Your Financial Manager

Financial Planning on the other hand is on a larger scale and includes everything from investment planning, savings, expenditure to paying of debts and bills. Here what you plan affects you other areas of financial concerns.

On a general man to man basis Financial Planning is of more importance when compared to investment planning. If a man fails to save money, then where is he going to make the investment from? It is here that the need to emphasize on a strong financial plan comes to play. Financial planning is on a larger scale compared to Investment planning. Where investment planning is individual oriented, financial planning takes into account the needs of the individual and family. Financial planning is the process of assessing the financial goals of an individual at different junctures of his life. It takes into account all assets and investments that he already has and what others he may require to achieve his financial goals in the near future. The prime objective here is to ensure that the required amount of money is there with him at the time of an investment, thereby enabling him to meet his personal goals. This is how financial planning and investment planning relate to each other. Coming to the investment part, security along with profit is a big question?

Any investment depicts a clear picture of your current financial situation. Bifurcate your investments amongst various assets to reduce the risk factor. Asset Allocation is the best way to ensure that a particular investment made is a success. Monitoring your investment to maintain the allocation with your financial goals makes the investment tax efficient.

Following are certain points as to how one can better their investment and financial planning:

Investment Planning:

1) Create a Budget for Monthly Expenses: This enables you to get a clear picture as to where your expenses lie and how much unnecessary expenditure you could curtail to save a decent percentage of your income.

2) Paying of Debts: Once you clear of your debts, a certain amount of your expenditure is saved. This can be used for investment purposes.

3) Emergency Savings: Emergencies do arrive unannounced. One has to ensure that a

certain amount is kept aside to meet these situations. These funds should be invested or

kept aside to meet these situations. These funds should be invested or kept aside in

investments that can be accessed anytime you need cash.

4) Investing in Long term Assets: Investing in long term Assets is a good decision. Purchasing a house is considered to be a good investment as payments towards interest and real estate taxes are tax deductible. Secondly the value of property increases with time. Other then this investing wisely in Mutual Funds, stocks and insurance will provide you with a good return on your investment.

Financial Planning:

1) Using a monthly spending plan or budget to keep finances on track

2) Making decisions about the job and its benefits

3) Getting the most out of other financial resources, including insurance and employer provided benefits.

4) Saving and investing money

5) Controlling expenses and staying out of debt.

6) Planning for estate transfer.

Generally people enlist the services of a financial planner prior to making any major investments. A financial planner is a professional who helps people deal with various personal financial issues through proper planning, which includes cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning. While dealing with Mutual Fund Investments they are called “Fund Managers” and it is them who determine the performance of a fund. Investment and financial planning if made wisely definitely guarantees you security and long term financial gains and keeps you financially independent through out your life.

It can be absolutely hard to do away with bad credit even when you have a debt consolidation plan, most especially when you still use your credit cards indiscriminately. To succeed with a debt consolidation plan, you are going to avoid using your credit card too much. A lot of individuals fall into the false sense of security that a debt consolidation loan give and may end up using more cash on their credit cards.

It is imperative that you consult a debt consolidator expert on the best way to consolidate your debts if you are planning so. A debt negotiator expert is one who is totally knowledgeable at bargaining and negotiating debt terms. A good debt negotiator will make sure that you walk away with the best debt consolidator deal.

Debt consolidation loans help to ease worry and anxiousness from your mind because it enables you pay off your outstanding debts. Thanks to debt consolidation loans, you can simply do a way with all those credit card debts that are scattered all around the whole place. Consolidating your debts help to bring clarity and purpose to your debt payment plans– more organized approach of debt payment.

It can be very embarrassing to have creditors knocking on your door because of your debts, right? Lots of debtors have been dragged to court over credit card debts. With the right debt management loan, you can easily avoid the embarrassment of house calls and court orders related to outstanding debts.

Christian debt consolidation companies help to manage the debts of Christians individuals. Christian debt consolidation companies help to negotiate loans for their clients and make sure that their debts are managed. If you are a Christian with a desire to manage your outstanding debts, you can consult a Christian debt consolidation company.

Apart from debt consolidation loans, there are other alternatives to get rid of debt. Some individuals get rid of debts by taking up two jobs to increase their source of income. But many people say that debt consolidation is the fastest avenue to pay off credit card debt.

An ideal candidate for a debt consolidation loan is an individual who has enormous credit card debts. Credit card debts can keep you away from perpetual misery and penury too. With a good debt consolidation plan, you can live your life with some measure of financial stability.

