Retirement Planning After 60's

This week we are discussing a scenario where an individual is about to reach 60 and are wondering whether they have to take their pensions at 60, or if they can delay this decision. And indeed, what are their overall options?

Some years ago, many in the pensions world advised investors not to touch their pension until it was absolutely necessary. The main reason for leaving pensions until the last minute was that they grew tax-free and the older you were the bigger pension you could buy.

Here is the advice we gave (in conversational style to the client):

(Note: We are referring to personal pension style plans)

Some of your policies have not shown any growth in recent years; one reason being that they now no longer grow tax-free following the introduction of Gordon Brown's stealth tax in 1997 when he removed dividend tax credits from pension funds (raising £5bn pa in the process).

The most frightening aspect, however, is that annuity rates do not always increase with older age. We must look more closely at each of your policies.

Many policies, particularly older individual policies, contain guaranteed annuity rates. This means there is a contractual obligation on the company to pay you a significantly greater pension than you could buy on the open market.

One of the reasons Equitable Life got into trouble was that it offered guaranteed annuity rates at all ages in all situations.

Not all policies work this way and your old Sun Life policy has a guaranteed annuity rate but, unusually, it applies only on your 60th birthday. It is available only on that date and so you must now look to take benefits from this arrangement.

You have another old with profits policy which we have wanted to move for several years but did not because of high penalties. Due to your employment circumstances when this policy was taken out, we have been able to provide protection for your tax-free cash which means that the whole policy is now available as a one-off cash payment. Continuing with this policy in its present form with tax-free cash protection would mean that the lump sum available would be unlikely to increase because of the investment fund used.

At your 60th birthday we have the ability to transfer the policy to another arrangement, retaining the tax-free cash protection and achieving a better return.

However, if you feel, like many commentators, that it is going to be several years before there is any meaningful return on investment funds and you have use for a cash payment now, I suggest you consider taking all this cash and putting it in your pocket.

Interestingly, while your Sun Life policy provides the ability for you to take some of the money as tax-free cash payment, you might want to consider taking all the cash from the second policy and no cash from the Sun Life policy, so that you can take advantage of the guaranteed annuity rates.

Another interesting twist with one of your contracts is that should you die, unlike all new pension policies where the full fund value would be paid out on death, your policy provides only for a return of contributions paid.

Being an old with profits contract, you have access to the full fund on your birthday. I am happy that it should stay within the pension environment but you should transfer it to another arrangement where you have greater control over the investments but more particularly, should you die, the full fund value would be payable to your nominated beneficiaries.

As you can see, there are many circumstances why you should always review pension policies as they approach their stated normal retirement date. In fact, we would go one step further and suggest that all investors should review their pension contracts as soon as possible as it's crucial to ensure the money is invested in line with your risk profile and risk tolerance levels (i.e. what percentage fall in value you will accept during tough stock market conditions).

The Financial Tips Bottom Line

No one knows what will happen to annuity rates. Over the last 15 years, we have seen the amount of pension that can be purchased fall from around 15% to 6%. The economic climate is very worrying. There is a belief that interest rates will have to fall and if they do, you can expect annuity rates to worsen.

ACTION POINT

The old adage of leaving your pension until the last possible moment is no longer the case. You must now continually monitor the situation as there is no promise that by delaying taking your pensions, you would achieve a greater income.

Make sure you contact your adviser (or find one if you don't have one) and ask them to do an audit of your pension(s), as well as recommend solutions available.

How to reduce day trading risk?

Day trading is one of the most active forms of trading which require high position sizing and quick responses to market changes. Because of this activeness, day trading involves more risk. The requirements of day traders are also high including real-time market access, news, charts and powerful technical analysis tools; and any system failure, wrong information or ineffective price analysis can result in huge loses. Reducing the risks involved is essential and here are some suggestions for that.

1. Targeting stocks of certain groups or industries.Specializing in stock of a handful of known industries or companies helps you to study the market deeply and to find more profitable trading opportunities. But never over specialize on one industry or group of companies, as this can increase your risk to market.

