Browse Category

Personal Finance

Psychology of Retirement

Retirement in the models described above is simply quitting your job. Retirement can be thought of as leaving a job or task to do another task. People rarely sit around and do nothing unless they are not able to do any work. People will want to find something to do, no matter what it is and whether they are paid for it or not.

A better definition of retirement is doing what you love and having control over your resources. Do you have to suffer for 50 years to do what you love? Many people talk of “paying your dues”. Why not do what you love now? Yes, there are many responsibilities to consider, and doing what you love means being much more mindful of how things get done, how things are paid for and who gets affected. Doing what you love is hard for most people because it means being different; it forces you to shed many fears and issues and become what you want to be. People are scared to face this reality, so they do a job that gets them by, “pays the bills”, and allows them to hang onto their current beliefs. Happiness may be compromised in this choice, as well as health and other aspects of life that are believed to be important.

Retirement is really about a state of mind. It is not only about the money. The money aspect as well as health, relationships, time and resources should all be planned because these areas are what the money is supposed to be used for. As jobs become more and more uncertain, golfing at age 65 is becoming more and more irrelevant.

The model of retirement from the 1970’s was used to sell a dream of leisure that was not very easy to materialize. Once the lifespan allowed it to materialize, the money became more and more elusive to fund the dream. Today the possibilities still exist, but you will have to make them yourself rather than relying on society for the dream prescribed to you. There are many assumptions and myths that are made regarding retirement, and some of them will be discussed below.

A retirement switch turns on when you turn 65 and no other age. This assumption was made in the past, but today, retirement ages are being pushed back to between 65 and 70 years old for the poor, and earlier than 60 for the wealthy. For the entrepreneur or self-employed person, there is no age as this model has been abandoned. The age of 65 is one possibility of when to retire, but it is not the only one. There really isn’t a set age any more to make this change; it will depend on what you want to do.

There are other people who postpone retirement indefinitely because they would not know who they would be without their jobs. If they don’t work, they feel useless, a burden to society, or second class citizens. These people may have more than enough wealth; but there are also people who work past age 65 because of financial lack. This did not happen in the past because people did not manage their retirement directly. The trend over the last 20 years is to shift responsibility for retiring to the retiree rather than the employer or the government. This is why RRSPs were introduced, why the TFSA was introduced, and why company pensions are becoming fewer and less reliable. If you have a pension plan, it is becoming defined contribution versus defined benefit. Defined contribution means that people would have to invest their own money and bear the risk of their losses, whereas for defined benefit this was not expected. Health costs were also covered up to and into retirement – and the trend is to privatize these services more, so that people will have to pay for themselves, either directly or through private insurance. Provincial health insurance is covering fewer items each year, work benefits are covering more each year, and more services are being charged for and outsourced to private companies.

People assume that retirement “just comes” like death, and they have to deal with it. There are stories of people who worked for 50 years continuously, and right after retiring at age 65 either die suddenly or become severely ill. Some go into depression or go into a state of decay where nothing is interesting to them anymore. Why is this? These people did not know what to do when they stopped working. Was retirement right for them? Why not stake out what you are going to do when the time comes and ease into it? Planning is done for life changes like when you leave high school, after university and even after having children – why not retirement? It makes the financial burden much easier to plan because you don’t have to guess what you need. You can test this out beforehand. The idea of clinging to a job for an identity will not be needed because you have found something to do before the “void” of indecision or transition takes place. Nature doesn’t allow a vacuum, so if you find yourself with “nothing to do”, something will always come in to replace what you have left. The trick is for that something to be what you intended rather than unconscious. You technically do not have to retire, or can retire constantly in spite of age, health, circumstances or options.

There is no prescription for retirement, just like there is no prescription for starting a business, doing a piece of art or finding the perfect trip. These depend heavily on what someone is looking for, and what appeals to them. The first question for the future retiree to ask is: What do I want to be? Secondary questions are: What do I want to do? How can my skills be put to the best use? What activities make me the happiest? What kind of lifestyle do I want to have? Understandably these questions are not easy to answer and they will take time to figure out. There may need to be some tinkering and trial and error before you know where you want to be and what you will need to get there. The good news is that you have a lot of time to experiment.

How much money do you need to retire? This is very much an individual question and it varies widely. There isn’t even a useful range to give out. Some people can live on CPP and OAS only, while for others $100,000 per year is not enough for their needs. If someone tries to give you a prescribed model, be mindful that it likely will not work for you unless you fit the intended consequences that the model is designed for. If you are living the average life and require the average amount of money to pay for it – the model may be useful. Any differences from this model that you want to make will have to be thought through by you to make sure that they are covered.

