May 17, 2012

You are here: Health Diaries Blog » retirement investing

High yield retirement investments and your options

November 6, 2011 By

Article by Markus Skupeika

Those who have been working for a long time must have noticed that many companies have improved on their employee retirement plans. Some would even say that employers have become more generous towards employee retirement plans.

But the situation is not the same throughout the companies. There are a lot of employees who are still suffering from rotten retirement plans that do not have potential to earn as much as possible if invested otherwise.

Take a closer look and you will find a lot of 401(k) plans where the companies are sticking to mutual funds that are low in performance. And to add to the employee misery, they often require higher amount of fees.

However, your situation is as worst as the above; it does not mean that you cannot do anything to change it. If you have enough ideas on different retirement investment plans, you can improve a lot on the situation. However, if you are not sure enough about it, you can always find a retirement advisor to offer you a customized solution for high yield investments.

However, before you go on to the next paragraph, let’s take a look at a general situation:

How much does your company contribute towards your 401(k) plan? Normally it is 50% of your own contribution. However, in many cases, company offers up to 100% of an employee’s contribution towards 401(K) plan. Just to point out, the amount that the company contributes towards a 401(k) plan is around 4 to 6% of your pay (but in most of the cases companies do not match more than 3% of your pay).

And ask yourself a question. Are you really taking the initiative to know how your funds are performing? You can always ask your plan administrator to get a complete picture on how your funds are performing. Otherwise, there are a lot of agencies in the market that can offer you a regular update.

So what options do you have to improve your situation?

Find out if your plan offers you the option of an index fund. Research shows that more than 90% of the companies offer this option in their 401 (k) plan. These funds are cheaper and offer moderate value for money. At the same time market trend shows that these funds are great at long term performance. Just take the initiative to talk to the plan administrator and invest some amount at these index funds.

You can also look forward to invest in a lifestyle fund. This option would allow you to maintain the fund in such a way that the risk factors would be reduced and your fund would become more conservative as you approach retirement date. This is a good option if you need to solely depend on your retirement savings to live the after retirement life.

However before investing in a fund for longer period, you must do critical studies on its historical performance. There are some funds that just cropped up from no where and shows great potentials • ” history says they often crack down faster than steady movers. And it all depends on how much risk you can afford to take.

Break the funds and invest some of the amount at self directed IRA. This is the best way to keep your retirement savings work for you to earn more. A lot of people invest in real estate market or even start up a company with their self directed IRAs for security and growth.

The only way to get the most out of any retirement solution is to take the best step forward on time. And you can take the best step when you have enough knowledge about it. So go ahead and know your options.

Filed Under: retirement investing Tagged With: , , , ,

Avoiding Bad Retirement Investing Strategies

November 3, 2011 By

Bad retirement investing methods aren’t that easy to spot, as even some so-called retirement experts and investment planners advise many an unknowing worker on how to integrate these into his or her retirement planning. The worst offenders are the universal sustainable withdrawal rate, or the exact percentage of income replacement that supposedly work for all retirees. These concepts can contribute to your financial ruin, or can be useless, at best.

If you’ve reached the normal retirement age of 65 and have enough to add ,000 yearly to your Social Security benefits for the same period, you may be able to survive on a million-dollar nest egg. If you don’t have the aforementioned figures, don’t expect a million dollars to last the rest of your life.

Also, a nest egg that can give you 75%-80% of your income while you were still working isn’t a sure thing for retirement, and so are the other recommended percentages. These serve as a very loose guideline to help you start estimating how much you should set aside, but the actual amount depends on your personal situation (which includes an overwhelming number of factors such as inflation rates, profit growth, investment losses, taxes, and so on).

To illustrate that there’s no such thing as an absolute figure for income replacement or sustainable withdrawal rates, for example, assume that you’re married and earning a joint amount of 0,000 yearly. Also assume that you spend about 50% of that yearly while living on the bare necessities. That estimated ,000 in annual expenses is bound to change as some expenses (such as the costs of commuting) can drop when you retire, while others (like utilities) may shoot up dramatically. If you use credit cards, savings, or home equity to support a comparatively luxurious lifestyle, the financial situation changes even further.