2. Creating and trading from a Hot/Short list of stocks. Create a list of stocks which fall in to your day trading regulations, such as price, volatility, risk, news trading, etc. Now you can screen stocks to be traded from this short list. 3. Updating your Short List. Regular modification of your day trading short list is also important. Constantly remove equities which no-longer fulfill your regulation or which have lesser trading opportunities, and constantly add new equities/groups which satisfy you regulations. 4. Practicing basic risk minimizing tactics. Like using of stop losses, never adding to losing positions and closing positions when market is against you. 5. Keeping low risk levels. Find a suitable risk level according to your account size, stocks trading, risk capital involved, margin usage, etc. It is good to limit risks below 1-2% of your account size. 6. Using lesser number of but effective technical analysis tools. Technical analysis and stock screening is always necessary but be sure that you are using the right tools at the right time to evaluate the right stocks. 7. Never trading in high uncertainty. It is always the better option to keep the money in hand for profiting from future opportunities than wasting that on totally uncertain positions. 8. Limiting the frequency of trades. Never trade stocks because of greed, trade only when there is an opportunity. It is better to concentrate at one trade a time, as it helps you in active management of trades and better position sizing. 9. Being vigilant with your margin trading. Trading on margin is a double edged sward; it can magnify your profit but also can magnify your loss. Keep reasonable margin levels with respect to your position size, profit goal and shares traded. High margin trades are better when you are sure about price direction. Beginner traders should use lower margins. 10. Evaluating your success and failures. For that write down all your trades, including what helped you to profit from the trade or what caused you to suffer loss. Go through them regularly.

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Personal Financial Planning during the U.S. Crisis

In order to obtain financial success, you must begin with a reliable personal financial planning program. This program will help you address important factors relating to how you handle your everyday finances so you can maximize what money you got. With proper budget planning, you can get more value out of your money and avoid experiencing financial crisis. Your first step is recognizing the importance of having a personal financial planning program so you can determine how you can reach your goal and what else can motivate you towards achieving it. Getting Started With Personal Financial Planning Today, when most people hear the word "budget", it readily implies a negative connotation. They think that budgeting is only for those experiencing financial shortage or crisis. However, even with enough financial resources as of the moment, an effective financial planning program will ensure that you will be able to maintain your financial status. Therefore, personal financial budgeting involves the following: 1. Financial budget for your day-to-day finances while not depriving yourself of what provides you enjoyment and satisfaction. 2. Setting up larger financial goals to which your daily budget and planning is aim towards. 3. Making sure that you have enough savings in case of emergencies or unexpected financial struggles. The Importance of Budget Others think that by creating a budget for your finances, it is similar to lack of financial freedom. However, it is of the exact opposite. By creating a budget, you are able to create a financial safety net so you have enough money to spend on things that you want without hurting your financial condition. Regardless of how little or large you earn on a monthly or yearly basis, budget enables you to take an effective step towards a healthier financial foundation. Hence, you can easily realize whatever financial goals you have. When making a budget, it is important to keep track of every detail in your expenses - even up to the last cent. Hence, you can also evaluate your spending habits. It allows you to determine whether you are placing your money on important things or whether you can do without it. How To Set Financial Goals? Financial goals serve as the endpoint of all efforts toward controlling your finances. Therefore, you need to clearly state what your goals are when it comes to your finances and what steps you need to achieve it. Step 1: Choose a specific goal. It could be saving for your house's down payment, sending one of your kids to college, buying a new computer, or going on vacation. Step 2: Your main financial goal is typically long-term. Hence, you need to break it down into smaller goals, which will serve as your stepping stone towards that bigger goal. Step 3: Inform yourself about ideas or strategies that will enable you to effectively handle your finances. There are several books or materials over the internet that provides the information you need. Step 4: Keep track of your goal. Evaluate your financial records alongside your spending habits. Then, you can determine whether you are following the necessary steps that will lead towards your goal. Therefore, you must get started on devising ways to maximize your finances and enjoy it to the fullest. A personal financial planning program would help you establish the steps that will lead towards more financial success in the future. Credit:articlebase

