One of the best investments that you can be involved in today is that which deals in real estate. Right now, real estate is moving very good and it is a good time to be dealing with it. Much money can be made in real estate transactions and the good news is that you can make a lot of money quickly - if your investments and selling techniques are made wisely. Here are a few things you need to know about getting started in this potentially lucrative field.
Learn About It
Investments of any kind require that you learn about what you are investing your money in. Any other way of investing is only foolish, unless you have some really good financial counselors. But generally, the more you know the better off you will be. This is especially true in real estate, because the investments are large and the losses can be high. You should want to read all you can about it before you make any moves. Not only should you learn about how to choose a property that people will want, you also need to know how to research the local market to know what a property should sell for.
Types Of Property
There are a number of ways that you can get started in real estate. Largely this will be determined by how much money you have to get started with. If you do not have much money, you may want to start with foreclosures, or pre-foreclosures. These properties will be the cheapest, and, because of their value as opposed to their cost to you, could bring some excellent returns. You can buy them at less than market value, fix them up a little, and turn around and sell them at market value - for a good-sized profit.
Other properties involve residential or commercial, large and small. Once again, you need to make sure you know what you are doing before you invest. Learn the secrets to investing that will make it worthwhile, and be able to recognize a bad deal when you see one.
For Sale Or Rent?
When you want to buy property is it so that you can turn around and sell it - or do you intend to rent it out? Residential renters have a great many needs and may disturb your sleep if they need to have something done right away. On the other hand, commercial renters have a tendency to take of small things for themselves just to be able to get back to their business. Renting property out is one way to ensure an income over a long period of time, but will require a percentage of outlay to keep the property up. Commercial property, if in a prime location, however, is always sure to remain in demand.
While the real estate market is hot, there is a possible downside that you need to be aware of. Money that is tied up in real estate, while able to keep its overall value, could be tied up in that property for some time - not all property sells quickly. So you need to be able to figure in things like taxes, interest and other things that will eat at your profits over a period of time.
The market is good and much money can be made in it. It is just waiting for the right investor.
About The Author
Joseph Kenny writes for the UK Loan Store, visit them here, UK Loans Store and more information on bad credit loans available on site.
Visit Today: http://www.ukpersonalloanstore.co.uk/
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Monday, April 2, 2007
Wednesday, March 14, 2007
Real Estate Investment - Still a Great Option for the Long Term Investor
Investing in Real Estate is a great Addition to any portfolio, but what is the best way to do it? There are a number of different options, and we will go through some of them here.
The first one, and the one that seems to get the most attention these days is the "Flip". With the emergence of shows like "The Big Flip", and "Flip This House", this Buy, Renovate and Resell strategy is the 'sexy' option for most real estate investors right now. However, there are a few things to consider before you go about this. The first thing to think about, of course, is where are you going to find the property that is priced well for the flip. There are a few options for investors - the first of which is to contact a good Real Estate Agent and have them scan all listings for you for any that are undervalued, priced as is, owned by the bank or foreclosure company, or any other good opportunities that might be on the market. Your Real Estate Agent is your best friend in this respect, as they will be very motivated to find you the best property, and will be very vigilant, if for no other reason than they know you will be reselling the property at some point pretty soon! When looking for Properties to Flip in your area, remember that the same rules apply as to your own home - the first three things you should look for is Location, Location, Location! Properties that are in Downtown Areas are often the easiest to resell, however, they are often more expensive than more suburban properties, so that will eat into profit margins. Look for houses on popular streets, in good neighbourhoods. If you are buying into a worse neighbourhood, make sure you are factoring that into your price of purchase, and projected resale. The other Key factor to the Flip, is that you must ensure that you don't price yourself out of the neighbourhood. For Example, no matter how nice you make your small bungalow in an area of starter homes, Don't expect to resell it for 50% more than anything else in the area! Ensure that your renovations don't bring the price too high. Finally, Understand that the higher price bracket you try to flip, the longer it is going to take to resell, and the higher your materials costs will be. You need to consider all of this and much more before considering the flip.
The other main strategy that you can use to add to your investment portfolio in the real estate world is the rental property. Rental Properties offer two different qualities to your portfolio - income and capital gain. Your rental property can offer you a monthly income over and above your monthly outlay of expenses (mortgage, utilities and taxes). Even if your rental property doesn't offer you a huge (or any) monthly income, remember, you are also earning a capital gain on the property, as it is very likely to increase in value... just like your personal home is. All of this should be taken into consideration when deciding on a property. However, with Rental property, the most important consideration is always the Tenants that you have. A great looking, well maintained and located property can still be a nightmare if you get a bad set of tenants in their. It is important to do stringent interviews, check references and draft a strong lease agreement. You should also familiarize yourself with the Nova Scotia Tenancy Act. Finally, you need to decide what kind of rental property you are going to run. Do you want to rent to students? Young Professionals? High or Low Income? Students offer payment by room, which is often higher than you could command for entire flats, but you have to consider that they will likely not care for the building very well, and might not have the rent each month. Additionally, you have the concern of them bailing out on you once school ends for the year. Young Professionals will often be very easy to deal with, will pay their rent on time, but will also be very astute about how much they will pay, and are likely to be there for only a short period of time. Your Rental portfolio must always account for at least a 5% vacancy rate (in the good times), and must still generate money for you with that in the equation.
Like I say, in both of these cases, your real estate agent can be your best friend, and you should seek out one that you feel can be an informative and trusted advisor. They will work in conjuction with your financial planner as well, to determine what the best course of action for you is. As always, you should feel comfortable with whatever investment you make!
About The Author
Matt Honsberger is a Licensed Real Estate Agent in the heart of maritime Canada - Halifax, Nova Scotia, and the designer of http://www.homesinhrm.com.