Remember, do not to trust all the low interest offers that most debt consolidation companies give as they may be bogus half the time. Stay away from debt consolidation programs that try to get you to join one affiliate program or the other. Try to research other debt consolidation alternatives before you make any choice.

This is true that our whole life revolves round the finance. We work hard to make money and plan various investments and savings and we always try that our finances must be in good shape. You also would be working hard in managing your office or business and making money. But, do you think that all your financial matters are in good shape, do you think that all your investments would provide profit, do you have a proper protection and pension plan. All these questions are important ones and if your answer is no for any one of these then this is the right time to opt for financial planning services firm.

In fact, financial planning services firms are those firms which plan your finance by offering various useful services for your protection, pensions, investment & savings, mortgage services, healthcare, tax planning and also group employee benefits. These firms offer their services to both individual and corporate clients. These firms are composed of finance researchers who are qualified professionals, carefully selected and rigorously trained. They are supported by a service focussed administration and research team providing great support in all areas of financial services.

These days many individuals are opting for financial planning services firms for taxation planning. This is a known fact that the frequency and significance of changes in taxation laws are affecting many small to medium enterprises. The professional taxation team of these firms can provide excellent taxation services and keep you up to date with the latest taxation legislation. This is a great way to be aware of day to day changing in taxation laws and to minimise taxation liabilities. You also can get assistance regarding state tax issues like state taxes, land tax, stamp duty, payroll tax, goods and services tax etc.

Therefore, whatever is your financial advice need whether it is pension or taxation, savings or investments or any other aspect, opt for Financial Planning Services firms and be aware of the latest financial movements.

The recent Pension Protection Act offers good news for the non-spouse beneficiary of a 401(k). It is now possible to arrange a trustee-to-trustee transfer of an inherited 401(k) to an inherited IRA. This is great news for the consumer, and represents a significant change from the old law.

The new law basically offers inherited 401(k)s the same tax treatment as inherited IRAs. The 401(k) owner should now make the decision to rollover or not to rollover based on investment reasons, not tax reasons.

401(k) Rollover Distribution Background

Under the old tax laws, leaving money in a 401(k) to an heir other than your spouse carried the potential for a tax nightmare. Rules governing 401(k)s vary according to a particular company’s plan documents. Often plan documents stipulated that if you left your 401(k) to an heir, other than your spouse, he or she would have to take distribution of the inherited 401(k) and pay income taxes on the entire distribution the year after the death of the original owner.

On a $1M inherited 401(k) this would mean paying $350,000 in taxes immediately, and the remaining $650,000 would be outside of the tax-deferred environment. Inherited IRAs did not have that limitation. An heir with a $1M inherited IRA could take the necessary minimum required distributions and maintain the money in the tax-deferred environment—stretching the IRA’s life. And the “stretch IRA” would continue to grow tax-deferred, and could be worth $1M or more over time for the non-spouse heir.

Therefore, the best tax advice used to be “roll the money into an IRA.”

The Roll The Money Into An IRA Problem

The reason people resisted the advice and rolling the 401(k) into an IRA is that many of these old 401(k) plans have a great fixed income fund as one of their components. Many of these old fixed income funds are paying returns in excess of today’s fixed income or bond funds and many of the old timers continue to have money in these fixed income funds of their 401(k) 10 years or more after they retire.

The old law forced a choice between offering the non-spouse heir the tax benefits of the stretch IRA and the owner’s interest in keeping the money in the better-than-average fixed income fund in the 401(k). Maybe some hotshot investor could show me a much better investment than these old funds, but with my experience, I would rather have money in many of these fixed income funds (including TIAA for the 403(b) crowd) than other bond or fixed income funds.

The New Law and My Solution: Make the Best of Both Options

I am still in favor of managed money if you find a low fee, ethical advisor with a great track record. Now, however, I would likely recommend retaining the fixed income portion of the portfolio in the 401(k). The stock and growth portion of the 401(k) could be rolled into an IRA to take advantage of the broader spectrum of investment options offered through IRAs. In either case the non-spouse heir will not have to worry about the tax consequences if he or she is lucky enough to inherit either the IRA or the 401(k).

We have planned our retirements pretty much the same way for the last 30 years but maybe it is time to design a new paradigm for the future.

