must remain the course.

In sum, listen to the market, not the mass media reports. Develop what I name a “safety-net strategy,” where the impact of human race events is diminished, yet those events never order your strategy. Such a strategy assesses existent instead of perceived hazards in the market. In future columns, I’ll be sharing what those existent hazards are and how to make a safety-net strategy that volition give you safe seaport in any economical climate.

What I Learned About Money from Million Dollar Baby

In Clint Eastwood’s award-winning movie, Million Dollar Baby, we see a positive, respectable, hard-working immature adult female physically destroyed when her dirty-dealing opposing lands a chump poke after the bell.

It happens to me that the same thing can go on with investments. The admirable combatant inside you seeks to do your financial dreamings come up true. That’s the interior voice that states you to work hard and put smart. Your opposition is the portion of you ruled by your emotions. Those emotions look for every chance to set down a chump poke and convey you down.

When I first met Bill, for example, he was deserving $10,000,000, yet he was miserable. Because he’d grown up during the depression, he was convinced that he was always one measure away from being broke, hungry and homeless. Keep in head that Bill was taking only $150,000 a twelvemonth from his $10 million nest egg. If you make the math, you’ll see that his backdown rate was barely 1.5%. So Bill really didn’t have got to worry about money … but he worried anyway, and he was ruled by his fearfulness and greed.

Because Bill was convinced that he was going to run out of money, he continued to do high-risk investments in the hopes of having more. He often lost a great deal of money with these chancy ventures, and this behaviour made his fearfulness a self-fulfilling prophecy. As his losings grew, his emotional need to do up for those losings grew, too. He took ever-greater risks and continued to delve himself into a suffering hole. It was a classic emotional smack-down.

Others dance the antonym direction. People who endure great investing losings understandably go gun-shy. They are afraid of getting pounded again, so they curse off investing forever—and lose out on securing their financial future.

Are your emotions whipping up your investments? Bash you take risky opportunities for no good reason? Or is your anxiousness making you afraid to come up out of your corner fighting? Let me state you something. In the sphere of investments, your emotions are always in the dorsum room workings the velocity bag just waiting for the opportunity to flooring you. You need an edge if you desire to remain in the ring.

How would you like to have got the financial equivalent of Elijah Muhammad Muhammad Ali as your trainer? Here are a few tips that tin give you that sort of an edge.

First, acknowledge that you’ll never totally eliminate emotions from your financial decisions. You can’t knocking them out. Second, cognize that you can neutralize them.

How? Remember the trainer’s advice: Always protect yourself.

One manner to maintain your guard up is to utilize stop-losses on all your investments. If you’re not familiar with A stop-loss, it’s a simple tool you utilize to reduce risk. Let’s state you purchase a stock at $50, and you are convinced the stock is going to $80. Put a halt of $45 on the position. If the stock travels all the way, the halt doesn’t ache you. But if you’re wrong, and the stock hits the mat, the stop-loss goes very important.

Once the stock driblets to a terms of $45 or less, the place is sold. What haps if the stock later regenerates its strength and climb ups back to $80? Too bad. You sold at $45, and you no longer throw the position. This is the downside to using stop-loss orders.

What haps if the stock goes on its downward spiral and falls to $15? You don’t care because you sold the place at $45. Could this happen? It haps every day. Just inquire people who bought technical school pillory in the early portion of 2000.

You can effectively utilize stop-loss orders to restrict your downside hazard on all your stock and common monetary fund investments. If you make this, you’ll be able to travel the 10 units of ammunition without getting knocked cockamamie by your emotions.

The Dangers of Buying and Holding

Maggie and Sam called my office last week, and I could hear the desperation in their voices. They’ve lost more than $1 million in the stock market since 2000 by “investing conservatively.” Their broker assures them that buying high-quality mutual funds and holding onto them through rough markets will grow their money safely. Yet they can plainly see it isn’t working. In fact, they’ve watched a serious decline for a while now, and they’re starting to panic.

Their problem is not earning money to fund their retirement dreams. Both Maggie and Sam are smart and successful: She is a heart surgeon and he is a well-heeled attorney. Yet they’ve lost a fortune, and they can see that no matter how much they earn, it can’t possibly offset the damage done by listening to the advice of their broker, so they’ve turned to me to stop the bleeding.

These two aren’t the only intelligent, affluent investors I’ve met who are frustrated and frightened by their investment results, and 2000 wasn’t the only bear market investors had to face. Based on 60 years of evidence, a bear market ravages investors every 3.3 years, and the average loss is 27%. That’s enough to scare anyone. According to AARP, 35% of all retirees go back to work after they retire. Could it be because the market cracks and scrambles their nest eggs?

I’m reminded of my Uncle Jim, who wouldn’t listen to me and retired in 1999 with $700,000. His plan was to create income from his retirement package and to live happily ever after. Interest rates were too low for Jim, so he decided to invest in growth mutual funds to create the income he wanted. By the end of 2002, his $700,000 had dropped to less than $400,000 thanks to an inhospitable market. His savings had lost 43% of its value. Then, instead of $700,000 working for him, he had $400,000 working for him. That meant less income--a lot less income. Faced with this disturbing reality, Jim sold his beautiful home to buy a small condo and had to go back to work. Jim didn’t have 70 years to “think long-term” as his broker and other financial “experts” suggested he should. Jim needed that income today.