Bad retirement investing and planning comes in all shapes and forms. While absolutes such as a specific sustainable withdrawal rate, percentage of income replacement, and an exact amount for your nest egg can be comparatively easy to spot and avoid, there are other strategies and methods out there that can erode your nest egg rather than boost it. Talk to your investment planner or financial advisor for more information.

Filed Under: retirement investing Tagged With: , , ,

Costs Are Eating Up 75% Of Your Retirement Investment Returns

October 31, 2011 By

Article by Patrick Millerd

As you carefully invest for retirement have you ever considered how much money you have lost from costs? Are you aware that the people making the money are the financial institutions, advisers and specialists who are skimming off apparently small amounts? Growing and filling their nest egg at your expense.

The numbers are eye opening. A simple calculation shows that the average costs of these advisers, asset managers and investment specialists will, over a 40 year period, crush the “real return” on your retirement savings by about 75%.

The “real return” being the actual amount that you gain after taking away the effect of inflation.

This is based on the average so in many cases the real gains may be completely wiped out by the costs. So after saving for 40 years you may have gained nothing!

A study carried out in 2004 calculated that the average administration costs of a retirement fund are about 3% of the asset value every year. Over a period of 40 years each 1% in costs reduces the final value of your investment by about 30%.

To explain in cash terms the following example explains the loss as a result of these costs:

Assume that you save 0 a month for 40 years and earn an average real return of 5% you will end up with 3 000. This is made up of 0 000 of your contributions and 3 000 of investment gains. With costs of only 1% the 3 000 will be reduced to 1 000 – a loss of 2 000! With costs of 3% the investment that was going to be 3 000 has now been halved to a measly 6 000.

Many retirement funds have costs higher than the average of 3%. So there are many, many retirement fund investors who receive little or no real investment returns after 40 years of saving.

To create the illusion that these numbers are insignificant the costs are quoted as a small percentage. It may based on a percentage of your contribution or based on the total assets. It is very easy to be fooled into believing they are not important.

If this was honestly explained you would understand that with a real return of 5%, a cost of 1% there will be a reduction of 20% in your investment return. You would be fully aware that 60% of your real return would be lost with a 3% cost, and your real return will be zero with 5% costs!

These examples have given you a true idea of the impact of costs on your investing for retirement. As you consider your retirement investment options make sure you fully understand the impact of this “little number” which can actually eat up all benefits that you expected to receive. Your quality of life and retirement options available to you may be completely changed by this measly 3%!

So be aware, your investing for retirement may be a futile mission if the advisers, product providers and asset managers are the ones getting the cake while you are lucky to pick up some crumbs!

More Retirement Investing Articles

Filed Under: retirement investing Tagged With: , , , ,

Things to Consider Before Financial Planning For Retirement

October 28, 2011 By

The retirement plans from insurance companies don’t seem sufficient enough in the current wavering economy. Consequently, people are now inclining upon investment plans and the investment market too is offering new temptations everyday.  Every investment plan can not be ideal for all therefore guidance of wealth management advisor is necessary to choose the right direction. Right orientation and clear vision of future liabilities ensure the success of financial planning and that’s the job of your wealth management advisor. Still one should consider a few things before initiating a financial plan. Let’s look through some essentials of financial planning for retirement:

Don’t risk your present for future: The thumb rule of financial planning for retirement is to prevent the comfort of your present. A good financial planning, where you need not to compromise with your current life style.
Make short or half yearly investments for post-retirement: When you are planning for retirement, go for small investments that can not be withdrawn before the estimated period of post-retirement even in the case of emergencies. A small monthly portion or a certain percentage of half yearly income is enough for the task.