The first one, and the one that seems to get the most attention these days is the "Flip". With the emergence of shows like "The Big Flip", and "Flip This House", this Buy, Renovate and Resell strategy is the 'sexy' option for most real estate investors right now. However, there are a few things to consider before you go about this. The first thing to think about, of course, is where are you going to find the property that is priced well for the flip. There are a few options for investors - the first of which is to contact a good Real Estate Agent and have them scan all listings for you for any that are undervalued, priced as is, owned by the bank or foreclosure company, or any other good opportunities that might be on the market. Your Real Estate Agent is your best friend in this respect, as they will be very motivated to find you the best property, and will be very vigilant, if for no other reason than they know you will be reselling the property at some point pretty soon! When looking for Properties to Flip in your area, remember that the same rules apply as to your own home - the first three things you should look for is Location, Location, Location! Properties that are in Downtown Areas are often the easiest to resell, however, they are often more expensive than more suburban properties, so that will eat into profit margins. Look for houses on popular streets, in good neighbourhoods. If you are buying into a worse neighbourhood, make sure you are factoring that into your price of purchase, and projected resale. The other Key factor to the Flip, is that you must ensure that you don't price yourself out of the neighbourhood. For Example, no matter how nice you make your small bungalow in an area of starter homes, Don't expect to resell it for 50% more than anything else in the area! Ensure that your renovations don't bring the price too high. Finally, Understand that the higher price bracket you try to flip, the longer it is going to take to resell, and the higher your materials costs will be. You need to consider all of this and much more before considering the flip.
The other main strategy that you can use to add to your investment portfolio in the real estate world is the rental property. Rental Properties offer two different qualities to your portfolio - income and capital gain. Your rental property can offer you a monthly income over and above your monthly outlay of expenses (mortgage, utilities and taxes). Even if your rental property doesn't offer you a huge (or any) monthly income, remember, you are also earning a capital gain on the property, as it is very likely to increase in value... just like your personal home is. All of this should be taken into consideration when deciding on a property. However, with Rental property, the most important consideration is always the Tenants that you have. A great looking, well maintained and located property can still be a nightmare if you get a bad set of tenants in their. It is important to do stringent interviews, check references and draft a strong lease agreement. You should also familiarize yourself with the Nova Scotia Tenancy Act. Finally, you need to decide what kind of rental property you are going to run. Do you want to rent to students? Young Professionals? High or Low Income? Students offer payment by room, which is often higher than you could command for entire flats, but you have to consider that they will likely not care for the building very well, and might not have the rent each month. Additionally, you have the concern of them bailing out on you once school ends for the year. Young Professionals will often be very easy to deal with, will pay their rent on time, but will also be very astute about how much they will pay, and are likely to be there for only a short period of time. Your Rental portfolio must always account for at least a 5% vacancy rate (in the good times), and must still generate money for you with that in the equation.
Like I say, in both of these cases, your real estate agent can be your best friend, and you should seek out one that you feel can be an informative and trusted advisor. They will work in conjuction with your financial planner as well, to determine what the best course of action for you is. As always, you should feel comfortable with whatever investment you make!
About The Author
Matt Honsberger is a Licensed Real Estate Agent in the heart of maritime Canada - Halifax, Nova Scotia, and the designer of http://www.homesinhrm.com.
Tuesday, February 20, 2007
Investing and Financial Planning
What exactly is financial planning, and why is it so important?
Financial planning is the process of determining how to manage money, investing, present and future financial goals, and the strategy that should be undertaken to obtain them.
Because our goals and desires change as we do, financial planning and investing is a task that is never finished. How we are financially able to reach these goals, and the risk we are willing to take to get there, necessarily means that any financial plan must be specifically tailored for an individual or family.
Financial planning begins by taking into account each individual's assets and liabilities at that particular point in time.
The asset category includes life insurance and monetary investments of all kinds, along with physical assets such as a home, automobiles and other items.
Liabilities may range from personal loans, credit card debt, and loans taken to obtain hard assets, such as mortgages.
Next is where sources of ongoing income and increases in hard asset wealth enter into the equation. Income most usually is earned by employment, but other sources, such as possible inheritances, must also be considered. Increases in hard asset wealth, such as rising home prices, will be affected by general economic conditions as well as owner enhancements.
From here, things get trickier, and this is where the true planning begins!
Our particular stage in life -- whether we are young, old, or somewhere in the middle -- will usually lead us to desire a particular set of goals. Financial planners often break down our life cycles into distinct phases. Which phase we are in is often determined by age but will also be dictated by how much risk we are willing to assume.
Younger people are most often described as being in an accumulation phase. Their earnings have not yet hit their peak, but at the same time they are striving to obtain both hard and soft assets.
Examples here include saving for a new home or a child's education. Risk assumed here will be tempered by the time constraints of these goals as well as individual risk tolerance. In general, the longer the time frame, the more investments in the aggressive category may be considered.
The other phases extend to middle age and beyond to retirement. Our middle age years often find us at the peak of our earning power, with many of our former goals satisfied. This will mean greater savings are possible, and as time progresses towards retirement, our tolerance for risk will necessarily diminish.
Financial planning takes all of this into account and more. Other factors, including planning for health care and other insurance needs, preparation for emergency expenditures, tax and estate planning and the like will all be part of the strategy.
Unexpected windfalls may also enter into the picture. Saving for retirement becomes increasingly important as the time earned income will end draws nearer.
All of these variables add to the importance of financially planning across all stages of one's life. It is a concept that encompasses your total financial picture -- both in the present and for the future.
About The Author
Copyright © I.E.C. Haramis
haramis@greekshares.com
http://www.greekshares.com
Ioannis - Evangelos (Akis) C. Haramis was born in Athens, Greece in 1951. Studied Business Administration, Marketing and Economics in Athens, Greece, in Chicago, ILL and in Boulder, CO (USA), as well as in Leuven, Belgium. He has been active in the stock markets since 1972 as an investor, stockbroker and consultant to individual investors and various funds. Since 2002 he is New Business Development Managing Director at a leading Investment Bank and always active in the stock markets.
Financial planning is the process of determining how to manage money, investing, present and future financial goals, and the strategy that should be undertaken to obtain them.