What can Jim, Sam, Maggie and everyone else do to protect themselves from catastrophic loss in the future? Since we know that a crash comes every 3.3 years on average and the typical loss is over 27%, it is critical for investors to invest only when the risks of doing so are relatively low.

Of course whenever you invest in the stock market you take on risk. However, we know that certain times are riskier than others. Just as you check the weather forecast before you embark on a road trip, I’m suggesting that you check the market’s temperature before you hit the financial road.

There are a number of ways you can do this. The method I like best is watching the major indices, such as the Dow, S&P 500 and the NASDQ. Here are the specific steps:

1. I look for days when the volume explodes. For example, if the DOW trades 2 billion shares on average, and today the DOW trades 2.2 billion shares, that is a significant increase in shares.

2. When that happens, I pay attention to what happens to the price of the index. Continuing our example, if the DOW closes higher today to boot, I know that large institutions are falling over themselves trying to buy shares, which means prices are moving up.

3. We know that one sign of a healthy market is a big increase in shares traded, coupled with the index moving higher. In fact, there has never been a bull market stampede without a big increase in trading along with an increase in the index price. If I see two or more of these strong days, I’m more prone to invest.

I strongly suggest that you watch the major indices for clues on the market’s health before you invest. I’ll be providing more specific tips on how you can “take the market’s temperature” next month, most notably how you know when it’s time to stop holding and sell.

Top 10 Ways to Avoid Loan Fraud

Every year, misinformed homebuyers, often first-time purchasers or seniors, go victims of predatory lending or loan fraud. Below you'll happen the top 10 ways to avoid becoming a victim yourself.

1. Take your clip and store around. You should be able to compare terms and houses. If a lender or broker states you they are your lone opportunity to get a loan or owning a home, don't make business with them.

2. Bash not subscribe a sales contract or loan written documents that are clean or that incorporate information which is not true.

3. Be certain that the costs and loan terms at shutting are what you originally agreed to.

4. Bash not be talked into lying about prevarication about your income, expenses, or cash available for downpayments in order to get a loan.

5. Watch out for higher-risk loans such as as balloon loans, interest only payments, and steep pre-payment penalties.

6. Be careful about disclosing things like your need of cash owed to medical, unemployment or debt problems. You are very vulnerable in these cases.

7. Don't deprive your home's equity by refinancing again and again when there is no benefit to you.

8. Beware of false appraisals.

9. Bash not allow anyone convert you to borrow more than money than you cognize you can afford to repay. If you get behind on your payments, you set on the line losing your house and all of the money you put into your property.

10. Get respective quotes from multiple brokers or lenders so you cognize you're being charged a just interest rate based on your credit history, not your race or national origin.

How To Be the Ultimate American Consumer

Feel like a lemming lately? Ready to follow the crowd into the great plunge of Ultimate American Consumerism? Just in lawsuit you need a small help, here is a tongue-in-cheek look at how to go on the procedure of becoming the Ultimate American Consumer!

1. Always pass right at the degree of your after-tax earnings. Having surplus dollars is troublesome. It’s hard to cognize exactly what to make with them.

2. Forget having 3, 6, or even 12 calendar months of basic life disbursals tucked into a liquid account such as as a money market or CD. Why bother?

3. Purchase repeatedly, often, and preferably on credit, points that rapidly depreciate such as as cars and consumer goods. Why wage all cash for something when you can utilize OPM (Other People’s Money)?

4. Keep at least $7,000 to $12,000 of rotating credit card debt – preferably on shop credit cards – and avoid reading the monthly statements.

5. Eventually rotating debt goes a spot of a burden. Once that happens, take out a Home Equity Line Of Credit (HELOC) to relieve monthly payments.

6. Seek out, and take advantage of get-rich-quick opportunities. They offer simple, easy wealthiness accretion programs – with small effort, of course. Leave honorable hard work to others. They don’t cognize any better.

7. Spend at least one-half of your allowable individual retirement account part each twelvemonth on Christmastide and holidays, preferably on credit.

8. If you have got an investing or plus plan, don’t reappraisal it too often. This tin be tedious, deadening and rather dull. Once every 6-10 old age should be fine.

9. Where possible, avoid the toilsome undertaking of creating plus accretion strategies. Instead, have got more than dinners out with friends, or merriment vacations. After all, you only travel around once!

10. Invest in insurance. Wrap yourself in insurance protection from disability, death, dismemberment, accident and sick wellness – you just never cognize when you’ll need it. See your pets as well!

11. Only purchase new automobiles for their quality and reliability. Used vehicles can cost as much as $150/ calendar month in long term average maintenance.

12. Regular financial program setting? Don’t make it!

13. If you have got a home mortgage, refinance every couple of old age to capitalize on low rates. Just think, you too can have got your house for 20 old age – and still have 20 to 25 old age remaining on whatever debt is there at the time.

14. Don’t trouble oneself with financial managers and truly nonsubjective advisors. They may help you with your money plans, but those nosy-parkers should happen something better to do.

These 14 stairway are a certain manner to attain the rank of “Ultimate American Consumer”. Along with the title, you will harvest all the privileges and benefits that this provides. All the best in your quest!