Mix And Match Stock And Bond Investments

Category: Finance, Financial Planning.

You have signed up for your employer s 401K plan and are very proud of yourself because you are not only getting tax benefits, but your employer matches a portion of your investment( can you say free money? ).

You have taken the first step to becoming an investor and building your portfolio for a wealthier life. Congratulations to you. But- if you are like the majority of Americans, you take a look at the selection of investment choices and all of a sudden, you are lost! Check out employee stock. Here are a few tips on how to best diversify investments in your company- sponsored 401K plan, even if you are a complete newbie to the investment scene. Some companies match their employee s contribution by giving out their own stock. If you are somebody who is already somehow investing in company stock, it may not be a good idea to purchase additional company stock through your 401K plan.

Other companies may give stock options. One of the main goals of a 401K plan is to provide financial stability for you in the future, which means having a well- proportioned investment strategy. Risk assessment. Make sure your company stock does not overwhelm your portfolio. Many financial companies have risk tolerance quizzes and assessment tools and these may be extremely helpful to help you understand just how much risk you are willing to take on. If you are approaching retirement, you may wish for a more conservative blend of assets. A good rule of thumb is that if you are younger, you can generally carry more risk because you have the time to wait out any market.

Check out the information related to how the investment is rated. While words like stable or income usually indicate a more conservative investment. Words like an aggressive growth mean a higher risk, but also a chance for higher returns. Mix and Match. Look at your investment choices and start to blend. Do not be afraid to mix and match. Mix and match stock and bond investments.

Blend industries or foreign/ domestic choices. Blend large- cap and small- cap funds. The goal of an investment portfolio is to become diversified, so review your choices and use the information given to you to create a great mix and match end result. These tips should help you diversify investments in your 401k plan. Be proud of yourself for taking that first step.

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The Trust Would Then Sell The Property To The Real Estate Developer - Monique Lansford's Finance and Financial Planning blog:

Charitable remainder trusts can increase your income, avoid capital gains taxes, lower or eliminate estate taxes, serve as another type of retirement plan, serve humanity and put a warm feeling in your heart. In the Path of Progress.

Money Management Deals With The Question Of How Much Risk A Decision Maker Should Take In Situations Where Uncertainty Is Present

Category: Finance, Financial Planning.

For others, it happens when we spend more than we should on stuff we don t need.

We have all heard the phrase" money- management" before, whether it is in advertisements or on financial education segments in the news. Money Management deals with the question of how much risk a decision maker should take in situations where uncertainty is present. You must understand that leveraging your money with management can turn a relatively mediocre investments/ trading situation into a dynamic moneymaker. The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans. If a big company wants a massive loan( which a lot do, just getting the, nothing bad money quicker than raising it yourself can mean the difference between launching a product next year, or in 5 yrs) , then the banks loan your money, and the only way they can do this is if everyone doesn t withdraw everything at the same time! Greater management can be achieved by establishing budgets and analyzing costs and income etc. More precisely what percentage or what part of the decision maker s wealth should be put into risk in order to maximize the decision maker s utility function.

Wise money- management is essential for a balanced, happy life. It can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Controlling risk by proclaiming the amount of loss if you are stopped out is not identical to directing risk through a model that determines the extent of your problem. It gives practical advice among others for gambling and for stock trading as well. Indeed, deficient money management is one major cause of bankruptcy among unseasoned traders. Proper formula should give you one outcome for an each set of variables, without any guesswork.

Proper management of money wouldn t work if you don t already have positive expectations from the system/ method you apply in your investment. When you only fund your account with risk capital, you will feel much more emotionally detached from that money and it will be easier for you to adhere to the rules of your trading strategy. Having a lot of assets right now is not a guarantee of stability especially when one considers today s erratic economy. The services that financial asset management provide commonly include but is not limited on checking services, debit cards, credit cards, margin loans, automated transfers from one account to another, and even brokerage services.

Start With How You See Your Retirement Lifestyle Working

Category: Finance, Financial Planning.

The basic level of retirement planning is to sign up for your 401k at work, support legislation to keep Social Security intact, buy some life insurance and let it go at that. After all, if you began preparing for retirement in your early adult life and stayed with it, you will have a resource to retire on and that is a good thing.

