Category: Personal Finance

Posted on

6 ETF Investing Tips for Beginners

This article first appeared on the WallStreetSelector.com website on June 2, 2013.
Various academic studies have indicated that asset allocation is more important than security selection, especially in times of greater volatility in the markets. However, according to Roger Ibbotson, writing about the importance of asset allocation in the March/April 2010 publication of the Financial Analyst Journal, about three-quarters of market gains or losses come from general (broad) market moves, rather than asset allocation or security selection. As a consequence, individual investors are turning more and more to index-based and/or sector-specific exchange traded funds (ETFs), rather than managed mutual funds or individual securities.

According to ETF Database, there are currently more than 1,400 exchange traded funds available, ranging from broad general market funds to highly specialized funds representing a single industry, country, commodity, or investment goal. You can pick ETFs which seek high dividends and/or interest payments, those focused solely on share appreciation, or those which seek both objectives. ETFs are available for bonds, commodities, real estate, or currencies. They are structured to move in concert with the index they track, exceed the index’s moves, or move in the opposite direction. The industry follows the advice popularized in the movie Field of Dreams: “If you build it, they will come.” And they have – to the tune of more than one million shares per day on average.

Read more . . .

Posted on

Risky Investment Moves That Could Pay Off

stack of money This article originally appeared on Investopedia.com on March 14, 2013.
According to a 2012 Employee Benefit Research Institute poll, only one in seven Americans are confident that they will retire with enough money to live comfortably, even though one in three expect to work past the age of 65. The reason: Saving for retirement is increasingly difficult for families faced with the costs of rising healthcare, purchasing a home and sending children to college. In fact, a middle-income household is likely to spend almost $227,000 to raise just one child to 18 years of age, according to a 2011 article in CNNMoney, and that doesn’t include college expenses. The College Board reports that attending a four-year program averages between $22,000 and just over $43,000 per year. Include more than $20,000 per year in healthcare costs for a family of four (including the employer’s portion), and it’s easy to understand why the average American is frighteningly underprepared for retirement.

One obvious solution to this dilemma is to increase the investment return on what you do have saved. The results can be dramatic. For example, if you’re 45 years old and have $62,000 in an account earning 3%, it will grow to almost $112,000 by age 65 with no additional investment. However, if instead it earns 9%, that $62,000 will become a more impressive $347,500 over the same period of time. Striving to increase your investment return is a no-brainer if you want to have a more comfortable retirement, but pulling it off isn’t quite so clear-cut.

Read more . . .

Posted on

6 Reasons to Buy Life Insurance

magnifying glass life insuranceFor many people, their first experience with life insurance is when a friend or acquaintance gets an insurance license. In my case, a college friend, recently hired by a major insurance company, contacted me (along with all of his other friends) to buy a $10,000 policy underwritten by his company.

Unfortunately, however, this is how most people acquire life insurance – they don’t buy it, it is sold to them. But is life insurance something that you truly need, or is it merely an inconvenience shoved under your nose by a salesperson? While it may seem like the latter is true, there are actually many reasons why you should purchase life insurance.

Read more . . .

Posted on

8 Tips to Protect Yourself from Rising Healthcare Costs

Rising healthcare costsThe impact of the Patient Protection and Affordable Care Act, informally referred to as “Obamacare,” is likely to be felt by Americans in the near future through higher healthcare insurance premiums, increased difficulty in making doctor appointments, and decreased face-to-face consultations with their personal physicians. While the exorbitant annual increases in healthcare costs of past years could moderate – and possibly reverse – in the long-term as a result of the act, everyone should be prepared for higher healthcare expenses in the short-term.

Each American will be required to assume more financial responsibility for his or her health. Fortunately, there are steps you can take to moderate the higher costs while improving the health of yourself and your family. Most steps merely involve simple changes in lifestyle and everyday habits.

Read more . . .