Because our goals and desires change as we do, financial planning and investing is a task that is never finished. How we are financially able to reach these goals, and the risk we are willing to take to get there, necessarily means that any financial plan must be specifically tailored for an individual or family.
Financial planning begins by taking into account each individual's assets and liabilities at that particular point in time.
The asset category includes life insurance and monetary investments of all kinds, along with physical assets such as a home, automobiles and other items.
Liabilities may range from personal loans, credit card debt, and loans taken to obtain hard assets, such as mortgages.
Next is where sources of ongoing income and increases in hard asset wealth enter into the equation. Income most usually is earned by employment, but other sources, such as possible inheritances, must also be considered. Increases in hard asset wealth, such as rising home prices, will be affected by general economic conditions as well as owner enhancements.
From here, things get trickier, and this is where the true planning begins!
Our particular stage in life -- whether we are young, old, or somewhere in the middle -- will usually lead us to desire a particular set of goals. Financial planners often break down our life cycles into distinct phases. Which phase we are in is often determined by age but will also be dictated by how much risk we are willing to assume.
Younger people are most often described as being in an accumulation phase. Their earnings have not yet hit their peak, but at the same time they are striving to obtain both hard and soft assets.
Examples here include saving for a new home or a child's education. Risk assumed here will be tempered by the time constraints of these goals as well as individual risk tolerance. In general, the longer the time frame, the more investments in the aggressive category may be considered.
The other phases extend to middle age and beyond to retirement. Our middle age years often find us at the peak of our earning power, with many of our former goals satisfied. This will mean greater savings are possible, and as time progresses towards retirement, our tolerance for risk will necessarily diminish.
Financial planning takes all of this into account and more. Other factors, including planning for health care and other insurance needs, preparation for emergency expenditures, tax and estate planning and the like will all be part of the strategy.
Unexpected windfalls may also enter into the picture. Saving for retirement becomes increasingly important as the time earned income will end draws nearer.
All of these variables add to the importance of financially planning across all stages of one's life. It is a concept that encompasses your total financial picture -- both in the present and for the future.
About The Author
Copyright © I.E.C. Haramis
haramis@greekshares.com
http://www.greekshares.com
Ioannis - Evangelos (Akis) C. Haramis was born in Athens, Greece in 1951. Studied Business Administration, Marketing and Economics in Athens, Greece, in Chicago, ILL and in Boulder, CO (USA), as well as in Leuven, Belgium. He has been active in the stock markets since 1972 as an investor, stockbroker and consultant to individual investors and various funds. Since 2002 he is New Business Development Managing Director at a leading Investment Bank and always active in the stock markets.
Friday, February 9, 2007
Mutual Funds - A Secure Investment
Mutual funds are a collection of stocks and/or bonds invested in different securities, which include fixed market securities and money market instrumentals. It facilitates investors to put their money under an efficient investment management. There are three types of mutual funds namely, income funds, growth funds, and balanced funds.
The basic principle underlying mutual funds is to pool in money with other people to convert it into funds. Mutual funds generally buy shares in stocks wherein an experienced fund manager performs the task of selecting, purchasing and selling off the stocks himself. Certificates are then issued to the shareholders as a testimony of proof of their partnership and participation in the emoluments of funds.
There are particularly three ways in which you can make money from a mutual fund. They are:
1. Benefits can be earned from the commission on stocks, and interests on bonds. All the income received all round the year is paid by the funds in the form of a distribution.
2. The fund will have an outstanding benefit provided the funds sell high priced securities. Most of the profits are given back to the investors in a distribution.
3. The value of the fund’s share automatically increases with an increase in the value of unsold high priced fund holdings. Accordingly, you can always sell shares of your mutual fund for profits.
Many people find investing in mutual funds an attractive option to that of dealing directly with the stock market because it is comparatively safe. In fact, these days, mutual funds have become the first preference of many investors. Mutual funds provide a balanced and better approach compared to conventional stock market alternatives. It has an added advantage of investing in several distinct sectors and firms, so, if one company suffers losses, the others may be rising. Investing in mutual funds, therefore, minimizes the loss-bearing risk of monetary assets.
In a nutshell, here are the salient points of the advantages of mutual funds:
1. Cost-effectiveness of investing in mutual funds: The main advantage of investing in mutual funds is the efficient management of your finances. Investors buy funds because they lack the competence and time to manage their own portfolio. It is a cost effective method, especially for a small investor because it is expensive to get a manager to manage individual investments.
2. Diversification: Compared to individual stocks or bonds, mutual funds diversify the risk of bearing loss. The basic intention being to invest in a diverse number of assets in order to overcome the negatives of loss making stocks or bonds by the profits reaped by others.
3. Economy of Scale: The transaction expenses are relatively low as a mutual fund is bought and sold in large amounts of credits.
4. Liquidity: Mutual funds provide the opportunity of converting shares into cash at any point of time.
5. Simplicity: It is easy to buy a mutual fund. Most companies have their own automatic purchase plans, and the minimum investment rates are very small.
Therefore, investing in mutual funds is certainly a secure investment as the chance of loss is spread out, and the opportunity for gains are numerous. At the same time, it is both cost-effective and an investment that gives great future returns.
The days of depending on government largesse in meeting old age financial requirements are growing dimmer by the day. Hence, investing in mutual funds can be a wise choice, especially for those who plan for an early retirement and hope to enjoy a secure senior citizenship.
About The Author
Joe Kenny writes for the UK Loans Store offering UK secured loans and offer more information on UK bad credit loans and other loan topics available on site. Visit Today: http://www.ukpersonalloanstore.co.uk
The basic principle underlying mutual funds is to pool in money with other people to convert it into funds. Mutual funds generally buy shares in stocks wherein an experienced fund manager performs the task of selecting, purchasing and selling off the stocks himself. Certificates are then issued to the shareholders as a testimony of proof of their partnership and participation in the emoluments of funds.
There are particularly three ways in which you can make money from a mutual fund. They are:
1. Benefits can be earned from the commission on stocks, and interests on bonds. All the income received all round the year is paid by the funds in the form of a distribution.
