Learn The Stock Market And How to Trade » Personal Finance

Which is best? Roth IRA VS 401K

Bill — Fri, 02 Jul 2010 18:45:01 +0000

When considering a Roth IRA VS 401K, the options are different and quite specific to your employment and tax situation. In this article, we layout details about the Roth IRA and 401(k) plans, so that you can consider the choices carefully.

The 401(k) retirement savings plan was created for workers who are currently employed and wish to contribute to a tax-efficient retirement savings plan. The employer operates the 401(k) plan and makes available a range of mutual funds to invest in. Contributions are taken directly from wages prior to taxes being deducted and invested in the plan, using the agreed proportional allocation to each fund. Whilst most plans are self-managed, some offer only a fixed asset allocation.

The 401(k) plan is useful for making savings on taxes but during the withdrawal phase after age 59½, you are liable to tax on withdrawals. Some companies are generous and offer to match part of your contribution to the company 401(k) plan up to certain limits and this is well worth considering.

The Roth IRA is used to invest for retirement from post-tax dollars. There are investment limits of $5,000 when below age 50 and $6,000 when age 50 or over, with the exception that for people with incomes below the limit, the total income is the maximum that can be contributed that year to a Roth IRA.

A Roth IRA withdrawal is not usually subject to taxation, so the tax burden is handled years before you need to withdraw the money during retirement. The age limit is the same at age 59½ for initial withdrawals in order to avoid taxation on early withdrawals before the age limit.

Which is best, Roth IRA VS 401K will depend on a number of factors in your personal circumstances. Sometimes a fee-only tax adviser is a useful step to take to consider the options closely, but if your company offers a match then you should certainly strongly consider using the 401(k) plan to take advantage of the full matching contribution.

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Why Choose Bad Credit Mortgage Refinance

Bill — Mon, 21 Jun 2010 21:12:51 +0000

When a homeowner finds the monthly mortgage payments on their home to costly, one option that they seek to lower the payments is refinancing. Normally a homeowner with suitable credit who has not missed or been late with payments will be able to find a company that will offer a refinanced mortgage with more affordable terms. Unfortunately more people than ever have bad credit and this can hamper the effort. That is why many people look for a bad credit mortgage refinance.

Finding a bad credit mortgage refinance would seem no different from finding a bad credit car loan. You would not go to the usual lenders and you would face some steeper costs in the terms or fees. While some of these aspects are indeed shared, refinancing your mortgage is a whole different type of financing.

The first difference is scale of purchase. Many people looking to refinance their homes have house worth at least $100,000 that is around five times more than the median cost of car. When the loan amount gets this large the credit rules are much stricter. That is why most first time homeowners are told about the importance of maintaining good credit.

The cost of refinancing for the same reason is also higher. For bad credit mortgage refinancing to be worthwhile it would have to have better terms than your original loan. This is rarely the case and you would have to have a very expensive mortgage to make it worthwhile.

The most pressing concern about bad credit mortgage refinance is finding an alternate lender. When you are dealing with getting a car loan you have to the option of dealer financing as well as traditional lenders. When refinancing a mortgage the search is more difficult. Most banks have been burned to badly to be directly involved in bad credit mortgages and finding a mortgage broker can easily lead you into a scam or some of the illegal activity that occurred during the height of the housing boom.

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Retirement Savings Accounts

Bill — Fri, 18 Jun 2010 06:39:51 +0000

Retirement Savings accounts are tax shelters that the federal government has provided in order to encourage people to invest for their own future. Each has different contribution limits and different criteria from workplace to income levels to qualify for the accounts.

IRA (Individual Retirement Account)

The individual retirement savings account is open to most US citizens who earned any income. One is allowed to invest up to $5000 per year unless you’re over 50 and then you can invest $6000 each year.

ROTH Individual Retirement Saving Account (ROTH IRA)

A ROTH IRA is used to have tax free growth with no taxes when you pull the money from the account in retirement. If you are young and will likely save a lot of money over your life this can be a very valuable option. Though I am skeptical the federal government will keep their hands off this account.

The ROTH is phased out at higher income levels so talk with a professional accountant to understand what you can contribute if any.