What do we mean by the word paradigm? The dictionary defines a paradigm as a set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline. In other words, a paradigm becomes our TRUTH. We accept it as fact until we believe it otherwise. It is our way of viewing reality and everything that agrees with it we take as true and everything that contradicts it, in our mind, is rejected as false. Sometimes we learn that our paradigms themselves are false (think of the discovery that the world was round) and we then have to create new paradigms and fit the new facts within them. It is lucky for us that we can do this, because if we were unable to make these adjustments we would have a hard time with change. Because we are reasonable beings, we can take new information and adapt it to new circumstances allowing us to create, evolve and progress.

So, what is the set of assumptions we have been planning with up to now? There are two basic assumptions that I see are in need of immediate evaluation:

1. Saving money in a tax-deferred environment is prudent planning.

2. You will be in a lower tax bracket when you retire.

Let’s deal with the second assumption first as I feel it is what has been driving the first assumption for a long time. In every seminar I give I ask the participants if they think taxes will be lower, the same or higher in the future. Without fail 100% of those responding agree that taxes will be higher in the future. Now there are many reasons why we believe this is so but let me enumerate just a few:

1. People over age 65 will nearly double in the next 30 years (from 12% today to 19.4% in 2030)

2. Our governmental debt ($7 Trillion) and trade balance of payments ($617 Billion) do not favor lower taxes

3. Social Security, Medicare and Medicaid are headed for huge deficits (up to $70 trillion by some estimates)

4. We have fewer deductions once we retire (no children and low or no mortgage interest write off)

Laurence J. Kautlikoff, Professor of Economics at Boston University and author of the book “The Coming Generational Storm”, has done the accounting, looking out several generations, and he concludes that “After calculating the immediate and permanent federal personal and corporate income tax hike needed to achieve generational balance; the requisite tax hike is a whopping 69 percent!” There are plenty of other authors out there saying the same thing which leads me to agree with my seminar attendees, that income taxes are going to be higher in the future.

Assuming you are still with me and that you agree with the forgoing assumption (if your paradigm allows it), we need to examine the thinking behind assumption number one, that saving money in a tax-deferred environment is prudent. First, we need to look at what deferred growth provides us. One of the reasons financial planners have been preaching deferred growth for so long is that you can accumulate more real dollars in a tax deferred environment than you can in a taxable environment. If your money isn’t being chipped away at with taxes every year, you can indeed end up with more dollars in your retirement account.

However, all you have done is to defer those taxes to a day when you thought you were going to be in a lower tax bracket, thereby allowing you a larger income in retirement.

Are you starting to see where I am going here? What we have unwittingly done is create a retirement plan for Uncle Sam, not for us. If we are in fact going to be in a higher tax bracket in retirement, we will end up with less real dollars in our pockets and Uncle Sam will end up with more in his. Let me give you an example that makes this real:

Assume you are in a 33% tax bracket and that you have saved $4,000 per year for 30 years in a tax-deductible account (a total of $120,000). If your account grew at 8% per year your account would be worth about $500,000 at the end of the 30th year. Over those 30 years you would have saved $1,320 per year in taxes or a total savings of $39,600. Now assuming you stay in the same tax bracket in retirement (although it could be a higher one) and you take out 6% of you retirement account each year, you will have an income of $30,000 on which you pay 33% in taxes ($9,900) to net $20,100 in spendable income. If you look, you can see that it would take only 4 years in retirement for you to exhaust 30 years of tax savings ($39,600 / $9,900 = 4).

For every year after four in retirement you are creating Uncle Sam’s retirement plan. On top of that, if you need $30,000 to live comfortably in retirement you will need to take out $45,000 each year in order to net the $30,000 you need to live on. You had better be earning at least 9% in your portfolio or you will run out of money before you run out of life.

Have we been duped? We were convinced that deferring the taxes was a smart move. What if we were farmers and the government came to us and said, “You have a choice. You can choose to pay tax on your seed or your harvest, which do you want?” We would most certainly say, “We will pay tax on the seed”. We understand that tax-free beats tax deferred all day long. In the example above, we will have increased our retirement income by 50% if we are able to access and spend the full 6% of our saved dollars without being taxed on it.

Wouldn’t it make more sense to create a tax-free retirement plan, or at least try to cut some of Uncle Sam’s take? We can do that, although the number of instruments is narrow, if we start adopting this new paradigm. Here are some of the things you can do right now:

1. Change your 401k contributions so that you are only capturing the company match. No reason to create a larger taxable harvest than necessary.

2. Fully fund a Roth IRA if you are eligible.

3. Fund an investment grade life insurance policy that can be accessed tax-free in retirement.

4. Optimize idle assets, like home equity, to fund your tax-free vehicles.

If we start educating ourselves in this new way of thinking we can create a successful, long retirement and remove some of the burden on our children and grandchildren.

