how to get rich young

Ask the Expert: Saving in the Fast Lane of High Yields

2009-10-30T06:37:00.000-07:00

by Walter Updegrave
Thursday, September 20, 2007provided by

Question: People are often advised to keep emergency funds in a secure investment vehicle that's highly liquid, like Treasury bills or a money-market fund. But wouldn't it make more sense to invest emergency funds in a higher yielding asset class, use a home equity line of credit for financial emergencies and then sell off some of the higher yielding assets in the emergency fund to repay the line of credit? - Dale, Charleston West Virginia
Answer: This is one of those strategies that comes off flawlessly in theory and may very well work in real life too - except when it doesn't.
And, unfortunately, the times when it doesn't work well are the very times when you will most likely really need the security of a bona fide safety net. To give you a sense of what I mean, let's do a little thought experiment.

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Reaching the $5 Million Club Takes an Open Mind

2009-10-27T06:35:00.000-07:00

by Anne Kadet
Monday, May 14, 2007provided by

The Old Saying is true: The rich are different. But not only do their values and habits set them apart from the hoi polloi, they're different from their wealthy predecessors of a generation ago. For those interested in joining their ranks, it helps to understand why.
To enter the nation's top 1%, you need more than $5 million. And if you get there, you'll have plenty of newly-arrived company: The number of U.S. "pentamillionaires" has quadrupled in the past 10 years, to more than 930,000. Indeed, 70% of the nation's big family fortunes are less than 13 years old, according to research and marketing firm The Harrison Group. And the people who amassed them are, first and foremost, entrepreneurs — risk takers for whom wealth is a byproduct of pursuing their passion.

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Digging Out

2009-10-25T06:34:00.000-07:00

by Tom Herman
Sunday, July 1, 2007provided by

How do you know whether you need to spend more time getting your financial affairs organized?
Answer: When a professional organizer sends you her latest book on the topic -- and you lose it before you get a chance to open it.
That's what happened to me recently, much to the amusement of several colleagues who sit near the mountains of books, papers, magazines, notepads, umbrellas, coffee cups and tax publications lying around my work space and spilling out of more than a dozen file cabinet drawers. One friend politely informed me I don't really need an expert organizer. I need an archaeologist.

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Lucky 13 Savings Strategies

2009-10-22T06:33:00.000-07:00

by Cheryl Allebrand
Thursday, August 16, 2007provided by

Saving for emergencies doesn't have to be about painful cutbacks or Draconian spending measures. Sometimes we get so focused on where we're going to find extra money that we forget the easy pickings are in setting up good savings strategies. Follow these 13 tips to save money without even trying.

Sure-fire emergency fund builders

1.	Autopilot saving and bill pay
2.	After paying off debt, keep paying yourself
3.	Enforce 24-hour rule on impulse buys
4.	Leave the credit cards at home
5.	Plan ahead, budget for fun
6.	Make things 'interest'-ing
7.	Learn to save short-term splurges
8.	Reward yourself
9.	Remove the temptation
10.	Treat it like a friend
11.	Keep them separated
12.	Enjoy compounding for a change
13.	Treat it like taxes

Cutting the Financial Umbilical Cord

2009-10-18T06:31:00.000-07:00

by Erin Burt
Friday, September 21, 2007provided by

You have your own apartment. Your own paycheck. You may even have your own spouse and children. So why do your parents still prepare your taxes, balance your checkbook or manage your investments?
Isn't it about time you grew up?

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20 Timeless Money Rules

2009-10-16T06:29:00.000-07:00

by Carla Fried
Thursday, August 23, 2007provided by

Money Magazine collected the best advice from some of the smartest investors (and other people) who have ever lived.
1. Be humble
When you do not know a thing, to allow that you do not know it--this is knowledge.
--Confucius
Investing is a big bet on an unknowable future. The mark of wisdom is accepting just how unknowable it is. Granted, that's not easy. Our brains are built to think the future will be like the near past. And we're too ready to act on the predictions of pundits, who are no more clued in than we are about what lies ahead.

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Beat Back 5 Financial Fears

2009-10-14T06:28:00.000-07:00

by Jeanne Sahadi
Friday, August 24, 2007provided by

Everyone's got concerns when it comes to money, but some have fears that can really put a big hole in their financial future. Here's how to overcome five common ones.
1. Fear of coming clean with your partner
You know it's bad. So bad you'd really rather keep it to yourself. Why, you figure, ruin your partner's day with news of your mounting debt or the fact that you've been living off your savings?

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Thirty-Five Minutes to Riches

2009-10-09T06:27:00.000-07:00

by Asa Fitch, Amanda Gengler, Josh Hyatt, and Ismat Sarah Mangla
Friday, September 14, 2007provided by

Find out your credit score
Time it takes: 7 minutes
Know how lenders see you. Take seven minutes to download a free credit report at annualcreditreport.com. (For year-round monitoring, get a report from one of the three major credit bureaus every four months.) If you spot an error, notify the bureau (online, by phone or by mail) and the creditor (call and also send a letter). You won't find your credit score here, so when you request a report from Equifax, pay $7.95 for your FICO score, the most commonly used score. The range is 300 to 850 - 700 and above is good.

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Wealth Defense: The Biggest Threat to Your Money

2009-10-08T06:26:00.000-07:00

by Mary Dalrymple
Friday, September 21, 2007provided by

What's one of the most ruinous and underrated things that can rob you of money over your lifetime? Neglect.
You know what I'm talking about. Picture this scene: You're at your 6-year-old's soccer game, chasing your 3-year-old out onto the field. Your boss calls your cell phone with an emergency complaint from a client, and in the middle of this crisis, your mom tries to break in on call-waiting to complain -- again -- about your sister's boyfriend. Meanwhile, in the back of your head, a little voice asks: "Should I have refinanced my home mortgage to get a lower rate?"

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Giving Makes You Rich

2009-10-06T06:24:00.000-07:00

by Arthur C. Brooks
Thursday, November 1, 2007

provided by

In John Bunyan’s 1684 classic The Pilgrim’s Progress, the character Old Honest poses this riddle to the innkeeper Gaius: “A man there was, tho’ some did count him mad, / The more he cast away, the more he had.” Gaius solves the riddle thus: “He that bestows his Goods upon the Poor / Shall have as much again, and ten times more.”
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Millionaires Focus on Freedom

2009-10-05T06:23:00.000-07:00

by Jay MacDonald
Monday, October 29, 2007provided by

Want to get to the top financially? Take advice from those who are already there.

At a glance

Name: Keith Cameron Smith
Hometown: Ormond Beach, Fla.
Education: Calvary Christian Academy, Ormond Beach, Fla.

Career highlights:

Author of the national best-seller, "The Spiritual Millionaire" and "The Top 10 Distinctions Between Millionaires and the Middle Class"
Entrepreneur and self-made millionaire at age 33
Hosted "Flames of Truth," a motivational radio program, for five years
Hosts seminars and teaches success principles to individuals, churches and companies across America

Financial guru Keith Cameron Smith, author of the best-selling "The Spiritual Millionaire" and himself a self-made millionaire at age 33, invested $100,000 and two years of his life to meet face-to-face with some of the world's wealthiest people to learn what makes them tick.

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Money Lessons From the Boob Tube

2009-09-30T05:48:00.000-07:00

by Geoff Williams
Thursday, March 20, 2008provided by

It's no secret that you can learn something about the way money works by watching television programs like "Power Lunch," on CNBC, and "Money for Breakfast," on FOX Business. But for those of us who don't read stock quotes and fund prospectuses for fun, watching those shows can feel like work. Sometimes, you want to just sit back and watch Andy and Barney outwit some small-town crooks and not think too hard.
Fortunately, if you want to enjoy a fun sitcom or a trashy reality show and still learn how to make money, you can. You just have to watch them with a slightly different mind-set.
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Budgeting is a Snap, Online

2009-09-27T05:42:00.000-07:00

by Selena Maranjian
Sunday, October 1, 2006

Q. Where can I find a worksheet to help me with my budgeting?

A. There are plenty online. Here are a few sources which offer worksheets:

Kiplinger.com budgeting worksheet
Houseclicks worksheet (there are four pages -- click over to the other three)
State of Vermont Department of Education and Training worksheet
The Department of Education -- aimed at students and new ex-students
About.com's Budget Zone

Note that with some, you'll need to already have a good handle on how much you're spending on various categories. Others can help you work through thinking about how much you spend. For some guidance on how to go about tracking your expenses, check out this article.

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Five Ways to Avoid Holiday Overspending

2009-09-24T05:46:00.000-07:00

To you, it may be the holiday season. To me, it's the danger season.
I'm talking about the five weeks between Thanksgiving and Christmas, when 20 percent of our country's annual retail spending occurs. Jamming one-fifth of our spending into a frenzied window of shopping time can lead to some ugly financial results: A whole lot of bills we have no way of paying off come January.
If you really want to put the joy back into your holiday season, focus on how you can avoid ripping yourself off. Spending money you don't have is one self-inflicted scam you can -- and should -- protect yourself from.
Here are five ways to avoid holiday overspending:
1. Double the cost of anything you buy with a credit card and don't intend to pay off when the bill comes next month.
The absolute worst move you can make is to charge gifts on a credit card you can't afford to pay off. If you run up a $1,000 balance this holiday season -- and that's close to the forecast of average individual spending -- and you intend to pay it off slowly each month by making minimum payments, your interest charges will total around $1,000 if your card has an 18 percent rate.
In other words, your total gift spending will double. That's just financially irresponsible.
2. Disorganization will cost you big-time.
I'm typically not a huge fan of budgets, but come holiday season I think giving yourself a written-in-stone budget is a must. Before you spend one penny on gifts, create a master list of every person you intend to give a gift to this year. Then figure out a reasonable total dollar amount you can afford to spend on gifts this year.
Every time you make a gift purchase, record it in your budget list: how much you spend, who the gift is for, and how much money is left in the budget. Don't skip the "who" part; we've all been stuck with more presents for someone than we anticipated simply because we forgot about the one we bought last week or last month. Keep track.
Keep that list nearby at all times -- at the mall, or next to your computer when you're shopping online. And wherever and whenever you're gift shopping, make sure it's for a specific person on your list; stay focused so you can stay under budget.
Let's be clear: if you have an unpaid balance on a credit card with a high interest rate right now, your gift-giving budget is zero. I don't care how Grinch-like that seems. What right do you have to spend money on gifts when the fact is that you're walking around with expensive debt?
That doesn't mean you can't give gifts -- you just shouldn't spend money on them. Get creative. Offer to look after your friends' kids for two Saturday nights so that they can enjoy time together on a date while you baby-sit for free. Or invite friends over for a lovely holiday dinner. Or, if you have friends who are big on house projects, tell them you would love to lend a hand and a hammer to their renovation projects.

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Launch Your Financial Life With Just a Few Bucks

2009-09-21T05:43:00.000-07:00

by Jonathan Clements
Wednesday, December 20, 2006
Maybe you're nervous about the financial markets and looking to start small. Maybe you're aiming to help your children or grandchildren make their first investment. Maybe you're just out of college, with precious little cash to spare.

True, many brokerage firms and mutual funds now demand $2,000 or $3,000 to open an account. But you can get started with far less.

Getting your share

Even if you don't have much to invest, you still want to be diversified, spreading your money across three key sectors: U.S. stocks, foreign shares and high-quality bonds.

But how can you get that sort of mix for a few hundred dollars? Consider buying exchange-traded index funds, or ETFs, through one of the low-cost Internet stock-purchasing services, such as www.buyandhold.com, www.foliofn.com, www.mystockfund.com and www.sharebuilder.com.