Estimate the ratio of post-retirement monthly expenses: Generally, according to your life style and health costs, the estimated post retirement monthly expenses should be 75% your current monthly income. Wealth management advisor also advise you to keep some savings for future investment, so that you keep earning even after retirement.   A carful planning can bestow work free retirement and who knows if your finances allow you the world tour.
 
Consider relocation: Don’t forget to think about relocation. Does your financial planning for retirement makes it mandatory to buy a smaller house? If you are planning to invest into real estate after retirement then capital can be obtained by downsizing your home.

Liability towards dependents: Estimate the years of retirement and count your possible liability towards dependents if any. Wealth management advisors also suggest you some flexible plans, in which a certain portion can be withdrawn right at the time retirement while the rest can be secured for rest of the years.

Life is full of uncertainties but an adequate financial planning can make life pleasant till the last breath. Checks and Balances TV is an endeavor towards making people aware of prevention from the post-retirement financial woes. Checks and Balances TV is America’s number one source for financial advice providing latest updates in newly introduced investment plans. Live experts assist you in your farsighted financial planning for retirement in a very minimal cost.

Visit checksandbalances for information about another service financial planning for retirement.

danielamerman.com What happened to the value of your retirement portfolio? Why is worth much less than you had been told to expect? In this video, author and financial expert Daniel R. Amerman, CFA, explains the fatal flaw that has always existed in the conventional financial planning model, why what was bad advice in the past is still bad advice today, and introduces a different approach to achieving financial security.

Filed Under: retirement investing Tagged With: , , , , ,

Retirement Investments–Act Now For Protection Later on

October 4, 2011 By

Article by Tom McClure

You already know that if you want to have security in your retirement, you need to act sooner instead of later. The ideal age to start might be 20. But your investments will still add up to much more money if you start investing at the age of 40 or even 50 instead of waiting till you are nigh unto retirement.

There are several strategies that you can use for your retirement investment plan. But unfortunately, there is no strategy that is totally free of risk.

If you want to use savings to fund your retirement, you will probably want a strategy that entails the least risk. In that case, you might consider investing in T-bills and bonds. There is no risk to their face value over time: the face value always remains payable. However, there is a risk to the time-adjusted value, the spendable value, of your T-bills and bonds. That risk is inflation, which fluctuates unpredictably and may make your savings worth less than you could have predicted. The healthy interest rate of today may be a sickly thing in the future.

Banks and insurance companies offer many different plans that you can include in your retirement strategy. You can have the security of dealing with the larger financial institutions that are generally conservative. But the face value of your financial instruments and their interest rates are still subject to the erosions of inflation.

Because of inflation, you may want a strategy that places some of your investments in assets that will usually rise in value commensurately. The best example is real estate. You can, of course, start by owning your own home. After that, you can look at owning rental properties, improving fixer-uppers, joining a realty investment group, or otherwise profiting from the maxim, “God quit making land but He did not quit making people.” The biggest risks in real estate are sudden, unexpected expenses such as repairs and unpredictable changes in the real estate market. Still, real estate is the investment that is most likely to keep up with inflation.

If you want some gamble in your retirement investments, you can roll your dice in the stock market. You might gain a good amount of money overnight–or you might lose it. The risks in the stock market are many, including, but not limited to, fraudulent offerings, “stock brokers” who are hardly more than phone solicitors, war, OPEC, and selling frenzies. Still, you can not shun the stock market for your retirement investments without considering that many people and institutions have made desirable long-term profits. Indeed, some of the institutions where you place your money for “safe” interest are putting some of that money into the stock market. If you are not an expert, you can minimize your risk by investing in mutual funds, thereby benefiting from the expertise of the fund managers and your share in diversified purchases.

If you are alive, you have risks every day. Lifting a cup of hot coffee entails a risk, as does stepping off a curb. Reduce the risks in your strategies for retirement investments by study, careful thought, consultation with experts, and diversification. Then you can look forward to your retirement with a sense of security.

