Get online help how to invest for retirement

We are in this age of economical crisis so we need to plan for our retirement and investment where we are more secure and get the best value for our money. Let's learn some terms which we need for investment plan management.

Vanguard Funds: is from 'Vanguard' which is a United States investment management company offers mutual funds and other financial products and services to individual and institutional investors in the United States and abroad.

Exchange-traded fund: An exchange-traded fund (or ETF) is an investment fund traded on stock exchanges, much like stocks.

Rolling your 401K plans into an IRA is one of the smartest things you can do with a retirement plan. The cleverest thing, of course, is being astute enough to sign up for your company's 401K plan.

An Individual Retirement Arrangement (or IRA) is a retirement plan account that provides some tax advantages for retirement savings in the United States.

What is asset allocation?

A simple definition is "Asset allocation is the strategy used in choosing between the various kinds of possible investments, in other words, the strategy used in choosing in what asset classes such as stocks and bonds one wants to invest."

The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.

- Time Horizon - Your time horizon is the expected number of months, years, or decades you will be investing to achieve a particular financial goal. An investor with a longer time horizon may feel more comfortable taking on a riskier, or more volatile, investment because he or she can wait out slow economic cycles and the inevitable ups and downs of our markets. By contrast, an investor saving up for a teenager's college education would likely take on less risk because he or she has a shorter time horizon.

- Risk Tolerance - Risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for greater potential returns. An aggressive investor, or one with a high-risk tolerance, is more likely to risk losing money in order to get better results. A conservative investor, or one with a low-risk tolerance, tends to favor investments that will preserve his or her original investment.

Stocks, bonds, and cash are the most common asset categories. These are the asset categories you would likely choose from when investing in a retirement savings program or a college savings plan. But other asset categories - including real estate, precious metals and other commodities, and private equity - also exist, and some investors may include these asset categories within a portfolio. Investments in these asset categories typically have category-specific risks. Before you make any investment, you should understand the risks of the investment and make sure the risks are appropriate for you.

Some financial experts believe that determining your asset allocation is the most important decision that you'll make with respect to your investments - that it's even more important than the individual investments you buy. With that in mind, you may want to consider asking a financial professional to help you determine your initial asset allocation and suggest adjustments for the future. But before you hire anyone to help you with these enormously important decisions, be sure to do a thorough check of his or her credentials and disciplinary history.

Tips from 'Sec.gov'

Read more...

Why invest in bonds?

Deciding to save and invest is the first step towards secure financial future. We can invest our money at many places but there are few options with low risks which might be stocks or bonds and among both investing in bond is better as they add safety and stability to your investment plan. Bonds are fixed-income investments, meaning that the amount of income you'll receive back on your investment is fixed in advance.

As every financial expert advises, the key to sound investing is diversifying – in other words, splitting your money up into different kinds of investments to reduce risk. The three main places to “park” your money are stocks, bonds, and cash/or savings.

Bonds can be a dependable source of steady, fixed income available for you to spend or reinvest.

The Benefits of Bonds

Financial Security
Who doesn't like the sound of “financial security”? There's a reason that a bond is called a “fixed-income” security – not only are you highly likely to get back your principal but you can also count on receiving interest on your investment.

Portfolio Balance & Diversification
Bonds can be great financial “buffers.” When the stock market is on a roller-coaster ride, bonds can help steady your pulse because they're a very safe financial tool to help balance the risk in your overall portfolio.

Tax breaks
One of the not so well known facts about bonds is that they're very often free from many taxes. For example, most bonds issued by state or local governments (also known as “municipalities” or “munis”) are exempt from federal income taxes. All bonds issued by the U.S. Government (also known as “Treasurys”) are exempt from state and local income taxes. Some municipal bonds (“munis”) are free from all three – city, state and federal taxes – a condition known as being “triple tax free.”

Weighing the Risks
Probably the first thing you've heard about investing is that it's never risk-free. True enough. And although highly-rated bonds are considered one of the safest ways to invest your money, you should still take the risks into account before making any decisions.

Bankruptcy
Bond issuers are not some mysterious “Wizard of Oz”-like entities. They're companies and units of government. And, sad to say, companies and sometimes even local governments can go bankrupt and default on their loans. Bonds with high credit ratings very seldom default and U.S. Treasury securities are considered essentially risk-free. But it's a fact to consider. Even bonds (except Treasurys) aren't risk free.

Your bond is “called”
Some bonds can be paid back early – what's known as your bond being “called.” If you own a callable bond and it is called you will still be paid back your initial investment and any interest you've earned so far, but you will not receive the future interest you would have otherwise gained. From our example, let's say your 9% bond was called after 8 years. You would be repaid your initial $1,000 investment (the principal), plus the $720 you had accumulated in interest. However, you would not receive the additional interest you were expecting when you made your initial investment for 10 years. Most important, if the company decided to call the bond, chances are that interest rates are now lower and you won't be able to find a similarly rated bond paying as high as the original 9% interest you were receiving.

Rising inflation
If inflation rises, the interest you make on your initial investment will look low compared to bonds currently being issued. And with your money locked in a bond, you could lose some principal if you sell it in order to move it into another investment that could give you a higher rate of return.