Financial planning is vital to your future since money is something that you not only need now, but will also need in the future. While social security was invented to assist individuals with their retirement years, it simply will not be sufficient when you are trying to retire from your current career.

In order to get your financial affairs in order, you need to be sure that you are finding financial planning that can assist you in not only completing your taxes year after year, making the most of every possible deduction, but who are also giving you advice on how to best use that extra money that you are returned because of tax breaks.

First of all, you need to know what goes into a good financial planner before you can start to choose the one that’s right for you. It is important to consider why you feel you need financial planning, what your financial goals in the future are, if will want a retirement plan, if will you need help managing new wealth, if you will need help with all of your financial information or do you simply want tax guidance?

What’s happening more and more these days is that financial service companies are making all things available to the average citizen, which is good for you since it will usually help you come in contact with someone that knows everything you might ever want to know about financial planning. But at the same time, you might also be paying for that wide range of knowledge.

If you are looking to narrow the field of your financial planning possibilities, there are many services that can be of assistance to you. Your first option, and a very beneficial one, is to use the assistance of a certified financial planner. If you need to find someone who can provide a wide view of your financial plan, the CFP might be just right for you. They will have at least three years of experience, will follow a strict code of ethics, and will also need to pass three different exams before they are ready to assist someone like you. They can also offer information in terms of tax planning and assistance.

Another great option in financial planning is to enlist the help of a certified public accountant. When you’re concerned mostly about your taxes and nothing else, a CPA is your best choice. They are trained extensively in accounting and are kept on top in their profession with strict testing and training.

Other options including a chartered financial consultant and chartered retirement planning counselors are wonderful help for financial and retirement planning but don’t have as extensive a range of information at their disposal. These financial planners are a good choice, but keep in mind that they don’t have as much training as other types of planners.

And finally, an excellent option, for more generalized financial planning is a personal financial specialist. Although they do not specialize in a distinct financial area, they do have a significant amount of experience and also have passed certification exams. Figuring out your financial goals for the future doesn’t have to be impossible. There are many ways you can benefit from the help of a financial planner to make sure that you are getting the most out of your moeny. Remember, whatever your financial goals for the future, there are assistants there to help you with financial planning.

As an adult, almost every decision you make, mostly has to do with money: your diet plan, your education & career goals, a family vacation & etc, all involve financial planning component to it. Hence financial planning is important to your life; success or fail to plan your financial will impact your life related to money, whether you chase after money (if you are in debt) or you make the money work for you (if you invest your money to increase your net worth).

Many people don’t plan to fail but they fail to plan; either they don’t know the correct financial planning process or they are chartered procrastinators who have thousands of excuses not to get started their financial planning process. Don’t let the procrastination to be your obstacle to get started your financial planning to secure for tomorrow. The bottom line for everyone to plan their financial successfully is to know the process of financial planning and know how to get started; here are six areas of financial planning that we will review together. Please note that these areas are all interrelated. What affects one area impacts the others as well.

1. Goal Settings

In your financial planning process, you can always get started with your financial goals setting. You should make your goals realistic so that they will be achievable. In order to set a realistic goal, you need to know your financial situation and the project future financial ability. Takes out all the important documents such as mortgage agreement, bank account fixed deposit, car loan contract & etc; based on all these information, compile a list of your current debts and assets. And from there, estimate the timeline when you will paid off these debts and make a projection of your future incomes. You set your goals based on these results at a realistic and achievable level.

2. Risk Management

Common method of risk management is using insurance to protect your assets from a loss that you couldn’t afford on your own. Insurance is a financial product that will give you a piece of mind. The insurance company will try to make you whole if you suffer a loss. Insurance coverage for assets, disabilities, sickness and even life is an important element that you should include in your financial planning process to minimize the potential risk of loss.

3. Tax Planning

Are you taking advantage of all tax benefits Uncle Sam has to offer? Although Uncle Sam has always has his hand in your wallet because he wants his fair share, but he also offer tax benefits for you, so you need to know how to take advantage of these benefits. The goal of tax planning is to help you minimize your federal income tax liability as much as you are allowed by tax law while saving for retirement.

4. Retirement Planning

When you are at age 25, retirement will seem so far away. At 25, you will think 60 are old, but when reach 60, you think 85 are old. Retirement planning should begin with your first job. So you need to figure out how much to save from now so that you will reach you goals of retirement later. There is never too early to start planning for your retirement.