Do you want to: Learn how the world of money really works without the need of a time consuming or expensive course of study Discuss what you want to achieve according to your horizon Restructuring your finances to achieve your goals Advice that is not affiliated with any institution or any product – an independent opinion

Cash Advance Lenders

In order to get a car title loan, the individual must own their own car. For those who do own the ‘pink slip’, they often would rather not put their vehicle at risk. A secured loan in default results in the loss of property. Most people need their vehicle to get back and forth to work. It takes a certain kind of desperation for a person to risk their vehicle in order to solve a financial emergency.

Pawn shops work for people who have valuable personal items can pawn them off for a percentage of their fair market value. It is important to understand the terms and conditions of these secured loans so you don’t lose your property. Like car title loans, a pawnbroker will sell the property to collect on the loan as well as make profit from it.

When people think about short-term loans, they often consider a cash advance loan lender because there is no collateral necessary to obtain fast cash. It is a simple online transaction which will land a few hundred dollars directly into the borrower’s bank account, usually within 24 hours as long as the following day is a working business day. Credit challenged applicants do not have to worry about the state of their credit history. These loans are processed without credit scores as a qualification factor. These lenders want a working bank account, proof of employment and a minimum amount of take-home pay. Since there is no collateral to collect if the loan goes into default, a lender will sell the balance off to a collection agency. At this point the bad debt will be another negative on your credit history since collection companies report to the credit bureaus.

A budget is a good money management tool to help stay in control of your monthly income. If you truly do not want to have to use short-term cash lenders, you will need to build an emergency savings account. Learn to reallocate funds within your own budget. Divvy up your paychecks according to your payment dates. If you have one pay period more burdened than another, reallocate funds from a different paycheck to cover the extra load. There are many people who have learned to juggle their money among living expenses. Those who live beyond what their income affords will be the ones who turn to other money options when unexpected costs creep in. Income can only be stretched so far without some sort of additional problem creep into the money books.

Personal Saving

First, many people buy products spontaneously without planning to buy them in advance. That is, they buy a product or service, and decide to buy it, only immediately before they make the actual purchase. Most of us fall prey to unplanned spending every now and then. Retailers put a lot of effort to encourage unplanned spending. Take for example the sweets at the checkout of the supermarket, or the sales table in the middle of the toy store. Temptations like these make it much harder to control spending. Of course, these are many more examples how retailers can motivate people to make unplanned purchases. Luckily, there are many ways to limit these kinds of expenditures. You can, for example, make a shopping list before going to shop, hold less money in your pockets to decrease the tendency to buy food items on your way home, or leave your credit card at home when visiting the shopping mall. Besides, never go shopping when you are hungry. It makes you vulnerable to buying unplanned food items and overfilling your cart.

Second, people tend to think it is more difficult for them to save money now (and spend less) than it will be in the future. For example, they want to go out of dinner this evening, they want to buy their partner a sweet gift, or they are planning to do something nice in the weekend. Obviously, in the short term people are aware and think of many things they want to spend money on. When they think about the future, they don’t know yet what they will be doing by then. As such, they are less aware of the temptations they will be facing in the future that might prevent them from saving more. Hence, they think it will be easier to save in the future. The point is, however, that they will also think this in a few months from now. Consequently, people tend to postpone saving more all the time. One way to avoid postponement is by committing yourself now to increase your savings rate at a certain point in the future. For example, you may want to consider arranging that a greater percentage of your monthly salary is automatically transferred to your savings account from a certain point in the future.

Spring Investment Property Form Guide

Size up the investment property market

To make sure you’re backing a winner – and getting the best value – you’ve got to research extensively. Ensure you’re across all the investment property magazines and websites for general property purchase tips and strategies and then do as much investigation into the market/markets you’re exploring as possible. Talk to local real estate agents and local residents and read as much about the local area as you can. The more you know, the more well-informed a purchase you’ll be able to make.

Hunt like a pro

To make the most of your time and find the right property as quickly as possible, take a serious approach to your property pursuit. Plan your Saturdays thoroughly and set up a system for documenting the properties you’ve seen, the agents you’ve met and the sale prices of the properties you’ve been watching.

Get in front with a pre-approval

There’s nothing worse than finding the right property only to miss out because you haven’t got your finances in order. Before you do anything this buying season, speak to us about your borrowing options and to get your pre-approval organised. Having a pre-approval also gives you a clear idea of your price range, so you don’t waste time looking at properties you can’t afford.

Steps To Control Your Financial Future

Learning how to significantly raise money can dramatically change your life. All it takes is commitment toward the power and independence that come from knowledge. This may not be a difficult task for some people to achieve with money; however, it is for others who have no money or source of income. People who are struggling to survive are not concentrating on investments.

The first key to put some extra dollars in your pocket is positive results. All it takes is a commitment to save money. Just as every pound you lose maintains the willpower you need to stay on a diet, every dollar you actually save will reinforce your commitment to financial success. This means understanding your needs to remain financially balanced.

