Posts Tagged ‘financial advisor’

Life Insurance Can Bring More Than What Mutual Funds Return

Tuesday, August 28th, 2012

Two experts who believe that the life insurance industry’s picture is far brighter than it first appears are Paul Hoffman and Anthony M. Santomero of the Wharton School’s Financial Institutions Center. Their paper, “Life Insurance Firms in the Retirement Market: Is the News All Bad?” answers their own titular question with a decided “no.” Hoffman and Santomero point to a number of facts that, while not completely reassuring to the industry, definitely show some profitable opportunities.

While mutual funds and brokerage houses have been expanding their market share, their inroads have been mostly at the expense of depository institutions, not life insurance companies. The retirement market is a growing financial feast, even if insurers do have to compete a little harder for their share of the bounty. By the end of 1996, total private retirement assets in the U.S. stood at almost $5.1 trillion, having increased as a share of total national wealth from 10.6% in 1983 to 13.6%.

The annuity market represent insurers’ best hopes to retain a significant share of the retirement market. In 1993, annuities represented almost 20% of the market, following IRAs’ 23.4%. Insurance companies’ share of this huge financial stash stood at almost 76% in 1993, equal to more than $1 trillion, of which about $734 billion was earmarked for retirement.

Life insurance carriers, then, are likely to retain significant sales and profit growth in the retirement market. Still, the industry needs to find new ways to grow. Its recent binge of mergers and acquisitions has improved cost efficiency and diminished competition among carriers, but is scarcely enough to offset inroads by brokers and mutual funds. Even banks have declared their intentions to market competitive new instruments in the annuities market.

When a 1966 article in Fortune magazine highlighted an obscure investment that outperformed every mutual fund on the market by double-digit figures over the past year and by high double-digits over the last five years, the hedge fund industry was born. By 1968, there were some 140 hedge funds in operation.

High-profile money managers deserted the traditional mutual fund industry in droves in the early 1990s, seeking fame and fortune as hedge fund managers. Unfortunately, history repeated itself in the late 1990s and into the early 2000s as a number of high-profile hedge funds, including Robertson’s, failed in spectacular fashion.

Hedge funds have evolved significantly since 1949. Modern hedge funds offer a variety of strategies, including many that do not involve traditional hedging techniques. The industry has also rapidly grown, with recent estimations pegging its size at $1 trillion – quite the leap from the $100,000 used to start the first fund half a century ago.

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Wealth Building Starts With Forming A Game Plan

Friday, July 13th, 2012

A mutual fund guide could basically be called a guide to investing in stocks, bonds, and money market securities.

Funds are not just another investment option; they represent the best way for most people to invest in investment securities. When I was a financial planner a prospective client once asked me, “should I invest in stocks, bonds, IRAs, or mutual funds?” That question told me a lot about the lawyer asking it. He needed a financial planner, and also needed access to a good basic guide to investing as well. I explained that mutual funds were the easiest way for the average investor to invest in stocks and bonds, and that this could be done in either an IRA and/or in various other types of accounts, like in a joint account with his spouse.

All of these funds are simply professionally managed pools of investors’ money. You invest a dollar amount, and in return own shares in a large portfolio of securities like stocks and bonds. The financial objectives range from safety and stability of principle, to high income, to high growth or profit potential. Money market funds invest in safe short-term debt like U.S. Treasury bills, with safety and liquidity as the primary objectives. They pay competitive interest rates in the form of dividends, and the value of their shares is pegged at $1 and rarely fluctuates in value. Bond funds invest in bonds, longer-term debt, to produce higher interest income for the investors. The value of investor shares will fluctuate with changes in prevailing interest rates, so risk is moderate in bond funds.

Equity funds invest your money in common stocks with the objective of earning higher returns or profits for investors. Risk is higher here, as the price or value of shares can fluctuate significantly. The fourth category is balanced funds, which invest in a combination of money market securities, bonds, and stocks. The objective is to provide both moderate growth and dividend income at a moderate level of risk. No guide to investing in mutual funds is complete without considering the cost of investing. You can invest through a middleman and pay as much as 5% or more in sales charges called “loads” or you can invest directly in no-load funds and avoid them. While all mutual funds charge for yearly expenses, you can pay 2% a year or more, or less than % in well chosen no-load funds.