2. The fund will have an outstanding benefit provided the funds sell high priced securities. Most of the profits are given back to the investors in a distribution.
3. The value of the fund’s share automatically increases with an increase in the value of unsold high priced fund holdings. Accordingly, you can always sell shares of your mutual fund for profits.
Many people find investing in mutual funds an attractive option to that of dealing directly with the stock market because it is comparatively safe. In fact, these days, mutual funds have become the first preference of many investors. Mutual funds provide a balanced and better approach compared to conventional stock market alternatives. It has an added advantage of investing in several distinct sectors and firms, so, if one company suffers losses, the others may be rising. Investing in mutual funds, therefore, minimizes the loss-bearing risk of monetary assets.
In a nutshell, here are the salient points of the advantages of mutual funds:
1. Cost-effectiveness of investing in mutual funds: The main advantage of investing in mutual funds is the efficient management of your finances. Investors buy funds because they lack the competence and time to manage their own portfolio. It is a cost effective method, especially for a small investor because it is expensive to get a manager to manage individual investments.
2. Diversification: Compared to individual stocks or bonds, mutual funds diversify the risk of bearing loss. The basic intention being to invest in a diverse number of assets in order to overcome the negatives of loss making stocks or bonds by the profits reaped by others.
3. Economy of Scale: The transaction expenses are relatively low as a mutual fund is bought and sold in large amounts of credits.
4. Liquidity: Mutual funds provide the opportunity of converting shares into cash at any point of time.
5. Simplicity: It is easy to buy a mutual fund. Most companies have their own automatic purchase plans, and the minimum investment rates are very small.
Therefore, investing in mutual funds is certainly a secure investment as the chance of loss is spread out, and the opportunity for gains are numerous. At the same time, it is both cost-effective and an investment that gives great future returns.
The days of depending on government largesse in meeting old age financial requirements are growing dimmer by the day. Hence, investing in mutual funds can be a wise choice, especially for those who plan for an early retirement and hope to enjoy a secure senior citizenship.
About The Author
Joe Kenny writes for the UK Loans Store offering UK secured loans and offer more information on UK bad credit loans and other loan topics available on site. Visit Today: http://www.ukpersonalloanstore.co.uk
Sunday, January 28, 2007
Where Should I Put My Savings? Different Types of Investment Accounts
In the big world of investing, it seems we hear a lot about what securities to invest in, but not as much about what types of accounts to invest in. There are so many different types of investment accounts, each covering a different purpose, and new types of accounts seem to be created weekly. What are some of the basic types of investment accounts and what can they do for you? This article covers some of the accounts that are available currently and why you would use each one.
Retirement Accounts
IRA stands for Individual Retirement Account. An IRA is meant for those who do not have access to employer sponsored retirement plans such as 401(k) plans or those who would like to contribute more than the maximum allowed by their employer plans. Why choose an IRA? Tax-deferred growth is the answer. With a standard savings account, you have to pay taxes on the interest or earnings that the account makes each year. An IRA, on the other hand, doesn't require you to pay taxes until the money is taken out in retirement, thus leaving more money in the account to grow each year. In many instances you can also deduct your IRA contributions on your taxes, giving you further tax savings. It seems like a small thing especially when the account balance is still small, but over time it makes a big difference. Investing $10,000 for 30 years in a regular savings account with a 28% tax bracket and a 6% average growth rate will give you $35,565 whereas that same amount put into a tax-deferred account will give you $57,435. Eventually, however, you do have to pay taxes on the earnings in your IRA, but you are still left with $44,153 after taxes are paid. Your net gain for tax-deferred growth is just over $8500.
Another individual plan is a Roth IRA. It is somewhat similar to a traditional IRA but the difference is that you cannot deduct the contributions and the earnings grow tax-free instead of tax-deferred. This type of plan is good for someone with a longer timeframe to invest or those whose tax bracket in retirement will be close to or higher than their current tax rate. Tax-free growth means that you don't have to pay taxes on any of the earnings in the account. If we start with $10,000 and invest it for 30 years at 6% growth like our example above, you would be left with $57,435. None of that money has to have taxes paid on it since the initial $10,000 already had taxes taken out and the earnings grew tax-free. Before you wonder why anyone would not automatically use a Roth IRA, consider the fact that the initial $10,000 investment wasn't tax deductible like it was for the traditional IRA above. With a 28% tax bracket, the Roth paid $2,800 on its initial $10,000 investment. If we look at the growth potential of $2,800 for 30 years in a tax-deferred account, it grows to $16,082. So, in this person's situation where their tax bracket is the same in retirement as it is while working with a 6% rate of growth, a Roth wouldn't be the best option. The Roth would only grow to $57,435 - $16,082 = $41,353 when all taxes are taken into consideration while the traditional IRA would grow to $44,153. There are several online calculators that can estimate which type of IRA would be to your advantage. Search under Roth vs. Traditional IRA for more information and calculators to determine the best account for you.
In addition to individual plans there are also employer-sponsored plans. SEP IRA, SIMPLE IRA and Keogh plans are in between Traditional Individual Retirement Accounts and the standard employer sponsored plans such as 401(k)'s. SEP's, SIMPLE's and Keogh's are for self employed individuals or small companies that need to put aside more money than a standard IRA allows but aren't large enough to warrant the expense of a 401(k) plan. Each plan allows both employee and employer contributions. Each has set maximums between $6,000 and $30,000, depending on the plan and the contributor, and each has tax incentives for both the employer and the employee. These plans are great for small businesses to be able to set aside money for themselves and their employees and not have to go through the time and expense of larger employer sponsored plans.