The second key is to understand how financial experts and institutions operate. Keep in mind for which these people work. No stock broker will tell you to take money out of your stocks and invest in real estate. Your banker will never tell you to take money out of your savings account and go see a precious metal dealer, even if he or she foresees a weakened or devalued dollar.

This does not make them a bad person. They have a job to do and are regulated by various government agencies. Their primary job is to keep their institutions afloat and to see things from a professional prospective. Not to go out of their way to give you the big picture. Although they want your business, be aggressive and ask questions. Never forget that banking, securities, real estate, and insurance are among the most competitive industries on earth.

The third and final key is to structure your spending. Before making a major purchase, research the product or service and get a better idea of what the item should cost by setting a fixed amount aside for that purpose. Paying a few extra cents or even dollars now and then should not do much damage, however, convenience or some other benefit of making the purchase then and there warrants paying a little more. Realistically, overpaying on major purchases can mean significant loss of future purchasing power.

You get nothing for the additional money you spend. That money becomes a higher gross profit to merchants, and less for you to invest or to spend on yourself or your family and friends. In order to get in motion and make your money work for you, identify the assets you already have and maximize your return on them. Be prepared to set both short-term and long-term goals and develop plans for achieving them. This type of commitment can reveal where the best opportunities lie during both good and bad times and teach you how to make money no matter what the economic conditions are.

Mistakes Most Investors Make

Improper Asset Allocation

Most investors have their assets dispersed with several advisors and several financial firms. No single advisor knows what the other is doing resulting in an uncoordinated portfolio. One advisor in firm A might be selling the very asset that an advisor in firm B is buying. Unless there is one coach reviewing the entire portfolio, then your money is not coordinated.

Your asset allocation should always reflect your current position in life, your current goals, future, feelings and family characteristics. When your hard earned money is scattered to other advisors and institutions, you alone are left to properly manage your portfolio. Many individuals are not trained to monitor this correctly and consistently. Unfortunately, the overall plan suffers.

Improper Correlation Within Investments, Managers and Funds

Without saying, each investment needs to be excellent on its own. The investment, manager, or mutual fund needs to have a strong track record (I like a ten-year record). You might be able to select quality investments. That’s not the problem. Where the breakdown occurs is knowing how these investments interrelate. This is nearly impossible to track when one advisor is doing one thing, and a different advisor is doing just the opposite.

Let’s think about a recipe analogy. You might have the best ingredients to make your favorite dish. You might even have quality chefs at your beck and call, ready to make this dish for you. If you put all of these chefs in the same kitchen, but don’t let them know what the other is doing, a culinary disaster awaits. You can see that the likelihood of your dish coming out correctly is very low, no matter how good the ingredients were. Same is true with your investment portfolio.

Failure to Monitor the Consolidated Portfolio

You know life is not static. Life is constantly changing. Whether it’s your job, children, the economy, world events, new laws, unplanned expenses (and the list goes on and on), your world constantly moves. Your entire portfolio needs to be dynamic as well. When market forces move, the properly managed portfolio needs to move with it. I am not talking about day-trading, but rebalancing when and where appropriate. Additionally, your goals, future, feelings and family characteristics are changing as well. Every day is either a day closer to your goals, or not.

Having your assets scattered makes it nearly impossible to properly monitor your portfolio based on your changing life. With the technology and tools available, along with the new “open architecture” available at full service financial institutions, you are better off hiring one advisor to help you monitor your portfolio. This trusted advisor will coordinate all of your “eggs” and not put them in the same “basket.” He/she can manage your diversified portfolio to meet your goals, future, feelings and family characteristics and make sure your entire portfolio works in unison to make your dreams come true.

In conclusion, years ago, many firms were limited to the solutions they could individually bring to the client. Many had their own proprietary funds or investments, which may or may not have been in your best interest. Today, full service firms have an “open architecture” and are able to go out into the market place and bring any solution to you that is appropriate. For your strong consideration, only hire an advisor who can go anywhere in the marketplace without limitation!

Automatic Bill Pay

You also need to consider whether you will pay any of your recurring bills via any if your crest cards. If this is the case, you will want to make a note of that on your list if bills that you are creating in step number 1 above.

The tracking System. To complete this step, you will need to create a bill pay tracking sheet that you will set up to record and monitor that all of your bills are in fact being paid automatically via your bill payment plan.

Set up your and record your method of bill pay automation for each of your bills. You will note whether the bill will be paid through a recurring bill pay set up in your online banking system, or via ACH through your creditor, or whether you will have the monthly charge for any of your bills automatically charged to your credit card.

Don’t keep this a secret. Take the time to show your spouse or close family member how your system works and where you keep your bill pay tracking system notebook. This Bill pay tracking system notebook will serve as a road map to loved ones should you ever need them to step in for you if you become ill, etc.