Mutual funds are basically a highly diversified, risk-spread investments that, while they charge expenses, are cheaper than virtually any other type of investment out there. Best of all, mutual funds can be virtually any asset class, not just equities, providing investors with plenty of options. This is because about 99% of the time, if you own mutual funds your money will be invested in one of the biggest and most established investment types.

If you have a small percentage of your portfolio (around 10% is recommended) in commodity mutual funds, then you have some protection from a downward swing in the stock market. Commodities also do well during times as of inflation. And they are a good hedge during times of a weak dollar. To take advantage of the diversification benefits of commodities there are other choices available, such as commodity mutual funds. They are similar to stock mutual funds in that there are many types to choose from, just as there are many brokers to buy them from. Do a little research on the funds and brokers and put some diversification into your portfolio.

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Investing By Yourself Is Better Than Not Doing Anything At All

Tuesday, July 10th, 2012

Many people have suffered large losses as a result of the last financial crisis. These large losses have made people seek out alternative investments as a way of protecting themselves. These investments do themselves come with risks and we will be looking at some of these today.

Why are alternative investments a good idea? Well many of them have a low correlation with traditional assets. This means if one goes up or down then the movement of the other is likely to be unrelated. This helps you in trying to perverse you wealth as it adds a further degree of diversification.

When thinking about how much should be accumulated for a retiree, try using a financial retirement calculator that can be found online. Every of you might have different protection needs, it is hard to determine how much you should insure yourself if you don’t have a clear financial situation. You might over insure if you are risk averse or under insure if you are a risk taker.

I just want to go over why it is so important to diversify through alternative investments. Traditional investments such as stocks, property, bonds and cash have performed badly on average. The stock market is less than its value 10 years ago. There have been housing bubbles popping as the credit dries up and interest rates are so low that the real value of cash is in decline.

This is not to say that all alternative investments are a great idea. You just need to be open to the idea. Investments in stamps, art, antiques and other collectables have some disadvantages which we will go through now. So what are the disadvantages? Well firstly the market tends to be quite illiquid. If you decide you want to sell you can’t just call up your broker and arrange a deal. This means that you have risk of not being able to liquidate your position if you need to.

When asking the question of how much should be saved for a retirement, the most obvious answer is as much as possible. This is harder than it seems, especially when someone has kids or has a high standard of living as it takes more money to keep those standards up. It may take some restraint and a lot of foresight, but planning ahead for a good retirement is paramount to the success and happiness of the golden years.

Making good decisions about your wealth and investments is part of having a good wealth plan. Most people have not gotten rich by letting other people manage their money. Once you get out of your workforce, getting back in can be very difficult. Your time should be enjoyed while you are older.

If you keep your head up and your optimistic, you can expect a small three to five percent return in a years time. This is a very reasonable way of looking at the market in terms of growing your money. There are people who make plenty more than that, I am just saying that being risky or irrational is not a winning game. Most people that manage money will agree with that statement. Once a person sees how much they are going to get if they have saved for 20 years they then can decide whether they need additional funds.

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How Many Shares Do You Have In the Market

Sunday, July 8th, 2012

To novices and experts alike, the stock market can sometimes be erratic and enigmatic. We can erase the mystery that clouds the topic and let you know how the market can be unpredictable, and how you can take advantage of this trait.

The words ‘stock market’ bring to mind a collage of institutions, long calculations, jagged graphs, stacks of paper, harried traders and bright screens. When a new corporation is established capital can be generated in many ways. One possibility is for the entrepreneurs to contribute. Another possibility is to get banks and venture capital investors to invest in your company. Or one could issue bonds, which is a way of selling debt. The most advanced method is to issue stocks i.e. shares of the company’s ownership. This gives rise to trading opportunities in the stock market.

To see how the stock market works is go to any website financial page and click on the name of this index. Next is to set the time frame for months. When you are viewing the stock market over the last 12 months with the month to month price rather than the day to day price you will find all the zig zags are gone.

The zig zaging of price movements is where investors become confused because all they see is the changing in price. This is caused from the buying and selling of stocks from the thousands of investors. Setting the time frame of the stock market chart to be viewed from month to month instead of day to day makes all these lines you see in a chart become straight. When doing this you will see the straight lines over many months as well as years. The stock market becomes a picture on pause because you are able to see when the market was rising down and up.