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How to Spend Less -- and Get More Joy from It

2009-09-17T05:40:00.000-07:00

by Laura Rowley

udging by the blast of e-mails that greeted my last column, many people are thinking about the U.S. savings rate. Some agree that Americans are overleveraged and saving too little. Others argue vociferously that the government's calculation is outdated and inadequate, and the savings rate is actually higher than it appears. Whatever the exact level of debt, most Americans will likely benefit from stashing away more cash. How can you maximize your savings?
The only effective way is to know exactly how much money is coming in and going out. Not only can this key piece of information help you save more, it can also reveal whether you're shelling out for things that aren't very meaningful to you. If so, you can spend smarter by using your money for things that will give you more happiness.
Fixed Expenses vs. Fun Money
Start by writing down your monthly take-home pay, after tax, plus any other income, and tracking your expenses for 30 days. Note down all your expenditures -- see the more comprehensive instructions for recording your expenses at the end of this article. At the end of the month, separate each expense into one of the spending categories listed on the next page.
Now total the amount you spent on each category. Then, separate the categories into two groups: Fixed Expenses or Fun Money. Fixed expenses are necessities such as housing, food, heat, and transportation. These can be tweaked -- you can get a roommate to share the rent, wear your coat indoors to cut the power bill, skateboard to work instead of driving. But you have to spend something on your fixed expenses. Fun money is everything else.
Add up your fixed costs and calculate what percentage of your spending is going to life's necessities (instructions on how to do so below). Now look for ways to close these spending sinkholes:
Improve planning: Late fees and fast food bought on the run can be budget killers. Move to paying your bills online to eliminate late fees; consider joining a grocery delivery service such as Peapod to reduce fast-food buys. Cut back on fixed expenses such as gasoline by visiting GasPriceWatch.com or GasBuddy.com before you fill up.
Address fixed-expenses creep: At least once a year, shop around for a better deal on phone service, auto insurance, and homeowners insurance. Check out sites such as LowerMyBills.com for competitive offers.
Keep on top of maintenance: I bought my first car for $300 in college and blew out the engine two weeks later because I didn't realize when the "oil" light went on, you really have to pour a little Pennzoil in there, pronto! Keep your car engine tuned and tires inflated to the proper pressure and save up to $100 a year on gasoline.
Was the Spending Worth It?
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Six Money Dilemmas

2009-09-15T05:34:00.000-07:00

by Janice Revell
Monday, December 17, 2007provided by

As you invest your money, shop for a home or tackle any one of the many financial decisions you have to make over your lifetime, do you sometimes wish you'd paid more attention in math class? Do you find yourself having to "run the numbers" and wondering how?
To help, we've taken six common financial quandaries and done the math for you. As you'll see, the solution isn't always black and white, and the "right" answer may depend on things that you can never know for sure, like your tax bracket in 2020 or how much your investments will grow.
Plus, at times emotional considerations may tip the balance. Even if the math favors buying stocks over prepaying your mortgage, say, you may simply sleep better being out of debt. So this guide will walk you through the caveats as well as the calculations. Use it to navigate some of your financial life's trickiest questions and come up with your best call.

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The Couch-Potato Guide to Budgeting

2009-09-11T05:38:00.000-07:00

by Dayana Yochim
Wednesday, December 20, 2006provided by

A survey last year by FindLaw.com found that 61% of Americans surveyed either don't have or don't stick to their budget.

Slackers? Hardly. Have you ever tried to stick to a budget?

If you have or haven't (hey, no one's judging here), read on for a streamlined cash flow control plan that even couch potatoes like me can follow.

Cash flow crash course Our Couch Potato Budget concentrates on everyday spending. We're leaving out housing, insurance, and the all-important savings categories for now.

Step 1: Get a snapshot of your spending Wondering where all the money goes? If your credit card company tracks your spending, you can ask Mrs. Mastercard and Visa for an annual spending recap. Your annual (or even monthly) statement can provide raw data for your cash flow reconnaissance. However, make sure you're sitting down when you review the color-coded pie charts. There can be some shockers, like seeing 54.64% of your expenditures attributed to "merchandise/retail." (Yes, this is based on personal experience)

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Where Did My Money Go? It's Mystery Spending

2009-09-08T05:36:00.000-07:00

by Jennifer Waters
Friday, September 28, 2007provided by

Turns out money really does burn a hole in our pockets.
In fact, according to a recent study by Visa USA, nearly half of all Americans "lose" $2,340 in cash each year. And 48% of those who use cash said they don't know what happened to more than one-third of it -- or about $45 of every $120 spent in a typical week.
The money's not actually misplaced, just inexplicably frittered away. Wayne Best, senior vice president at Visa, calls it "mystery spending."

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Managing Debt and Credit

2009-09-05T05:13:00.000-07:00

Avoiding credit card overload increases your opportunities to save and invest for important goals.

Credit was once defined as "Man's Confidence in Man." But in fact, the definition of credit today is more like "Man's Confidence in Himself." Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.
Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.
What is the balance between using credit wisely and staying out of overwhelming debt? Let's look at the facts and some pros and cons.
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Debt comes in many forms, and most types help us in our daily lives -- when used responsibly. Most people cannot buy a home without some financial help, and many cannot buy a car (especially a new one) without some sort of financing. The money borrowed to purchase large-ticket items is called installment debt: The debtor pays a portion of the total at regular intervals over a specified period of time. At the end of that time period, the loan with interest is paid off.
Installment debt allows you to purchase items at a competitive interest rate: for example, 5% to 7% for a 30-year home mortgage and 8% or 9% for a car loan. The loan is paid back on an amortizing schedule, monthly payments of a fixed amount that remain constant over the life of the loan. At first, most of the monthly payment consists of interest. In later years, principal begins to be paid down.

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Yes, You CAN Get Out of Debt

2009-09-02T05:10:00.000-07:00

Are you carrying too much debt? Find out if you are, and learn ways to reduce your debt.

In America today, carrying some debt is unavoidable, and even desirable, for most households. But between mortgages, car payments, and credit cards, many Americans find themselves over their heads -- unable to dig out from under a growing debt burden that consumes an ever growing portion of their resources.
The average U.S. household now has credit card debt of more than $9,300. Credit card companies have made running up that balance deceptively convenient. What's lost when you're on that spending spree is the realization that paying off your debt can be costly, in terms of both cash on hand and your overall financial health.
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How much debt is too much? The figure varies from person to person, but in general, if more than 20% of your take-home pay goes to finance nonhousing debt or if your rent or mortgage payments exceed 30% of your monthly take-home pay, you may be overextended.
Other signs of overextension include not knowing how much you owe, constantly paying the minimum balance due on credit cards (or worse, being unable to make the minimum payments), and borrowing from one lender to pay another.
If you find that you're overextended, don't panic. There are a number of steps you can follow to eliminate that debt and get yourself back on track. Working your way out of debt will, of course, require you to adjust your spending habits and perhaps be more judicious in your spending.
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Put Savings (and Yourself) First With a Budget

2009-08-31T05:06:00.000-07:00

Personal savings have reached record lows, yet saving is essential to ensure a comfortable future. Learn how to track monthly expenses with a budget and potentially free up cash for saving.

Where does that money go? America, it seems, is in the midst of a savings crisis. Personal savings rates have dropped in recent years and remain low by historical standards as many people continue to spend beyond their means.
If you're among those Americans who can't seem to save, it might be time to create a budget. A budget allows you to understand where the money goes and may help you free up cash for important savings goals, such as college and retirement.
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Setting up a budget will require some work, but the benefits more than offset the time invested. How you create your budget is up to you. You may choose a piece of financial planning software, such as Microsoft Money or Quicken, or you may choose the paper and pencil route. The above worksheet is a simple yet inclusive budget that you can use to get started.
The first element of any budget is your income, or how much money you receive each month. This can include paychecks, legal settlements, alimony, royalties, fees, and dividends from investments that you do not reinvest. Once you know what your monthly income is, you can use a budget to make sure you don't spend more than you earn, thus helping to reduce debt and freeing up cash for savings.
Next, you need to know how you spend your money. Start by tracking your spending for a month. Gather bills and receipts, and don't forget to include newspapers from the corner store and trips to the soda machine. Don't assume any expense is too small to record.
Write down your expenses and break them into categories. Using the budget worksheet as an example, we find Fixed Committed Expenses -- mortgage, loan, and insurance payments that stay the same from month to month; Other Committed Expenses -- things you can't live without, like food, utilities, and clothing; and Discretionary Expenses -- things you like but don't necessarily need.
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Once you know where the money goes, it's time to analyze your expenses. There probably isn't much you can do about Fixed Committed Expenses without moving or getting rid of the family car. However, if these expenses are greater than your monthly income, you are probably carrying too much debt to effectively save.

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Starting Out: Begin Funding for Your Financial Security

2009-08-30T05:08:00.000-07:00

An overview of financial planning geared toward young people just entering the workforce. The importance of saving for the future will be stressed, and tips on budgeting, insurance, and paying off student loans will be offered.

Congratulations! You've graduated from school and landed a job. Your salary, however, is limited, and you don't have much money (if any) left at the end of the month. So where can you find money to save? And, once you find it, where should this cash go?

Here are some ways to help free up the money you need for current expenses, financial protection, and future investments -- all without pushing the panic button.
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For most young adults, paying down debt is the first step toward freeing up cash for the financial protection they need. If you're spending more than you make, think about areas where you can cut back. Don't rule out getting a less expensive apartment, roommates, or trading in a more expensive car for a secondhand model. Other expenses that could be trimmed include dining out, entertainment, and vacations.

If you owe balances on high-rate credit cards, look into obtaining a low-interest credit card or bank loan and transferring your existing balances. Then plan to pay as much as you can each month to reduce the total balance, and try to avoid adding new charges.

If you have student loans, there's also help to make paying them back easier. You may be eligible to reduce these payments if you qualify for the Federal Direct Consolidation Loan program. Though the program would lengthen the payment time somewhat, it could also free up extra cash each month to apply to your higher-interest consumer debt. The program can be reached at (800) 557-7392.
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How would you pay the bills if your paychecks suddenly stopped? That's when you turn to insurance and personal savings -- two items you should "buy" before considering future big-ticket purchases.

Health insurance is your first priority, as hospital stays can be extremely costly. If you're not covered under a group plan, see if you can join any trade associations, which often offer group-rate policies. Otherwise, start obtaining quotes on individual policies by calling the major insurers in your state.

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Here's a Switch: Americans Who Don't Spend

2009-08-25T05:02:00.000-07:00

Here's a Switch: Americans Who Don't Spend

by Jennifer Waters
Monday, July 20, 2009provided by

CHICAGO (MarketWatch) -- Grace Case hasn't used a credit card in more than two years. She's given up her cell phone, buying new clothes and toys on a whim, getting her hair colored every month, making big-ticket purchases until they're absolutely needed and going to concerts -- her and her husband's favorite form of entertainment.
She shops garage sales, uses coupons and never finds her fridge full of leftovers because she stretches every meal she makes.
Her 3-year-old daughter Emily plays with toys that were bought for 10-year-old Adam when he was a toddler. She grows many of her own vegetables, buys meat in bulk and carpools to work.
"I'm just managing my budget within the parameters of what I have," she said.
Her frugality was forced upon her when the Fulton, N.Y., accountant lost a $60,000 a year salary in 2006 and faced the frightening truth that she was unemployed with $41,000 of credit-card debt, two car payments and a mortgage that her husband's machinist salary alone couldn't cover.
"I didn't really pay attention to my debt," she said. "I always thought that I would pay it off later. But later came a lot sooner than I had planned."
Cash-Only Lifestyle
She's now in year two of a five-year program to be debt-free and is living on cash only. But here's the catch: When all the balances have been cleared and her savings is back to what she would consider a comfortable level, Case, 38, said she will not change the way she lives.

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When to dump a fund

2009-06-25T16:37:00.000-07:00

1) Your fund is a persistent loser
The mere fact that a fund has low returns or even losses isn't a good reason to sell. If the overall market is down, or the specific sector your fund invests in is out of favor, you can't expect your fund manager to be a miracle worker. But if you own a fund that trails similar funds for two years by a substantial margin - say, 2 percentage points or more - think about moving on.
2) The fund's investment strategy has changed
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Guidelines for choosing stock funds

2009-06-11T16:28:00.000-07:00

In-depth mutual fund information is widely available, either from the funds themselves or third-party ratings companies like Morningstar. Here are some things to look out for:
1) Opt for funds with low expenses
Fund expenses directly reduce your returns, so you'll increase your odds of success by avoiding funds with bloated expense ratios; that's the annual cost, divided by your investment.
2) Look for consistency of style

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Different types of stock funds

2009-06-08T16:24:00.000-07:00

When searching for stock mutual funds, you're going to run into all sorts of names and categories. They are usually pretty broad and sometimes misleading, but at least they give you an idea of what you are getting yourself into.
Here are some of the most common categories and sub-categories.