This system will work so there is reason to call this bad retirement planning. But there is a way to take it to the next level and that is to actually start putting some flesh and bones on your vision of your retirement and get a feel not only for the fact that you will retire but how you expect to live in retirement. So if you can get a realistic view of what you have as your expectations for retirement, you can start making adjustments to your retirement planning package right now. Very often, we have idealistic visions of retirement life based on media images or the fantasy life of living in luxury and having little to do but golf in the morning and drink campaign and eat caviar all afternoon. Start with how you see your retirement lifestyle working. But other people have adventure and high living in their retirement dreams.

If you want little more than a manageable retirement apartment, a cat and the chance to knit or watch ESPN without interruption, that is a fairly modest retirement lifestyle to prepare for. So if world travel or living in a luxury setting is part of that dream, only one person is going to make that dream a reality and that is you. Start by picturing your living conditions. An exercise that is fun and eye opening is to detail every aspect of your dream life in retirement. Include your diet needs and wants as well as any entertainment and recreational needs you expect to be a part of retirement. So include the physical and financial needs for that lifestyle in this final step of retirement planning.

For example, if you know you will want to go on long fishing adventures several times a year, you will need a RV and the finances to support taking off for the most scenic spots within driving distance to kick back and enjoy the fishing. You can complete the exercise by getting to such a level of detail that you could go out and price the dream in todays dollars. Now, the actual cost of those different components will be much higher when you actually get to the point of retirement. Then when you take your own dream retirement shopping list out into the open markets and use retail locations, catalogs and internet sites to actually find out how much it would cost to have that retirement today, that will shed a lot of light on your retirement preparations that you are doing. You could try to factor in inflation and make those kinds of adjustments but do not play with the formula so much that you get the idea that it is impossible and give up. Your daily needs may not be as demanding.

However, another factor that offsets the inflation factor is that your retirement life will be less expensive then your current lifestyle. If you sell your house after paying off the mortgage, your monthly expenses will go way down and you will have a significant surge of retirement capital that will come from the sale of the house. All of these things offset the inflation issue. And you are not raising kids, putting them through college or having to support the lifestyle and wardrobe of a working person.

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Be Careful With Your Money - Finance and Financial Planning Blog:

Ten dollars is ten dollars. Not really.

Have You Considered Real Estate Mutual Funds - Finance and Financial Planning Articles:

Income is hard to come by these days. The bond market is in disarray, credit spreads are widening( meaning the price of existing bonds is declining) and there are serious liquidity issues( which also impact value) .

The Interest Rate Will Change Your Mortgage Interest Payment Each Month - Finance and Financial Planning:

When you decide to buy a home, getting the best possible loan is important.

Many Stocks Have Historical Earnings Patterns

Category: Finance, Financial Planning.

ALCOA( AA) , this is the bell weather sign that earnings are upon us again.

The fact is that earnings never stop and while the numbers may dwindle to a trickle at times there are companies reporting constantly. AA is the first major component of the DOW to report and it is the unofficial signal that the earnings cycle has started. But now we will see a swell of daily reporting that builds to as many as 3- 400 per day over the next two weeks and then it will peak and drop off again sharply. The brokers shook the up the markets in mid September and RIMM has often rocked the trading world like it did last Monday but in general, most of the companies you know will report over the next three weeks. Not all exciting companies report during this time. The reporting excitement has an overall effect on the market and while companies can benefit from reporting good information while everyone is watching, the earnings cycle can also work against them if they get caught up in a list 300 companies reporting that day.

Tough to report good news on a bad day. Also a couple high profile companies can influence the market for a day or two and others will be swept along with the momentum regardless of what their earnings were. So, some ideas on how to play the market during the earnings season; First- find out what day your company is going to report. It is possible to get several different dates on different reporting sites. This is not as easy as it may seem. Companies make adjustments to their schedules and sites may or may not be updated. In Dedicated Trader there is a phone number listed in Company Profile.