The last type of retirement plans are employer sponsored plans. When it comes to retirement, it seems everyone knows the term 401(k). This is because a 401(k) is the retirement plan of choice for medium and large companies. In 2006, the maximum contribution to a 401(k) is $15,000. If you are over fifty and your employer offers the 401(k) "catch-up" contribution, you can contribute up to $5,000 more, so $20,000 total. Your employer may also contribute to your 401(k) plan which generally doesn't decrease your contribution allowance. Originally, 401(k) plans were only offered to for-profit companies. Those who worked for non-profit companies such as charities, schools, universities and hospitals weren't able to contribute to 401(k) plans but were able to open 403(b) plans which allowed most of the same contribution limits as a 401(k). Government or public employees often used 457(b) plans for their contributions and for highly compensated employees there are 457(f) plans. This eventually changed to where 401(k) plans are now available to non-profit companies so more and more of the non-profit sector are opening 401(k) plans for their employees. Taxes on these types of plan can vary from one plan to another, so it is best to consult your plan director or talk with the investment company that manages your employers plan.
Education Savings Plans
Education plans have become available in the past decade allowing parents to better save for their children's education. Instead of trying to set money aside in taxable savings accounts, parents can now setup an education savings account that has various tax advantages depending upon the type of account used. Choosing an education savings account depends upon what your long-term goals are for the money. There are three basic types of education savings accounts, IRC section 529 plans, the Coverdell Education Savings Account (CESA) and the Uniform Gift to Minors Account (UGMA). Each plan is tailored a little differently when it comes to its tax advantages and who gets the money from each plan, but each has the same general purpose, to save for your children or grandchildren's future.
Medical Savings Accounts
There are three different types of accounts to help you save for healthcare costs, Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA). The first of these, Flexible Spending Accounts are also called section 125 plans or "cafeteria plans." This plan allows participants to put pre-tax money into the account each year to cover health insurance deductibles, co-payments, dental care and other medical expenses. Cafeteria plan money cannot accumulate from year to year, however, so it needs to be used up in one year or it will be gone. The second type of medical savings account is a Health Reimbursement Arrangement. It is similar to an FSA but the employer contributes to the account instead of the employee.
The employer can make contributions contingent on an employee participating in designated health and wellness programs. In June 2002 it was updated to allow funds to rollover from year to year, but it cannot be rolled over from employer to employer so if you change employers, you loose the accrued benefit. The last and most recently created plan is a Health Savings Account. This plan enables employees with high-deductible health insurance plans to set aside and invest money to use to pay the deductibles or other healthcare costs in the future.
These plans are designed to put healthcare decisions more into the hands of the employees. These plans are also portable so they move with you when you change employers and they can be rolled over from year to year.
Other Accounts
For those who are just looking to invest, a brokerage account is the medium to use. Brokerage accounts are setup through investment companies to allow you to purchase securities such as stocks, bonds, mutual funds, money markets, options, etc. Generally the money sits in a "core" account such as a money market until you are ready to invest it in other securities. There are fees for purchasing many securities which vary depending on the company that the account is setup with. Brokerage accounts can also offer check writing, debit and ATM cards for easier access to money in the account. Since there are no tax-advantages of a brokerage account, money can be withdrawn at any time from the core account. These accounts are perfect for additional savings that you want to invest in the stock market.
The standard savings account is probably what everyone is most familiar with. Offered by any bank, a savings account allows you to set money aside and receive a variable or fixed interest rate depending upon the account. Savings accounts are very liquid and can be withdrawn at any time, but they don't allow check writing capabilities. Most savings accounts now days do offer ATM cards. Certificates of Deposit or CD's are types of savings accounts that require money to be left in for a certain period of time in exchange for a slightly higher interest rate, these accounts are less liquid and there is generally a fee to take the money out before the predetermined period of time.
Whatever the reason or account used to set aside money, it is always a good thing. Savings in any form creates a more secure financial future and allows for problems or emergencies to be taken care of without having to obtain loans or dip into less liquid savings such as a home or other physical assets. Opening up any of the above types of accounts gets you started on the right track towards savings.
About The Author
Emma Snow is a writer who specializes in financial planning. She has worked in the financial industry for over eight years. Currently Emma works on a Finance and Investing site at http://www.finance-investing.com and Investing Partners http://www.investing-partners.com.
Retirement Accounts
IRA stands for Individual Retirement Account. An IRA is meant for those who do not have access to employer sponsored retirement plans such as 401(k) plans or those who would like to contribute more than the maximum allowed by their employer plans. Why choose an IRA? Tax-deferred growth is the answer. With a standard savings account, you have to pay taxes on the interest or earnings that the account makes each year. An IRA, on the other hand, doesn't require you to pay taxes until the money is taken out in retirement, thus leaving more money in the account to grow each year. In many instances you can also deduct your IRA contributions on your taxes, giving you further tax savings. It seems like a small thing especially when the account balance is still small, but over time it makes a big difference. Investing $10,000 for 30 years in a regular savings account with a 28% tax bracket and a 6% average growth rate will give you $35,565 whereas that same amount put into a tax-deferred account will give you $57,435. Eventually, however, you do have to pay taxes on the earnings in your IRA, but you are still left with $44,153 after taxes are paid. Your net gain for tax-deferred growth is just over $8500.
Another individual plan is a Roth IRA. It is somewhat similar to a traditional IRA but the difference is that you cannot deduct the contributions and the earnings grow tax-free instead of tax-deferred. This type of plan is good for someone with a longer timeframe to invest or those whose tax bracket in retirement will be close to or higher than their current tax rate. Tax-free growth means that you don't have to pay taxes on any of the earnings in the account. If we start with $10,000 and invest it for 30 years at 6% growth like our example above, you would be left with $57,435. None of that money has to have taxes paid on it since the initial $10,000 already had taxes taken out and the earnings grew tax-free. Before you wonder why anyone would not automatically use a Roth IRA, consider the fact that the initial $10,000 investment wasn't tax deductible like it was for the traditional IRA above. With a 28% tax bracket, the Roth paid $2,800 on its initial $10,000 investment. If we look at the growth potential of $2,800 for 30 years in a tax-deferred account, it grows to $16,082. So, in this person's situation where their tax bracket is the same in retirement as it is while working with a 6% rate of growth, a Roth wouldn't be the best option. The Roth would only grow to $57,435 - $16,082 = $41,353 when all taxes are taken into consideration while the traditional IRA would grow to $44,153. There are several online calculators that can estimate which type of IRA would be to your advantage. Search under Roth vs. Traditional IRA for more information and calculators to determine the best account for you.