Related Retirement Investing Articles

Filed Under: retirement investing Tagged With: , , ,

Essential Info About Retirement Investing

September 30, 2011 By

Article by Cindy Heller

I do not know what retirement might mean for you, but for those who have worked their entire lives, it means the relaxation they have been looking for, while for other people it may mean the fulfillment of their desires and expectations, so their retirement investment is a means for them to do their favorite activities. If you want to choose the correct retirement plan and to make a proper retirement investment, there is a great variety of companies you can turn to for guidance. In order to avoid unnecessary risks, you should do some research and find out the essentials about retirement investing, so here are some important aspects to consider.

Can Retirement Investing Really Help Me?

In order to avoid losing all of your money in case of a company problem, it is always better to invest your money in a company other than the one where you have your retirement plan. The first thing to consider when choosing a company is its stableness and reliability.. There are many scams prepared for retirees. Many of them have been robbed their entire lives’ savings in the hands of these fake companies.

A little research can save you a lot of trouble

It is always very important to take all the necessary steps to find out about the company’s honesty, seriousness, and reliability in order to avoid loosing all your money. Although it sounds pessimistic, it is always better to be prepared for the worst situation when it comes down to investing. Never invest more than what you can afford losing. Remember that the chance is 50-50. Avoid risk as much as possible. It is even possible that you earn millions if you are smart and careful enough, and you may end up enjoying your old age as you would have never imagined before.

A Useful Piece Of Advice.

Always remember that the earlier you start taking care about your retirement, the better off you are going to be in the future. If you begin planning early for you retirement and retirement investing, you will be the owner of your own destiny, so you will be free to do as you like, when you reach retirement age or even before, if you want to. Remember that we are talking about enjoying life t make up for all those years of pleasure and sharing with your family so it is worth the sacrifice.

Filed Under: retirement investing Tagged With: , , , ,

Segment one, Part 1: How to get the most from your investments in retirement

September 26, 2011 By

Paul Merriman, founder of Merriman Inc, an investment advisory agency in Seattle, discusses what he believes are the most important measures to just take in purchase to grow to be a productive investor.

Filed Under: retirement investing Tagged With: , , , , ,

Retirement Investment Techniques Quiz – Are You on the Appropriate Track to Investment Success?

September 22, 2011 By

How safe is your retirement money? Do you have faith that it will grow — and do so safely enough and quickly enough to help you enjoy your retirement? Take this quiz and find out if you are using the retirement investment strategies that will make that happen:

1. Do you believe you can time the market by following your gut feelings?

2. Have you lost a lot of money during the last two years?

3. Do you have all or most of your money in mutual funds?

4. Do you get your investment advice from your insurance salesman or your friends?

5. If you do have an investment advisor, does he or she get paid through commissions?

Here are the answers:

1. Making investment decisions based on your gut feelings has gotten a lot of people into big trouble. Instead of buying low and selling high, which would result in profits, your emotions are bound to guide you in the opposite direction. What works much better is to develop sound retirement investment strategies and create a plan with the help of an experienced fee only financial advisor — and then sticking with that plan, unless your advisor suggests other actions.

]]>

2. Chances are your answer to this question is yes. Most investors have lost huge amounts of money during the last two years. How can you prevent that from happening again? By going with safer investment strategies. Talk with your investment advisor about the absolute return investment strategy — which is designed to help preserve and grow money safely.

3. If you have a 401(k), an IRA, or a similar retirement plan, chances are good that the answer to this question is yes. Unfortunately, that’s not in your best interest. Did you know that most mutual funds perform less well than even their benchmark index funds? And if this weren’t bad enough, mutual funds also come with hefty fees to pay for the fund managers, advertising, and more. What’s the alternative? There are several, but the easiest and least complicated would be to buy shares of index funds. They’re bound to perform better and come with reduced costs.