The best way to verify is to call the company investor relations department. It will usually get you to a person who will( by law) give you the most accurate update of the earnings report date. For this article I selected General Electric( GE) . You may have to work through a person or two to get the data but just ask clearly to know when the earnings are being released for the quarter. I went to Dedicated Trader and called 203 373 2211, the receptionist referred me to 800 786 2543 for Investor Relations. Now that I knew for sure I could look at a strategy for playing GE s earnings or I could make sure I was not sitting( unaware) in a GE option position on the day the earnings were released. The nice young man had to ask a supervisor to verify that it will be October 25th.

Second- Time of day is very important to traders. I was given another number( 800 242 0134) where another nice man verified that it is always after the market close for GE. The young man could not tell me what time of the day the data would be released. This is quite common for a company to have a standing policy for release time but it is not guaranteed. The release time allows you to position earnings plays correctly. Lately there have been a number of companies with accounting problems and that can cause reporting to be delayed. If a company releases after market, plays can be put together during the day before release and sensitive to the days movements going into the close.

Third- Play or No Play. Before market open is interesting because after market trading can tip the scales but your decision had to be made the day before so you get to feel the anxiety( good or bad) as you watch the price movement prior to open. If you do not have experience playing earnings you must do some learning and practicing. Guessing is not a good one. There are specific earnings plays that can work well. So many examples can be shown where the opposite of what most people expected, happened when the report came out.

It is a guess, a pure guess. A one sided( bullish or bearish) trade is a huge risk when the earnings are reported after the market is closed and should only be played with money that will not be missed. For most traders it is a good idea to sit out earnings plays and play the reaction. Many trading platforms have mock trading accounts where the trades are tracked completely but not funded. Practicing can also be done by playing the earnings with non funded positions. These practice accounts are tremendous tools.

The history of the stock can be very valuable. Fourth- History. Many stocks have historical earnings patterns. Gapping( large or small) is another trait to be aware of. Running up before the announcement is a common trait. Inconsistency or lackluster reactions etc. help you plan for contingencies and set realistic targets and strike prices. Fifth- Option Pricing.

As stated before, it is not a guarantee but it needs to be factored in. The price of options can be a big tip off. This can make a Long position( owning a Call or Put) a big disappointment even if the stock moves in favor of the position. High volatility can produce huge time premium which often gets reduced dramatically after the earnings come out. The intrinsic value can be eaten up by the drop in time premium. Fair or slightly bloated time premium may work fine for long positions if you know how to judge it.

Look for big differences between Fair Value and Actual time value as one of the tip offs. Sixth- Time of the month. Option strategies have expiration dates and you must have a clear idea of how long you will be staying in the trade before you choose an expiration month. The date of the release also has significance relative to the expiration of the options. It may be fine to enter a trade by buying a Call or Put even if there is only a week left until expiration if you will only be in it for one or two days. Seventh- Strategies.

The lack of time helps to depress time premium which might otherwise have stopped you from making a play. The riskiest and so most profitable earnings play is the one sided Long Call or Put. Most often some sort of combination play such as a Strangle or Straddle is used. Again, it is a crap shoot and must be played with VERY disposable cash. Often the reaction to the release will also give an opportunity for a secondary play after the release. These are powerful tools in a potentially dynamic and highly volatile trading scenario.

The require skills with countermoves and unwinding can be very profitable even doubling or more the original gains from a big gap open, and they can also turn a bad play into a good one if you know how to react. Remember though, the selection of the strategy and the selection of the strike prices will generally be determined by history and option pricing. Half way in between two strikes will call for a different strategy than sitting close to one. One last determinate is how close the stock is trading to the strike prices. This showed that there was actually a bit of pricing bias to the downside as the puts were a little more expensive that the calls. The cost of the two position was$ $50+ $ 30= $80 total. A Long Strangle was chosen at the$ 80 puts and the$ 90 calls because they were the next price targets( support and resistance) for either an up or down Gap.

The Cost of the At the Money( time value) was$ 00 so with prices not inflated dramatically and the cost of both Legs at and less than the time value the risk was fairly neutral. The puts were worthless so the trade totals. The next morning RIMM opened up$ 16 points at$ 101At the first sign of retracement the calls are sold for$ 13This was interesting because the time value was actually inflated quite a bit at the opening, opposite of the reaction to a bloated pre- announcement price. Selling$ 90 calls$ 130 minus trade cost of$ 80 cost, gross profit$ 15Now if RIMM had not moved that far the results would have been less. Now there is a lot of good information in this newsletter but if it seems short on details. A move to$ 90 or$ 80 would have probably been close to a break even but the move to$ 90 or$ 80 was probable, so the risk was reasonable. Sorry. if it were a book it could be more complete, right?

