Finance Tips

Have you ever heard people talking about short sales and you wonder what in the world they are talking about? It really is a business term that company use. The name itself sounds like it should mean what it says. But it does not mean to get a quick sale but it relates to real estate. The way to define short sale is nothing more than a process when a piece of property falls short on the balanced that is left on a loan.

Short sales happen when the owner of the property owes more than the house could be sold for. The owner then will have made some form of arrangement with the loan agency to see if the house could be sold for less than what they owe.

In other words, to define short sales are simply when the bank agrees with take less money for the property. Most people will love to get there hands on a short sale home. It will save them some money in their pocket.

This will also save them time from running around the town trying to find a home for their budget. Short sales will benefit everyone that has a fixed income.

Now you may want to know who can purchase a short sale home. In this day and time, everyone can purchase these types of homes. The real estate companies will sale you the house at the short sale price than to lose money by no sale at all. That is how it is in the business world.

You have to do what it takes to be successful. You do not want your business to fall short. Therefore you need to do what needs to be done to succeed. That is not only in the real estate business but all types of business as well.

Many people will define short sales as a deal that is gone wrong, but that is not the case. It is really know as a plan to step up.

It gives the customers the great opportunity of a life time. Here the company gains and the property buyer. No one will lose this way. You will have to do the research on the property to make sure that you are making a wise choice.

Companies that are marketing in real estate, do not like to have short sales because they will lose a great deal. But they will not lose as much as they would if they do not sale at all. So if you see some property that you are interested in or in the process of buying, try to talk to the realtor and see if the property qualifies for short sale.

Now short sale is not always the way to go. It can destroy your credit and make you look embarrassed in front of family and friends. More than half of the sales now is from short sales. That is just how bad property sale have become. If you think about short sales, then you will need to find out who will do this type of sale. Not all real estate companies will agree with that type of transaction.

Long-term objectives aided with good forextrend indicators are the main necessities of being a success in the foreign exchange market. But it does not take only having the correct tools to make things work in harmony; it also takes the correct attitude and discipline to be effective in this business arena.

There have been studies, like the Parabolic, DMI, Stochastic, MACD, and the like, which are usually used to filter trends. These studies, however, only serve as mere indicators as time goes by. It would still be highly advisable to get a consultant or an advisor who would actually perform real trend filtering on the trader’s behalf. Having a consultant would mean having somebody who assesses and dissects the trends with further technical significance than the trader. Aside from that, he would also make sure that the profit percentages are at its peak, regardless of the average losses along the way.

It must not be ignored that trends are merely indicators that cannot assure or earn profits for the trader. Moreover, it only guarantees to point the direction in which the average trend is moving towards, which either would be down or up. And the way the trends would follow, you cannot be guaranteed a fixed income per month. That is why extensive market research, along with knowledgeable advice from your financial consultant, is needed to determine the probable and worthwhile investments to make.

It is a requirement to update the trend regularly for it to help you. A lot of traders usually neglect this rule because they think that it is more essential to hold position than to take on the pains of getting an additional trade. What they would usually do is open one trend only after they have already closed a previous one. Forex trend indicators should be updated after each consultation to help you succeed and make suitable profits.

Before we start diving into the details of insurance settlement, it is important to understand its definition. A settlement in itself means that you would collect a certain amount of money over a certain period of time as a result of a personal injury. These payments can spread over several years, giving you a fixed income over a time period and is advantageously taxed both on the state and federal level. The only disadvantage is that once you have agreed upon the structure of payment, you can not decide half-way that you want to be paid in a one-time lump sum.

What if you encounter a financial burden and need the money immediately? It does not matter what you need it for, whether it is an emergency medical expense or because you want to make an investment or you simply want to purchase something for you to enjoy. The bottom line is, you need the money fast.

Insurance settlements can be the option to help solve your problem. You can sell off your settlement in exchange for liquid cash. You can decide to sell the whole amount of your settlement or just a portion of it. The idea is that you sell the rights to receive the amount in exchange for an amount you agreed upon.

There is no fixed amount or percentage you can get for an insurance settlement. The procedure basically entails your claims adjuster to complete the estimate at the time of inspection, proposing to you an amount written on a check. You would want to find an insurance company with a higher rating who can usually issue a higher price for the settlement.

Consider the type of your insurance settlement and the amount before you agree on anything. If you are uncertain of what your next move should be, do not take any action without seeking legal or financial advice. You do not want to make a decision you would regret.

With pensions fading away and 401k’s becoming one of the major reliance’s of retirement planning everyone wants to know the best setup for their 401K. While the best setup is generally what you mentally feel comfortable with saving for retirement, we can offer a few general tips and guidelines to help you choose. Please remember higher risk has potential for greater gains and losses, while lower risk is the opposite.

Portfolio Selection

Typically all 401K plans offer the following categories when choosing funds to place your money in: growth, capital preservation, income, balanced, and sometimes stock in the company for which you work.

Capital Preservation Funds

Capital preservation funds are designed to preserve your savings principal. They typically invest in government securities with a predictable rate of return. This is the lowest risk category with the lowest returns. The returns have been known to under perform inflation, which means you could lose buying power in any given year. For example, if the economy inflates at 4% and you get a 3% return on your savings, then you have 1% less buying power than the previous year. Simplified, a TV costs $100 this year and after inflation of 4% the TV costs $104 ($100*4%). Your savings account with $100 had a 3% return leaving you with $103 ($100*3%).

Income Funds

Income funds usually diversify your money into various bonds and are typically for long-term gains. While the exposure to any type of loss is very rare, it is not impossible. With the low amount of risk that comes with income funds you will generally see a lower return then the average of the New York Stock Exchange.