Track your payments. In this all important step you will need to review all of your automated payments to see that they were automatically paid in the correct amount due by the intended date and by the proper bill pay automation method. You will see that this is indeed the lost important step and activity that you will take in your automated payment system.

Reasons to Use a Community Bank

Executives Stay Local

With a national entity, you never know where its executives and managers are located. With a community bank, however, you can rest assured knowing that its executives live locally, are easily accessible and are invested in the community.

Productive Investment

Nationwide institutions set aside a substantial part of their resources for speculative trading on Wall Street. This provides a nice return for them but does nothing for their clients or the local economy. Smaller banks don’t rely on such investments, instead choosing to work to turn client deposits into loans.

Personal Qualification Criteria

Larger institutions that lack local roots usually operate on an impersonal qualification criterium when determining a candidate for a loan. Conversely, community banks are open to taking into account family history and personal character when deciding upon a loan. Individual circumstances actually matter to local banks and they’ll spend time to consider them.

Shorter Wait Times

Looking to receive swift acceptance for a new loan request? Community banks should work in your favor. Since all executives and employees are located locally, they are able to make such decisions with haste. Megabanks are slowed down by their loan approval committees, which are scattered across multiple states.

Control Individual Money Pursuit

  • You have to designate your money efficiently. For the event, I had to replenish myself consistently with water and food throughout the race. I also took care of myself to avoid physical injuries and abrasions while participating in the walk. This is congruent to budgeting because I had to stay conscious of my energy level and refresh my body as necessary. Relating this to financial planning, it’s more efficient to manage your income if you prioritize what’s significant to you, to avoid spending money carelessly on things that don’t bring you happiness. Manage the income your have currently.
  • A plan provides groundwork to build detail steps that point the way to reaching your goal. When I located a system on the Internet for my level, I was relieved. This system supported me, and I didn’t feel alone. This plan showed me what to do. It helped me stay focused and line up detail points in the plan to build up to the actual event. Money management also has thorough steps such as saving money monthly. A savings account’s total can acquire an important purchase or serve as financial security for the unexpected. Overall, in-depth proactive actions regarding money management will basically progress to financial security in the short-term. In the long-term, it can be prosperous retirement security. To summarize if you follow specific steps consistently, you will gain the prize you set out to achieve. Believe in the course of action. My most favorable quote is that it’s not about the destination it’s about the process and how you will grow through it. I prepared for the charitable event for months, and some days were difficult. I also sweated profusely during training in the summer’s humidity. Yet I continued my process. After hours of practice on a weekend day in August, I hurt myself and was forced to stop for one week. During this time, I doubted if I could reach my goal. However, I trusted that everything was in order and maintained my plan as needed. This is similar to personal finances in the sense that when you create a financial plan and stick to it, life sometimes takes you in a different direction. When this occurs it’s important to continue to believe and adjust as necessary. Active money management and using money as a tool to support the life you want to live is the same as preparing to participate in a marathon.
  • Some adults believe that money management is too difficult and that they are the only person that doesn’t know how to do it successfully. I’m here to remove that myth. I have proven that money management is a learned skill if you are open to the teaching and adjust your routines as necessary.

Just as I completed a walk for a worth objective you can certainly gain profitable money management skills. The best part is that when you have reached your financial goals you won’t have blisters to show for your efforts.

 

How To Become A Millionaire

Make a decision to become financially independent

The foremost tip you must follow is to set yourself a clear objective that you are going to be financially independent. Becoming rich is not a matter of luck or an accident. It is normally loaded with lots of hurdles and you must have the passion to overcome those obstacles to obtain your objective.

Comprehend in what manner money works

Most of us would not have studied about investment or finance in our school days. We even would not have considered learning about balancing our checkbook. In order to become an expert in these aspects, you must comprehend and explore what successful rich people had done. You should attend seminars; take part in classes related to those subjects.

Have a predefined objective

Do not set goals which are unattainable. Have some goals with clear vision. For instance, you can fix a particular date, that on that day, you will clear off all your debts and become financially independent. Likewise, make yourself a promise that each month you will be saving a particular amount of money.

Expand your budget

A budget or a financial plan is normally a collection of aspirations & dreams. It is a chart of your destination as how you wish to utilize the money for the benefit of your family. Hence devise a budget with clear goals. Evolve your budget with more financial goals which will ultimately lead to prosperity.

Curtail your expenditure

Reducing your expenditure is a vital strategy which you must follow so as to become financially independent. A majority of the successful millionaires lead their lives less than their means, which you must also pursue.

Start investing and augment your assets

You must begin investing and increase your assets in the form of stocks & buildings. These assets will increase the value your wealth into manifolds over a period of time.