In addition to individual plans there are also employer-sponsored plans. SEP IRA, SIMPLE IRA and Keogh plans are in between Traditional Individual Retirement Accounts and the standard employer sponsored plans such as 401(k)'s. SEP's, SIMPLE's and Keogh's are for self employed individuals or small companies that need to put aside more money than a standard IRA allows but aren't large enough to warrant the expense of a 401(k) plan. Each plan allows both employee and employer contributions. Each has set maximums between $6,000 and $30,000, depending on the plan and the contributor, and each has tax incentives for both the employer and the employee. These plans are great for small businesses to be able to set aside money for themselves and their employees and not have to go through the time and expense of larger employer sponsored plans.
The last type of retirement plans are employer sponsored plans. When it comes to retirement, it seems everyone knows the term 401(k). This is because a 401(k) is the retirement plan of choice for medium and large companies. In 2006, the maximum contribution to a 401(k) is $15,000. If you are over fifty and your employer offers the 401(k) "catch-up" contribution, you can contribute up to $5,000 more, so $20,000 total. Your employer may also contribute to your 401(k) plan which generally doesn't decrease your contribution allowance. Originally, 401(k) plans were only offered to for-profit companies. Those who worked for non-profit companies such as charities, schools, universities and hospitals weren't able to contribute to 401(k) plans but were able to open 403(b) plans which allowed most of the same contribution limits as a 401(k). Government or public employees often used 457(b) plans for their contributions and for highly compensated employees there are 457(f) plans. This eventually changed to where 401(k) plans are now available to non-profit companies so more and more of the non-profit sector are opening 401(k) plans for their employees. Taxes on these types of plan can vary from one plan to another, so it is best to consult your plan director or talk with the investment company that manages your employers plan.
Education Savings Plans
Education plans have become available in the past decade allowing parents to better save for their children's education. Instead of trying to set money aside in taxable savings accounts, parents can now setup an education savings account that has various tax advantages depending upon the type of account used. Choosing an education savings account depends upon what your long-term goals are for the money. There are three basic types of education savings accounts, IRC section 529 plans, the Coverdell Education Savings Account (CESA) and the Uniform Gift to Minors Account (UGMA). Each plan is tailored a little differently when it comes to its tax advantages and who gets the money from each plan, but each has the same general purpose, to save for your children or grandchildren's future.
Medical Savings Accounts
There are three different types of accounts to help you save for healthcare costs, Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA). The first of these, Flexible Spending Accounts are also called section 125 plans or "cafeteria plans." This plan allows participants to put pre-tax money into the account each year to cover health insurance deductibles, co-payments, dental care and other medical expenses. Cafeteria plan money cannot accumulate from year to year, however, so it needs to be used up in one year or it will be gone. The second type of medical savings account is a Health Reimbursement Arrangement. It is similar to an FSA but the employer contributes to the account instead of the employee.
The employer can make contributions contingent on an employee participating in designated health and wellness programs. In June 2002 it was updated to allow funds to rollover from year to year, but it cannot be rolled over from employer to employer so if you change employers, you loose the accrued benefit. The last and most recently created plan is a Health Savings Account. This plan enables employees with high-deductible health insurance plans to set aside and invest money to use to pay the deductibles or other healthcare costs in the future.
These plans are designed to put healthcare decisions more into the hands of the employees. These plans are also portable so they move with you when you change employers and they can be rolled over from year to year.
Other Accounts
For those who are just looking to invest, a brokerage account is the medium to use. Brokerage accounts are setup through investment companies to allow you to purchase securities such as stocks, bonds, mutual funds, money markets, options, etc. Generally the money sits in a "core" account such as a money market until you are ready to invest it in other securities. There are fees for purchasing many securities which vary depending on the company that the account is setup with. Brokerage accounts can also offer check writing, debit and ATM cards for easier access to money in the account. Since there are no tax-advantages of a brokerage account, money can be withdrawn at any time from the core account. These accounts are perfect for additional savings that you want to invest in the stock market.
The standard savings account is probably what everyone is most familiar with. Offered by any bank, a savings account allows you to set money aside and receive a variable or fixed interest rate depending upon the account. Savings accounts are very liquid and can be withdrawn at any time, but they don't allow check writing capabilities. Most savings accounts now days do offer ATM cards. Certificates of Deposit or CD's are types of savings accounts that require money to be left in for a certain period of time in exchange for a slightly higher interest rate, these accounts are less liquid and there is generally a fee to take the money out before the predetermined period of time.
Whatever the reason or account used to set aside money, it is always a good thing. Savings in any form creates a more secure financial future and allows for problems or emergencies to be taken care of without having to obtain loans or dip into less liquid savings such as a home or other physical assets. Opening up any of the above types of accounts gets you started on the right track towards savings.
About The Author
Emma Snow is a writer who specializes in financial planning. She has worked in the financial industry for over eight years. Currently Emma works on a Finance and Investing site at http://www.finance-investing.com and Investing Partners http://www.investing-partners.com.
Thursday, January 25, 2007
Stock Market Investments Or Gambling? What Is The Difference
The art of speculating in one form or another has been around forever.
When it comes to speculating, there are always three things that you can be sure of – there will be always people willing to speculate, there will always be people who will love to play the game with the first group. Lastly history can be counted on to repeat itself.
Sure the object of speculation may change, the rules may change and the technology may change. But in the end it is always the same.
However what has happened before is 100 %sure to happen again. You can count on it. Everyone thinks always that they are so original when it always the same story again and again. Whether it is tulip bulbs, precious metals, mutual funds, lottery tickets or penny stocks human nature is human nature.
Ignorance, greed, fear and hope determine how people react and thus how prices move and markets behave. People have speculated on everything at one time or another,
For the last hindered years and certainly into the foreseeable future speculating on stock prices offers liquidity combined with legitimacy and purpose. Stock speculation, trading and investing have become an essential and vital parts of both our economy and our lives.
