Stocks 101

When you buy stock in a company, you become an owner of the company. The stock is an asset that you expect to increase in value. The thinking is that if you invest in Coca Cola that they will be able to grow their business and be rewarded with a higher stock price. Investments can help you stay ahead of inflation. The things to be aware of is that when you buy a stock, there is usually a commission charged to buy the stock. When you sell the stock and it has increased in value, you will need to pay taxes on the difference between what you paid for it and what it was worth when you sold it.

Wishing You Success in all its Greatest Forms,

Alex

Life Expectancy Examined

If you are in good health, there is a good chance that you may live to be about 75 if you are a man and 80, if you are a woman. In the 1900's, people tended to live only to around 47. By the 1950's life expectancy had grown to around 68 years old. On average, those born in 2005 will live to nearly 78 years old.[cdc.gov]

With the strides and advancements in biology and medicine, life expectancy continues to grow. Some scholars belive that the human body is built to last many years and we have just begun to uncoverthe tools to optimum life span. Imagine living to the age of 150, or longer. Many animals live six or seven times their age at maturity.

These are sobering statistics since most people create their financial plan starting at the age of 65. With medical advancements, it's possible that many will be retired for more years than they spent working. It's key that you create a plan that is based on the possibility of an extended retirement.

Wishing You Wealth in all its Greatest Forms,

Alex

Financial Check Up Reminder

We are now nearly halfway through the year and it’s a good time to take a look at your financial goals. In life, it’s easy to get caught up in the day to day and put financial plans on the back burner. But here are two thoughts.

Take a good long look at your financial goals and see if they have changed. Make sure that when you put together a plan it is both actionable and quantifiable. When a plan is actionable, it is something that you can actually do. For instance, an actionable plan is saving a certain amount of money per month. A non-actionable plan would be winning the lottery. A quantifiable plan is one where you can measure at the end of the year whether or not you have succeeded in it. Let’s say you were to put away $200 a month for the remainder of the year. You should have $1,200 if you save for July, August, September, October, November and December. If you don’t have $1,200 on December 31st, then you haven’t reached your goal. Take the remainder of the year to work on consistent saving, budgeting and investing methods.

If you were planning to make contributions to your favorite charity, there has never been a better time to do it. Charities that support the welfare of the local community are in a recession also. In a time where community services are much needed, charities have to get by with much less. Plus, it’s also a tax deduction you will be able to take for 2008.

Start with those two and check back here for more ideas soon.

Wishing You Wealth in all its Greatest Forms,

Alex

Is Your Mortgage "Under Water?"

The words “under water” have taken on new meaning as many homeowner’s who purchased a home in the last few years have experienced the value of their home dropping below the balance remaining on their mortgage.

There is good news with Fannie and Freddie, the government sponsored companies that buy and insure mortgages and provide liquidity so that new loans may be made. If your loan is held by either or the FHA (Federal Housing Administration), you may be able to refinance your property up to 105% of its current appraised value.

The possibility is that you may be able to get a lower interest rate or reduce your monthly payments. If you quality, you may even move from an adjustable rate to a fixed one. Owner occupied properties up to four units, including single family residences, condos and rental properties are all potentially eligible for this. [Bankrate.com]

To find out more about the eligibility, go to the government website here.

Wishing You Wealth in all its Greatest Forms,

Alex

Credit Card Companies Complain, but Consumers Rejoice!

President Obama put the pen to paper on May 22 and made changes to the way that credit card issuers do business. The changes were “common sense reforms designed to protect consumers.” Advocates are happy, but banks have already begun campaigning that the new reforms may hurt cardholders in the long term.

