retirement planning

Say Goodbye To The “McMansion” – Downsize

Retirement has changed radically over the last several decades in America. Years ago, you expected to work most of your life for a single, large employer and you then count on a pension. “Retirement planning” meant figuring out how to use your free time. Today, in all likelihood you will be living in retirement on money you, yourself, saved.

Moving to a smaller home may initially be challenging for a variety of reasons, including emotional, but smaller spaces can be better. For most people it offers a more practical lifestyle; there’s less to manage, clean, and maintain. Of course, there’s also less space and accompanying expenses to pay for too.

For many active adults, a smaller home makes good financial and practical sense. Newer designs use efficient floor plans, large windows and multi-functional rooms to make smaller homes feel more spacious. They let you save money upfront and during day-to-day living.

The absolute best retirement investment that will fit into any retirement plan is to have a debt-free home. That means to pay off the home mortgage as soon as possible, then use the money that was paying mortgage payments to start a retirement account or reinforce an existing one.

Rural communities are a great alternative to the more costly larger cities like Atlanta, Birmingham or Chattanooga. Many retirement-aged investors are opting for Weiss Lake Real Estate and the gated mountain community of The Bluffs.

Some of the most common reasons we hear for a downsizing move by seniors are the following: 1)lower household costs; 2) lower property taxes; 3) lower crime rates; 4) a closer knit, more friendly community; 5) more attentive and caring healthcare services; 6) an opportunity for a more active retirement in the outdoors; and 7) less traffic and congestion.

In downsizing your real estate investment, look for opportunities to capture character and uniqueness without giving up too many of the comforts you are accustomed to. You will be amazed how much more you can get for your money in a rural community like we mentioned above.

Combining mountain views lake views and river views from all homesites the Weiss Lake real estate at The Bluffs offers one of the most affordable and attractive alternatives for people wanting to downsize. The Weiss Lake Southern Living Showcase Home is located in this gated mountain community and it highlights just how economical and energy efficient a downsize home can be.

retirement planning

Evaluating Interest Rates Of Various Types Of Financial Accounts

The interest rates of banks is not surprisingly highly correlated to Federal Reserve policies. During rocky economic times, such bursting of the dot com bubble of the late 1990s and the real estate crisis of the 2007 in the United States, the Federal Reserve dramatically reduced interest rates in an effort to stimulate the economy. While this was good for people whose livelihood depended on access to credit, the low interest rates were damaging to those who were savers.

One way of viewing these actions is that the government is discouraging people from saving. The low interest problem savers face is made more acute by the fact that inflation slowly makes saved money worth less. Savers face the low interest rate problem most commonly at large institutional banks, especially those whose business spanned state borders and could leverage economy of scale. This has forced savers to turn to less conventional ways of saving money in low risk investments.

Interestingly, some small-town banks are able to offer higher interest rates than the big banks. This may seem paradoxical except for the fact that the high interest rates are usually tied to restrictive conditions. Therefore, if a customer is willing to put up with such restrictions he or she may be able to take advantage of high rates.

For example, the banking client will often have to set up direct deposit for the monthly paycheck with the small bank guaranteeing them a steady stream of increasing deposits. Moreover, the small bank might demand that the client use the ATM card as a check card for transaction purposes which increases the fees the bank can collect from businesses.

Another possibility savers have is an internet bank. Some banks do not have physical operations which reduces their cost and increases their capacity to offer high interest rates. Internet banks also must attract customers without the benefit of a face-to-face sales pitch. High interest rates are a way to entice otherwise wary customers. Some websites offer comparisons of internet banks, interest rates, and trustworthiness.

If the traditional bank account still does not fit the bill, one may turn to a money market account. These are offered at both banks and financial institutions. The standard money market account is FDIC insured with interest rates slightly higher than run-of-the-mill checking accounts. The restriction usually entails an upper bound on how many withdrawal transactions can take place within a time frame, usually six months.

During times of low interest rates, one must be prepared to think outside the box for finding a way of saving money and making the money grow. The tactics discussed above are but three examples of a bigger universe of financial options, among which are bond funds and high yield mutual funds.

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retirement planning

Understanding Mutual Funds Of The Last Ten Years

The last ten years have been severely unkind to mutual fund investors. Four of those years were positive in returns, but another four were negative while the remaining two were not much different from flat. The end results is that the cumulative compounded return of the last decade was effectively negative were inflation to be factored into calculations.

The end consequence is that a lot of investors have given up on the stock market and mutual funds, electing instead to pour their money into different kinds of financial instruments. A few of these are discussed below. However, we offer our readers the same warning that such investments while carrying less risk are nevertheless not risk-free. There is always some chance of losing money that is invested. Indeed, even if the money were put into the bank for deposit it can still be wiped out by a bank failure barring FDIC insurance.

A money market deposit account is a sort of investment security for citizen investors focused on keeping assets in a safe, accessible place simultaneously gaining higher earnings than a traditional checking account. Where can an investor start a money market account ? It so happens that the regional branch of a national bank sets up such accounts. In addition, one may set up an account online by way of internet banks.