Value funds

Value fund managers look for stocks that they think are cheap on the basis of earnings power (which means they often have low price/earnings ratios) or the value of their underlying assets (which means they often have relatively low price/book ratios).
Large-cap value managers typically look for big battered behemoths whose shares are selling at discounted prices. Often these managers have to hang on for a long time before their picks pan out.
Small-cap value managers typically bottom fish for small companies (usually ones with market value of less than $1 billion) that have been shunned or beaten down by other investors.

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money 101: investing in mutual funds

2009-06-05T16:20:00.000-07:00

1. What exactly is a mutual fund?
A mutual fund pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities, according to its charter. Each investor in the fund gets a slice of the total pie.
2. Mutual funds make it easy to diversify.
Most funds require only moderate minimum investments, from a few hundred to a few thousand dollars, enabling investors to construct a diversified portfolio much more cheaply than they could on their own.
3. There are many kinds of stock funds.
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Five Questions to Ask Before Buying a Mutual Fund

2009-06-02T16:13:00.000-07:00

You may feel intimidated by the task of picking a mutual fund. With more than 15,000 funds to choose from, it's tempting to buy a magazine or visit a Web site that will tell you exactly which funds you should buy, or to just pick the fund that's topping the performance charts.
These aren't the best ways to find the fund that will meet your goals or suit your investment personality, however. The next section will give you a better idea of how to approach the vast marketplace for mutual funds and will introduce five questions that you need to ask and answer before buying any stock fund.

How has it performed?

How risky has it been?

What does it own?

Who runs it?

What does it cost?

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How to Choose a Mutual Fund

2009-05-30T16:11:00.000-07:00

he average mutual fund investor tends to fare significantly worse than the average mutual fund. How so? Well investors tend to let their emotions get the best of them – and dash in and out of funds at precisely the wrong moments. You know how it goes -- you want to buy when the market is hot and sell when it’s going to pieces. If you simply create a well-diversified portfolio of stock and bond funds and left them alone, you’d be much better off.

As long as you do your homework upfront…

Everyone’s tempted to base their fund buying decision on a fund’s performance, but that shouldn’t be the only factor you consider. Today’s star performer could easily become tomorrow’s laggard. Here are some guidelines:

1.) Fit. To get started with mutual funds, you need to figure out what mix of stocks and bond funds best suits your objectives. The right mix depends on how long you’re going to invest your money for and how much risk you like to take on. Check out this asset allocation calculator which helps you figure out what types of investments you should make. Once you figure out your strategy, you’re ready to evaluate which particular funds will help you achieve its goals.

2.) Index Funds versus Active Funds. Consider whether you’re comfortable using index funds or whether you want to use actively managed funds.
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What Is The Difference Between Active and Passive Investing? Which Performs Better: Active Investing of Passive Investing?

2009-05-25T16:07:00.000-07:00

Think of the difference between active and passive investing like the difference between the actions of one individual vs. the actions of a group as a whole.
For example, statistics tell us that women live longer than men. That’s a fact, and as long as we look at all women, compared to all men, it holds true. But suppose you were trying to pick out just the men who will outlive most women? Would you be willing to bet your money on your ability to choose right?

Passive Captures the Return of an Entire Market

When you take this analogy, and apply it to investing, first you look at the entire market of available stocks. A passive investor wants to own all the stocks, because they know as a whole, over long periods of time, what return they will get from the investing in the entire stock market.

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If You Cant Beat em, Join em Beginner's Strategy: Investing in Low-Cost Index Funds

2009-05-20T16:06:00.000-07:00

According to the folks at the Motley Fool, only ten of the ten thousand actively managed mutual funds available managed to beat the S&P 500 consistently over the course of the past ten years. History tells us that very few, if any, of these funds will manage the same feat in the decade to come. The lesson is simple; unless you are convinced you are capable of selecting the 0.001% of mutual funds that are going to beat the broad market, you would best be served by investing in the market itself. How? By beginning a dollar cost averaging plan into low-cost index funds, you can be absolutely certain you will out perform a majority of managed mutual funds on a long-term basis. Indeed, the most successful investor in history, Warren Buffett, advocates that those unwilling or unable to intelligently evaluate individual stocks should invest in a low-cost index fund such as those offered by Vanguard. Why? Index funds boast three distinct advantages over their actively-managed counterparts:

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The Power of Automatic Investing

2009-05-17T16:03:00.000-07:00

One of the easiest and most efficient ways to invest in mutual funds is through automatic investing. Utilizing the process of dollar-cost averaging, automatic investing is a simple term for a type of mutual fund installment-purchase plan and is one of the best ways to grow your investment over time.

In an automatic investing plan, you agree to automatically invest a specific amount of money each month in the same mutual fund. Many companies allow you to participate in an automatic investment plan for as little as $50 per month. Find funds for $50 or less with the Fund Selector.

The chart illustrates how dollar-cost averaging through automatic investing can work for you.

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Dollar Cost Averaging A Technique that Drastically Reduces Market Risk

2009-05-09T15:58:00.000-07:00

Dollar cost averaging is a technique designed to reduce market risk through the systematic purchase of securities at predetermined intervals and set amounts. Many successful investors already practice without realizing it. Many others could save themselves a lot of time, effort and money by beginning a plan. In this article, you will learn the three steps to beginning a dollar cost averaging plan, look at concrete examples of how it can lower an investor’s cost basis, and discover how it reduces risk.

Dollar Cost Averaging: What is It?

Instead of investing assets in a lump sum, the investor works his way into a position by slowly buying smaller amounts over a longer period of time. This spreads the cost basis out over several years, providing insulation against changes in market price.

Setting Up Your Own Dollar Cost Averaging Plan

In order to begin a dollar cost averaging plan, you must do three things:
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Frequently Asked Questions About Mutual Fund Fees

2009-05-03T15:53:00.000-07:00

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Mutual Fund Management Fees And Chocolate Chip Cookie Dough You Get Your Share After The Baker Has Eaten Some Of The Dough

2009-04-30T15:51:00.000-07:00

I don’t know about you, but I love chocolate chip cookie dough. Each time I make chocolate chip cookies, I always end up eating some of the dough.
It occurred to me one day as I was baking - and eating cookie dough - that in essence, I was charging a management fee for my baking services. Each final cookie was a wee bit smaller because I had eaten some of the cookie dough.
This is exactly how a management fee in a mutual fund works. Every single mutual fund has a management fee; some are much higher than others.
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Understanding Mutual Fund Fees

2009-04-28T15:49:00.000-07:00

The first thing to understand about mutual fund fees is that, whether you see them or not, you pay them.
There are various classes of shares of each mutual fund available for purchase (a mutual fund may offer various classes of shares to investors -- the differences are in the fees and expenses of each share class). Several common share classes are: Class A, Class B and Class C. Each share class requires a management and operating fee and many share classes charge a 12b-1 fee.

Mutual Fund Management Fees & Operating Fees

All share classes of funds carry fees that are paid out of the fund’s assets to the fund’s investment advisors (as opposed to paying the advisor who sells the fund). In other words, investors see these fees as a reduction in their net returns versus an expense on their bank or brokerage statement.
Fees and expenses vary greatly from fund to fund and may range from less than .10% to more than 2.00%, depending on the investment style, market capitalization, fund assets, fund company and share class of the fund.

12b-1 Fees

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Invest Wisely: An Introduction to Mutual Funds

2009-04-25T15:46:00.000-07:00

Over the past decade, American investors increasingly have turned to mutual funds to save for retirement and other financial goals. Mutual funds can offer the advantages of diversification and professional management. But, as with other investment choices, investing in mutual funds involves risk. And fees and taxes will diminish a fund's returns. It pays to understand both the upsides and the downsides of mutual fund investing and how to choose products that match your goals and tolerance for risk.
This brochure explains the basics of mutual fund investing — how mutual funds work, what factors to consider before investing, and how to avoid common pitfalls.

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Why Mutual Funds

2009-04-21T15:43:00.000-07:00

Let's suppose you're just getting started as an investor and have $5,000 to invest and you have three important goals you want to achieve. First, you don't want to lose your money in a risky venture so you want security, like that found in a certificate of deposit or other fixed income investment. But you also want to make the most money you can, so you want the prospect for growth potential, too. Finally, since you don't have the time or knowledge to actively manage your money, you want professional money management -- occasionally diversifying your investments into promising new opportunities. That sounds like a very good plan, but where can you invest your money and have a chance to meet all three criteria?

Certificates of deposit and other fixed income investments offer security, but often with low rates of interest and a fixed potential for growth. Individual stocks may carry greater potential for growth, but $5,000 isn't a lot to invest and if you put it all in one stock, you risk everything if it performs poorly. And, brokers and investment advisors can offer you advice and money management, but at a price -- you pay for their services, which reduces further the amount you have available to invest.

So where can you invest your money? The answer for more and more Americans is to invest in mutual funds.

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The Three General Types of Mutual Funds

2009-04-18T15:41:00.000-07:00

Mutual funds can generally be placed into one of three primary categories: stock, bond or money market. Many investors will diversify their portfolio by including a mix of the three.

Stock Funds

Stock funds, also called equity funds, are the most volatile of the three, with their value sometimes rising and falling sharply over a short period. But historically stocks have performed better over the long term than other types of investments. That’s because stocks are traded on the expectation that a company’s future results will include expanded market share, greater revenues and higher profits. All of that would increase shareholder value.
Generally stocks fluctuate because of investors’ assessment of economic conditions and their likely impact on corporate earnings. Socially responsible investors also factor in other risks to earnings such as exposure to fines or lawsuits from polluting the economy or discriminating against particular employees.
Not all stock funds are the same. Some common funds include:

Growth funds, which offer the potential for large capital appreciation but may not pay a regular dividend.
Income funds that invest in stocks that pay regular dividends.
Index funds, which try to mirror the performance of a particular market index, such as the S&P 500 Composite Stock Price Index..
Sector funds usually specialize in a particular industry segment, such as finance, health care or technology

Bond Funds

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Mutual Funds 101 What they are and how they can make you money

2009-04-17T15:38:00.000-07:00

The brain-child of Wall Street, mutual funds are perhaps the easiest and least stressful way to invest in the market. In fact, more new money has been introduced into funds during the past few years than at any time in history. Before you jump into the pool and select a mutual fund in which to invest, you should know exactly what they are and how they work.

What is a mutual fund?

Put simply, a mutual fund is a pool of money provided by individual investors, companies, and other organizations. A fund manager is hired to invest the cash the investors have contributed. The goal of the manager depends upon the type of fund; a fixed-income fund manager, for example, would strive to provide the highest yield at the lowest risk. A long-term growth manager, on the other hand, should attempt to beat the Dow Jones Industrial Average or the S&P 500 in a fiscal year (very few funds actually achieve this; to find out why, read Index Funds - The Dumb Money Almost Always Wins).

Closed vs. Open-Ended Funds, Load vs. No-Load

Mutual funds are divided along four lines: closed-end and open-ended funds; the latter is subdivided into load and no load.

Closed-End Funds
This type of fund has a set number of shares issued to the public through an initial public offering. These shares trade on the open market; this, combined with the fact that a closed-end fund does not redeem or issue new shares like a normal mutual fund, subjects the fund shares to the laws of supply and demand. As a result, shares of closed-end funds normally trade at a discount to net asset value.
Open-End Funds
A majority of mutual funds are open-ended. In simple terms, this means that the fund does not have a set number of shares. Instead, the fund will issue new shares to an investor based upon the current net asset value and redeem the shares when the investor decides to sell. Open-end funds always reflect the net asset value of the fund's underlying investments because shares are created and destroyed as necessary.