Let’s take a look at these changes. It’s called the Credit Card Accountability, Responsibility and Disclosure Act, but has been named “CARD” for short…a very fitting name. Some changes will occur in 2010, while others could happen in 90 days.[SmartMoney.com]

• No Surprise rate increases
If your card company wants to raise your rates, they now have to let you know 45 days ahead of time and let you know why in writing.[LaTimes.com]

• Bills in Advance
Your monthly bill has to be mailed at least 21 days before your payment is due. [SmartMoney.com]

• Restrictions on retroactive rate increases
The rate on an existing balance can’t go up unless you are at least 60 days late on a payment. And even if you are 60 days late, your credit card company has to restore the prior rate if you pay the minimum for the next 6 months.

• On time Redefined
If you pay your credit card before 5pm EST it will be considered paid on the same day. And in the chance that your payment due date falls on a weekend or holiday, you cannot be subject to late fees because they weren’t open.

• Fight Higher Rates.
If you are paying different rates for different kinds of transactions, you can now apply any payment above the minimum to the highest rate balance.

• Additional Protection for College Students
College students will be able to get credit, but within reason. There’s little reason for college students to graduate with loans and high credit card balances, which is a double whammy to getting started on the right food. Account limits will be either 20% of their annual income or $500, whichever is greater. The goal is to make this market less attractive to issuers and reduce the amount of exploitation.[SmartMoney.com]

• Protecting Future Generations
The new legislation bars companies from issuing cards to most people under age 21. Those younger than 21 will only be able to use a credit card under one of the following conditions: They can prove they have the means to pay the debt (or their parent or guardian promises to pay it off if they default).They are emancipated minors. They are designated secondary cardholders on a parent or legal guardian’s account.[CNBC.com]

• Universal Default Ending. This is the practice where if you make a late payment to one credit card company, they all get to raise your rate. Under the new plan, if you make a late payment to one, others cannot hike your rate and bury you.[SmartMoney.com]

• Over Limit Fees by Exception. Your account cannot be put over the limit without your advanced okay to do so. [SmartMoney.com]

Credit card companies are staunchly against these changes because without the extraordinary amount of fees, there will be less revenues. I believe that going forward, there will be less rewards and new annual fees.

Whether or not these changes help America become more financially independent remains to be seen. But I believe every bit helps and believe that credit card companies will need to also take a pay cut during these difficult economic times.

Wishing You Wealth in all its Greatest Forms,

Alex

Too Young For Life Insurance? Probably Not.

It’s a common myth that you needn’t invest in life insurance early in life. That’s actually not necessarily true. The reality is that getting a life insurance policy early may pay huge dividends when planning for the future. By comparison, few people acquire life insurance coverage between 18 and 45, but there are many reasons to get life insurance during this time.

The most important question is “Are supporting loved ones whose livelihood depends on your income?” If the answer is yes, then you should be looking at life insurance to guarantee their future.

Commonly, people wait because it is believed that life insurance is only needed later in life and want wait until expenses decrease. Life insurance has been long viewed as only for “old people.” When you are 30 or 35, you focus on the long life ahead of you. Financially speaking, it may make sense to acquire life insurance coverage now.

1.Your health is in great shape. Most shop for a life insurance policy in the 50’s and 60’s. At that age, your health may be different and it may be more difficult to qualify for affordable life insurance. A multitude of things can cause premiums to spike, so why not get the coverage you will need someday, while you are in your prime.

2.The cost will be a lot less. Life insurance premiums are based upon your current age and life expectancy. Since you are younger, the premiums will be less since they will be based on a longer life expectancy.

Some studies have cited that premiums for standard risk-term life insurance policies have dropped as much as 50% between 1994 and 2007. This can be credited to the fact that people have been living longer. Even cash value policy premiums have decreased an average of 4% per year since 2000.

If you are single, you may also want to look for a term policy that can be converted to permanent coverage at a later time. It’s a way to protect your insurability, even if your health changes.

As we all progress though different stages of life including marriage, having children and retirement, our needs for life insurance change and typically increase. If you are considering life insurance, your timing might just be perfect.

Wishing You Wealth in all its Greatest Forms,

Alex