401k

The 401k allows you to contribute up to $16,500 per year unless you’re over 50 and then you can contribute $22,000 per year. Unless you make more than $110,000 per year you’ll be able to contribute the maximum amount each year. I would generally advise you put money into an IRA first so you have more control and options. Though many companies offer investment matches which should always be taken advantage of.

SIMPLE IRA

A SIMPLE Individual Retirement Saving Account is for the small company. It’s a low cost option which allows a company match. Each employee can contribute up to $11,500 per year.

SEP IRA
The SEP IRA is designed for the self employed. This is an awesome tax shelter if you don’t need all of your income to get by. The entrepreneur can contribute 25% of their income up to $49,000 per year. That’s a lot of tax savings.

403B

If you are in public education or a charity you have nothing to fear, you can plan for retirement also. The 403b is exactly like the corporate 401k.

Section 457

If you are a government official you get your own 401k also with perks. You don’t get penalized for taking your money early, so there really is no retirement age. Just grow your money tax free and enjoy when you wish. If they wish they can have contractors contribute to a Section 457 also.

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To Become a Millionaire Is No Longer Enough

Bill — Fri, 11 Jun 2010 21:56:34 +0000

We’ve all dreamed of being a millionaire. We picture the mansions, fancy cars, hired help, luxurious vacations. Believe me; just typing about it makes me want to become a millionaire. However, don’t actually do the math on this lifestyle because a million dollars just won’t cut it anymore. Even with the recent housing bubble pop that vision of the mansion is still going to eat up your whole million dollars. You’re going to have to think bigger younger.

A million dollars will provide you the luxurious lifestyle of $40,000 to $100,000 per year for the rest of your life. Not exactly living high on the hog, but comfortably. Of course if you don’t have the million dollars right now, and it takes your 40 years or so to save that much money then it’ll only have buying power around $20,000 to $50,000 per year. You’ll be turning in the limo for a Tercel.

Obviously you’ll need to think bigger to reach the dream of becoming a millionaire, but it’s not impossible.

Become a Millionaire Overnight

Your first option is one of the endless get rich quick schemes available on the internet, in your mail, told to you by your neighbor, or touted on your favorite popular music station. These options include:

Run a scam website
Get involved in Multi-Level Marketing
Get involved in a pyramid scheme
Become a professional sports player in one of the few sports that actually pays anything
Become a huge rock star
Create a widget that a million people will buy for 5 ez payments of $9.95
Bet Big at the horse races, casino, lottery, or other gambling service
Highly leveraged FOREX trades over and over again.

The obvious problem with most of these is they require a level of luck or skill that not every person has to have to become a millionaire with these ideas. The other problem is they are often sold as instant riches because you only notice the person after they are rich. Even these ideas require planning, effort, and work, or such an insane amount of luck that it likely won’t happen.

How to Become a Millionaire (X 10) For Real

The real secret to become a millionaire is just to plan. Do the math. If you want to have 10 million dollars by the age of 65 and you’re 25 right now you have 40 years. By finding your favorite spreadsheet or online calculator you can play with payment scenarios to get to your end result. In this example at 10% return on investment it would take $1600 per month until you’re 65. While in 20 or 30 years with good planning (like stay out of debt) this could be really easy, but now that would be hard. So perhaps you focus on getting out of debt (including your house) for the first 10 years and then make your millions in the next 30. Well that would take $4500 per month. Well if you have no payments and a good job this is possible, but you need to know the reality. Extra jobs, smart spending, good investments, learn stock market tricks for yourself. It really makes you think.

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Some Markets Require You Find Other Money Making Ideas

Bill — Thu, 03 Jun 2010 04:34:39 +0000

The stock market just doesn’t always move the way you want it to sometimes. While it would be nice to earn the nice steady 8% per year (12% by some in the know it alls) and just keep cashing our checks. For those who live off their retirment money (or just really large investments) these rough markets get them to look to other money making ideas.

The first choice we tend to look at is the quick money making ideas. We love the idea of the get rich quick. However, if you’re living off a nest egg you probably didn’t earn that all that quickly. Also, how did you earn your money that you have invested? If you were in some kind of trade or professional you didn’t become good overnight. You didn’t read about it for a week on the internet and then earned a good living for the rest of your life. So why would any of the easy money making ideas work either?