What are the benefits of investing through a mutual fund?

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Should You Own Stocks or Mutual Funds?

2009-04-15T15:30:00.000-07:00

Should you own stocks, mutual funds, or stick with baseball cards?
There are some who would make the case that a portfolio of carefully selected baseball cards held for the long term have proven a better investment than either stocks or mutual funds, however I wouldn’t bet my retirement on what’s in a shoebox in your attic.
For many investors, it is not a question of either individual stocks or mutual funds. They use both to meet different financial goals. You’ll need to find your comfort zone and make your on decisions.
Here are some properties of both mutual funds and individual stocks to help you decide.

Mutual Funds

Mutual funds offer at least four characteristics that many investors find attractive:

Professional Management
Diversification
Selection
Convenience

Mutual funds employ professional managers to oversee the operations. These professionals typically have many years of experience in the business of selecting and evaluating investments for the fund. They make the entire buy and sell decisions, relieving you of that responsibility.
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Introduction to Investing: What Are Mutual Funds?

2009-04-13T15:26:00.000-07:00

Basics for Beginners

Mutual Funds are a way for a group of investors to pool their money so they can invest in a wider variety of stocks and bonds. Why is this a good idea? In order to really make wise decisions when you buy individual stocks and bonds yourself rather than buying a mutual fund, you'd have to do extensive research on various types of businesses in general (automobile, construction, medical) and on specific companies (GE, IBM, Microsoft). This is work that most of us are not interested in or maybe are not capable doing.
The group of investors forms a mutual fund and hires a fund manager. This manager makes decisions about how to invest the money based on the established goals of the owners of the fund.

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Six Ways To Prepare Now For Rising Interest Rates

2008-12-27T21:17:00.000-08:00

Take Steps Now to Soften the Impact!!

For several years before 2005, interest rates were at historic lows, enticing people to spend more on credit. When interest rates rise, what do higher rates do to your personal finances? Is there anything you should do to prepare?

When the Fed starts pushing up the interest rates, credit card debt, mortgage rates, and rates on car loans are affected. The average US household debt, according to the Fed, is $20,000, not including mortgages. Most of that debt is credit card debt and home equity lines of credit, so people with this type of debt will be affected most.

If you're struggling to pay your credit card bills each month or you pay your bills but can only swing the minimum payment, even a small rise in rates could be a problem. Over time, as the rates gradually continue to rise, more and more of your monthly payment will go towards interest and less and less towards paying off your balance. For help on getting out of debt, see Credit and Debt Guide.

Here are six ways to prepare yourself to come out ahead:

   1. If you're only making minimum payments on your credit cards, start paying more. If you can't come up with the money to increase your payments, start budgeting or tighten your existing budget, cut spending, and pay down credit card debt with the money you save.
   2. Don't be fooled by your "fixed rate" credit cards. Your credit card company legally must only give 15 days written notice before raising your rate. Even so, if interest rates are expected to increase and you haven't already transferred your balances to lower-rate cards, you should consider doing so, looking for those that promise a low rate for a specific period of time.
   3. If you have a home equity line of credit, consider taking out a home equity loan to repay it if interesst rates are expected to rise. Since interest rates on home equity lines of credit are tied to the prime rate, if rates rise, so will the interest on your loan. Depending on how much you borrowed, this could quickly become a payment you can't afford, and your house is at risk. By replacing the home equity line of credit with a home equity loan, you lock in a lower interest rate.
   4. If you have an adjustable rate mortgage, and you plan to be in your home for at least five years, consider refinancing to a fixed rate mortgage when rates are expected to rise.
   5. As mortgage interest rates rise, you'll be able to afford less house for your money, so if rates are expected to rise and you're in the market for a house, consider stepping up your house-hunting efforts. Be sure to research real estate trends in your area so you don't buy at a period of inflated home prices.
   6. If you're in the market for a new car, consider accelerating your plans before interest rates rise, possibly taking advantage of zero percent financing. These offers often disappear as rates rise.

for About.com

Student Credit Card Debt Tops the List of Money Mistakes

2008-12-07T21:11:00.000-08:00

College Student Mistake #1: Getting Into Credit Card Debt

In addition to student loans, the average undergraduate college student in 2004 had four credit cards and $2,169 in credit card debt. Final year students had the highest balances, at an average of $2,864. The average graduate student had $5,800 in credit card debt, according to Nellie Mae, the nation's largest maker of student loans. At interest rates of 15 to 18%, you may be paying off this credit card debt into your 30s and 40s. See Money and the College Student: Leave College Without Credit Card Debt and College Credit Crisis: Avoid Piling Up Debt in College.

College Student Mistake #2: Squandering Your Student Loan Money

Use your student loan money to finance your education, not your lifestyle. Tuition, room and board, and textbooks are smart ways to spend your student loan money. Eating out, buying CDs, clothes, going on spring break, or otherwise bankrolling your social life, are not. You'll be paying these loans off for ten to 20 years, so use the money wisely.

College Student Mistake #3: Ruining Your Credit Score

The way you handle your credit card debt will follow you for many years. If you max out your credit line, don't pay your bills on time, and collect credit cards like they were going out of style, you'll have a poor credit score after you graduate that will make it difficult to get an apartment, obtain a car loan, get a home loan, or even find a job. Learn how to handle credit cards responsibly, and then do so. See What You Need to Know About Your FICO Credit Score.

College Student Mistake #4: Not Budgeting

A budget is a planning tool that empowers you to handle your money smartly; it's not financial handcuffs. It helps you plan ahead by knowing how much money you have coming in and going out. It gives you the peace of mind of knowing you won't run out of money. Not having a budget is like sailing a boat in the fog without radar. See How To Set Up a Successful Budget, Budgeting: First Step in Financial Planning, and College Budget Worksheet.

College Student Mistake #5: Choosing a College That's Too Expensive

It's not that important where you spend your first two years in college. Attend a community college while getting your general education requirements out of the way, then transfer to the school of your choice for the courses in your major. What matters is where you graduate. You'll save tens of thousands of dollars, which you'll appreciate when you're trying to pay off your student loans after you graduate and find that money is stretched so thin that you're still dining on Ramen Noodles. In-state public universities are another much cheaper alternative than out of state schools or private schools.

The Bottom Line

Smart use of your money and your credit in college will enable you to spend the money you earn when you graduate on things you really want (a new car, a nice apartment or house, a great wardrobe, travel, or whatever) instead of all your disposable income going towards debt repayment.

Should we manage our daughter’s money?

2008-12-04T08:13:00.000-08:00

You can’t protect your kids from making financial mistakes, but you can provide them with the tools to learn fiscal responsibility on their own.

Question: My 20-year-old daughter works two jobs and is going back to school part-time. Her father takes her paychecks and doles out money to her as needed. He thinks he’s helping her by doing this, but I think he’s hurting her. I worry that if she doesn’t start to manage her own money, she will have trouble in the future knowing how to pay bills, etc. What is your opinion? –Debbie, Canton, Ohio

Answer: First, let’s give Dad some credit for taking an active interest in his daughter’s finances. Many parents neglect this aspect of their children’s lives while they’re growing up, often to the kids’ eventual detriment. Your daughter, by contrast, has a father who is willing to take the time and effort to do what I’m sure he believes is in her best interest.

That said, I don’t think the situation you’ve described is a case of father knows best. However good Dad’s intentions are - and however much his gatekeeper-to-the-dough role might help your daughter in the short-term by preventing her from going through her money too quickly - I don’t think his approach will help her develop the financial skills she’ll need as adult to live within her means while doing things like buying a car, purchasing a home and saving for retirement.

Fact is, at some point people have to learn by doing. I’m sure Dad wants to protect your daughter from mistakes like failing to budget, running up debt, making poor investments, etc. But making mistakes, recognizing them and then changing your behavior is an important part of learning. Dad’s approach may prevent your daughter from making bad decisions with her money for now. But by coddling her this way he’s also depriving her of the very experiences that will eventually help her make reasonable decisions on her own. And isn’t that goal - for her to be able to function financially on her own?

So what do I recommend you do?

Well, maybe there’s a way to harness Dad’s willingness to help, but channel it in a more productive direction. You might suggest that over the next couple of months your husband help your daughter lay the groundwork for managing her own affairs. He could start by helping her open a checking account, savings account and sign up for any retirement and health insurance plans at work. From there he could move on to helping her create a budget and set up a system for paying bills.

As he’s doing this, he can explain the importance of each of these activities, point out some of the potential pitfalls and give her practical tips (like learning to live on your salary after you’ve made an allowance for regular saving rather than think of saving as something you do if you happen to have money left over at the end of the month).

And just so he isn’t the sole front of information - let’s face it, even well-meaning father’s don’t know everything - your husband might point your daughter to some other sources. Our Money 101 Lessons, for example, provide a quick and easy way to get up to speed on topics ranging from setting priorities and budgeting to investing and planning for retirement. (And while he’s at it, Dad might want to check out the lesson on Kids and Money .)

Your husband might also suggest your daughter check out sites more specifically geared toward students, young adults and people just starting out, such as Young Money and Kobliner.com, which is run by my former Money colleague Beth Kobliner, author of “Get A Financial Life.”

And since your daughter is returning to school part-time, why not have her look into taking a course on personal finances or economics, for that matter?

This doesn’t mean your husband has to abandon his daughter financially. He can make it clear that she can come to him with questions or to discuss specific financial issues. But rather than tell her what to do or what choice to make, he should act more as a good listener who helps her evaluate options and come to her own decisions, even if he doesn’t agree with them.

In short, your husband’s aim should be to help her learn enough about her finances so she’ll eventually be able to manage them without his help, which, after all, at some point she will have to do.

source

Ultimate guide to retirement: When can I retire?

2008-11-30T08:10:00.000-08:00

Trying to figure out whether you can afford to retire is like putting together pieces of a financial jigsaw puzzle. First, you need to estimate how much you'll spend in retirement. Then you must consider the income you'll collect in retirement from pensions and Social Security - as well as the amount you can afford to draw from your personal savings or other sources.
The idea is to assemble the various pieces, and then see whether the picture of retirement life that emerges is acceptable to you.
To help bring the retirement picture into better focus, try plugging all your pertinent financial information - including pensions, Social Security, retirement investment accounts and anticipated retirement expenses - into an online calculator. The calculator can crunch all the numbers and assess your odds of being able to retire on the schedule you envision.
Revisit the calculator and all the different pieces of the puzzle each year, in order to make sure you remain on track

Ultimate guide to retirement: I'm saving a lot but will still fall short - what now?

2008-11-27T08:09:00.000-08:00

Consider other alternatives that can reduce how much you need to save. The most obvious one: Think about delaying retirement by a few years. That strategy will allow you make more contributions to your retirement accounts while postponing withdrawals - which could significantly increase the size of your nest egg even as it reduces the amount you need to accumulate to make it through retirement.

For example, if you retire today at age 65 with $500,000 in retirement savings and withdraw $43,000 a year, your savings likely would last until you reached age 90. But if you delay retirement for another five years and max out your IRA contributions during that period, you would retire at 70 with $772,680 saved. That nest egg would let you withdraw $72,000 a year until age 90. (Calculations assume an 8% annual return on your investments.) So by delaying your retirement just five years, you can increase your retirement income by nearly $30,000 a year.

Getting a part-time job after you retire also can make a big financial difference - and can provide mental, physical and emotional benefits as well. Other options include trading down to a less-expensive home (you can invest the profits toward retirement), reining in your spending or transforming the equity in your home into income by taking out a reverse mortgage - though high costs mean this last option is a good idea for only a small number of retirees.

Ultimate guide to retirement: How can I reduce the amount I'll need?

