Posts Tagged ‘Investments’

Me and My Financial Adviser

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December 20th, 2011

A third of adults say that running out of money is their top retirement concern

I am contemplating retirement. I have done my homework ten times over until I am satisfied that I can afford to retire. I have all my numbers on half a dozen spreadsheets so I went to the bank, with the spreadsheets, and asked to see the financial adviser. I would be totally hysterical if I retired only to find that I am still here living the life of Riley but my money has gone, spent or stolen and leaving me high and dry. I managed to rebuild my retirement nest egg after a couple of disastrous years on the stock exchange and I’d like to know that someone more or at least as capable as me will be looking after things when I retire.

Navigating between the scams

There are major investment scams out there. Sen. Charles Schumer, D-N.Y., has said that Bernie Madoff’s Ponzi scheme is an extreme example of the many scams lurking out there that can trap unsuspecting investors. The Securities and Exchange Commission filed a record 735 enforcement actions in the 12 months ended Sept. 30.

Addressing the risk of outliving my money

I’m old, I grew up in different times and I don’t always understand what’s going on now. I find that many products today are very complex and some brokers can’t even explain them very well. "If you don’t understand how it makes money for you, what fees and commissions or costs you have to pay, then you shouldn’t be investing in that particular investment," says a financial adviser.

What I’m going to do

My first call will be at BrokerCheck. This will allow me to search for brokers and their firms that are currently or previously registered with FINRA to learn about their education, where they have worked previously and whether they have a history of disciplinary actions or complaints. I may also call the state securities regulator for more information.

Interviews and a list of questions

I will interview advisers and ask them all my questions. We will be talking about my money, all the money I have and the money I expect to last longer than me. I am not hesitant or shy about asking questions, even the stupid ones.

Questions

I will also ask the financial planner:

What experience do you have?
What are your qualifications?
What licenses do you have?
What products and services do you recommend?
Will you be the only person working with me?
How are you compensated? For example: Do you charge a flat hourly rate (or "à la carte" rate) for services? Is the fee a percentage of assets under management?
Do you receive a commission or a referral fee paid by the product or service providers that you sell?
What organizations are you and your firm regulated by?
Will you provide a written agreement that details the services and fees that will be provided?

Tags: Financial advisers, Financial planners, Investments, Retirement
Posted in Economy, Employment, Finance, Personal / Internet, Retirement | No Comments »

Quick “Get Rich” Schemes or Careful Investing

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October 1st, 2011

There are ways to make a quick fortune, but…

Here are the ways I know to make a quick life-changing fortune:

Play Lotto.
Play the progressive slot machines.
Win a TV show that offers a mega-prize

TV Show

"Who wants to be a millionaire?" the famous TV game show asks. And the answer is, plenty of people. However, getting rich quick isn’t as easy, and many financial schemes that promise high returns may not be as attractive when you read the small print.

Millionaire

While living like a millionaire may sound glamorous, having a stable financial future is more important than the thrill associated with a glitzy lifestyle. Adopting careful financial practices can increase your net worth, which may be even more important than joining the millionaires’ club. In the financial world, time may be your best friend and discipline your best ally.

No guarantees

There are no guarantees of quick fortunes, but sensible financial habits may be your best bet in achieving the financial future of your choice.

Bonus

When you get a raise or bonus or come into some inherited wealth, don’t spend the "extra" money. While you could allow yourself a small luxury here and there, look to save some of this money. If you are not sure how, then consult a financial advisor. And remember that many wealthy people actually live quite simply. That’s why they are wealthy.

Retirement

If you and your spouse are both working, see if you can trim your expenses and live off one income while saving as much of the other as you can. This way, you have some emergency money for situations of need, and if all goes well, you’ll have a retirement nest-egg when the time comes.

Expenses

Keep reevaluating your expenses and watching your bills. Is your car costing you more in repair bills than it would to buy a new one? Depending on your traveling habits, perhaps a combination of public transportation and taxis may be cheaper than owning a vehicle.

Investments and pension plans

Review your investments and pension plans. Consult your financial advisor on a regular basis to review your portfolio’s diversification. Take into account your changing needs as you and your family grow older, and be flexible enough to change streams if needed.

Spend wisely

Spending money is so easy and so exciting. New clothes, new car, new furniture, and new this and new that. We all like new things and we grow tired of old things and old clothes. I live next to a mall and the short cut to the bank, post office and bus stop is through the mall. I see the new shirts and new jeans on show in the storefronts as I pass by almost every day and I have to stop myself from walking into a store and spending. I do that too, almost every day.

Follow the rules

If you follow these relatively simple guidelines, you may find yourself closer to the retirement lifestyle that you always imagined.

Tags: Investments, pension, Retirement, Savings, spending
Posted in Business, Economy, Employment, Finance, Money, Personal / Internet | No Comments »

Retirement Planning: Avoid Mistakes

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August 27th, 2011

One bad decision can ruin a lifetime of good ones

Actions have consequences, and this is more than true in the final third of life. If you are at or near retirement, the decisions you’re about to make will have consequences for decades to come. Unfortunately, it only takes one bad decision to ruin a lifetime of good ones. So what are the biggest mistakes to avoid?

Link your retirement to your bank account

If asked when you’ll retire, your answer should be a dollar amount, not a year. Retirement is about independence, not simply age, and money is critical to independence. You need to know exactly how much you need to save to fund the retirement you want.

Managing your risk

Risk is a necessary companion to investing. When you’re in your 20s and 30s, you can afford to take greater risks in hopes of receiving greater returns. If you lose money, you have decades to recover. Not so as you approach retirement. You can’t afford to operate at the same risk level. As you age, you need to progressively shift out of potentially volatile investments. During retirement, large losses in your portfolio are extinction-level events. The bigger the loss, the worse the recovery. If markets have taught us anything during the last 10 years, it’s that you need a plan to manage your risks and avoid large losses.

Senior risks

The same is true for a whole host of new risks that come with growing older. A serious medical condition, the death of a spouse, getting laid off, entering a long-term care facility or getting divorced could all significantly impact your emotional and financial well-being. The goal is to consistently identify and manage your risks in order to increase your odds of a rewarding retirement.

Minimize debt

An increasing number of people are entering retirement age with no pension, inadequate savings, a big mortgage, an average of about six credit cards, and debt on one or more cars. Work is not a choice at that point any more than it’s a choice for a 30-year-old with all the same obligations and a growing family to feed. Debt adds risk and reduces cash flow. Your primary goal should be to retire debt-free and have your income at your disposal. If you retire with debt, you will spend a long period paying for the purchases of yesteryear instead of using your income to live the life you’ve dreamed of. Get professional advice. Preparing for retirement is all about accumulation, saving and investment performance are your primary concerns. But in retirement, your primary goal becomes much more complex: to continue to grow the pie while simultaneously eating it. Going without a competent adviser at this stage could be a big mistake.

Distribution strategy

When you retire, your portfolio takes over the job that the payroll department handled during your working years, namely to send you a paycheck every month. If you retire when you’re 65 and live until you’re 85, it needs to cut you 240 monthly checks. There are a host of variables that will affect its ability to do that, such as the distribution rate you choose, investment returns, inflation, how long you live, and good old-fashioned luck. Some things you can control and others you can’t, but having a well-conceived, sustainable distribution strategy will help ensure that your money lasts as long as you do.

Tags: Income, Investments, Portfolios, Retirement, Seniors
Posted in Economy, Employment, Finance, Money, Retirement | No Comments »

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