5. Investment Planning

In your financial planning process, you should think of how to increase your asset net worth and achieve your financial goals with what you have right now. Investing is a tool you can use to achieve your financial goals that you set for yourself. All investments come with certain risks; you need to understand how much risk you should be taking with your investment to achieve your goals.

6. Estate Planning

Life journey will end one day, but many people try to avoid thinking about. The fact is no one will get out of this world alive, so you might as well plan for it. There is a need to protect your assets from Uncle Sam and to have things get in order for your loving family that you will left behind later.

In Summary

Financial planning is important to your life; success or fail to plan your financial will impact your life related to money. The six areas of financial planning that we just reviewed are all interrelated. Hat affects one area impacts the other areas as well, you should be aware of these areas and ho they impact your financial strategies.

In order to get a debt consolidation loan, apply for a loan, get a second mortgage and get a second line of credit that can be consolidated into one bill. Get a debt consolidation loan that will lower payments withtips from a financial consultant in this free video on credit cards and personal finance. Expert: Carrie Kukuda Contact: www.wearehdtv.com Bio: Carrie Kukuda has a business administration degree, and was branch manager of a community bank. Filmmaker: Christopher Rokosz…

In order to get a debt consolidation loan, apply for a loan, get a second mortgage and get a second line of credit that can be consolidated into one bill. Get a debt consolidation loan that will lower payments withtips from a financial consultant in this free video on credit cards and personal finance. Expert: Carrie Kukuda Contact: www.wearehdtv.com Bio: Carrie Kukuda has a business administration degree, and was branch manager of a community bank. Filmmaker: Christopher Rokosz…

Big Tax Refunds=Poor Financial Planning

You’ve heard this every spring in the lunch room at work. Joe bragging about getting a $1400 tax refund. Jenny tops him with a $2200 tax refund. Then Jack whose wife had a baby during the year and bought a new house tops them all with a $3100 tax refund. Over in the corner smiling to herself is Joan who had to pay an additional $120 in income tax. With all the others getting big tax refunds what is so special about Joan’s situation?

And why was Joan smiling? Well because after last years $2000 tax refund Joan and her husband decided they didn’t want the government holding their money for the better part of a year and they earned nothing on the funds. How could they tune-up their investing and saving plans so they did in fact earn something on the prospective tax refund? Importantly, they wanted a plan so their earnings would compound and over time they would have a comfortable nest egg with the annual tax refund.

Their first step was to review their savings and investing plans. They found that Joan was not contributing enough to her 401k to get the maximum company match. So she increased her 401k contribution from 3% to 5%. The gross cost on her $40,000 annual salary was $800 but since it reduced her taxable income by $800 her net cost was about $680. The company matched 50% up to 5% so the company added $400 to her account. Not bad investing $680 and increasing the amount invested by about $1200.

Joan’s husband was contributing 6% in his company’s 401k plan and was getting the maximum company contribution of about .60 cents for every $1.00 invested.

They decided to start Roth IRA’s with the balance of the prospective tax refund. Although there was no immediate tax benefit, the investments would grow over time and as they got raises they could increase the amount invested until they reached the allowable yearly maximum. The big benefit would. be after age 59 ½ they would pay no income tax on any withdrawals from the Roth IRA.. So in the first year, they had $120 a month automatically deducted from their checking account, with $60 allocated to each Roth IRA. So in one year each Roth IRA was funded with $720. An additional benefit of the Roth IRA was they considered them an emergency fund as there was no penalty for withdrawing the funds.

Now you ask where did they get the money to fund the Roth IRA’s and the added contributions to the 401k? After some calculations they submitted new W-4 tax withholding forms. They increased their deductions to equal the amount of the anticipated tax refund. Now their take home pay was increased, but with the extra 2% (before tax so the real cost was about 1.70%) for Joan’s 401k and with the $120 a month automatically deducted from their checking account to fund their Roth IRA’s their collective take home pay stayed about the same.

But look what they accomplished. A 401k with an additional $1200 invested and Roth IRA’s

with an additional $720 each invested for a total of about $2620. All instead of a tax refund of about $2000. And the investments will continue to grow and compound. When asked if she missed the big tax refund Joan said, “I don’t even remember what we did with the tax refund last year. I think we paid some bills and went out to eat a few times and it was gone. I’m real happy with the change.”

What about you? Which group are you in the lunch room? It’s never too late to take control of your tax refund. Consider turning it into a long term benefit rather than the one time windfall. After all it’s your money and your future.