Tips Guides

Over the last 8 days, the Dow Jones Industrial Stocks have lost 13.6%, which is roughly 1,500 points. While this does not qualify as the largest drop in stock prices in history, it is hurting Americans who have money in the stock market and in pension and 401K plans.

According to the Associated Press a top congressional budget analyst now says that pension plans have lost as much as $2 Trillion over the last 15 months. CNBC’s analyst, Jim Cramer, was quoted on the Today show as saying Whatever you may need for the next five years, please take it out of the stock market. Right now. This week. I do not believe that you should risk those assets in the stock market.

All the combination of all this news has a number of effects on senior homeowners who thought they had a retirement strategy in place to last throughout their retirement years.

Some senior homeowners are being forced to put off retirement. Some who are already retired and have been living off of their investments have been shocked to see their latest statements only to find that their assets have shrunk dramatically. Many cannot easily re-enter the work force nor do they wish to do so at this stage of their lives. For some, the shock of seeing their lives suddenly altered regardless of their careful planning is devastating.

For many senior homeowners the government-insured Home Equity Conversion Mortgage(HECM or Heck-um) is a viable alternative. The HECM allows eligible senior homeowners to eliminate mortgage payments for life and in many instances, receive a monthly payment to subsidize their income.

The recent legislation that passed, H.R. 3221, raised the national limit to $417,000 for the HUD HECM loan and therefore more borrowers than ever before will be able to take advantage of this program (HUD has not released the effective date of the new limits as of this time but it is expected that they will do so on or before November 1, 2008). Government Reverse Mortgages allow borrowers access to their equity, do not require monthly payments and the seniors always own their home.

Interest rates, borrowers ages, property values all have an impact on the amount for which a borrower will qualify. With the recent increases to the LIBOR (London Inter Bank Offered Rate) margin and with the decrease to housing values in much of the nation, the effect has been one of of eroding the amount a borrower can receive on a reverse mortgage.

Borrowers who were shopping just a few months ago have in some instances been surprised when they made the decision to continue with their reverse mortgage, only to find that the margins had risen on the loans and they were now eligible for less money.

The silver lining in the cloud however is that there are still fixed rate programs available with very low interest rates (if you are paying off a current mortgage and want to take all your proceeds up front - you cannot take a monthly payment with a fixed rate HECM). There are also some Constant Maturity Treasury programs available and those rates have recently dropped making them still very attractive as well.

The end result is that if you or a loved one are 62 or older and own your own home and have recently seen your retirement funds shrink with all that has happened in the financial markets, before you panic, you may want to take a good hard look at this government-insured program.

Michael G. Branson (CEO All Reverse Mortgage Company)is a Mortgage Broker who has over 31 years of mortgage banking experience. Toll Free (888) 801-2762
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IRA vs 401k? This is the question you should be considering as you rollover your previous retirement accounts. Do you want to eventually have those funds invested in a new employers 401k or stay in one of your individual retirement accounts? As usual, the answer boils down to personal circumstances, but lets take look at some of the benefits of both.

To start off with, we must specify that the individual retirement account option is a standard IRA, not a Roth. Since the retirement money is being moved from a previous tax deferred account, placing that money in a Roth would trigger taxes and a heavy early withdrawal fee of 10%. This must be avoided at all cost.

No, the retirement account we are referring to is a traditional IRA, which still leaves many options to choose from. It could be a self directed individual retirement account, which will allow you to invest beyond the typical stock and bond market, a bundle of retirement accounts with different investment strategies, or a simple IRA with all of your funds placed in index funds.

Now that that is established, we need to take a closer look at what can benefit you most in the IRA vs 401k argument.

One area to examine closely is flexibility of retirement account. As you can tell from the earlier need to define our IRA, there are many options when it comes to an individual retirement account. And while that may seem overwhelming at times, options and flexibility are very important when planning your retirement.

401k’s on the other hand can be limited to only the specific programs offered through your employer. If those investment choices are top notch and coupled with a little financial planning analysis, then it might be a good idea to consider an ira rollover into 401k in the future.

The truth is that very few company sponsored programs offer investment options that are better then IRA options. In addition, many 401K plans contain programs that have a heavy management fee that can sap your retirement account earnings. Since an individual account offers a multitude of investment choices, it can be easier to avoid mutual funds with those issues.

Another item to consider when looking at the IRA vs 401k decision is how much time you have to research your investment choices. A company sponsored retirement account is fairly structured from the beginning, which means you can make a few simple choices and have your money invested quickly and earning you dividends. An IRA might have to many choices, which leads to avoiding making a decision as you deal with the business of everyday life, and postponing the needed investments.

As you can see, there is no easy decision when looking at completing a rollover into an IRA vs 401k. Take a look at your personal needs and make the decision from there. The most important thing is to have your funds invested and earning you money for your future retirement.

James provides information about the differences between a ira vs 401k through his website on ira rollovers.