You really should be looking for legitamate money making ideas. These are probably going to include blending the talents you have already accumulated over your life and applying it to a larger market than yourself.

One great money making idea is to start a blog. By sharing your knowledge and experience you can earn a nice side income writing about something you enjoy (or didn’t enjoy, but makes a great entertaining story.) Don’t write about things everyone else can without adding your unique background to it. Remember you have to add value to earn money – nothing is for free.

Another idea is to learn a different style of investing. If you are normally long term buy and hold it may be time to learn stock trading. Really choppy volatile times are hard on the long term investor, but fatastic for the momentum trader. Stocks can do poorly in some markets, but the commodities investing is doing fantastic. Being stuck with one option (long term retirement account choices) never makes anyone feel secure. Stick with what you know, but use the bad times to invest in yourself with a few new money making tricks.

The last of the ideas for making money when your investments just don’t seem to is to go back to work. When you don’t need to go to a J-O-B everyday work can be very fullfilling. You won’t have to do it forever, just until your investments are on solid ground again. Find an area you always wanted to be involved with. Most of us chose jobs on the maximum money the first time. Maybe this time your money making idea should include your happiness a little more this go round.

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Grow Your Retirement Fund With Value Stocks

Bill — Sat, 01 May 2010 19:34:28 +0000

If you were smart and started out on a retirement plan years ago, you are probably in a very good financial position today. But if your funds are in a money market account earning 1%, they are not really growing. It is also very upsetting every month when you get your bank statement to see just pennies in interest. If you would like to invest some of this money in the stock market, you may yield a better return than that meagre 1% in the money market account.

Investing in Blue chips stocks is always worth looking into as they are currently making a comeback. Prior to the economy going bad, some of the larger cap corporations didn’t really have a lot of activity. The people who were investing in the market in the past did so aggressively and enjoyed all the activity. Now, these same investors are looking for some security and comfort with their investments but still make more than their money sitting in the bank or in a certificate of deposit. There is nothing like a recession for investors to seek out some stable instruments. It also forces investors to look for reputable and trustworthy companies to invest in which the blue chips provide.

So if you have some extra money that you would like to earn a higher yield on, the blue chip stocks are now trading cheaply as well as other growth stocks due to the recession. Therefore, it may be worth investigating these markets so you can take advantage of opportunities as they arise.

If you invest in the stock market however, it will involve some of your attention. It is not like a CD that locks in a rate over a certain period of time, or a money market account that just sits safe. The stock market changes on a day-to-day basis. Even if you invest for a long term, the market deserves your attention so you are on top of your investment. And after all, it is the activity that we enjoy the most, especially when the value increases and you earn a higher percentage of profit, right?

Do educate yourself on the type of investment you are interested in. That way, you will know what to do when you want to buy or sell. If you are not interested in learning, you can hire a stock broker or investment banker to help you.

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Investing In One’s Future

Bill — Wed, 28 Apr 2010 23:01:11 +0000

Some people are fortunate enough to come into possession of a sum of money, maybe large or small. This may come from a lucky lotto ticket, inheritance, or tax return. Even if the amount of money is not very large, you should use it in a way that they get the most value out of it. Putting money in the bank is a way to keep it safe. However, current interest rates are not very high, so one is not going to get much of a return on their investment. There are ways to earn some cash though, as the stock market is performing better than most people think.

The first thing one will want to do before investing in the stock market is to educate themselves on the market, how it works, and what different terms mean. Unless one has a great deal of time to spend on this venture, conducting research into the best stocks, it is usually a good idea to hire a reasonably priced, trustworthy broker. A good broker will know the market and can help one increase their revenue. Still, one should compare the necessary costs to hire a broker against what they will likely earn from the transaction.

Another option is to use stock trading software. Many of these computer programs offer up to the minute data on different stocks and can help one stay organized, make decisions, and streamline market trading activities.

Although the current economy seems to be struggling to many people, some will be surprised to the learn that the economy actually improved, especially in the area of the stock market, in 2009. There are many resources for one to use as they get ready to start investing. Investing in stocks is a good idea for people that are looking for a long term way to manage their money, because it will likely take some time to earn a significant profit.