May I invite you to attend the Traders Forge two day training to develop and hone your trading skills and then the Advanced Trader Forge( ATF) for specific Options Training? But there is still a lot of usable information for those who want to avoid getting blindsided by earnings and those who want to play earnings. The ATF should be attended after the Forge and it will address all the details of strategy and option selection for all situations including earnings plays. Know where your skill level is before you put money into trades but do not be afraid to play earnings. So. please have fun during earnings season but be careful. You will not learn as much or as fast on the sidelines and you do not have to put very much if any money into the trades to practice in real time with the market. So you must Practice Perfectly and that means get trained Properly.

Practice makes Permanent! Please join me for the free web shops I teach on the FIVE trading skills that are trained in the Traders Forge. Hope to see you soon. I teach them to prepare you to get the most out of the Traders Forge. Ryan with Better Trades

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Be Careful With Your Money - Stacie Siddens about Finance and Financial Planning:

Ten dollars is ten dollars. Not really.

When You Are Shopping Around For A Bank To Put Your Money Into One Thing You Will Need To Compare Is The Saving Account Interest Rate That Is Being Offered - Finance and Financial Planning Blog:

When you are shopping around for a bank to put your money into one thing you will need to compare is the saving account interest rate that is being offered. Be assured that your money is protected by the government if you place it in a savings account.

A Budget Is Basically A List Of Expenses And Income - Finance and Financial Planning Blog:

It is fairly common knowledge that money matters can be simplified and controlled with a budget. It is not a really hard task, but one that many people avoid.

Depending On The Homeowners Budget, Some Changes Are Small And Can Be Made Relatively Easily

Category: Finance, Financial Planning.

I was asked to give a speech to a group in Boise, ID about how seniors can stay in their homes by using a reverse mortgage.

She didn t need as much help as some of the other seniors I have spoken with who worked with companies who specialize in home remodeling for seniors. This was an easy one for me because I had helped my mother do this very thing. Some senior homeowners use reverse mortgages to help them financially by retiring debt or generating income. In fact, according to an AARP housing survey, 83% of older Americans want to stay in their current homes for the rest of their lives. But there are also many seniors who love their homes and want to stay in them but find that their homes just don t accommodate their needs any more. Of the 83% , many are looking for some help to make it possible.

Depending on the homeowners budget, some changes are small and can be made relatively easily. Here is how a reverse mortgage can help seniors stay in their homes by allowing them to make improvements and alterations to their homes enabling them to stay at home where they are comfortable. Items such as hand rails, grab bars and lever handles on doors are fairly minor alterations and not terribly expensive. Some of these items can get very expensive. However, sometimes an older home may need some more expensive updating or home improvement for the senior borrower to be comfortable or practical for seniors to stay. Some of these improvements or updating include new windows, doors and screens that open and close easily and updated kitchens for easier meal preparation. Some of the items that may need to be considered which are expensive are items such as elevators and lifts, enlarging doorways and, ramps halls to allow wheelchairs to move freely through and installing emergency communication systems.

The home may require general maintenance of roofs, heating and air conditioning, flooring and anything else in the home that may need updating. Some seniors also require alterations to the bathrooms and there are some very nice tubs and showers made with the senior user in mind enabling them to be self- sufficient. I always encourage senior borrowers to check out places like the AARP website. Still others use the proceeds of a reverse mortgage to hire in- home care so that they can stay at home in that manner. It full of great information on projects to make their homes more livable, how to choose a good contractor and avoid bad the ones, and products geared to the senior homeowner. But then they don t know how much money they will have to spend until they look into their financing. Many homeowners get into the chicken or egg scenario they don t know what projects they want to do or what they will cost until they look into the available improvements.

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Mr Tortoise Plodded Along - James Geraghty's Finance and Financial Planning blog:

Many people spend their time hoping to get rich quickly, like winning the lottery, or getting an unexpected inheritance from a distant relative. The tortoise and the hare both started at the same starting point in life.