2008-11-25T08:06:00.000-08:00

The most obvious way is to rethink your standard of living in retirement. Swapping the around-the-world sailing trip for a Caribbean cruise may help you lower your retirement target to a more attainable goal.
You can also delay your planned retirement date from, say, 62 to 68 or so. Working past the traditional retirement age will let you postpone withdrawals from your retirement accounts. Your savings will have more time to grow, and you'll reduce the number of years you'll need to draw on them. Working longer may also let you delay taking Social Security until you reach at least full retirement age (66 if you're 50 today), potentially increasing the size of your monthly benefit by 30% or more.
The great thing about online retirement savings calculators is that you can play with the numbers to see exactly how much more or less you'll need to save based on when you plan to stop working, or how much you'll spend in retirement, or any number of other factors.
Working part-time can help too. But the problem is that you don't know if you'll have the interest or energy to work at an advanced age - or if you'll have health problems that prevent it. You also may have a tough time finding an employer who wants to hire you in your later years for the amount of money you want to earn. So pinning your entire retirement strategy to working in your 70s or beyond isn't such a great idea.

Ultimate guide to retirement: What if I can't save enough?

2008-11-22T08:05:00.000-08:00

Try to divert as much of your earnings into savings as you can. If you don't have a budget, create one. If you do have a budget, revise it to reflect your newly urgent commitment to saving, as well as any changes in your spending since your last outbreak of budget fever. Chip away at wasteful habits - that might mean ditching expensive dinners or unused gym memberships.

If you're still young and you can't save enough right now, don't be discouraged. Your income will probably grow as you progress in your career, allowing you to save more. You might also have other opportunities to boost your savings rate; for example, a bonus or inheritance can make a big difference in your long-term prospects if you invest some of the money in retirement accounts.

12 Reasons Budgeting Can Improve Your Life

2008-11-19T21:09:00.000-08:00

Got Budget?
Why Budget? Here are twelve good reasons:

   1. A budget is a guide that tells you whether you're going in the direction you want to be headed in financially. You may have goals and dreams but if you don't set up guidelines for reaching them and you don't measure your progress, you may end up going so far in the wrong direction you can never make it back. Can you imagine the government or a major corporation operating without a budget? No, and neither should you.

   2. A budget lets you control your money instead of your money controlling you.

   3. A budget will tell you if you're living within your means. Before the widespread use of credit cards, you could tell if you were living within your means because you had money left over after paying all your bills. The use of credit cards has made this much less obvious. Many people don't realize they're living far beyond their means until they're knee deep in debt.

   4. A budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments.

   5. Following a realistic budget frees up spare cash so you can use your money on the things that really matter to you instead of frittering it away on things you don't even remember buying.

   6. A budget helps your entire family focus on common goals.

   7. A budget helps you prepare for emergencies or large or unanticipated expenses that might otherwise knock you for a loop financially.

   8. A budget can improve your marriage. A good budget is not just a spending plan; it's a communication tool. Done right, a budget can bring the two of you closer together as you identify and work towards common goals and reduce arguments about money. That's got to be good for your sex life!

   9. A budget reveals areas where you're spending too much money so you can refocus on your most important goals.

10. A budget can keep you out of debt or help you get out of debt.

11. A budget actually creates extra money for you to use on things that matter to you.

12. A budget helps you sleep better at night because you don't lie awake worrying about how you're going to make ends meet.

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Ultimate guide to retirement: How much should I save?

2008-11-16T08:03:00.000-08:00

"As much as you can" is the standard advice. Many financial planners recommend that you save 10% to 15% of your income for retirement, starting in your 20s.
But that's just a general guideline. This is your retirement we're talking about, so it pays to get a little more specific by doing your homework up front. It's a good idea to establish a savings target - one that tells you roughly how much you should set aside over time to meet your retirement goals.
The best way to determine your savings target is to use an online calculator like this one. It will help you figure out how much you should accumulate and how much you must set aside in the meantime to reach that target. Be sure to update the calculation each year, so that you can see if you're on track.
As a general rule, you'll need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses. So for example if your projected retirement expenses exceed Social Security and pensions by $20,000 a year, you might need a nest egg of $300,000 to $400,000 to bridge the gap.

Ultimate guide to retirement: Will pensions and Social Security be enough?

2008-11-13T08:00:00.000-08:00

nfortunately, probably not. When you run the numbers, you should definitely factor in other sources of income in retirement, including Social Security and a traditional pension, if you're lucky enough to have one. But your personal savings will have to generate enough income to cover the shortfall.

source

Ultimate guide to retirement: How much money will I need in retirement?

2008-11-10T07:58:00.000-08:00

Ah, the key question. One rule of thumb is that you'll need 70% of your pre-retirement yearly salary to live comfortably. That might be enough if you've paid off your mortgage and are in excellent health when you kiss the office good-bye. But if you plan to build your dream house, trot around the globe, or get that Ph.D. in philosophy you've always wanted, you may need 100% of your annual income - or more.
It's important to make realistic estimates about what kind of expenses you will have in retirement. Be honest about how you want to live in retirement and how much it will cost. These estimates are important when it comes time to figure out how much you need to save in order to comfortably afford your retirement.
One way to begin estimating your retirement costs is to take a close look at your current expenses in various categories, and then estimate how they will change. For example, your mortgage might be paid off by then - and you won't have commuting costs. Then again, your health care costs are likely to rise.

Ultimate guide to retirement: How should my strategy change as I get older?

2008-11-07T07:56:00.000-08:00

As you approach retirement age, most experts agree you should gradually shift more into bonds to protect the money you've accumulated. But retirement can last a few decades, so it generally pays to maintain a healthy dose of stocks well into retirement: possibly between 40% and 50% while you're in your 70s, and up to 30% when you're in your 80s.

If you want to put your asset allocation on autopilot, consider "target-date retirement funds," which are available in many retirement plans. You simply choose a fund that's labeled with the year you intend to retire, and it will automatically adjust what it invests in (usually a mix of stocks, bonds and cash) to maximize your return and minimize your risk as you get older.

The Secret to Budgeting Successfully

2008-11-05T21:04:00.000-08:00

It's All in the Attitude, Dude!

Have you ever attempted to budget and given up in frustration or discouragement? If you can figure out the reason your budgeting attempt failed, you'll be able to institute a rewarding, successful budget and stick to it. Think about it. What really determines whether budgeting works for you?

One of the top reasons, if not THE top reason, so many people fail at budgeting is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it? It’s like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge now and then and still achieve your goals.

To increase your chances of success, work on your attitude first. Many people refuse to budget because of budgeting’s negative connotation. If you’re one of them, try thinking of it as a “spending plan” instead of a “budget.” Once you’ve attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Don’t give up!

Why does budgeting matter? Money is a tool that enables you to reach your goals in life, but until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively. A budget shows you exactly where your money goes and provides a spending plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a college education, travel, or whatever your particular goals and dreams happen to be.

There are several universal budgeting concepts that every successful budget will include, but one of the most important features of a successful budget is customization to your needs. Don’t try to force your lifestyle and personal situation into a generic, one-size-fits-all budget. If a simpler approach makes it easier to stay committed, then go for simplicity. If you stick with a realistic, effective budget long enough, the rewards will keep you motivated; in the meantime, do whatever it takes to keep yourself going.

One important aspect of a successful, long-term relationship is working towards common goals, and a budget is a means of achieving them. Couples who can’t come to an agreement about savings towards common goals should sit down and talk calmly and rationally and come to a compromise to resolve this disconnect in their relationship.

It’s okay to have individual goals that the other person doesn’t share, and to provide for a way for those goals to be met, but it’s critical to have basic common financial goals that both people in the relationship agree to and are motivated to work towards. If you can’t agree about saving towards those goals, you’re going to be at cross-purposes that are going to be a cause of ongoing conflict. A budget centered around conflict and resentment is a budget doomed for failure.

If you still can’t figure out why your budget isn’t working, consider the psychological factors at work. What does money mean to you? Do you use it for reasons other than its obvious purpose? Do you use it as a self-esteem booster, to make yourself feel worthwhile? Do you enjoy the heady rush of making a new purchase? Do you use it as a sign of power or control in a relationship?

There are a number of good books about the psychological aspects of money that can help you spot these factors and help you work with them. See The Psychology of Spending Money.

If you jump into budgeting without a positive attitude about it, chances are high that you'll give up before you've seen the difference a budget or spending plan can make in your life. The secret is to work on your attitude first.

for About.com

Ultimate guide to retirement: How should I invest the money?

2008-11-02T07:54:00.000-08:00

To build a nest egg large enough to see you through retirement, which may last 30 years or more, you'll need the growth that stocks provide.

The stock market returned 10.4% a year on average between 1926 and 2006, versus just 5.9% for bonds, according to research firm Ibbotson Associates. Given stocks' superior returns over the long haul, most financial advisers recommend that investors whose retirement is more than 20 years away hold at least 3/4 of their portfolios in stocks and stock funds.

Of course, a stock-heavy portfolio can give you some hair-raising moments (or years). For example, during the 1973-74 bear market, U.S. stocks lost 43% of their value - and it took the market three-and-a-half years to recoup those losses. The stock market also suffered a 47.6% decline during the bear market at the start of this decade. It's been suffering in 2008 as well.

If you don't have the stomach for steep downturns, you might increase your allocation to include more bonds or bond funds. Holding, say, 70% of your portfolio in stocks and 30% in bonds will let you capture most of the long-term growth of stocks while sheltering your investments to a certain extent during market downturns.

Ultimate guide to retirement: Where should I save my retirement money?

2008-10-31T07:50:00.000-07:00

ax-favored retirement accounts such as individual retirement accounts (IRAs) and 401(k)s are the best places to save for your retirement. The different types of plans have different features, but most of them allow you to defer taxes on the money you save and the returns you earn within the account.

"Tax deferral" means that the amount you contribute escapes the usual income taxes until you start withdrawing the money years later. As a result, more of your money can earn investment returns over time - an enormous advantage over ordinary taxable accounts.

The plans have other advantages as well. For example, many employers will match part of their workers' contributions to employer-sponsored retirement plans such as 401(k)s.

source

Your Monthly Credit Card Minimum Payments May Double

2008-10-29T21:01:00.000-07:00

If you've been incurring credit card debt based on being able to afford the monthly minimum payment rather than whether your income and expenses can support the purchase of a particular item, you may be in trouble. For years, low monthly minimum credit card payments have encouraged us to spend more than we really can afford. Now it's time to pay the piper.

Under pressure from the Office of the Comptroller of the Currency (which regulates national banks), the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, some national banks will soon be increasing minimum monthly credit card payments so they are closer to 4% rather than the current average of around 2%. Some major banks have already increased the minimum payments and others are about to follow suit.

In the long run, an increase is actually good news for consumers, but in the short-term, it could be devastating for people who have overextended themselves.

The Bad News

The bad news is that you soon may have to come up with more cash each month in order to make your monthly minimum credit card payments. If you're the average American, with $10,000 in credit card debt, your minimum monthly payments are probably currently around $200 (2% of your balance). Under the new guidelines, sometime this year, your minimum payments may go up to as much as 4% of your balance, or $400 on a $10,000 credit card balance. If that's the case, will you be able to come up with the additional $200? In addition, minimum payments and your interest costs will continue to rise as interest rates go up.

The Good News

Paying 2% of your balance each month barely covers the interest, and leaves very little to apply to your actual balance. That's why, if you owe $2,000 or more, and you only pay the minimum balance of 2% each month, it will take you approximately 30 years to pay off your balance even if you never charge another penny.

Under the new guidelines, the minimum payment will have to cover the interest and have enough left over so you could pay off your balance in 10 to 12 years if you didn't add any new charges. This is good because you'll get out of debt sooner and you'll pay a lot less interest over the years (thousands of dollars for many people).

What To Do

First, think twice before you add that purchase to your credit card. If you charged your $2500 spring break trip to your credit card or if you and your spouse just splurged for a $2500 flat screen television and charged it to your credit card, at 18% interest it would take you 34 years and six months to pay it off if you paid a 2% minimum balance and never charged another penny to your credit card. In that time, you'd pay $6,421 in interest in addition to the $2500 original cost. When you make a purchase on credit, know what the true cost to you will be if you don't pay it off right away.

Second, if you're in the habit of paying the minimum monthly payment on your credit cards, now is the time to go through your budget with a fine-toothed comb and identify areas to cut costs so you'll be prepared for the increased minimum payments if your credit card company puts them into effect.