External Links
Investment Strategy 101 | Home Turned Green
The Motley Fool

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How To Read The Stock Pages

Bill — Fri, 16 Apr 2010 01:46:57 +0000

How to read the stock pages

The first two columns of a stock page will show the stocks High and Low prices. These are the highest and lowest prices that the stock has traded over a period of time. These figures are adjusted, reflecting any stock splits that have occurred. This information can come in handy by showing the range the stock has traded in for the past year.

The third column is called the YTD % chg. This figure portrays the stocks percentage price change since the beginning of the year or its initial public offering (IPO). YTD stands for year-to-date. This shows exactly where a stock stands from its high and low.

The fourth column is called Stock-Div. This listing displays the names of the company followed by their dividend. The Dividend is shown as an annual figure and is determined by the last quarterly or semiannual dividend payout. If there is a small “f” after a dividend, it means that it increased on the last declaration being made in the market.

The fifth column provides the stock’s yield which is an annualized percentage return provided by the dividends that have been given. This is a great way to identify an undervalued stock.

The sixth column shows the stock’s price-earnings ratio or P/E- figured by dividing the closing price of the stock by the company’s total earnings per share for the latest four quarters. The most common measure if a stock is to be considered as a good stock purchase for you.

The seventh and eighth columns show the closing price as well as the dollar charge for the previous day.

If you are going to be an independent investor, you will need to know how to read a stock page, and what the different points of data mean. You will then be able to know what you are doing with your trading decisions.

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How Stock Buying Has Changed Over The Years

Bill — Wed, 14 Apr 2010 13:14:33 +0000

Investing in the stock market has changed considerably since the Internet has become such a part of the process. Older buyers remember the day when you had to make a phone name to your stock broker for each trade you needed to make. Also, everyone who had money in a broker account was assigned an actual person who took and executed the trade information.

Investing in shares in 2010 has developed into a much less personal and anonymous experience. Opening an internet stock account is something you can simply do without ever speaking to an actual person. Corporations in all lines of business are trying to reduce real paid workers and replace them with computers in order to try to save money. The business of stocks is no different and more often than not, you are now able to do everything from buying and selling on-line with no human interaction.

This lack of a personal touch has made stock trading something that you must study yourself. Many “Stocks for dummies” type books have been written to teach people the ins and outs of investing yourself online without the help of a financial advisor or stock broker. You can buy one of these books at almost any book store and start your quest to learn how to begin investing in the modern age of computers.

There still are a few brokerages that have full service options and offer you help and recommendations from real professionals. However this service comes with a hefty price ticket and it is something that fewer and fewer people are using. It seems that folks with larger estates would be more likely candidates for this type of full service as they want more input from qualified investment professionals to help them figure out what are the best stocks to buy right now.

Stock investing has changed quite a bit in the last decade, at least the part of the buying and selling stock shares has. However, the art of uncovering good stocks with upside potential is still as difficult as it ever was.

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What stocks to buy now…

Bill — Wed, 31 Mar 2010 07:40:48 +0000

So, I bought some stock and to be honest, it tanked. I didn’t get out of it what I put into it. I did however sell before I lost all of it at once. Now I am stuck, because I don’t want to lose my money, but I do want to invest again and try to make some money. I am looking through the Internet searching out good investments and I feel stuck. So, my question is what stocks to buy now?

So, as I was thinking about what I wanted to buy shares in, I started thinking about my house. Then it hit me. I didn’t just walk outside one day and decide I would go buy a house and invest in the first one that I walked into. I looked at the area, the value of the community, what was being built there to make the property value worth more and what I thought my longevity might be in that home. I looked at many different homes and communities before I made a decision. That is when it hit me. Buying my home or investing in real estate is very similar to purchasing stock. I needed to follow stock and learn about it, really do my homework on what would be the best investment for me and my family.

When I first purchased shares of stock, I did it on a whim and didn’t make any money off it, in fact I lost money. But, what I learned is that I didn’t really know anything about what I bought. I hadn’t researched it like I should have, I just skimmed over information and didn’t really put myself into it like I have in almost everything else I have done in life. I have to say, lesson learned. I know now, that I need to research it, watch it, then invest in it and that is how I will make money off of the stock market.

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