4. Just like you want a medical specialist if you have a serious medical problem, you also should talk to someone who specializes in investing if you want investment advice. Your friend may have had a winning stock at some point, but chances are good that he or she doesn’t know too much about the reasons why this stock did so well, and would be unable to replicate that performance with other investment vehicles. If you want expert advice, it’s always best to talk with an expert.

5. This is a key question. If your investment advisor is paid in commissions for their advice , they’re not working for you. Be sure to ask any prospective advisors how they get paid, and look for fee only advisors. That way, you know that their fiduciary responsibility lies with you.

So how did you do? If you answered yes to even just one or two questions, you could probably get much better results by consulting with an experienced investment advisor. If you answered Yes to more questions, you should definitely get expert help with your retirement investment strategy.

Filed Under: retirement investing Tagged With: , , , , , ,

How to Faucet into the Green Revolution with Green Investing

September 10, 2011 By

Green Investing is a massive element of my retirement portfolio. When I was pondering about my retirement investments, I ultimately acquired to considering, “what excellent is investing now so that I can have enjoyable in retirement, if the planet will be a dump by the time I retire?”. This assumed led me to the conviction that I should dedicate a part of my retirement price savings to green investments.

If you feel, as I do, that the Obama administration will commit a lot of money on green systems, it may possibly be a very good notion to jump on the bandwagon, ahead of absolutely everyone else.

In this post, I describe how I have allotted the money in the green investing component of my retirement portfolio amongst four Trade Traded Funds (ETFs). If you want to understand far more about how effortless it is to get and market an ETF, you can examine the eHow article that I wrote about it (see the link below).

Guidelines

Stage 1 Here’s my green investing strategy: Very first, I never know a lot about which specific companies are standouts in green systems, but i do know that there are several green investing money that make it their enterprise to locate the very best green technological innovation organizations, and do some green investing in them. The two funds are PBW, which invests in (primarily) American green technologies businesses, and PBD which invests in global green electricity businesses.

Most of my green investing portfolio (70%) is split amongst these two cash, this is meant to give me coverage to the international green revolution, but with a heavier focus on American green technology organizations.
Action two The other thirty% of my green investing is split in between two other green investing funds, that play an essential role in retaining the planet green.

PUW is a progressive energy fund, which signifies that it invests in organizations that make existing power resources greener in the course of the changeover to green electricity. Because I know we can not get rid of coal vegetation overnight, I may well as properly motivate organizations that consider to make present coal vegetation cleaner!

EVX is a fund that invests in environmental services organizations, which generally figure out techniques to deal with the waste that our civilization inevitably results in, by way of our individual lives, and by means of sector.
Phase three The funds that I mention in this report seem to be to be a good blend, that reflect my priorities for the green revolution. You don’t have to use the exact same green investing combine, but I assumed that I would share my method in hopes that it will be helpful to you when you are creating yours!

Ideas &amp Warnings
An extra bonus of green investing is the feeling you get, that your cash is actually operating to serve by yourself, your young children, and everyone else on earth at the exact same time!

Filed Under: retirement investing Tagged With: , , , ,

How to Pick Investments in Your 401k or IRA

September 6, 2011 By

Millions of workers have the opportunity to participate in a 401k retirement plan via their employer. Unfortunately, most people are not very well informed about stocks, bonds, mutual funds and ETF’s or how the Financial Services Industry works. The purpose of this article is provide enough information for the average investor to grow their retirement capital in the most efficient, safe and inexpensive way.

Like the majority of people these days, we all seem to be burning the candle from both ends trying to raise our children the best we can, manage our households and stay employed. It’s no wonder that the number of 401k and IRA investors actually spend very little time choosing how they invest their retirement money. I have seen all kinds of far out methods for how people choose their retirement investments, none of which are advisable and are pretty much guaranteed to rob you of thousands or tens of thousands of dollars that you would have had to pay for your needs when you are retired. Let me give a couple of examples.