Easy ways to overcome credit problem

Believe it or not, people are paralyzed at the thought that our economy is a bit shaky. They look at all the credit problems that we are having, and they give up on fixing their own credit problems before they even start. However, it doesn't have to be that way. As bad as your credit problems are, they can be solved. All it takes is a few minutes a day and it can dramatically fix your credit problems and your credit scores in no time. Here are 5 ways to cure your credit problems and move closer to the credit you truly deserve. 1. Create an action plan to eliminate your debt the smart way. If you are overcome by credit card debt, rest assured that you can join the ranks of thousands of others who are shedding their debt using a simple strategy. First look at the balances of your credit cards and determine which on has the smallest balance. Your only job is to send the minimum payments on the larger balanced cards and focus any extra money on the credit card with the smallest balance. Soon, you will eliminate the debt on that credit card and you are one step closer to being completely debt free. Now, focus on the next smallest balanced credit card and get rid of that. Be sure to focus the majority of your budget towards the one card while paying the minimum payments on the other cards until you eliminate all of them. 2. Leverage other people's credit to get approved for your own. If your credit problem revolves around not getting approved, then ask your friends or family members to cosign for you while you establish your credit once again. The important thing is that you are on the loan too, otherwise it doesn't help at all. Using someone else's credibility allows you to get the credit you need at that time, and helps you get better established to apply for your own credit within a short period of time. 3. Accept the higher than normal interest rate as a short term solution. If your problem is that you can only qualify for high rate credit, then accept it (as long as you can afford it) and make your payments on time with the expectation to refinance for better terms within 6 - 12 months. This can be the step necessary to rebuild your credit and secure better financing over the long run. It's like biting the bullet now to save yourself thousands of dollars over the next few years. Although you don't solve your credit problem now, you will shortly by sacrificing a few months of having high rates. 4. Plan to wait for your next big purchase. It may be possible that you are looking to buy a house or car and your credit is not up to par. The best thing to do in this situation is to wait before you make the purchase. It may end up costing you a whole lot of money to make the purchase when you're credit is damaged compared to waiting it out. A good thing to do if this is your credit problem is to ask yourself, "how else can I solve this problem? " If you need to buy a car, perhaps you can take the bus or find a ride to work. Perhaps you can find a used car for a couple hundred dollars just to get by until your credit is back in shape. 5. Look for creative ways to bring in extra cash in your home to get rid of debt. If you are facing issues like not being able to afford your debt, then you should look for ways to increase your income or cash flow. Some ideas include selling household items that you don't really need or use on eBay or Craigslist. You'd be amazed by the items that people buy every day. Another option is to start a small business in your home with something that you are already good at doing. Are you good at quilting, making jewelry, or installing stereo systems? There are people looking for those things all over the place. Making money from these things can supercharge your debt payment plan. As you can see, with a little thought, creativity, and action, it is completely possible to eliminate your credit problems. You must create a plan of attack to eliminate your debt by starting with the smallest credit card balance first and looking for other creative ways to bring in extra money every month. It may also make sense to use a co-borrower or temporarily take on loans with higher than usual terms to get you in the position to obtain much better terms later on. And finally, it may also be best to put off large purchases when necessary so that you don't buy into something that ends up giving your much larger credit problems. Use these tips and you will be much better off!