A Budget Is Basically A List Of Expenses And Income - Ingrid Grimley's Finance and Financial Planning blog:

It is fairly common knowledge that money matters can be simplified and controlled with a budget. It is not a really hard task, but one that many people avoid.

You Will Receive A Credit Card Plan That Has The Lowest Interest Rate They Offer - Finance and Financial Planning Articles:

As you probably know, credit cards are some of the most valuable tools in our modern world.

Selecting An Experienced Trust And Estate Planning Attorney Is Critical

Category: Finance, Financial Planning.

You are a busy professional or business executive who must serve his clients or build his business.

How can you find the time to both grow your business and ensure that your assets are not devoured by estate taxes upon your death? However, you also have a family and significant personal assets that require your attention. Selecting an experienced trust and estate planning attorney is critical. A credit shelter or tax savings trust, included in your Will and that of your spouse, can eliminate or reduce these devastating taxes. Federal and State estate taxes can erode as much as 70 percent of your estate leaving your loved ones with significantly less money than you had anticipated. In order for a tax savings trust to work, assets owned by you and your spouse must be titled so that each owns approximately the same amount of assets in their own name.

The assets then pass tax free to your children upon the death of your spouse. Upon the death of the first spouse, assets are transferred to the trust. For some individuals, the use of an irrevocable life insurance trust is also a key component to reduce the bite of death taxes. The proceeds from the policy will be excluded from the estate of the surviving spouse, thereby eliminating or reducing the estate tax to be paid. This trust will become the owner of a life insurance contract and will receive the death benefit upon the death of the surviving spouse in a marriage. Furthermore, the remaining monies in the trust can then be distributed tax free to your children or other chosen beneficiaries.

The Will should designate an individual known as a guardian who will assume parenting responsibilities. In addition to preserving your financial estate, protecting your children in the event you and your spouse die before they are eighteen( 18) is a fundamental goal of any successful estate plan. This person should share your child rearing philosophy and be mentally and physically able to perform this difficult and challenging task. Many individuals will name a trusted brother or sister and their spouse. Naming an elderly parent as guardian is not recommended. It is not a good idea to name a brother- in- law or sister- in- law to serve with your sibling as a co- guardian.

You do not want an estranged in- law with a legal claim to raise your children. Who is to say if that in- law will remain married to your sibling? Careful consideration should also be given to the choice of an executor for your estate. This individual could be a spouse, adult child or trusted professional. An executor should be a responsible and organized person. An executor will work with an attorney to probate the Will and to value the assets of the decedent as of the date of death. It is important to realize that without a properly prepared Will the State and Federal government will receive more of your estate than you may believe.

Thereafter, estate debts and taxes will be paid by the executor with the balance of the estate being distributed to the beneficiaries in accordance with the terms of his Will. Moreover, without a Will the beneficiaries of the estate you have worked a lifetime to accumulate will be decided by the State and not you. In conclusion, a properly prepared Last Will and Testament with the appropriate tax savings trust and the proper selection of an executor and guardian will preserve your assets and provide the peace of mind you and your loved ones deserve. In many instances, these State mandated beneficiaries are not the same people you would have named in a Will.

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Nobody Likes To Pay Taxes - Finance and Financial Planning Articles:

Nobody likes to pay taxes. Knowing some simple rules will reduce your tax bill and allow you to keep more of what you inherit.

This Is How You Can Find The Best Estate- Planning Attorney For Your Family - Finance and Financial Planning:

Finding a good estate- planning attorney is vital for the success of your estate plan.

Educator Expenses - Finance and Financial Planning Blog:

How many times have you done your taxes, and a week or a month later realized you forgot a deduction? In my experience, these are the top 5 missed deductions.

Debt Consolidation Is Taking Out One Loan To Pay Off Others

Category: Finance, Financial Planning.

Debt consolidation is one of the best solutions for those of us who have too much debt.

Debt consolidation is taking out one loan to pay off others. Consolidation is often the first step that should be taken by someone looking to find a solution for their debt problem, as it is seen as making the overall debt easier to handle. Restructuring your existing debt with your creditors, it gives you a solution for lowering interest rates on bills, reducing monthly payment obligations or even just to simplify financial management. If you are finding it hard to keep up with your monthly payments and are losing track of when your bills are due, or if you find that at the end of each month your monthly income no longer covers all your expenses, then you may want to consider consolidating your debt. Debt consolidation is NOT a loan, and it does not require you to take out a second mortgage on your house. Through debt consolidation, you can combine all your loans and other debts into one single payment, making it easier to keep track and with a bit of luck end up costing you less.