Balanced Funds

Balanced funds try to get the best of all worlds by diversifying between international stocks, domestic stocks, and fixed income securities. These funds are very reliant on the fund managers to choose the right mix to protect and grow your savings. If you are unsure which percentage of your funds you wish to devote to the various other funds, then you may want to consider a balanced fund. Before placing your money into one of these funds, please ensure that you research the funds management history and current manager.

Growth Funds

The “riskiest” of all investments is the growth fund, but it also has room for unimaginable returns. Over the long run these funds typically out perform the stock market because they are invested in international bonds and markets, small cap stocks, and emerging markets of developing nations. It is not uncommon for the annual returns to follow a pattern as such: -73%, 115%, 50%, -33%, 83%. These funds are subject to a variety of factors that some funds are not such as: oil prices, civil wars, and medical epidemics.

Company Stock

Everyone remembers the Enron scandal where thousands of employees lost all of their retirement savings in less than a year. While this is not always the case with companies and some may be very well and dependable, please keep situations like the above-mentioned in mind and take proper precautions to protect your finances. I do not recommend placing more than 10 percent of your savings portfolio into your company stock; however, the choice is completely up to you.

Choosing the Right Mix

With so many options it is hard for an individual to make a choice between various funds. Because everyone has different financial needs and situations the worst thing you can do is pick the same options as your co-workers without giving it a second thought. Before placing your money into any of the categories you will want to consider the following:

Years before retirement How much money you need Your reaction to sudden market drops
How many years before you retire?

One of the most important factors is how many years you plan to continue working. If you have a long time left to work (over 10 years) then a good idea may be to place the majority of your assets in growth funds. The longer you have left to work the more aggressive you should be while saving for your retirement. As you get closer to your retirement age (less than 10 years) you will want to consider starting to migrate some of your growth funds into balanced or conservative funds so your nest egg has less sensitivity to market drops

How much money do you need?

How much money you need goes hand-in-hand with how many years you have left to work. A lot of financial planners can assist you with determining how much money you should place into your savings each month based off these two factors. You can estimate this yourself by doing the math or using an online financial calculator. I recommend an online calculator or use of a Microsoft Excel spreadsheet to save yourself the time. Here is an example of what the math would look like. Take your expected rate of return on your savings and multiply it against the amount you save each year so that the first year looks like this:

Year 1: $4,000 (your yearly savings) % 1.08 (8%) = $4,320
Year 2: $4,320 (previous balance) + $4,000 (annual addition to savings) = $7,320 * 1.08 = $7,905
Continue to do this formula until you reach the year you desire, there are calculators that can do the math for you. Just type in “retirement calculator” in Google and you are sure to get results.

If the market crashed…would you care?

The #1 determining factor of where people place their retirement savings is mentality. Regardless of what you should and shouldn’t do with your retirement fund, if you are not able to mentally handle the results then it is not worth doing. I would never recommend to someone to place all of their money in growth funds if they would not like the idea of losing half of their money in a single month. Whatever you decide to place your money into, please ensure that you are okay with the decision. Remember, it’s never a real loss until you sell, any growth fund capable of losing half your nestegg in a year or less is also capable of returning it.

Tax Deferred or Taxed Contributions?

Another important determining factor is whether or not to save with after-tax contributions or before-tax contributions. Unlike regular savings accounts, 401K’s have the option putting money into them without being subject to federal income tax. Here is a list of things you should consider before choosing either option:

Your tax bracket If the money will be used for emergencies
What is your tax bracket now and what will it be?

Generally speaking if you are in a high tax bracket and plan on making less money when you retire than you would want to consider tax-deferred contributions. Tax-deferred contributions are deferred on taxes up until the point when you start withdrawing the money. If you are currently making enough money to be in let’s say, the 33% tax bracket, but when you retire you only plan on being in the 25% tax bracket, then you should definitely consider placing your money into your 401k as tax deferred. By deferring taxes until you withdraw the money after retirement in the 25% tax bracket you would be saving 8% on taxes (33%-25%) and on top by deferring you have 33% more money in your fund that can grow tax deferred. If you tax deferred $5,000 a year into your 401k and it grew at 8% a year for 30 years; you’re ending balance would be about $611,729.34 which you would draw out in monthly payments that would be taxed at 25% or whichever bracket you fall into after retirement. If you took that same $5,000 dollars but put your money in after tax your final balance for the same scenario would be about $409,858.66, the difference is that you would not have to pay taxes on this money because you have already paid them. You would have about 50% more money in your account after 30 years.

The opposite also holds true. If you are currently in a 15% tax bracket but plan on retiring and being in a 25% bracket, then you may opt to place after tax money into your 401k.

Please keep in mind everyone’s situation is unique and that you should find yourself a good financial advisor or planner if you are unsure of which is best for you.

Is this money going to be used for emergencies?

If you are using your 401K as an emergency buffer account for things that ARE NOT: Primary Residence purchasers, Medical Emergencies, and things of this nature and plan on USING it for things such as credit card debt, paying late bills, and other things related, then you will definitely want to take into consideration the 10% tax penalty and tax consequences of making a withdrawal for these things.

If you take a withdrawal on a tax-deferred 401K that is a non-emergency than you will be subject to not only income tax on that money but a 10% tax penalty as well. Please take that into consideration before making any unnecessary withdrawals. Also, you can always get a loan from your 401K but it is not recommended because you lose savings principal to earn interest on and you have to pay it back at an interest rate probably around 8%.