You have several rollover options when deciding what to do with your IRA or 401k account. Make sure to think about your personal situation when reading through these options, so you can weigh what the best choice is for you. And keep in mind that more than one option may pertain to your retirement needs, especially when you consider those retirement needs in the future.

The easiest thing to do is not act at all. Keep any and all accounts exactly where they are and do not give them a second thought until you are ready to retire. As you can imagine we do not advocate this choice. While it is easier to bury your head in the sand then learn about and act on your financial future, it will only cause bigger retirement problems in the future. Can you imagine finally being ready to step away from work and all of your retirement assets are scattered between a dozen or more past employers that you have worked for over the last 40 years?

You can consolidate your retirement accounts into a Rollover IRA. If you already have a past employer or two where you are still keep your retirement funds, or an individual retirement account opened years ago when you were younger, you can transfer the funds to a Rollover IRA account, so they are all consolidated and easy to locate. This way you can add simplicity to your retirement planning. Rollover retirement accounts also allow you to rollover your money again in the future, so that you can adjust your investing goals as you get closer to retirement age.

If you like to take personal charge of your retirement funds, you can rollover into separate IRA accounts that will allow you to greatly diversify your retirement investments. Each retirement account can be given a different purpose, such as a self directed IRA that you use to purchase rental properties, or an retirement account that you do not intend to touch personally, but is set aside as a inheritance for your children.

If you are already with a new employer that offers a great 401k program, the past retirement account funds can be switched directly into the new 401k. Make sure that your new company will match a portion of the money you save from each paycheck and that the investments they offer can produce good returns with reasonable management fees. There is no point in changing out of a flexible IRA unless the retirement program your company offers is top notch.

Your final option is that you can take the money out of the retirement accounts and use them, but if you are hoping to have any ability to really retire in the future, this is a huge mistake. Any money that you take out of your 401k or IRA for personal use will be heavily taxed by the IRS. On top of that early retirement account withdrawals are hit with large penalties. Avoid this choice at all costs.

These are a sample of the options given you when deciding what choice to make with your IRA rollover or 401k rollover. It is always recommended to speak with a trustworthy broker when deciding and implementing any retirement account changes.

James provides information about the retirement account rollover options through his website on completing an ira rollover.

Choosing to partner with a bank to reach your financial goals is no decision to make lightly. Some stick with the same bank for years not because the bank offers competitive terms, but out of habit. Making an informed decision requires some research. After all, what may be at risk is the ability to reach one’s monetary objectives as well as peace of mind.

To begin, decide on bank service priorities. Do you need a savings account? Is the ability to invest through the bank important? Perhaps desired services will include retirement planning or trust management. For those looking to conduct business banking, details on small business loans and lines of credit may be a consideration. Compose a list of needed services. The list will help direct your research of banks, both locally as well as online. Visiting a particular website may help clarify the bank’s services and products and whether they are a good fit for your needs.

Identify branches located nearby. Accessibility will probably be a large consideration, unless you are looking specifically for an online bank. Choose banks near home or work with plentiful ATMs located conveniently to places you frequent. With the cost of gas these days, finding a bank close by will cut down on drive time. On the other hand, online banking is a very attractive feature as it gives account holders online access to their accounts 24/7. The only thing to be aware of when opening an account with an online bank is that deposits may take a day or two to clear before the funds are available.

Examine the fees for services used often. Perhaps you use checks to pay bills or conduct transactions online. Make sure to compare these fees as some banks will offer plans that cover a group of services. Another route is to monitor monthly statements to gain a better idea of transaction patterns and then seek a plan to complement that.

Don’t be afraid to speak to a bank representative to gain a better idea of how the bank’s services will fit with your needs. She The bank representative will be happy to take the time to explore a potential financial partnership and answer any questions you may have. This will also provide potential clients with a real sense of the bank’s approach to customer service.

In this day and age, it’s vital to find a bank with identity theft prevention tips and security measures in place. Especially when it comes to online banking, it’s a bank’s priority to educate clients about how they can protect themselves from ID theft. Good banks are not in reactionary mode to these sorts of crime. They are taking full advantage of security measures to prevent it.

Most people want not only a bank that offers layers of security, but also one with a solid reputation. This comes in the form of name recognition with high ratings and easy access. These banks are established regionally or nationally and provide access both close to, and far from, home.

After deciding on which bank to do business with, establish a relationship with its representatives. Take the time to make yourself known to bank employees. Expressing appreciation for good service is always welcome and opens the lines of communication when problems arise.

Sometimes things don’t go as planned. While your bank should strive to exceed customer expectations, there are occasions where it may fall a little short. Give bank representatives the opportunity to right any wrongs. Be willing to work through a problem with them. Negotiate better terms if needed. A bank that views you as a long-term client will work hard to keep the business. View these challenges as a way for both parties to build the partnership - a worthwhile effort over time.

AmericanMomentumBank.com provides a wide array of personal banking and business banking options and banking solutions tailored to your individual needs. For more information, please visit AmericanMomentumBank.com.