When your lenders start complaining about your delayed loan payments, and when you start feeling that you are paying back too much interest, its time for you to think seriously about a debt consolidation loan program. An unsecured loan means that the lender requires no security and that the lender trusts you to will repay the debt. These are exactly the circumstances when your debt starts to overtake you. If a borrower does not have to apply for and obtain a larger sum of loan money, then the best option is to opt for an unsecured debt consolidation loan. Many different lenders in the market offer debt consolidation loans to people looking for this kind of financial help and a number of plans can be available to you. The conditions of repayment can be decided mutually leading you to an easy way of digging yourself from underneath your debt pile and moving towards financial security. With credit card costs and interests rates constantly skyrocketing, more and more people are increasingly concerned about their level of debt.

The amount you want to borrow, your monthly income, your credit rating and ability to pay, the perceived risk to the loan company and whether the loan is secured or unsecured will affect the terms of the debt consolidation plan. A lot of people owe money on credit cards and with the current increased rate in bankruptcy declarations, most people would prefer to start sorting out their debt consolidation problems sooner, rather than be forced into it later. As long as you remove your credit cards from your wallet, (even better if you cut them up) , you will see your level of debt slowly reduce month by month. Shopping around for the best deal will allow you to reduce the interest rate on your debt consolidation loan. Debt consolidation is one step in realizing that you have problems that have to be taken care of before its too late. Debt may be one frightening thing but debt consolidation is one way to help keep the nightmares at bay.

One of the things you should determine before you look into the world of debt consolidation is how much you owe on all your existing loans, and the current interest rates. Before you go out and start searching for a consolidation loan there are a number of things that you will want to think about. A wide range of consolidation loans are available from your regular banks, online banks, credit unions, as well as from supermarkets or general finance firms. Taking up a debt consolidation loan becomes a little easier if you own any major assets such as a car, shares, house, etc. My advice would be to talk to your own bank first( they know you best) before trying the wider market.

Hence, It Is Very Easy To Start Charitable Trusts

Category: Finance, Financial Planning.

Businesses can gain immensely from charitable trusts, though these trusts are nonprofit organizations that are set up for the benefit of some other party. It is not too difficult to set up a charitable trust either.

That is the reason why most businesses are setting up charitable trusts for themselves. A minimum amount of$ 100, 000 worth in assets is enough to be eligible to set up a charitable trust. The following is a list of these privileges: - Charitable trusts will not cease to function even if they have not been able to fulfill their initial goals. In addition, there are several privileges that charitable trusts have. These trusts have what is known as cy pres, a provision that allows charitable trusts to change their beneficiary options if they are not able to meet the first one. - Charitable trusts can remain working perpetually, which is not the case with other organizations. Even if there is just a philanthropic concept, charitable trusts are given permissions to start. Most establishments have a particular tenure after which they have to either renew licenses or cease to function, but charitable trusts can go on indefinitely if they so wanted. - Charitable trusts are given permissions to establish themselves even if their beneficiary options do not seem to be quite concrete.

Hence, it is very easy to start charitable trusts. The charitable trusts do fulfill the noble intention of serving some beneficiary, which could be an individual, a group of persons or an establishment. That is what businesses do. At the same time, the charitable trusts help the owners to manage their resources well. These taxes can even be waived off if the established charitable trust is large enough in its scope. - Charitable trust owners are also benefited in terms of capital gains taxes. The following is a list of benefits that the owners of charitable trusts are provided by the authorities: - Charitable trust owners are exempted from a portion of their estates taxes.

In this way, charitable trusts help to increase the overall income of the owner of the trust. - In case of retirement or winding up of business, the charitable trust funds can be used as a sort of retirement benefit plan for the owner. However, it will also pay for the expenses of the owner. - Charitable trusts are very handy if there is a sudden demise of the owner of the assets. The charitable trust will continue to work as long as there are funds in it. These trusts will then appoint a living trustee- or the living trustee could be appointed during the lifetime of the owner- and this living trustee will undertake the proper disbursement of the assets among the survivors. An advantage of this arrangement is that the survivors do not have to wait for lengthy probate periods and nor do they have to pay heavy fees for legal procedures. This happens if no will is made, and in many cases, even if there is a will, the living trustee can supersede the will in some points.