Saving Money during The U.S. Economy Crisis

The U.S. economy isn't that hot right now and when you worry about your money, you're not alone. In fact, millions of Americans are in the same shoes as you. Since every penny counts in today's world, it's important to know some of the few saving money tips that can save you a few dollars every month. Remember that every penny counts! Here are some steps you can take in order start saving money. The electric bill - If you don't have a digital thermostat, I suggest you get one. Once you get one, set your heat or air down to a low or high rate when you're at work. There's no reason to have the house at 70 degrees when you're working. Instead in the summer, have the house at 80 and turn on the air conditioning when you get home. The same goes in the winter, when you're not home or even sleeping, lower your heat and just pile up the blankets! This alone can save you a fortune during the month. Use coupons - Every time you grocery shop, hop on online coupon websites and see how much you can save. Some grocery stores will even provide you with simple and cheap meal creating ideas. Your dinner meals can be made for less than $10. Don't believe me? Do some research online and find out for yourself! Don't eat out - Eating out is fine but with a family of four, you're spending way too much. Instead, try and limit your eating out. If you only eat out once or twice a month compared to five times, you're already saving a hundred dollars. Sure, it can be convenient but if you want to save money, don't eat out, it's that simple. Limit your driving - Gas prices aren't cheap today. Instead of making ten trips a week, condense to a few trips. Do all of your errands at once. So when you need to grocery shop and go to the doctor's office try and do it all in one day. This way you're saving on gas and you're save your car some troubles. It's always best to create a plan and stick with it. Just watch your finances - Each month, write down everything you spend a dollar on. At the end of the month, look back and see what you're spending your money on. Are you eating out instead of packing a lunch? If so, cut that out. There are so many things you can cut out to save money on. Just because you're cheap, it doesn't mean you have to live a cheap life. There are many ways to have fun while saving money! Saving money is so easy and no one cares what you look like or what you drive. You're saving your wallet and family money. The more money you save, the earlier you can retire. Don't work 10 extra years just so you can show people that you drive a BMW. Saving money is easy. It just takes discipline and action. credit:articlebase

Life Insurance - Which type is suitbale for you?

This may be a good time to rethink the types of life insurance policies you should buy. Until the market settles down many people don't want to be spending a lot of money. Everyone is looking for a safe place to put their money. We see some stocks, like Wachovia, slide then rise again. Others may take a longer time before they are again viable.

What of life insurance though? Which types of life insurance policies should we buy?

Term life insurance requires very little premium outlay and, for some, may be a good idea. Why would one want to put out money for the higher premium permanent policies at this time. You get the same death benefit with term insurance as as you would with the more costly universal life, variable universal life and whole life policies. You have a variety of term policies to choose from.

Yearly Renewable Term

This policy has a premium that increases every year so you would likely want to keep it for a very short period of time. The premium is very low, initially. The death benefit is level throughout.

Decreasing Term

This is a policy that is more often than not used to pay off a mortgage balance upon the death of the insured. The death benefit decreases with the mortgage balance and the premium is level throughout.

5 Year Term

If you are uncertain what type of life insurance policy you should buy you probably should take out a 5 year term policy now and convert to a permanent policy later on.

Other Level Term Policies

The 10 year term, 15 year term, 20 year term, 25 year term or 30 year term may be best for you now. You will have quite a while to think where you go from here. Your family, or business, will be protected meanwhile.

Permanent Policies

During a past recession I saw something I considered quite strange at the time. People were putting large sums of money in annuities but they also put considerable sums in single premium, limited payment and regular whole life policies. At that time I was with the Northwestern Mutual Life Insurance Company, Now Northwestern Mutual Financial Network. When I asked why they said that they were not looking to make any big profit. They wanted safety and they knew the reputation of that company. They felt they would not loose their money. They were right.

There are other companies that you can feel safe with. Check out their performance with the A. M. Best company. There are also what may be arguably better types of life insurance policies to safely put your money in. I refer to the universal and the variable universal life policies. If you choose to do this, however, you should make it your responsibility to check out the performance history of the company and how well they do with these policies.

When everything settles down again some people will choose to switch to a term policy and invest your money in mutual funds or probably a money market plan.

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If Banking Failed - How To Protect Yourself