Only brokers are authorized to carry out trades. Private investors need to find a suitable brokerage to set up an account with and deal through. The process is no more complex than setting up a bank account and once a brokerage account has been established, you are in control of the buy and sell orders related to it.

Alternatively, you can invest in the stock market through special plans such as those involved with retirement. Examples of such plans are the 401k in America and Individual Retirement Accounts (IRAs). In these instances, you do not have any control over traded stocks. The third way to invest in stocks is via Dividend Reinvestment Plans (DRIPs) or Direct Reinvestment Plans (DIPs), where you do get a say in the stocks you buy or sell.

Stocks listed under the firm are “held in street name” and are insured by governments up to a certain sum, against bankruptcy or fraud of the brokerage firm. Of course, you get no such guarantee for stocks listed under your own name, although you will get the actual stock certificates. Most investors choose to have their stocks held in street name because of the massive reduction of paperwork and stress that is instead transferred to their brokers; individuals who are well trained to process, track and store related paperwork.

Do have a Plan and stick with it. Always stick with your trading plans and rules and do not get carried away with the market. If you just stick with your strategies, trading plan and be disciplined you will succeed every time. Never ever enter a trade without a plan. Imagine entering a battle without a plan or strategy. It will fail!

This all points to our economy. Our economy is base on the gross domestic product. This is the increasing and decreasing of services and products that are produced by business services in the U.S.A. The Government have Economist study how the U.S. economy is performing every month. These reports show how the manufacturing of products, employment, business services and retail goods are performing currently and in the past. It easy to see if the U.S.A. economy is in a recession by comparing it to the stock market.

Don’t trade against the trend. As a novice, it doesn’t make sense to trade against the trend. If you look at any stock in an uptrend, you will see that it is met with very weak pullbacks. This means it is not a good situation for shorting. On the other hand, any stock in a downtrend is met with very weak rallies. This is possibly the worst situation to buy stocks. Therefore, it is wise to always trade with the trend.

Here is one way of calculating your chances of success. It is known as the Average Profitability per Trade (APPT). APPT measures the average amount a trader can expect to win or lose per trade using a simple mathematical formula. It is based on historical trading results. The formula is as follows: Average Profitability per Trade = (Probability of Win x Average Win) – (Probability of Loss x Average Loss).

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The Secret To A Comfortable Life After Retirement

Wednesday, October 26th, 2011

Definitely, you don’t like to spend your entire life working. After many years of working eight hours a day, five days a week, you’d definitely want to spend the remaining years of your life not worrying about work or earning money but enjoying the result of your hard work. If you like these things, then you need to prepare for your retirement.

Preparing for retirement does not begin five or ten years before your intended age of retirement. It needs to begin as soon as you land your first job. When you set goals or make plans, don’t just focus on your career or how to earn more. Think as far as your retirement day, for this is something you cannot avoid.

So, how do you prepare for retirement? Start by asking yourself the question, “At what age do I want to stop working?” If you are 25 and you intend to retire when you are 40, it means you have 15 years to save, make investments and prepare for it. Knowing when you plan to retire gives you a clear idea of how long you have and how much you need to put aside to achieve your retirement plans.

You also need to ask yourself this, “What kind of retirement life do I want to live?” Decide as to where you want to reside and what you intend to do. Determine your needs and wants when this time comes. These information will help you set your monthly retirement allowance and basically, the amount you must save to sustain the life you want to live.

In preparing for your retirement, what you need to do is to set achievable goals. Of course, you need to have strategies as to how you can attain them. Fulfilling your retirement plans is all about saving and not burying yourself in debts. It’s also about knowing where to put your money and how to spend it wisely.

Retirement planning can be overwhelming. But you don’t have to fret. Today, there are experts who can help you create a retirement plan. These people are you allies in making your plans come true.

Hire an experienced financial consultant and know more about how to plan for retirement. This expert definitely knows how to be a financial advisor to people who want to ensure their financial stability after retirement. (8305). Check here for free reprint license: The Secret To A Comfortable Life After Retirement.

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