That is the reason why setting up a charitable trust is a worthwhile idea when the person is still alive. Setting up a charitable trust is easier than setting up other organizations. It will help to improve assets during life, and will help to properly disburse assets after death. However, since the rules differ from one place to another, it is necessary to look into state laws before planning to go ahead with the idea of setting up a charitable trust.

O Reminds Us That Most Money Managers Lack The Discipline To Consistently Execute Strategies

Category: Finance, Financial Planning.

Want to structure your mutual fund portfolio to achieve optimal returns for the next twenty years?

There was a great article in the June CFA Institute publication Expected Rates of Return: Back to the Future by Jim O Shaughnessy. Read on or just skip to the last paragraph. Mr. This unusual combination of talents first came to my attention when I read What Works on Wall Street: A Guide to the Best- Performing Investment Strategies of All Time. O conducts solid research, and makes recommendations, writes clearly. Although the book discusses stocks, Mr.

The article published in by the CFA Institute is a synopsis of his work. O s research and conclusions are applicable to mutual funds. Mr. That s true for us investors- we tend to change our strategies, following the hot idea in the market- as it is for professional money mangers. O reminds us that most money managers lack the discipline to consistently execute strategies. Note to self: make sure your fund manger follows their stated investment strategy.

Even Warren Buffett doesn t. The corollary to disciplined investing is not to expect to outperform the market every quarter. Adhering to these principles alone will make us better investors. Mr. Chasing quarterly results and/ or changing investment strategies only guarantees one result in a bad performance. O uses rolling 20 year periods( i. e. , 1945 to 1965, 1946 to 1966) , and went back fifty years to measure performance and draw his conclusions. Investors can find many strategies predicted by historical data but it s far less frequent to be able to test actual recommendations. (Correlations can change over time and sometimes extrapolations from past data don t hold up. ) One of his more interesting observations is how many times over twenty year periods investors lost money owning long term corporate bonds.

He first published his work in 199Ten years later( as discussed in the article and the newest edition of his book) he looked at the performance of the strategies recommended in 199They worked! Rising interest rates( falling bond prices) from the 1950s into the 1980s had something to do with this, but Mr. How should we invest for the next twenty years? O says that the twenty year bond rally( starting in the 1980s) is over and I agree with him. Drum role, please. Your fixed income component should be invested in intermediate term bond funds.

Your equity portfolio should be 40% big cap value, 25% big cap growth and 35% small and mid- cap funds. Sounds like good advice( don t forget to invest some of your equity money in foreign funds) for any investor with a reasonable time horizon.

Educator Expenses

How many times have you done your taxes, and a week or a month later realized you forgot a deduction? In my experience, these are the top 5 missed deductions.

The tax law is very complicated, so it's easy to miss a deduction or two. Non- Cash Donations. Chances are you donated those items to Goodwill or a similar non- profit organization. Did you clean out your closets this year? The value of donated items( clothing, etc, furniture. ) is deductible. Points on Refinancing.

You will need to get a written receipt and assign a value to these items, but the tax savings are worth the effort. With interest rates so low the past few years, there have been a record- number of houses refinanced. These points are deductible over the life of the new loan. If you refinanced, you may have paid points to get a lower interest rate. In addition, if you incurred points on an old refinancing, any unamortized points are deductible in the year of the new refinancing. If you' re a qualified educator( teacher, instructor or principal, aide) , you can deduct up to$ 250 for materials you bought for the classroom.

Educator Expenses. Qualified expenses include books, and computer equipment, supplies. Investment and Tax Expenses. This law is set to expire in 2006, so take advantage of it now if you qualify. Expenses for tax planning and investment advice are deductible as a miscellaneous deduction, subject to the 2% Adjusted Gross Income( AGI) limitation. Many people assume that they won' t have enough miscellaneous expenses to exceed the 2% AGI floor, but all of these expenses combined can be substantial, especially if you have unreimbursed employee expenses to add to these expenses.