Saving for retirement is something that everyone needs to consider, as it is an important long-term goal. Every working person, no matter how old he or she is, will eventually reach retirement age. Once you person retires, they will no longer be earning the income that they were accustomed to receiving every pay period. In order to deal with that loss of income and still be able to pay bills, maintain their lifestyle, and survive in general, every working person needs to plan ahead.

Time is on Your Side

The earlier you start planning and saving for your retirement, the better. If you are in your 20’s or even your 30’s, retirement may seem far away, and you may think you don’t necessarily need to worry about it at this point in time. You may find yourself juggling many competing priorities that require time and money. You may even think that there is plenty of time for the American government to fix the social security system so that it can actually take care of you when you retire.

Well, while an optimist may hope for such a positive outcome, the truth is, the social security system is not designed to take care of all your financial needs after retirement. The best thing to do is to save for your own retirement. If you are young, you are in a perfect position to maximize your savings for a much better potential outcome. That is because you have time on your side. Time, when combined with money, is a very powerful tool. First, there is the obvious -every year you save for retirement is another year’s worth of savings to add to your egg’s nest. Of course this has plenty of value in itself. For example, if you save $3,000 every year for 20 years, versus saving the same amount for only 10 years - well, do the math. More importantly, however, is the value that compounding adds to your investment.

Compounding

Compounding can be explained simply as the ability of your investments’ earnings to earn additional earnings by automatically reinvesting all interest, dividends and gains. Confused yet? Basically, compounding multiplies the growth of your savings by earning interest on interest earned. Suppose you save $10,000 in an interest-earning retirement savings account. Imagine that the first year, the account earns 20% (granted, this is beyond optimistic, but stay with us). Your investment is now worth $12,000. Since this is a retirement account, you don’t touch it. In Year 2, the shares appreciate another 20% (this is just an example). Therefore, your $12,000 grows to $14,400. Rather than your shares appreciating an additional $2,000 (20%) like they did in the first year, they appreciate an additional $400, because the $2,000 you gained in the first year grew by 20% too. If you continue to work the process out, the numbers can start to get very big as your previous earnings start to provide returns. In fact, $10,000 invested at 20% annually for 25 years would grow to nearly $1,000,000 (and that’s without adding any money to the investment)!

Tax-deferred Growth

Another very important reason to start saving for your retirement as early as possible is the tax benefit that you will enjoy. Most retirement savings account, whether they are IRA’s or employer sponsored programs, are tax deferred. This means that the tax you would normally pay on the portion of your income you contribute to your retirement savings is essentially given to you tax-free. This makes a huge difference when combined with compounding. As you can see, there are many benefits to start saving early for your retirement, but don’t forget - it’s never too late.

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Planning for one’s retirement is to think long term and to start early on. Preparing for it is a lifetime process of reducing all possible risks and obstacles that get in the way of that bright future. Many people have turned their eyes to and put their hopes on the stock market, which, ironically, thrives on uncertainty and speculations. But these uncertainties in the game of stock trading can be most profitable, when they are understood and capitalized to the investor’s benefit.

If one is looking forward to a retirement life characterized by financial freedom coupled with incessant income, it is only logical to invest in long-standing companies that show consistent growth rate and dividend accumulation for at least 10 years. However, the downside is that these large and stable companies sell their shares at a high price. While such investment is sound, it may be unreachable to those with only a few hundred dollars to start investing. But there is a type of stock investment for someone like John Doe with only two dollars in his pocket - penny stocks.

There have been a lot of negative perceptions about trading in penny stocks. Companies that sell them do not necessarily belong to the Fortune 500; they are usually upstarts that are yet to be proven, idealistic, and small to medium in scale. Investing in them is highly risky and volatile. But then, so is any other type of stock, or even investments in general. All stocks are presumably speculative anyway. With penny stocks, since the investment is small, so is the loss, if it is a bear market. It is a painful loss, indeed, but one that is manageable.

That is just one side of the coin. As much as they are high-risk, penny stocks are high yielding. To make them work for the investor, the trick is to be early in the game, and to be constantly on the look out for small businesses with a lot of potential to increase in market value. No doubt, it takes discipline and hard work. It is like mining for a rare jewel. Because of this, trading penny stocks discourages people at the onset. But once the the right company is found, the rewards are worth all the effort. With small investments turned into small fortunes, and they accumulated over time as the investor becomes better with the trade, early retirement becomes plausible.

But there should not be a dichotomy between investing in large companies and putting one’s stakes in emerging ones. If one’s cash flow allows for both, the chances for returns are better. In fact, retirement investment plan should be further broken down and diversified into other forms of investment other than the stock market. Trading strategy should be as diversified and flexible as the investment portfolio.

And here is another trick up the sleeve keep investing, even during the retirement years, if only to guard your investment from the increasing inflation rate. It should be remembered that money is either gained or lost; it is either earned or spent; and to keep it idle is to lose it just the same. A smart investor who is keen on securing a rewarding life of retirement will always make his money work for him.

Justin DeMerchant is the founder of trading blox, stock trading program, and da big market man where information on stocks and investing can be found.