Taking Control Of Finances By Investing Smartly Is The Way To Go!

Investing one’s money can be fun what the excitement linked to the rise and fall of prices and the tension and anticipation associated with picking and choosing the best investment options. Money management could never have been so thrilling. This feeling may not be universal but surveys reveal that more than 40% of youth in the age group 18 to 25 enjoy investing, and the figures are increasing.

It’s easy to feel happy and contented with a rising income and little or no responsibilities when one is young but the lucky are those that invest money early in 401k. But the 401k is by no stretch of the imagination the sole investment option. A little bit of risk taking can be useful and stock funds are a great way to make a sound start.

If you are planning on entering the huge world of canny investments here are some excellent tips coming from the masters that have been there and have done it all:

The first lesson is determining how much cash you have at your disposal

Never even entertain any ambition of entering investments till you have created at least six month’s emergency fund to take care of contingencies, pay down your debts and you are able to comfortably budget immediate daily expenses, and you have a comfortable disposable income. Then only should you plan for short term and long term goals?

Decide the level of risk that you can comfortably take

Before you go into various options decide how much risk you can safely assume regarding different types of instruments like savings accounts, bonds, and stocks. The accepted rule is that if you have a longer stretch ahead of you till retirement you can take more risk simply because you have more time at your disposal to overcome losses if any. That way you can aim for high growth stocks that assure greater returns, albeit at a higher risk.

Of course, it pays if you happen to study the investment scenario as it unfolds before your eyes, and you can take help from investment pros that have more experience in deciding the right investments. Your assessment of risk should not make you risk everything that you have invested; on the contrary, you should follow a path where investments can be mixed to create a relatively safer portfolio that assures a higher growth rate but can take a hit if circumstances move adversely.

Broad base your portfolio with diverse instruments of investment

There are well-established techniques for ensuring a diverse asset base in one’s portfolio. Relatively lower risk corporate bonds, for example, can be used to balance high growth high-risk stocks. You can cultivate a judicious mix of low cap stocks with large caps and a few international corporates. This is a sound strategy because young and dynamic local firms and international companies have registered almost 12% growth in recent years compared to even well-established local firms.

Experts watching the unfolding stock market scenario say it pays rich dividends to focus 65% of stocks in national companies as opposed to 35% in international firms that have a solid reputation in emerging markets. To make matters safer you can peg stock investments at 65% of your portfolio and leave 25% to bonds and mutual funds and market index stocks and leave 10% in bank savings accounts and Certificates of Deposit.

Prioritize a 401k investment for ensuring retirement security

In this area at is best to follow a mix of 401k and an Individual Retirement Account (IRA) as that will give your investments a better choice in order to make higher growth while you secure maximum benefits from the employer’s matching contribution in your 401k.

Improve your techniques of monitoring the progress of your investments

A portfolio of investments can’t be left to itself. Make an assessment by pouring over the quarterly reports on your 401k investments and check websites to ascertain how companies are faring vis a vis their competitors. An effective site is Morningstar that gives you detailed analyses on prospective stocks in emerging markets. A periodical review helps you get rid of laggard stocks and chose healthier substitutes. The best moment to overhaul a portfolio may be when you undergo major changes in life like shifting to a higher paying job, or when you tie the knot and consider raising kids.

Have fun!

Investing is a serious science but you can have your share of fun if you follow the tips we have enumerated. Remember that your goal is to make your money grow and you can give it your best shot as there may be a long stretch between now and your retirement. Security is certainly a warm feeling and investing properly opens up a safer, happier and more secure future.

If Parents Become Financially Extravagant Do They Forfeit The Need To Be Cared For?

Raising children is an awesome responsibility, and as children grow up, cross adulthood and mature the same “children” begin to realize that they need to return the favour by looking after their parents as age and infirmity overcome them. Old age is replete with lifestyle changes that take over as the human body slows down and hitherto healthy bodies become weaker and disease prone and quirky. This is the time when youngsters need to give a lot of their time and attention to parents to ease their transition to a more relaxed and caregiving period.

When it comes to finances, it is basically the children’s responsibility to see to it that their parent’s needs are taken care to the extent possible. This role assumes importance because it may not be possible for parents to squeeze in all their benefits when they are living on a reduced and inflexible income. Food, shelter, and medication are not easy to acquire and parents need to shell out more money than ever before to make ends meet. What adds to their misery is the escalating cost of health care, therapy, and medication. Parents do need financial assistance to tide over cash shortfalls in their daily needs.
The case for supporting ones parents is compellingly strong, a dire necessity that can’t be ignored under most circumstances, and you would be hard pressed to find children that deliberately neglect their parents or withhold financial assistance where financial assistance and care is the need of the hour.

But there might be an exception to this trend; consider a situation where ones parents lead a spendthrift and extravagant way of living with scant regard for savings and make zero efforts to grown investments; parents that lead a “now or never” type of existence with no thought for tomorrow. Such parents would be deliberately ignoring or neglecting to lead a financially Qik car title loans prudent lifestyle. What would you do with such parents? Would you pursue the same principles and tackle such parents as you would in the case of financially prudent parents?