Expenses that qualify include tax preparation fees, safe deposit box fees, fees paid to investment advisors, legal and accounting fees related to tax planning, broker and IRA fees paid directly, and more, investment publications. College Savings or 529 Plan Contributions. Because this deduction is only available on the state return( no deduction available on your federal return for 529 contributions) , many people fail to include this deduction on their state tax return. Depending on which state you live in, contributions to 529 college savings plans may be deductible on your state income tax return.

Communicate The Fund Raising Idea

In the next few minutes, you are going to learn the steps to implement a fund raising idea that can raise significant cash within a very short time frame.

If you are involved in any facet of nonprofit fund raising, you can use this technique, to buy or, for example pay off the church organ, add another kennel at the local animal shelter or add a room on to the private school. As opposed to simply asking donors to dig deeper into their pockets, this fund raising idea provides tax and increased income benefits to the donor. Three Steps to Funding Your Project. This fund raising idea involves annuities. Select an insurance agent. Annuities can only be placed by a licensed insurance agent.

Look for agents with the CLU, ChFC or CFP professional designations. I would suggest selecting an insurance agent from outside the organization. My experience is that you are asking for trouble if you try to use an insurance agent who is on your board or active in your cause. Resist the temptation to spread the business among several agents, as you want to keep things simple. Chances are there are several insurance agents to choose from and you don' t want to hurt anyone's feelings. Having been in the insurance business for 35 years, here is my rationale: If any agent within the organization expects to earn the commissions resulting from this fund raising idea, they should have brought the concept to the organization long ago.

Prospects for this fund raising idea are senior members of your organization support group. Communicate the Fund Raising Idea. They should be age 70 or older. Here is a simple outline of the fund raising technique. a. The older the donor is, the greater their benefit. A person donates cash or a highly appreciated asset. b. A portion of the sale proceeds purchases a single premium immediate annuity on the life of the donor. d.

If an asset is donated, your organization sells the property and pays no tax on the sale. c. Your organization keeps the difference and can immediately fund your need. e. The donor also receives a guaranteed life income. The donor receives an income tax deduction, which can be spread over 6 years if necessary. f. The rate of return that the income represents is normally much greater than they have been receiving. g. Your nonprofit receives immediate cash. The net result is that the donor receives an income tax deduction and increased income benefits.

The agent can assist with presenting this fund raising idea to your constituents. Many types of media can be used to communicate the idea. That is his or her forte. For example, a post on, a mailing your web site, or an audio, a seminar CD outlining the benefits. Mechanically, this is how the entire fund raising idea flows: a. Set Up the Simple Administrative Procedure.

Your organization uses the cash or the proceeds from the donated asset to buy a single premium immediate annuity on the donor. A one- page agreement, which complies with the laws of your state, outlines each party's obligations. b. A simple letter is usually required, signed by the donor, to establish insurable interest. Each month your organization receives a check from the insurance company for each donor. c. The process is very simple. Your organization could endorse these checks over to each donor or you could issues separate checks. It is just a couple of new line items in your accounting system.

You may recognize this fund raising idea as a charitable gift annuity. Summary. Many national nonprofits have gift annuity programs. This is the power and simplicity of this fund raising idea. However, most small nonprofits do not. It is simple, straightforward and your organization receives funds immediately upon the completion of each transaction. Furthermore, national programs do not realize any gain until the person dies and then the gain goes into their coffers, not your organization's.

National gift annuity programs do not fund your program immediately. If you are involved in a charter school, a church or any nonprofit, here's how the numbers could work out. Further, assume that the range of donations is between$ 10, 000 and$ 50, 000, with the average being$ 25, 00 This would bring in$ 250, 00The cost of the immediate annuities will vary by age, but let's assume this cost is$ 125, 00That puts$ 125, 000 in your organization's pocket. Let's assume there are 500 supporters and this fund raising idea applies to just 2% , or ten individuals. This fund raising idea appeals to the average person. Moreover, they get to see the end result of their gift.

The donor benefits financially in two ways: a tax deduction and a guaranteed life income. Your organization receives a large influx of cash quickly to fund a pressing need. This fund raising idea is a win- win for everyone.