Finally, calculate your current minimum payment percentage on each major credit card. Divide the minimum payment from your last statement by the most recent balance. Then you may want to call your credit card company and ask them what their intentions are regarding the recommended increase in the minimum payment percentage.

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Ultimate guide to retirement: When should I start saving for retirement?

2008-10-27T07:47:00.000-07:00

The answer is simple: as soon as you can. Ideally, you'd start saving in your 20s, when you first leave school and begin earning paychecks. That's because the sooner you begin saving, the more time your money has to grow. Each year's gains can generate their own gains the next year - a powerful wealth-building phenomenon known as compounding.

Here's an example of what a big difference starting young can make. Say you start at age 25, and put aside $3,000 a year in a tax-deferred retirement account for 10 years - and then you stop saving - completely. By the time you reach 65, your $30,000 investment will have grown to more than $472,000, (assuming an 8% annual return), even though you didn't contribute a dime beyond age 35.

Now let's say you put off saving until you turn 35, and then save $3,000 a year for 30 years. By the time you reach 65, you will have set aside $90,000 of your own money, but it will grow to only about $367,000, assuming the same 8% annual return. That's a huge difference.

source

Empty Nesters: Is It Wise to Downsize?

2008-10-25T07:44:00.000-07:00

Last year Rick and Suzanne Pepin moved from the four-bedroom 3,400-square-foot house in Minneapolis where they lived with their three (now grown) kids to a luxury condo that's a third smaller and offers only a Murphy bed for guests. Still, the couple couldn't be happier. "The location of our old home dictated that we drive to the grocery store, pharmacy and cleaners," says Suzanne, 57, a retired lawyer. Their new digs are across the street from Whole Foods and within easy walking distance of other stores and restaurants. They love the low-maintenance life.

"We have no worries about upkeep. No worries about lawn care. No worries about snow removal," says Rick, 68, also an attorney.

To continue reading, click on this website:
http://finance.yahoo.com/real-estate/article/105724/Empty-Nesters:-Is-It-Wise-to-Downsize?

Investing: Look before you leap

2008-10-22T07:41:00.000-07:00

Can we feel safe in the stock market again? Monday's record point gain for the Dow Jones industrial average - an eye-popping 936-digits on the Big Board - certainly gives us reassurance that 2008 won't be another 1929.
To continue reading this article, click on this website:
http://biz.yahoo.com/cnnm/081014/101408_safe_wall_street.html

Feature: Poor husband, rich wife

2008-10-19T07:33:00.000-07:00

It is a fact that men feel threatened by the riches, power, and high accomplishment of women.

Men are born to identify themselves and meet their emotional needs through accomplishment, because that shows their competence, efficiency and power.

In relationships, men must feel the stronger and provider. We, therefore, see women who are rich, powerful, assertive and domineering as a threat to our self-esteem.

Some husbands see the riches of their wives as a sign of their failure and an attack on their ego.

They, therefore, quit the relationship to restore their failing ego. Others take young and ordinary girl friends who are vulnerable and open to care to redeem their pride and self esteem

The Ghanaian wife today

Today, with equal opportunities and interventions, our wives have made great strides in business, politics, and highly skilled professions.

Happily, successful wives are multiplying in Ghana, but sadly, success has been unsettling for some wives as they struggle to be smarter, better and more successful than their husbands.

Some wives place their careers way ahead of their marriage. Some make comments like, "If you get a good job, you have love, if you lose your job, there is no romance left."

When some wives get rich and their husbands lose their jobs, these poor husbands are made to do things, which culturally, they are not programmed to do. If she brings home the groceries, you must cook and keep the house. This further worsens the failing self-esteem of poor husbands and some get jealous and bitter.

Research has shown that success of women repels weak or poor men. Studies have also shown that in relationships where the women are richer than the men, failure is higher than where men are richer than women.

Most husbands can't compromise on their self-esteem and would leave relationships in which they can't cope with the rich lifestyle of women. Rich women, therefore, have difficulties managing fulfilling relationships.

What must a rich wife do?

A rich wife must not pride herself in intimidation, aggression and power. No husband will accept to be controlled by a wife just because he is poor. Instead, a rich wife must remain strong in her finances. She must be humble and respect her husband to make him stronger.

Allow him to provide to the extent to which he is capable without controlling him. Discuss your plans. Seek his input. If a wife really loves her husband, it shouldn't matter if he is rich or poor.

You are one flesh with him and believe it or not, you couldn't have made it without him. Surely, he does things that can't be measured in tangible terms.

Rich wives also need love as their greatest emotional need. If a rich woman has lots of money, but no love, she suffers it. Completeness and self-sufficing in riches is a myth. What works is commitment, honesty and unconditional love to enhance emotional fulfilment. Seek your man's advice and let him feel part of your success.

There are some wives who are very rich, but still stand behind their husbands and allow their husbands to control all the financial activities in the family. Such acts of humility enhance the relationships.

What must a poor husband do?

Have a positive mental attitude. She is a woman. You are a man. You can easily marry and handle her. It is, however, important that you don't get comfortable leeching her.

If she pays for all her bills, it may be tempting for her to control and disrespect you. It may not be your fault that you are poor, but it is your fault if you don't do anything about it. Women love men who have plans and work ambitiously at them.

If you do your best to provide something for your relationship no matter how small, your wife would know and appreciate it. Don't force yourself to match her riches, but let her know you are comfortable and enjoy her company.

Be proud of her achievements and support her.
Poor husbands can still be very good husbands as they offer what women admire most - companionship, love, appreciation, feel her valued. honoured, understood and wanted. Send small gifts. Be a great friend who shares quality time just to talk. Be there for her. She needs you above everything.

Can a poor husband handle a rich wife?

A poor husband can easily handle a rich wife. True love is not measured in monetary terms, but on life-long commitment and the love to share. Being together is not about money. It is about choosing to be happy together, rich or poor.

If you can make your wife happy, you are already rich and must not allow money to interfere with your relationship, because material things can't compare with the satisfaction in a fulfilling relationship.

As long as both are happy, there is no need to be jealous of or feel threatened about each other's success. The success of one is the success of both of you, because you are one flesh. Choose to be rich in your heart by seeking unconditional love, instead of 'physical things. Marry rich, but not riches.

source

Rich kids get a crash course in money- Rich kids get a crash course in money Program aims to teach affluent kids about managing the family wealth

2008-10-16T07:28:00.000-07:00

The children of high-net-worth families have a unique problem: becoming financially fluent to manage investment portfolios or take over the family business.
To address this, Jean Blacklock, vice-president and managing director, personal trust services for BMO Harris Private Banking and chief operating officer for BMO Trust Co., is offering a day-long financial fluency program that targets the offspring of privileged Canadian families.

to continue reading the article, click on this website:
http://www.financialpost.com/analysis/columnists/story.html?id=788025

Top Ten Money Tips for Women

2008-10-01T20:58:00.000-07:00

Why do so many women delegate their financial security to a spouse or signficant other and allow divorce or death to plunge them into poverty? Why do so many women spend more than they earn and become mired in debt?

A National Center for Women and Retirement Research (NCWRR) study showed a direct correlation between a woman's personality characteristics and her financial habits. Assertiveness, openness to change, and an optimistic outlook are the qualities that tend to lead to smart money choices.

Financial Planner, author, and TV host Suze Orman believes our problems with money are manifestations of problems in our life and relationships. Work on the money issues and many of the other problems will take care of themselves; or, work on the other problems and the money problems will take care of themselves.

For many people, money is an emotionally charged issue. It may represent power, or love, or control, especially in relationships. Our beliefs about money and our emotional attachments to it strongly influence the way we spend and handle money.

If you aren't where you should be financially, examine what drives you emotionally when it comes to money and try to figure out the psychological stumbling blocks that keep you from becoming financially independent. Here are ten of the most important things women can do for themselves and their financial future:

   1. Don't rely on someone else, like a husband or boyfriend, for your financial security. Educate yourself about money management and investing. See Ovecoming the Financial Gender Gap.

   2. Set goals - it's key to financial success. See Building a Balanced Financial Plan and Setting Financial Goals.

   3. Don't use money to make yourself feel good. That type of high is fleeting. Instead, do things that promote self-respect and creativity so you don't have to seek those feelings through spending money. See The Urge to Splurge and The Psychology of Spending Money.

   4. Spend less than you earn - it's the secret to creating wealth. See Budgeting 101.

   5. Get an education. People with college degrees make on average significantly more money than those who don't have degrees.

   6. Build an emergency fund. Without one, losing your job or incurring a large unexpected bill could force you to take on heavy credit card debt, and could put you into a financial hole that will be difficult if not impossible to dig your way out of. See Emergency Funds: Why You Need One, How Much You Need, and Where to Keep It.

   7. Be involved in the day-to-day management of your family's finances, and talk about money with your spouse. See The Family CFO and Couples and Money: How To Talk the Talk.

   8. Don't take on your partner's or spouse's debt when you marry. Wait until you're both out of debt before tying the knot, or protect yourself with a pre-nuptial agreement. They're not only for the rich. See Tying the Financial Knot.

   9. Don't let the fear of losing money, fear of failure, or fear of the unknown stop you from investing. See Start Investing With Very Small Amounts of Money.

10. Learn from your money mistakes. Don't let them hobble you.

Your financial security is dependent on your attitudes and beliefs about money and your willingness to take your financial future into your own hands.

for About.com

Ten Tips for Late Starters To Boost Their Retirement Savings

2008-09-25T20:51:00.000-07:00

If you're one of millions of Americans who are on the other side of 40 and don't yet have a substantial retirement nest egg, don't despair. It's not too late, but time is of the essence.

   1. Estimate roughly how much money you'll need to live on in retirement. Don't get bogged down by conflicting advice on how to calculate the amount. A ballpark figure is a good starting place, and you can use one of a number of good online retirement calculators to get an estimate.

   2. Once you have an idea of how much you'll need for retirement, calculate what will be available from sources other than your savings. For example, what is your expected Social Security benefit at retirement age? Do you or your spouse have a pension from a previous or current employer? If you have a 401(k) plan, what is its expected value at your planned retirement age? Use a conservative rate of growth to avoid overestimating.

   3. Set goals for reaching the amount you'll need to make up the difference between Social Security, pensions, and any other retirement funds you already have.

   4. If your employer has a 401(k) or 403(b) or other voluntary contribution retirement plan, and you're not already participating, sign up today and try to contribute the maximum allowed by law. Remember that the tax savings on your deductions will soften the blow. If you're in a combined federal and state income tax bracket of 35%, your contributions will only cost you 65 cents for every dollar you put into your account.

      The maximum contribution for 2006 is $15,000 for those under 50 years old and $20,000 for those over 50. If you're currently 45, you have 21 years until retirement. Your $15,000 a year contribution will grow to nearly three quarters of a million dollars (pre-tax) in 21 years at a seven percent rate of return. (This is a very rough estimation that depends on if you contribute the "catch-up" amounts each year and other unknown factors.)

      If your employer matches a percentage of your contribution, that's free money you should never pass up. Add your employer match to your own retirement contributions and you'll have a tidy additional sum of approximately $364,000, assuming a 50% employer match, for a total of well over one million dollars.

   5. Go for the Roth. If you make under the income thresholds, you can contribute to a Roth IRA in addition to your 401(k) or 403(b) plan. The contribution is not tax deductible, but the earnings will be tax-free in retirement. The maximum contribution for a Roth IRA in 2006 if you're under 50 years old is $4,000 ($5,000 if you're over 50). $4,000 a year will grow to nearly $208,000 in 21 years at a 7% rate of return, and you will owe no taxes on any earnings in your Roth IRA.

   6. Don't Be Too Conservative. Even at 45 or 50 years old, you have several decades for your retirement earnings to grow, so invest a large percentage in carefully researched, proven stocks, or better yet, mutual funds.

   7. Consider relocating or downsizing. If you live in an area with a high cost of living, moving to a less expensive area and investing your savings for retirement could make a big difference in your ability to amass a nice nest egg.