Trading is just another word for speculating and investing is nothing more than speculating, except that it supposedly encompasses a longer time horizon and for some odd reason implies less risk. Speculators speculate, trader’s trade and investors invest to make money. Traders buy stock or any other object of speculation because they anticipate a price appreciation.
Speculation and gambling are similar, with a few important distinctions. One difference is the perception, sometimes true, that successful speculators profit due to their skill or an unseen advantage, while gamblers prosper due to chance or luck.
Remember though that it may not happen to you but in the end given enough time or chances the odds will always prevail. The casinos in Atlantic City and Las Vegas were not built with winner’s money.
Another distinction is that gambling in most forms has been illegal (at least until government got involved and changed the rules in their favor) while speculation plays an essential role in our markets and thus our economy.
These important distinctions make speculating which indeed is what our investment industry purveys as an accepted occupation – indeed one with one prestige and gamblers not being accepted in the same light.
Whether a gambler, a trader or a speculator, in all cases the attraction is the same – the chance to make a lot of money in a hurry. It is the immediate gratification of the win that makes these games irresistible - an opiate of sorts.
Indeed problem gamblers have been compared to alcoholics in needing that rush which gives them such pleasure and serves amazingly to release endorphins to relax their troubled minds.
On top of that the unpredictability of the wins serves to even reinforce this addictive behavior.
Not far off of the methods of B.F. Skinner and the rats of operant conditioning fame.
Indeed some people will tell you that “it will almost always end with crying!”
About The Author
Amy Goodmann Senior Investment Analyst Substantial Incomes http://www.substantialincomes.com http://www.forexforexforexforex.com.
When it comes to speculating, there are always three things that you can be sure of – there will be always people willing to speculate, there will always be people who will love to play the game with the first group. Lastly history can be counted on to repeat itself.
Sure the object of speculation may change, the rules may change and the technology may change. But in the end it is always the same.
However what has happened before is 100 %sure to happen again. You can count on it. Everyone thinks always that they are so original when it always the same story again and again. Whether it is tulip bulbs, precious metals, mutual funds, lottery tickets or penny stocks human nature is human nature.
Ignorance, greed, fear and hope determine how people react and thus how prices move and markets behave. People have speculated on everything at one time or another,
For the last hindered years and certainly into the foreseeable future speculating on stock prices offers liquidity combined with legitimacy and purpose. Stock speculation, trading and investing have become an essential and vital parts of both our economy and our lives.
Trading is just another word for speculating and investing is nothing more than speculating, except that it supposedly encompasses a longer time horizon and for some odd reason implies less risk. Speculators speculate, trader’s trade and investors invest to make money. Traders buy stock or any other object of speculation because they anticipate a price appreciation.
Speculation and gambling are similar, with a few important distinctions. One difference is the perception, sometimes true, that successful speculators profit due to their skill or an unseen advantage, while gamblers prosper due to chance or luck.
Remember though that it may not happen to you but in the end given enough time or chances the odds will always prevail. The casinos in Atlantic City and Las Vegas were not built with winner’s money.
Another distinction is that gambling in most forms has been illegal (at least until government got involved and changed the rules in their favor) while speculation plays an essential role in our markets and thus our economy.
These important distinctions make speculating which indeed is what our investment industry purveys as an accepted occupation – indeed one with one prestige and gamblers not being accepted in the same light.
Whether a gambler, a trader or a speculator, in all cases the attraction is the same – the chance to make a lot of money in a hurry. It is the immediate gratification of the win that makes these games irresistible - an opiate of sorts.
Indeed problem gamblers have been compared to alcoholics in needing that rush which gives them such pleasure and serves amazingly to release endorphins to relax their troubled minds.
On top of that the unpredictability of the wins serves to even reinforce this addictive behavior.
Not far off of the methods of B.F. Skinner and the rats of operant conditioning fame.
Indeed some people will tell you that “it will almost always end with crying!”
About The Author
Amy Goodmann Senior Investment Analyst Substantial Incomes http://www.substantialincomes.com http://www.forexforexforexforex.com.
Tuesday, January 16, 2007
Key Factors To Consider When Buying Investment Property
Buying investment property with discretion is perhaps a foolproof way of accruing long-term wealth. With the stock markets being overly volatile the investor is anxious and often seeks haven in real estate, which unequivocally involves less uncertainty than other investment options. While real estate has drooped a bit from its zenith during the late 1980s, astute real estate investments can still deliver significant gains. In general, buying investment property gives you access to three benefits: yield, capital growth, and tax advantage through negative gearing.
Investment properties are also known as Non-Owner Occupied properties. Since every investor looks for high capital growth, buying investment property in a developing area does make sense. Experienced investors state that suburbs located within a 10 km radius of a city’s hub can be regarded as developing areas. It is recommended that you explore the area prior to buying investment property. Ensure that the basic amenities and emergency provisions are easily accessible to potential tenants. This would result in healthy rental returns and minimal vacancy periods, if any.
While buying investment property, you must consider that renting an apartment unit is much easier than renting a separate house. Moreover, the expense of rectifying problems, such as replacing the heating ducts, is shared among the several owners in the apartment.
The locale also plays a crucial role in determining which property to purchase. Properties with a panoramic view are often more desirable than others. Undoubtedly, the rental income from such a property would be huge. But there is no point going overboard and purchasing an expensive property, prior to ensuring that potential tenants can afford renting such a property.
If capital growth is what you look for in an investment property, then seek a property that can be sold quickly. Augmented properties, such as a unit with a balcony, garage or laundry, are rather alluring and can be sold with ease.
While buying investment property with the key intent of renting it, you must bear in mind that there might be periods when the property is unoccupied, either because of repairs or lack of tenants. Therefore, you must have a contingency plan for such vacancy periods.