Selling your bond before maturity
If you decide you need your money back earlier than the date that your bond matures, You're taking “a chance” that you may get more, or less, than you paid. This depends mostly on the interest rates at which new bonds are being issued. That's why individuals who invest in bonds typically plan to hold them till they mature. And that's why it's important to determine when you'll want, or need, to reach your financial goal in order to purchase a bond that matures at that same time.
Now that you understand the benefits and risks, you should better understand the importance of bonds as part of your overall portfolio – they add some safety and stability to your investment plan. Next let's look at your bond buying options.
Source: Tomorrow's money

Read more...

An online FREE tutorial - "Investing For Your Life"

We make planning and save money for our future and the best use of our saving is to invest it at a place which is reliable and could provide profit for our hard earned money. But when our saving is not too much and we are new to 'investing', we need a guidance in this regard. This post is about an online FREE tutorial which is basically a home study course "Investing for Your Future".

This online FREE tutorial is helpful for the people who save money and want to invest their money for their future needs. It is especially for beginning inverstors with a little savings. You can also get the print out of this course as it is very easy to download at your hard disk.

"Investing for Your Future"– is brought to you by the USDA's Cooperative State Research, Education, and Extension Service, this home-study curriculum covers the basic building blocks of sound financial management.

Details of the home study course

11-unit home study course is developed by the Cooperative Extension system for beginning investors with small dollar amounts to invest at any one time. It was assumed that many readers will be investing for the first time or selecting investment products, such as a stock index fund or unit investment trust, that they have not purchased previously.

The course units were developed in a logical order. "Basic" topics such as setting goals, investment terms (e.g., diversification, dollar-cost averaging, asset allocation), and finding money to invest lay a foundation to help readers understand how and why they’re investing. You’ll also begin to understand that there’s generally a trade off between risk and reward. The more risk an investor assumes, the greater the chance of a high return, as well as the greater chance of loss.

After exploring "the basics," the course describes specific types of investments (e.g., stocks and bonds) in detail. You’ll begin to understand their characteristics, how they are purchased, and what it costs to purchase each investment. There are also units that focus specifically on tax-advantaged investments and investments that can be purchased with $1,000 or less.

Finally, Investing For Your Future concludes with additional topics of use to investors: available resources, how to select professional financial advisors, and information to help you avoid becoming a victim of investment fraud. You can choose to read the entire course, in any order that makes sense to you, or select only those topics that are of most interest. The choice is yours.

Simply reading Investing For Your Future will not turn you into a successful investor, however. A printed page simply can never replace the personal motivation that is required to take action to achieve financial goals. That is why there are "action steps" listed at the end of each unit. These are specific steps that readers can take to apply the course material to their lives. We urge you to consider each action step carefully and take action that is appropriate for your individual financial situation. The course also contains a number of worksheets, which, again, are tools to help readers apply the information contained within each unit.

Link: Home study course

Read more...

Tips for making the most of your tax refund

According to Kiplinger.com, about 70 percent of all filers get tax refunds and are anticipating a tax refund this year averaging $2,200. Americans more than ever are choosing to efile and with more consumers filing their income taxes before April, the extra cash can't come soon enough.

You can also get your income tax refund faster with direct deposit. IRS Form 8888 allows you to deposit your refund into more than one account so you can wisely save and spend your tax refund.

Tips for managing your tax refund

Avoid refund anticipation loans (RAL)
An RAL is an extremely high-cost bank loan secured by your pending tax refund, which you have to pay back even if you don't get a refund. If you're looking for a quick refund you can get it within two weeks or less by efiling and having the refund directly deposited into your account. You can e-file for free if you earn $52,000 or less. Also consider the Volunteer Income Tax Assistance (VITA) program and AARP's TaxAide - both offer free tax preparation for low-income taxpayers.

Pay down credit cards or other high interest loans
Use your refund to pay more than the monthly minimum payments. Add extra cash to loans with high interest rates. Remember, credit card debt is simply an unsecured loan. The longer the life of the loan, the more you'll pay for borrowing the money. If you can't pay them off completely, make an extra payment. By making an extra credit card payment you can reduce your interest costs.

Pay down your mortgage
Any extra payments go toward paying down your principal. Paying off your mortgage faster means you pay less in interest. Using your refund to reduce your mortgage debt can mean substantial long-term savings. Just by making two extra payments a year, you might be able to pay off your loan in 15 years on a 30-year mortgage.

Contribute to or open an emergency fund
Most people don't have money stashed away for unexpected emergencies. Your tax refund is a great way to start. The NFCC recommends saving three to six months of living expenses. By placing the cash in a separate savings account or short-term CD, you're going to be less likely to use it and it will be there in case of an emergency.

Invest in retirement
Many people are working after the normal retirement age of 65 and it is estimated that a majority of workers believe they are behind on their retirement.

Tips on Your Tax Refund savings.

Whether it's your 401(k), IRA or Roth IRA, investing your tax refund now could mean a nicer cushion later. The sooner you start saving the more time your money has to grow. Make retirement savings a high priority by setting goals for yourself, devising a plan and sticking to it.
Service the car and tackle other to-do's. If you've been putting off getting an oil change, cleaning the gutters or fixing the leaky roof - now's the time to cross those things off your list. Using your tax refund to maintain your expensive possessions now could save you money in the future.

Open a 529 College Savings Plan. A college education isn't getting any cheaper. With 529 College Savings Plans withdrawals are tax-free when used for higher education. Plus, some plans come with tax benefits.

Source: The National Foundation for Credit Counseling (NFCC)

Read more...