      If your kids have left the nest and you're still living in a big house that has appreciated in value, consider selling it and buying a smaller, less expensive home. You'll save not only on your mortgage payment, but in less obvious places like the cost of heating, cooling, insuring, and repairing your home, property taxes, etc. You can sock all the savings away for retirement or use some of them to enjoy your life now.

   8. If you're worried about ever being able to amass enough money to retire, consider taking on a second job and investing your earnings.

   9. Play catchup. The tax laws now allow those over 50 to contribute a little extra to 401(k)-type retirement plans and IRAs, so they can do a little catching up as they near retirement age. Take advantage of this if you're over 50.

10. Get out of debt. If you carry thousands of dollars of credit card balances and pay the minimum payments each month, your potential retirement savings is going directly to your credit card company in the form of interest. Paying only the minimum payment on credit cards is one of the worst financial mistakes you can make. Start applying as much as possible to your credit card balances and once they're paid off, resolve to pay the balance in full each month. You'll be amazed at how much money it frees up for retirement savings over time.

The older you are when you start seriously saving for retirement, the harder you'll have to work at it, but it can be done by following the advice above, so don't let doubt or discouragement keep you from starting right away, regardless of your age.

for About.com

Beware of the Warning Signs of Too Much Debt: How to Tell if Youre in Over Your Head

2008-09-18T20:46:00.000-07:00

Do you have debt that is bogging you down and keeping you from reaching your financial goals? Using credit and debt can be a powerful tool that allows you to buy a home, a vehicle, send children to college, and even provide leverage for other purchases, but when you accumulate too much debt, it can pose a serious problem.

Keeping up with your debt payments is only part of the problem. Just because you can afford to fit these payments into your budget, you’re still putting added strain on your finances. Money that is used towards paying down debt can’t be used elsewhere. That means if you’re spending money each month on credit card or other unnecessary debt, you’re taking money away from other areas of your budget that can be used to build wealth and plan for the future.

It can be difficult to actually realize when you’ve reached a critical point with your debt situation, but there are some warning signs that can help you identify the problem before it becomes too serious to address. Here are a series of statements to compare to your situation. If any of these apply to you, it is time to stop and take action to remedy the problem.

10 Warning Signs of too Much Debt

   1. You don’t have any savings.

   2. You only make the minimum payment on your credit cards each month.

   3. You continue to make more purchases on your credit cards while trying to pay it off.

   4. You have at least one credit card that is near, at, or over the credit limit.

   5. You are occasionally late in making payments on bills, credit cards, or other expenses.

   6. You don’t even know how much total debt you actually have.

   7. You use cash advances from your credit cards to pay other bills.

   8. You bounce checks or overdraw your bank accounts.

   9. You’ve been denied credit.

10. You lie to friends or family about your spending and debt.

Take Action Now

Sometimes we know deep down inside that we have a debt problem, but it is easier to deny the problem than to address it. It can be painful and require hard work, but the sooner you realize that you are in over your head, you can begin to make positive changes. Delaying changes to your habits will only prolong the problem and make it worse. If you don’t think you can tackle the problem alone, there are people out there willing to help.

By Jeremy Vohwinkle

The Psychology of Spending Money

2008-09-11T20:42:00.000-07:00

The Real Culprit Behind Your Urge to Splurge

In a perfect world, we would all avoid too much credit card debt and would never have to deal with the desperation of being unable to meet our credit card payment obligations.

We'd never have creditors hounding us for payment.

We'd never know the frustration of not being able to afford what we really want because every extra cent has to go towards keeping up with the minimum payments on our credit cards.

But this isn't a perfect world, and unfortunately these distressing situations are the norm for many people.

If you find yourself in this position, or headed there, take control of your spending now. Don't wait until your situation is so dire that you have few options available to you.

An important aspect of debt that is not always addressed is why you got too deeply into debt in the first place. Why did you keep charging items you couldn't afford? Why did you feel the urge to use those little plastic cards for things that weren't necessary, even when you began to struggle to make the payments? What causes your compulsive shopping?

Facing the factors that give you the urge to splurge can be uncomfortable, but if you don't face them, you may never get control of your spending and your debt. If you're always trying to pay off yesterday's purchases, many of which have long since worn out or been forgotten, how will you acquire the things you truly want for tomorrow?

One negative aspect of using credit cards instead of cash is that you don't feel like you're spending real money. The pleasant feelings you experience when you purchase the item are disconnected from the unpleasant or painful feelings of making the payment when you get the credit card statement.

Studies show that most people are much less likely to buy, or less willing to spend as much, when paying with cash as opposed to credit cards. Try leaving your credit cards at home. Pay with cash, check, or a debit card.

To really get control of your spending and your credit card debt, you need to examine what money means to you. Make an effort to notice how you interact with money and what beliefs and attitudes you have about money. Studies also show that people with low self-esteem engage in more impulse spending and buying things they don't need.

Remind yourself daily that money or a lack of it doesn't determine who you are. Your worth as a person has nothing to do with how much money you have. Once you truly believe this, and money is no longer connected to your sense of self-worth, you open up the psychological barriers that were keeping you from wisely handling the money you do have and limiting your ability to make more.

Right now, your unconscious limiting beliefs may be keeping you from being financially successful, but as you begin to build up your feelings of self-worth and develop a positive attitude about yourself and about money, you'll attract positive things into your life. As you do so, you'll feel less of a need to generate positive feelings by purchasing things, and you'll find it easier to stop buying items you don't really need.

There are hundreds of books, magazine articles, and Internet web sites about getting rid of credit card debt. Some of them offer sound advice about the psychological aspects of money and spending that you'd do well to consider.

If psychological factors influence your spending, credit reduction programs are like using perfume to cover body odor: they will treat only the symptoms, not the root cause. Working on the psychological aspects while taking steps to reduce debt will greatly increase your chances of long-term success.

Several of my favorite books on this subject are listed below, all available at Amazon.com. To explore this topic more, read one or more of them:

The Courage to Be Rich by Suze Orman

Your Money or Your Life by Joseph R. Dominguez and Vicki Robin

Money Harmony: Resolving Money Conflicts in Your Life and Your Relationships, by Olivia Mellan

Consuming Passions: Help for Compulsive Shoppers, by Ellen Mohr Catalano and Nina Sonenberg

for About.com

Getting Started in Stocks: Growth or Value Investor? Understanding Value and Growth Stock Investing is Smart Move

2008-09-01T20:36:00.000-07:00

Maybe you already own some individual stocks, but don’t have any organized way to approach buying more or perhaps you’re just getting started.

If you are ready to start investing in individual stocks in an organized and thoughtful manner, you’ll want to develop your own system and strategy.
Growth or Value Stocks?
This article is about your first step, which is deciding if you want to be a “value” or “growth” investor.

There’s no rule that says you can’t be both, although it may be easier to pick one as your primary focus and most investors usually end up more in one camp than the other does.

One strategy is not necessarily better than the other is, although over time value investors have an edge. It is important to note that growth and value investing are not opposites, just different approaches to the same problem.
Overview
Here is an overview of each so you can begin deciding which strategy makes the most sense to you.

The basic characteristics of growth investing:

    * Companies exhibit higher than average growth rates in revenues and earnings
    * Companies are in expanding industries that are riding an economic and/or demographic cycle
    * Companies don’t pay dividends
    * High growth companies often beat earnings estimates
    * Holding period determined by continued growth of company

The basic characteristics of value investing:

    * Companies have higher than average earnings per share
    * Companies that pay high dividends
    * Companies in solid, but not necessarily glamorous industry
    * Companies are industry leaders
    * Holding period typically longer than growth stocks

These are not exhaustive lists, but they’ll get you started.

For those who are concerned about risk, and everyone should be, of the two strategies value investing is less risky than growth investing.
Not Risk Free
That doesn’t mean value investing is risk free, but value stocks tend to be less volatile than growth stocks.

If you lean towards growth investing, you will want to pay attention to current stock and economic news – not to chase hot stocks, but to see where growth in occurring in the market.

If you are a value investor, you’ll be paying more attention to the financials using a stock screen to help you find candidates.

Either value or growth is a good place to start, but don’t dismiss the other, there are good opportunities in both strategies.

By Ken Little

Should You Invest in Mutual Funds or Stocks?

2008-08-28T20:29:00.000-07:00

Question: Should You Invest in Mutual Funds or Stocks?

Answer: Whether you invest in mutual funds or stocks depends on how much risk vs. return you are prepared to handle. If you want a higher return, then you must accept a higher risk. It also depends on how much time you have to learn about individual companies, which is necessary before buying that company's stock, vs. the smaller amount of time needed to learn about mutual funds.
Risk Return Tradeoff
By pooling a lot of stocks (in a stock fund) or bonds (in a bond fund), mutual funds reduce the risk of investing. If one company in that sector has a bad manager, or a losing strategy, it is balanced by other companies that are performing better. This lowers the risk, thanks to diversification. For example, an energy fund in 2000 that included Enron stock would have declined with Enron's demise, but not nearly as much as those who only had Enron stock...they would have lost their entire investment.
Time Available to Learn About Stocks vs. Mutual Funds
To learn about investing in stocks, you need to research which company is the best investment. To do company research, you need to learn how to read financial reports to see how much money the company is making, and what strategies it is using to grow earnings. You must stay apprised of how the economy is doing, and how that will affect that company and its industry. You will want to pick companies who are in industries or sectors that are on the upswing.

To pick mutual funds, you don't need to learn how each company is doing - that is what the mutual fund manager does. However, you still need to research the past performance of the mutual funds. You also need to decide which sectors seem most promising. Of course, you still need to know how the economy is doing.

By Kimberly Amadeo

Should You Invest in Mutual Funds or Stocks?

2008-08-23T20:29:00.000-07:00

Not a Fund Investor Yet? Five Mental Hurdles to Overcome

2008-08-23T20:19:00.000-07:00

You’ve read good things about mutual funds, but for one reason or another you fail to trust your hard earned dollars in them. Perhaps you’re not right in the head! Let me play investment psychologist and help you get over five common mental hurdles.

Hurdle #1: I don’t have enough to invest in a mutual fund.

You can invest in a mutual fund for as little as $100. Mutual funds are the ideal place to invest small amounts of money because you can buy a mutual fund without trading costs. For example, if you put $100 into a stock each month for a year, you will end up paying at least $160 in commissions at a discount broker, so out of $1,200 invested, only $1,040 goes to work for you (an automatic loss of 13%). But when you invest $100 a month directly with a fund company - all $1,200 goes to work for you!

The trick with investing is to invest early and invest often – even if it is a small amount of money. I worked with a guy who used to work at an investment firm whose largest client was the estate of their buildings janitor. For more information on how this could possibly be, read “the power of compounding interest.”

Hurdle #2: I don’t want to risk investing in non-guaranteed or non-insured investments.

Despite the seemingly safe bank investments or insurance products, mutual funds are safer than you think. Mutual fund prices are driven by the price changes of the securities it holds (the fund is only as risky as you the type you choose). Banks and Insurance companies can go bankrupt, but by definition, mutual fund companies cannot.

Once you understand inflation, average returns of different types of investments and compounding interest, you may realize you are taking a bigger risk by tying your money up with low producing products (like savings accounts).

Hurdle #3: I can do better picking stocks on my own.

I’m always amazed at people who think they are better at picking stocks then a dedicated team of seasoned professionals. Study after study shows that investors are horrible at picking stocks. Then there are index funds, which are notorious for beating even the best professional stock pickers over time. It’s true that you can roll the dice and potentially hit a home run (or lose all your money), but anyone who has been to Vegas and seen the sheer wealth of the casinos realizes that law of numbers wins in the end.

Hurdle #4: I know more about my company then the mutual funds offered in our retirement plan, so I’m going to invest in what I know.

Investing in company stock is one of biggest mistakes in retirement plan investing. The beauty of mutual funds is that you don’t need to be an expert on the hundreds or thousands of stocks that it owns. Diversification helps keep your returns up and risk down. Your job is already tied to your company – if the company crashes, don’t let your retirement plans crash as well. For more information, read “The Dangers of Investing in Company Stock.”

Hurdle #5: I don’t understand how mutual funds work, so I shouldn’t invest in them.