Property investment might not seem all hunky-dory during the initial few years. But after a few years of holding a property, you might hopefully see yourself from being negatively geared to being either neutrally geared or positively geared. That is, your returns would be higher than your operating expenses. This is because the rental income would increase on a gradual basis, keeping pace with the market sentiments. Over time, you would also generate extra capital in your investment property.
On the whole, buying investment property can be a profitable venture if it’s done astutely.
Copyright © 2006 Joel Teo. All rights reserved.
About The Author
Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the “Six Day Real Estate Investment Profits Course” now at http://www.realestateinvestment101.info/Ahwatukee.html.
Investment properties are also known as Non-Owner Occupied properties. Since every investor looks for high capital growth, buying investment property in a developing area does make sense. Experienced investors state that suburbs located within a 10 km radius of a city’s hub can be regarded as developing areas. It is recommended that you explore the area prior to buying investment property. Ensure that the basic amenities and emergency provisions are easily accessible to potential tenants. This would result in healthy rental returns and minimal vacancy periods, if any.
While buying investment property, you must consider that renting an apartment unit is much easier than renting a separate house. Moreover, the expense of rectifying problems, such as replacing the heating ducts, is shared among the several owners in the apartment.
The locale also plays a crucial role in determining which property to purchase. Properties with a panoramic view are often more desirable than others. Undoubtedly, the rental income from such a property would be huge. But there is no point going overboard and purchasing an expensive property, prior to ensuring that potential tenants can afford renting such a property.
If capital growth is what you look for in an investment property, then seek a property that can be sold quickly. Augmented properties, such as a unit with a balcony, garage or laundry, are rather alluring and can be sold with ease.
While buying investment property with the key intent of renting it, you must bear in mind that there might be periods when the property is unoccupied, either because of repairs or lack of tenants. Therefore, you must have a contingency plan for such vacancy periods.
Property investment might not seem all hunky-dory during the initial few years. But after a few years of holding a property, you might hopefully see yourself from being negatively geared to being either neutrally geared or positively geared. That is, your returns would be higher than your operating expenses. This is because the rental income would increase on a gradual basis, keeping pace with the market sentiments. Over time, you would also generate extra capital in your investment property.
On the whole, buying investment property can be a profitable venture if it’s done astutely.
Copyright © 2006 Joel Teo. All rights reserved.
About The Author
Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the “Six Day Real Estate Investment Profits Course” now at http://www.realestateinvestment101.info/Ahwatukee.html.
Wednesday, January 10, 2007
Rental Property Investment – A Quick Introduction
Rental property investment is emerging as an excellent option for investors as they are anxious about the sudden slumps and trifling gains of the stock market.
Are you looking for rental property investment? Before you set on your quest for a rental property, ensure that you really know what it’s like to be a landlord. Though it is a profitable venture, it is not a cinch by any means. You would have to maintain the property in order to reap the financial rewards throughout the period of your ownership.
To many, rental property investment is simply something that involves buying a house, giving it on rent, and then raking in bucks while relaxing in a couch. However, this is far from being realistic, especially, if you wish for a regular rental income for years to come. Bagging a rental property and accruing a healthy rental income for a year or two is nothing but a mundane task. However, maintaining a steady rental income until you sell the property is what counts as a great effort on your part.
Being an investor, there is nothing worse than having to keep a vacant rental property. This is because you would still need funds for the upkeep of the property, which isn’t providing you any returns as it’s vacant. Therefore, you should actively seek tenants, and do whatever is possible to keep them contented. This involves heeding to the needs of the tenants and making timely repairs. Though you might carry out some trivial repairs by yourself, other complex tasks (fixing pipe leaks and windowpanes) are best left to an expert.
In your quest for rental property investment, it is pivotal that you consider the locale. This entails taking into account the distance of the property from your residence, the availability of tenants, the average rent that you can collect, and the ability of tenants in the locality to pay you. Some locales may prove more beneficial than others. For instance, it is better to rent a house nearby a college, since an awful lot of students are likely to search for a dwelling in the vicinity of their college. This results in an ample supply of tenants all year round.
In a gist, rental property investment is all about analyzing the locale, doing whatever it takes to rent your property, keeping your tenants happy, and maintaining the property so it can be rented year after year thereby minimizing the vacancy period.
Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)
About The Author
Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the “Six Day Real Estate Investment Profits Course” now at http://www.realestateinvestment101.info/Ahwatukee.html
Are you looking for rental property investment? Before you set on your quest for a rental property, ensure that you really know what it’s like to be a landlord. Though it is a profitable venture, it is not a cinch by any means. You would have to maintain the property in order to reap the financial rewards throughout the period of your ownership.
To many, rental property investment is simply something that involves buying a house, giving it on rent, and then raking in bucks while relaxing in a couch. However, this is far from being realistic, especially, if you wish for a regular rental income for years to come. Bagging a rental property and accruing a healthy rental income for a year or two is nothing but a mundane task. However, maintaining a steady rental income until you sell the property is what counts as a great effort on your part.
Being an investor, there is nothing worse than having to keep a vacant rental property. This is because you would still need funds for the upkeep of the property, which isn’t providing you any returns as it’s vacant. Therefore, you should actively seek tenants, and do whatever is possible to keep them contented. This involves heeding to the needs of the tenants and making timely repairs. Though you might carry out some trivial repairs by yourself, other complex tasks (fixing pipe leaks and windowpanes) are best left to an expert.
In your quest for rental property investment, it is pivotal that you consider the locale. This entails taking into account the distance of the property from your residence, the availability of tenants, the average rent that you can collect, and the ability of tenants in the locality to pay you. Some locales may prove more beneficial than others. For instance, it is better to rent a house nearby a college, since an awful lot of students are likely to search for a dwelling in the vicinity of their college. This results in an ample supply of tenants all year round.
In a gist, rental property investment is all about analyzing the locale, doing whatever it takes to rent your property, keeping your tenants happy, and maintaining the property so it can be rented year after year thereby minimizing the vacancy period.
Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)
About The Author
Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the “Six Day Real Estate Investment Profits Course” now at http://www.realestateinvestment101.info/Ahwatukee.html
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