One choice before you would be to hep such parents out of filial responsibility and a sense of obligation because after all family is family and blood is thicker than water, and we all need to stick together through good times and bad. Besides, one can’t forget the fact that at a vulnerable point of time we too were totally dependent on our parents and they made no compromises when it came to dedicating their time, energy and money for rearing us.

This is one side of the story looking from the perspective of the children, but what of the parents that are profligate? Parents that live life king size like it was their last day are exhibiting a high degree of selfishness and their actions are patently anti-family and more of a self-seeking nature that is not conducive to family cohesiveness. Such parents have no regard for their own future and they are also compromising the security and integrity of the children and their children’s future.

The worst scenario is having parents that are highly skilled and intelligent but who refuse to use their skills to work or earn an income or bring in additional streams of income. Had they worked to nurture a positive income flow they would have taken a lot of pressure off their retirement kitty and they could even have postponed their withdrawals. If parents are financially responsible they could delay taking financial help from their children unless they are utterly compelled by bad health or indigent circumstances.

The million dollar question is would you support parents that are financially profligate? Whichever way you lean you might not have much of a choice because many states have filial responsibility legislation in place that obliges you to provide basic needs and even home assisted care.

But just for the sake of argument let’s say law is the last thing on your mind. The moot question is would you set aside your misgivings and help parents that are helping themselves more than fulfilling their responsibility to you and your children?
Perhaps the best answer to that question is to help such wayward parents out of filial responsibility but to also educate and guide them in such a manner that they open their eyes and regain their lost perspective and take bold steps to set right the wrongs they are committing. To sum it up you need to help, guide and educate your parents and lead by example.

Spreading Savings Across Multiple Accounts May Not Be A Viable Option For Many Individuals

If one pays due respect to traditional wisdom one may take the view that holding many different types of savings and checking accounts is essential for organizing finances and for ensuring efficient money management. But according to erudite professionals, this may not be the ideal pathway to financial success. In fact, citizens may save substantially if they restrict their accounting to single accounts.

Hidden implications of Banking sector strategies

Banks are literally falling over themselves offering multiple accounts in package deals like discounted airline tickets and such aggressive sales tactics may be pushing people towards wrong choices. It is an undeniable fact that the average savings ratio of the American citizen is a pathetically low 5% and far from improving matters there appears to be sustained inability of individuals and families to survive life’s expensive ride and recharge their savings accounts.

Understanding the craze for holding multiple savings accounts

The craze for multiple accounts has less to do with mathematical correctness or accounting efficiency. The average American is still preoccupied with hosting multiple accounts to channel multiple expenses, but these expenses are overshooting his budget and financial capacity. Having a single account reduces the confusion and a man knows exactly where his resources stand when any item of expenditure looms over the horizon. The accounting simplicity of a single account enhances one’s decision making power.

Multiple savings accounts encourage wasteful expenditure

By creating multiple accounts we wrongly think that we are accumulating savings in a systematic way and we are financially stronger. The auto title loan reality is that we are creating more avenues to spend our money and savings is relegated to the background. To put it another way, we open more and more savings accounts, we start thinking that we are sitting on a mountain of savings that will comfortably help us meet expenses but in reality, just the opposite may be happening. We are actually justifying our need to spend recklessly thereby destroying our savings mentality.

For the sake of debate, let’s simply assume that multiple savings accounts are a big deal. Now ask yourself what am I doing to control my cash flows? Do I have a system in place that tells me precisely how much in aggregate I have in the account in my accounts, every time I think of footing some bill? The harsh reality is the most people wouldn’t have a clue how much they have in their accounts overall. They have only one dominating all-consuming thought – I have an expenditure lined up and “I think” my balances in other accounts can take care of that expense. The system of multiple accounting may work only if we judiciously employ a software app that adds up the figures and tells us our net position at any time day or night.

In fact, a University survey sought to study the difference in patterns of savings and expenditure among participating students that were given a regular income for performing various computer related jobs. Many students operated multiple accounts and some had single savings accounts. Students were given the option of accumulating savings in their accounts or spend their earnings on university books, stationary and clothes. It was revealed that students that operated single savings accounts were more motivated to save money than the students that possessed multiple accounts. It was noted that the issue was not the technical competence or mathematical skills or abilities of the students but the level of motivation to save that differentiated multiple account holders and single account holders.

But multiple accounts do serve a purpose, or don’t they?

Proponents of the multiple account strategy proclaim that holding different savings accounts is not a disadvantage if one is focused on one’s savings goals and that such a person should spell out clear cut strategies to save for different goals. For example, a person may opt to have one account for accumulating an emergency fund for future contingencies, another for buying a car, and yet another account for buying a home. He may strategize to push 20% into the emergency fund and 10% each into the car and home account. Gradually, as he tops up his emergency fund, he can accelerate the savings ratio for the remaining accounts. Such a systematic individual may find a consolidated account confusing as it might not tell him how much he has allocated for each different goal.

Ultimately, it is up to each individual to choose the strategy that helps him fulfill his goals and it is equally important that he controls expenses to maximize his savings.