Investing in mutual funds is really simple. It can be as simple as filling out an application online and mailing it in with a check. If you don’t want to learn about them , you could simply invest in an S&P 500 fund (which represents the 500 biggest companies in the U.S. stock market). However, knowledge is power and if you do desire to understand mutual funds and make smart investing decisions, I invite you to sign up for my free mutual funds 101 ten-day email course.

By Dustin Woodard

How To Become Truly Rich Seminar by BO SANCHEZ

2008-07-23T22:28:00.000-07:00

Your financial life will change!

Here’s what you’ll receive from Bo Sanchez’ Truly Rich Coaching Program:

On August 8 and 9, 2008, Bo will personally lead you in two Wealth Group Coaching Days. In these powerful Sessions, Bo’s financial mentors will teach you the important building blocks of wealth—and help you chart your own personal path to financial abundance. The size of the Wealth Group will be enough to create the synergy for wealth building, yet small enough so that you get the personal attention you need. The goal is to give you enough practical ideas to start your own specific, tailor-fit path towards financial abundance.

In these 2 Sessions, you’ll learn these five vital lessons:

Wealth Building Lesson #1: How To Build A Solid Financial Foundation

§ You’ll learn about the two lines of money and how you can solve the two financial problems faced by everyone.

§ You’ll learn how to get out of debt in a strategic way.

§ You’ll find out if you’re adequately protected and learn the best ways to protect yourself and your family.

§ You’ll learn how to plan, organize, and manage your finances.

Wealth Building Lesson #2: How To Grow Your Money Through Mutual Funds

§ You’ll learn how mutual funds work and why they should be your basic investments.

§ You’ll learn what kind of funds are there to choose from

§ You’ll learn the various mutual funds Bo’s team has invested in and how you can invest in them too—giving you names, phone numbers, etc.

§ Finally, you’ll learn how you can create your own financial brokerage firm so that you can “buy” from yourself when you invest and thereby save huge discounts, and earn money when you offer investment opportunities to others.

Wealth Building Lesson #3: How To Grow Your Money Through Real Estate

§ You’ll learn a unique real estate “system” that doesn’t need huge amounts of capital to create wealth.

§ You’ll learn how to spot foreclosed properties and turn them into cash producing assets—even if you just want to buy your own home.

§ Finally, you’ll learn about the real-estate franchise that you can own—which will provide you sources to get funding, marketing tools, mentorship, accounting programs, legal contracts, and the step-by-step system for you to create your own real estate wealth—minimizing your failure rate drastically.

Wealth Building Lesson #4: How To Grow Your Money Through The Stock Market

§ You’ll learn how to invest in the Philippine Stock Market

§ You’ll learn the difference between long-term investors and strategic traders.

§ You’ll learn how to trade stocks on-line from the comfort of your home

§ You’ll discover the strategies successful traders use to create their wealth

§ There’ll be time for people who’ve never invested in the stocks to ask basic questions (no question will be too silly)—and there’ll be time for seasoned stock investors to ask questions too!

Wealth Building Lesson #5: How To Start & Grow Your Own Business

§ You’ll be inspired as you meet successful entrepreneurs face-to-face and listen to their stories of failure and triumph.

§ You’ll learn the keys to knowing what kind of business to get into, which is a very crucial step to succeeding in business

§ You’ll learn the 3 ways of growing your business

§ You’ll learn the importance of marketing your product—and how you need to be an expert in the marketing essentials to grow your business.

§ You’ll learn the world of the internet—and the various ways you can earn from it

§ You’ll learn all the tools that you need for your internet-based business

§ You’ll learn about the world of the inforpreneur or the business of selling information especially through the internet

§ You’ll learn the keys to successful internet marketing.

Option: Private Face-to-Face Coaching Session

If you wish, you can sit down with one of Bo’s financial coaches to create a Financial Plan for your life–your financial goals and how you can reach your goals through savings, insurance, and investments. The same people who also sat down with him and created a financial plan for his life. Through this face-to-face coaching, you’ll finally be in control of your financial life. At the end of your our one-on-one coaching session, you’ll be able to create the same step-by-step financial plan for your life. And of course, you can ask all the questions you want to ask about money, investments, etc.

Very Limited Slots Available

Because this is a Coaching Program and not a Seminar, we can only accept a limited number of participants. And we will only accept participants who are 100% serious in wanting to grow their financial life and share their wealth to others.

Email Beckie at beaconlightevents@gmail.com or call her now at (632) 7229562 (Tuesdays to Fridays, 9:00 a.m. - 5:00 p.m.) (We reserve the right to decline any application.)

If each of our mentors charged for the time spent coaching you (compared to how much they earn in their own businesses), the Truly Rich Coaching Program would be priced at P200,000++! But because of their desire to give back and help others, most of our mentors are giving their time for free or have agreed to accept tokens for their time.

To get into the coaching program, your investment is only 2.5% of that figure, or P5,975 only (inclusive of 2 power lunches and 2 snacks). This is a huge steal. (We reserve the right to change this price at anytime.

Marriage Partners and Business Partners Discount: We highly encourage married couples and business partners to attend this program together, so you’ll be of one mind and heart in your path towards financial abundance. Married Couple rate is P9,975 only. (Inclusive of 2 power lunches and 2 Snacks per person.)

Full 100% Money Back Guarantee + P500!

If at anytime along this Program, you feel you didn’t learn anything to improve your financial life, just tell us—we will return 100% of your tuition fee—no questions asked. That’s how much we believe in the wealth education of our program.

In fact, we’re so serious with this offer, we’ll even add P500 more, for your inconvenience and your loss of time in attending this Coaching Program.

Don’t delay. First come, first served. Once we reach our needed number for the Wealth Group, we stop accepting applicants. Call Beckie at Tel. (632) 7229562 (Tuesdays to Fridays, 9:00 a.m. - 5:00 p.m.) or email at beaconlightevents@gmail.com to register now.

How To Become Truly Rich Seminar

2008-07-12T22:19:00.000-07:00

How To Become Truly Rich

Seminar

By Bo Sanchez

Bestselling Author of 8 Secrets of the Truly Rich

August 2, 2008, Saturday (8:30AM to 12:00 NN)

Seminar Fee: ~~P7,000.00++~~ P475 only per person.

Early Bird Offer: The first 9 people who reserve will pay P375 only per person!

Each Seminar participant will automatically become a member of the Truly Rich Club.

Call up Beckie at o (02) 7229562 (Tuesdays-Fridays 9am-5pm) or email at beaconlightevents@gmail.com now!

how to get rich young

2008-07-12T19:59:00.000-07:00

Hey guys, I found this article that might help you in obtaining financial freedom

Nine Truths That Can Set You on the Path to Financial Freedom
By Joshua Kennon

#1: Change the Way You Think About Money
The general population has a love / hate relationship with wealth. They resent those who have it, but spend their entire lives attempting to get it for themselves. The reason a vast majority of people never accumulate a substantial nest egg is because they don't understand the nature of money or how it works.

Cash, like a person, is a living thing. When you wake up in the morning and go to work, you are selling a product - yourself (or more specifically, your labor). When you realize that every morning your assets wake up and have the same potential to work as you do, you unlock a powerful key in your life. Each dollar you save is like an employee. Over the course of time, the goal is to make your employees work hard, and eventually, they will make enough money to hire more workers (cash).

#2: Develop an Understanding of the Power of Small Amounts

The biggest mistake most people make is that they think they have to start with an entire Napoleon-like army. They suffer from the "not enough" mentality; namely that if they aren't making $1,000 or $5,000 investments at a time, they will never become rich. What these people don't realize is that entire armies are built one soldier at a time; so too is their financial arsenal.

Do not despise the day of small beginnings!

#3: With Each Dollar You Save, You Are Buying Yourself Freedom

When you put it in these terms, you see how spending $20 here and $40 there can make a differencein the long run. Since money has the ability to work in your place, the more of it you employ, the faster and larger it will grow. Along with more money comes more freedom - the freedom to stay home with your kids, the freedom to retire and travel around the world, or the freedom to quit your job.

#4: You Are Responsible for Where You Are in Your Life

Years ago, a friend told me she didn't want to invest in stocks because she "didn't want to wait ten years to be rich..." she would rather enjoy her money now. The folly with this school of thinking is that the odds are, you are going to be alive in ten years. The question is whether or not you will be better off when you arrive there. Where you are right now is the sum total of the decisions you have made in the past. Why not set the stage for your life in the future right now?

#5: Instead of Buying the Product... Buy the Stock!

Someone once asked me why they weren't wealthy. They always felt like they were putting money aside, yet never seemed to get any further ahead. The answer is simple. I told them to stop buying the products companies sell and start buying the company itself! A survey of America's affluent (those who make over $225,000 a year or own $3,000,000 in assets) revealed that 27-30% of all the income the wealthy earned went into investments and savings. That isn't a result of being rich, that is why they are rich. When the pain of getting out of the bondage of financial slavery is greater than the pain of changing your spending habits, you will become rich. Either change, or be content to live as you are.

#6: Study and Admire Success and Those Who Have Achieved It... Then Emulate It
A very wise investor once said to pick the traits you admire and dislike the most about your heroes, then do everything in your power to develop the traits you like and reject the ones you don't. Mold yourself into who you want to become. You'll find that by investing in yourself first, money will begin to flow into your life. Success and wealth beget success and wealth. You have to purchase your way into that cycle, and you do so by building your army one soldier at a time and putting your money to work for you.

#7: Realize that More Money is Not the Answer

More money is not going to solve your problem. Money is a magnifying glass; it will accelerate and bring to light your true habits. If you are not capable of handling a job paying $18,000 a year, the worst possible thing that could happen to you is for you to earn six figures. It would destroy you.

#8: Unless Your Parents Were Wealthy, Don't Do What They Did

To achieve the financial freedom and success that your family may or may not have had, you have to do two things. First, make a firm commitment to get out of debt. Find out which debts should be paid off before you invest and those that are acceptable. Second, make saving and investing the highest financial priority in your life; one technique is to pay yourself first.

Purchasing equity is vital to your financial success as an individual whether you are in need of cash income or desire long-term appreciation in stock value. Nowhere else can your money do as much for you as when you use it to invest in a business that has wonderful long-term prospects.

#9: Don't Worry

The miracle of life is that it doesn't matter so much where you are, it matters where you are going. Once you have made the choice to take control back of your life by building up your net worth, don't give a second thought to the "what ifs". Every moment that goes by, you are growing closer and closer to your ultimate goal - control and freedom.

Every dollar that passes through your hands is a seed to your financial future. Rest assured, if you are diligent and responsible, financial prosperity is an inevitability. The day will come when you make your last payment on your car, your house, or whatever else it is you owe. Until then, enjoy the process.

how to get rich young

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Passive Captures the Return of an Entire Market

If You Cant Beat em, Join em Beginner's Strategy: Investing in Low-Cost Index Funds

The Power of Automatic Investing

Dollar Cost Averaging A Technique that Drastically Reduces Market Risk

Dollar Cost Averaging: What is It?

Setting Up Your Own Dollar Cost Averaging Plan

Frequently Asked Questions About Mutual Fund Fees

Mutual Fund Management Fees And Chocolate Chip Cookie Dough You Get Your Share After The Baker Has Eaten Some Of The Dough

Understanding Mutual Fund Fees

Mutual Fund Management Fees & Operating Fees

12b-1 Fees

to continue reading this article, visit this website:

http://mutualfunds.about.com/od/mutualfundfees/a/fundfees.htm

Invest Wisely: An Introduction to Mutual Funds

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The Three General Types of Mutual Funds

Stock Funds

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Mutual Funds 101 What they are and how they can make you money

What is a mutual fund?

Closed vs. Open-Ended Funds, Load vs. No-Load

What are the benefits of investing through a mutual fund?

to continue reading this article, visit this website:

Should You Own Stocks or Mutual Funds?

Mutual Funds

Introduction to Investing: What Are Mutual Funds?

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Ultimate guide to retirement: How much should I save?

Ultimate guide to retirement: Will pensions and Social Security be enough?