One is advised to be aware that a money market account is not to be confused with a fund. The first is the offering of one bank and guarantees an interest rate. The second is a portfolio of money market securities and does not have one interest rate, rather appreciating at varying returns over time.

One kind of fund that is not well-known is the GNMA mutual fund, in contrast to the sister Fannie Mae and Freddie Mac. All three manage to property buyers and profit handsomely from the interest payments. The astute reader will recall in recent years Freddie Mac and Fannie Mae were mauled in the property bubble of late 2000s. However, Ginnie Mae survived largely unhurt and likely is in a vastly superior position. A mutual fund investing in greater than 85% of total assets in GNMA-related securities is called a Ginnie Mae fund.

The day-to-day operations of a government, such as running a police force on the city level, or the city college system functioning on the state level, relies upon loaned money. Temporarily obtaining money at these amounts is carried out via the selling of bonds, essentially guarantees by the government to repay plus interest. People buy into bonds for what up till now has been a very trustworthy promise of return and investment profit.

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retirement planning

Learn About Alternative Mutual Funds

There are a number of choices for investing, or as financial advisers put it, ways of making your money work for you. Some investments take the form of buying property and renting it out for regular payments, and other investments involve purchasing gold and hoping that the price will appreciate. A very common type of investment is buying shares on the stock market. An investment in stocks is an expression of the belief that the issuing company will do well and the investor can share in the spoils.

The biggest disadvantage of purchasing shares of stock of individual companies is the tremendous day-to-day volatility of prices. The sharp up and down movements of stock prices is favored by day traders who try to profit on intraday trading. However, for the average investor such volatility is disconcerting and even damaging in the long-term.

In order to take advantage of the stock market but avoid the volatility of single stocks, financial companies have come up with mutual funds. A mutual fund is effectively a bundle of different stocks. Price fluctuations are damped out in the bundle, because on average the down movement of one stock is balanced by the up movement of another. Furthermore, as the economy expands and companies grow, the mutual fund should also rise in price per share.

What is not known to many investors is that mutual funds can contain more than stocks, even the high yield mutual funds. Some mutual funds are focused exclusively on corporate and government bonds which not only fluctuate in value but also pay a return over time (when the underlying bond matures). Other types of funds include real estate, commodities, short and long term bonds.

As mentioned before, bond funds are mutual funds which contain many bonds. Bond may include United States Treasuries as well as corporate debt which show a distribution in length of maturity as well as yield. Sometimes bond funds are divided into short, medium and long term, three terms that describe the maturity length of the component bonds.

A real estate fund is one which depends on the value of the underlying real estate, which in turn is managed by the government agencies Fannie Mae and Freddie Mac. A lesser known entity is Ginnie Mae which handles safer, less distressed mortgages. The real estate fund derives its growth from both rising value and the steady, continuous payments of those who have not defaulted on their property.

Finally, commodity funds are made up of financial instruments that derive their value from underlying commodities. Commodities usually refer to exploitable minerals or fuel such as gold, silver, petroleum, or farmed products like soybeans and oranges. The value of commodity funds goes up and down in accordance to scarcity and demand of the underlying commodities.

Even if the investor is purely interested in index funds, fees can take a large chunk of income from the investor. It may be wise to consult a firm that specializes in no load index funds.

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retirement planning

Contrasting Mutual Funds And Growing Low Risk Investments

Every investor must consider two things when investing his or her money. The first is the expected rate of return on the investment, the other is the risk. To understand what this means, we can consider a simple example of a stock that overall shows only two kinds of behavior. At the end of the year, there is a 95% chance it doubles, but also a small 5% chance that it gets wiped out.

For an investment with this simple kind of behavior, one can compute the rate of return to be at 90%. This is a monstrously high rate of return. But the average return value masks the fact that there is a pretty good chance that the investment will be completely lost. Therefore it is not considered one of the low risk investments.

Of course all stocks exhibit a kind of randomness and stochasticity, therefore all stocks have both averaged rates of returns as well as risk profiles. A case in point is the junk bond, usually issued by a company that is in dire straits or at the verge of bankruptcy but needs money that is not forthcoming. The bonds have very high rates of return but also can default completely if the company also falls apart.

Other investments should be evaluated on the basis of their risk versus reward.

A money market deposit account is a sort of investment security for individual investors interested in keeping assets in a secure, accessible locale while accruing more interest than a traditional savings account. Money market accounts are likewise guaranteed in the event of a bank collapse by the FDIC. The investor needs to realize that a money market account is not identical to a money market fund account. The former is the offering of one bank and guarantees an interest rate. The second is a portfolio of money market securities and does not have one interest rate, instead offering slightly changing returns over the life of the fund.