Say hello to Scatter-Gun Sue. Scatter-Gun Sue has a 401k retirement plan sponsored by her employer. Her 401k plan offers her a total of seven investment choices, and since Susie doesn’t really know a lot about this stuff she decides to just evenly distribute her contributions to each of the seven choices. Hey, at least she’s diversified right? WRONG. Not only will she be way outside the realm of diversification, she will be losing much of her potential gains to the fees imposed by each investment.

Now let’s meet Company Man Chris. Chris works for a company that offers his company stock as an investment option in his 401k. Chris thinks his company is going to blow up big one day like Google or Microsoft so he puts 100% of his retirement money in his company stock. That must be a smart move since all his managers tell him what a great company they are and how they are all going to be rich one day. Besides, it worked for Google employees. But don’t forget the ones that it didn’t work for like Enron, Nortel, WAMU, Countrywide, Bear Stearns, Lehman, Merrill Lynch and the list goes on. You already get your income from your company and if you own a mutual fund you probably own your company stock as a portion of that fund. So if your company hits a bump in the road you don’t want to lose your current income and your retirement money. That is definitely not diversification.

You may have noticed that I keep mentioning diversification. Diversification is how you manage risk to your portfolio. The more diversified you are, the less risk you are taking. And since we are discussing retirement money, not discretionary money or fun money, then we want to take the minimum amount of risk necessary to grow our money at a rate that will beat inflation after fees, taxes and expenses. I will show you the best way to invest your retirement money that will give you diversification, the lowest fees and expenses and promise a return that few other investment vehicles can consistently beat.

Are you ready for the big secret? Well, I have to tell you upfront that this is not exciting or flashy. It does not require you to pay a broker or manager exorbitant fees. It does not involve derivatives, margins, credit default swaps, double shorting or any of that Wall Street jargon designed to make the average person believe they need to pay someone to manage their money. The big secret is index funds. Yep, plain old index funds. For starters, index funds are passively managed meaning there is no hot stock picker making millions of dollars from you the investors to try and beat the market. This allows index funds to have the lowest fees out there, less than 1/2 % with most. Fees really add up over the years as they eat away at the gains you made. Actively managed funds have fees from 1% up to 4%. So if your actively managed fund beat the market by 2% but you paid 3% in fees, then you actually trailed the market by 1%. Get it? The market is typically the S&P 500 Index or the Wilshire 5000 Index. These are the two benchmarks most stock funds attempt to beat, but rarely can. There will always be some fund out there that beats the market once in a while, but this is your retirement we are talking about. You want to match the market benchmarks consistently since no one can consistently beat the market.

I  highly encourage you to take another look at your 401k or IRA and invest your money this way. Invest in a stock index fund that attempts to mirror the S&P 500 Index or the Wilshire 5000 Index. Then invest a portion of your money in a Bond Index Fund. These two or three funds will mitigate your risk through diversification and offer the best consistent returns you will find at the absolute lowest cost to you. Take a look at Vanguard Funds; they invented the index fund back in the 1970′s and offer the lowest costs for index funds you will find for the average investor.

And for all you superstar day trader types, good luck. I would love for etrade, Schwab or Scottrade to show some data that demonstrates the average returns for day traders. I bet the majority are losing small fortunes paying all those commissions for each trade and trading way too often. Don’t get caught up in the drama on CNBC and Fox Business that leads you to buy stocks because some analyst says they are hot. Ever heard of Efficient Market Theory? This theory says that the prices of stocks and bonds take into account all available information. This means that whatever the current price of a stock is it has already adjusted to any news good or bad. So in order to beat the market you would need to get information no one else has about a stock and execute on that information before the stock price goes up or down. This would sometimes possible years ago, but with technology comes efficiency and the more efficient markets are, the harder it is for you to beat them. Oh, and that guy screaming buy, buy, buy on TV, the information he is giving to you has already been disseminated and the stock price already reflects it. So you don’t stand a chance picking individual stocks, you may as well go to Vegas.

Filed Under: retirement investing Tagged With: , ,
« Older Posts