The thought of this only several short years ago was not in anyone’s mind. Today from the UK to the States and beyond this fear is forefront in so many people.We have seen so far this year 13 bank failures, scared savers rushed to withdraw their deposits. Each bank failure seems bigger. First there was Indy Mac and then last weeks Washington Mutual. The largest bank failure yet! While that number is still well below the number of financial institutions that went Bankrupt during the savings-and-loan crisis of the late 1980s and early 1990s, people are scared. To make matters worse approximately 117 banks are on the FDIC watch list currently. (You can check your banks ratings at Bankrate.com and BauerFinancial.com. As well you can go to the FDIC's Web site, www.fdic.gov and research your bank. ) What really happens when a bank fails? If another bank buys the bank, as was what transpired with J.P. Morgan Chase and their purchase of Washington Mutual, then it is business as usual. Customers of the failed bank can continue to carry on to write checks and withdraw their money usually without any interruption in service. The issue arises when there is no buyer. This necessitates that the Federal Deposit Insurance Corp to come in and take over the financial institution. In the best scenario the FDIC will start mailing out checks to customers for their insured deposits within 48 hours. Those with amounts over the FDIC's limits of $100,000 per person, per insured institution, will receive payments as the assets of the bank are sold. Some won't get all their money back. If you have over the $100,000 there are steps you can do to protect yourself such as opening various joint accounts, retirement accounts and revocable trusts. If you have a tremendous amount of money this too can be covered. You could deposit your money with a bank that participates in the Certificate of Deposit Account Registry Service, or CDARS. The deposit-placement service disperses the funds in individual CDs under $100,000 in member banks. In theory this sounds fine as long as you do not have more than $100,000 per account, BUT the fact is that FDIC started the year with approx $53 billion dollars in the pool. Due to the insolvency so far this year this number is down and is in the $40 billion dollar range with only 13 bank failures so far. Do the math! There are approximately 117 banks on watch…How many of these need to fail in order that the pool of FDIC money is diminished. If the cost of future bank failures exceeds the assets that the FDIC is holding, they have the option to draw on other resources to protect depositors. As well, the FDIC is looking at raising the rates that it charges the banks it insures as a way to bring in additional funds. The FDIC can also draw on lines of credit with the Treasury Department. This occurred in early 1991. The fact is no one has yet to lose money with the FDIC’s program, Hopefully this will continue in the coming years. credit:articlebase

Forex Trading - 7 Thing to make you success

It's important to succeed at Forex trading, is it not? So, what's it like when you imagine quickly and painlessly trading the Forex successfully? Then, just imagine how great you'll feel when you can quickly and easily spot the market conditions and setups that will lead to successful and profitable trades. It's easy to do for traders who use proven methods , tested Forex trading strategies, and most importantly good coaching and training. After all, winning is what proven coaching and Forex training does for you. The role of the truly effective trading coach is to create the right conditions for learning to happen, and to continually motivate their students. Most Forex traders are already highly motivated and therefore the task is to maintain that motivation and to generate excitement and enthusiasm. The roles that an effective trainer/coach undertake are many and varied. At some stage they will be your: instructor, assessor, friend, mentor, facilitator, demonstrator, advisor, supporter, fact finder, motivator, counselor, organizer, planner and the fountain of all knowledge - so it's important to find a good one. With the thousands of different Forex training courses available, how do you know who's got one that works? There are many to choose from, all making the same claims. Plus, Forex training is notorious for being filled with charlatans out there selling their get-rich-quick snake-oil. The reality is that not everyone can make thousands of dollars overnight. If you could, we would all just buy the latest "Miracle Money System" DVD set for $500 and quit our jobs tomorrow. Yeah right! The problem with being new to the Forex is that you don't know who to trust. So let me show you seven "must haves" to get a real, genuine education in Forex. You should get, as a minimum: One - 24/7 Access to online training materials - professional videos, recorded live trading sessions etc. It's important to be able to have access to them on your own time, and at your own pace. Plus, it's nice to review things when you're trading. Two - A comprehensive written manual - some people learn better by reading than watching videos and nothing can substitute for well written teaching materials. Three - Look for courses that offer live interactive sessions that let you look over the shoulder of a professional trader in real-time. These should be offered at least monthly but weekly or daily is even better. Four - You want live monthly extended day-long online classes that allow you to review, all the information you received, get updates on the current market, and learn what's working now. Six - One-on-one mentoring (this one should probably be #1) to give you specific actionable trading advice. Encourage you to make progress and correct bad trading habits or techniques. This is the big one! Nothing works better than personalized coaching. Seven - The live onsite option - Look for courses that offer periodic onsite training opportunities. An in-person seminar has its own dynamic and its own unique learning opportunities that you miss in ebooks, videos, or email and telephone mentoring. Look for those seven features in a Forex training course that is offered by a successful professional trainer, with proven abilities to teach. After all, just because someone's a great trader does not mean they can teach. Michael Jordan was a legendary basketball player, but openly admits he can't coach. Remember, success comes with commitment and action "period". credit: Winston McCafferty/articlebase