An oft-overlooked treasure in the financial world is the Ginnie Mae fund, often eclipsed by the related companies Fannie Mae and Freddie Mac. The trio are in charge of real estate borrowing but GNMA funds are considered the most conservative. Readers will recall in recent years Freddie Mac and Fannie Mae got pounded in the real estate bubble of late 2000s. Despite this, Ginnie Mae survived largely unhurt and likely is in a much better position. SEC rules still demand that GNMA-titled funds to invest more than 80% of assets in GNMA-related securities.

The day-to-day activities of a government, such as ensuring police are doing their job on the city level, or the public college accepting students on the state level, relies upon loaned money. Such a large scale borrowing has no hope of being accomplished using a regular bank, but must be self-financed via the distribution of bonds that are guarantees of repayment. Private investors, companies and even countries buy bonds issued by the United States government on account of historical performance and robustness of the United States economy.

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retirement planning

Risk And Stability In Top Mutual Funds

For the last 5 decades, stock market equities have been just about the best investment possible, with yearly returns that are much higher than comparably accessible financial instruments. On good years the returns can exceed 25% although on average it has hovered near 10% Other types of financial instruments such as bonds and CDs do not come close. However, before opening up an account it is nevertheless important to understand how to assess mutual fund returns and find out about the top 100 mutual funds.

The primary way of evaluating whether a fund is a top 100 mutual fund is to look at its average return over several years, if not decades. However, the return is a number that by itself means very little. Instead, it must be compared to the performance of the entire stock market. So a good fund should exceed the average returns of 10% of total stock market indices.

The second typical way of assessing top mutual funds is to examine the volatility. Some funds may have high returns some years, but are extremely volatile. The factor known as beta is a measure of relative volatility, again compared to the broader stock market. A beta of greater than 1 means the mutual fund is more volatile than the stock market.

Mutual funds have fluctuating returns. It is important to contrast them with investments that have stable returns as in the following.

Individuals who are curious about stable yields but higher yield than a savings account might ponder over the money market account. Such accounts are kept in mostly very short term securities. At what institutions might an investor start a money market account ? It so happens that the little branch of a nation-wide bank has the power to offer these accounts. In addition, one may open an account on the web through online banks. Those who are concerned about the trustworthiness of internet-only banks should be comforted as long as the banking institution is licensed, deposits are insured by the FDIC in case of a disastrous collapse.

A government-related fund that is very stable is the GNMA mutual fund, especially when compared to the sister Fannie Mae and Freddie Mac. The trio manage to real estate consumers and benefit from the gains. Most interested people will recall in recent years Freddie Mac and Fannie Mae got severely damaged in the property crash of late 2000s. Not all mutual funds can call itself a Ginnie Mae fund. Only those that invest than 80% fraction of money in GNMA securities are so entitled.

The final, stable investment we consider is the bond. The daily activities of a government, for example keeping a police force active on the city level, or the city college system functioning on the county level, depends upon loaned money. This loan cannot be done through a regular bank, but must involve the sale of bonds that are promises of payment. People put their money into bonds for what up till now has been a highly reliable promise of yield and absence of risk.

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retirement planning

Hiring A Personal Finance Company And Budget Management

The great misfortune of modern financial knowledge is that it must be learned by oneself or at least passed from one generation to the next in a family, rather than being part of our regular schooling. There are some stirrings afoot for making finance a part of high school courses, but that movement has yet to become mainstream. As a result many people blindly feel their way through the complexities of finance. A personal finance company can help guide the way.

What is a personal finance company? It is a company that is designed to assist people, and sometimes small businesses, in financial matters. Its associates have knowledge and experience in a variety of money matters, ranging from personal taxes to corporate finance. Moreover, they are skilled in hands-on work, for example putting together tax paperwork, calculating through the consequences of financial actions, and suggesting alternates to save money.

A good example is how a personal finance company can step in when the taxes are due for a sole proprietorship or small business LLC. In both cases, the personal finance company collects receipts incurred by the business, categorizes them, and then separates them into deductible versus non-deductible groups. This can help maximize allowable deductions for businesses.

There are many other important methods of budgeting in addition to using a personal finance company.

It is likely that your monthly phone costs is too much if you have an old plan. Identify a good personal finance online place and input all the pertinent information regarding your current cell phone plan, then you can compare it to plans that are suggested on the market today. A useful online place offers a listing of phone plans that are suggested in your area and will work with what you need. There may additionally be a tool on the site that compares the cost of any modern phone plans with the cost of your active phone plan.

In the event that you buy a large appliance, it may drain your budget when you buy it, then continue to drain your budget when you run it. Every consumer site will tell you that it is important to find out about the energy star ratings and energy requirements of an appliance before purchasing it. An intelligent consumer can save a lot of money on energy during the year. Products that possess the energy star rating issued by the government can save you about half of the usual amount of energy which is a great deal.

If your job is considered low-risk by the Bureau of Labor Statistics, you may be able to save some money on your health insurance rates. Some fairly “safe” jobs are teaching and accounting which enables lower costs on health coverage. Additionally, you can get your prescriptions at reduced rates from stores like KMart, Walmart, and warehouse stores like Sam’s and Costco. In any case, monthly health care payments will likely remain difficult to manage.

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