Archives for May 2012

Before You Retire: Are You Building Your Assets?

One of the life's great milestones is retirement. Many of us are saving up for retirement, doing our best to build up a nest egg that can get us through retirement, and provide the lifestyle we want.

If you want to be truly ready for retirement, one of the best things you can do is make sure you have built up plenty of assets. And you want to reduce your liabilities as well.

building assets for retirement

Build Financial Assets

If you are interested in financial freedom, you need to make it a priority to build up your financial assets. This means that you focus on the activities traditionally associated with improving your nest egg. For many people, this means investing. You can use your tax-advantaged retirement plan to maximize your ability to build assets and save for retirement. You can also include other investments, making use of dividend stocks, and the DRIPs that go with them.

Don't forget that passive income can also be a great financial asset. Creating passive income streams can help you so that you aren't so dependent on your investment portfolio performance. The right income streams can be a huge help during retirement, and provide you with assets. Many people also consider their homes assets. If you can add value to your home or other property, that becomes an asset you can tap during retirement.

Build Personal Assets

A successful retirement requires more than just adequate financial assets. You also need to build your personal assets. What will you do while you are retired? You need a purpose to help you get going in the morning, as well as add value to your life. A part-time job, or a hobby, can really help fill the hours and give you a sense of accomplishment. On top of that, you can enhance your retired life with friends and relatives. Develop relationships now that can be carried on in retirement. You'll enjoy social interaction, and find yourself glad to be retired.

Your health is another important personal asset. Take care of yourself now, and you will be glad for it later. Make sure to eat properly, and engage in physical activities. Better health also usually means that you spend less on health care during retirement. If you make a point to develop healthy habits, you will most likely be in better condition to enjoy your retirement years.

Reduce Your Liabilities

While you are building your assets, don't forget to reduce your liabilities. These obligations can drain your wealth, and reduce your ability to retire in comfort. Make efforts to reduce your debt, and to limit your recurring expenses. That way, when you retire, there will be fewer demands on your income, and you will be less worried.

It also helps to reduce your personal liabilities. Distance yourself from negative people who drag you down. Work on eradicating personal habits that are holding you back. Replace bad habits with good habits, and you will feel better about yourself and your situation. When you have fewer financial obligations, and you surround yourself with people and things that uplift you, your retirement is much more likely to be the success you want it to be.

Traveling This Summer? Don’t Forget Your Credit Card!

By Miranda Marquit 1 Comment

When it comes to the debit card vs. credit card vs. cash debate, there often isn't a clear winner. We all have our preferences. However, for maximum security when you travel, it's often a good idea to bring your credit card along. (Yes, debit cards claim to have the same protections, but some issuers have different time limits that need to be met in order to reduce your liability.)

If you plan properly, your credit card can help you protect your money when it comes to lost or stolen wallets. Additionally, you can rack up the rewards points with your credit card. Before you go, though, here are some things to keep in mind:

travel credit cards

Make Sure You Have the Cash Available to Pay Off the Balance

The first thing you need to do is realize that using a credit card for your vacation is not an excuse for reckless spending. While it's true that some transactions are better suited for credit cards, it doesn't mean that you should just pile on the charges. Save up for your vacation, and keep the cash in a high-yield account. When you get back, you can pay off the balance. You avoid interest — and debt — while still enjoying the advantages of earning reward points and other solid advantages. But it only works if you pay off the balance as quickly as possible. Otherwise, the interest you pay more than offsets your rewards, and your summer vacation becomes even more expensive.

Let Your Issuer Know Your Plans

When I went on spring break with my son, we took the credit card, and left the debit card at home. Our adventure also included some time in Las Vegas. From the standpoint of the credit card issuer, it appeared that someone had taken our credit card, and then used it for a Vegas vacation. The issuer called our home phone number (the number on the account), and talked to my husband about the charges. It was actually rather comforting to know that the issuer was staying on top of the situation. But it also illustrated the point that you should let your issuer know what is going on. If you plan to cross state lines and make several purchases, and especially if you plan to take your credit card abroad, you should tell your credit issuer what is going on. I was lucky that my issuer chose to call before denying purchases. If your issuer denies charges and asks questions later, though, it can make for a disappointing vacation.

Keep the Account Information in a Separate Place

As you travel, you want to make sure that you keep the account information in a separate place. Write down the account number, and the customer service number of the credit card issuer, and then lock it up. Keep it in the room safe at your hotel. Or, you can leave it with someone you trust. My husband doesn't like travel, so he often stays home (and does fun things with his friends) when my son and I head out. As a result, all I need to do is make a phone call to him, and he can get the information from a safe place at home. You want that information separate from your credit card, and accessible, so that you can use it quickly in the event that your card is lost or stolen.

Do you have other tips for using your credit card while you travel?

How Scammers Use Personal Information To Fool You

By Miranda Marquit 4 Comments

Thanks to the Internet, and social media profiles, and the fact that an announcement in your local newspaper has probably been digitized and is searchable, chances are that there is a wealth of personal information about you available to scammers. My son has an Internet footprint (thanks to an obituary naming him as a survivor of his great-grandmother), even though I don't use his name on Facebook or in posts, and he's only nine years old.

The fact that personal information about you is available online means that scammers can use it to fool you into thinking that you are being contacted by someone you know, or someone you share an affinity with. Here are some of the ways that a scammer can trick you with the help of information that many people don't think about as being too telling online:

scammers use internet for personal information

Pretend To Be A Buddy

With a quick look at your Facebook profile or Twitter feed, it's possible for a scammer to get the name of a friend or two. And, if you have been lax with your privacy settings, they can get your email address or your cell phone. Someone I know was called on his cell phone (number available online), and was told that he was a friend stuck overseas. It happened that my friend had served a religious mission in this country with the contact in question. “Hey,” the guy said, “I was visiting our old mission, and I was mugged. I don't have any money or documents. Can you wire me some cash so I can get back home?”

It seems convincing at first blush, since you don't immediately think about how all of these clues appear on Facebook, or on some other social media profile or network. Luckily, my friend was suspicious, so he excused himself and called his friend's cell phone. Sure enough, his friend was home — safe and sound. If he had taken the conversation at face value and wired the money, he could have lost thousands of dollars.

A variation of this can also be used to scam grandparents and others. Be on the alert for such sob stories. Double check before you send money, whether your friend wants you to send money to help pay rent, or whether you are worried about them in another country.

Claim To Be An Associate Of An Associate

While it hasn't happened to me yet, I worry that someone will try to scam me by claiming to be an associate of someone I know online. It doesn't take much to figure out that I'm a freelance writer, and it's pretty easy to track down the sites I write for. Using this information, someone could easily claim to have an “opportunity” for me, dropping the name of someone I know online.

You should watch out for this as well. You might be approached by someone who claims they know one of your social media connections. After building a little trust, they could ask for money, or try to get your bank account information for “direct deposit” on a job or money making “opportunity.” Before you believe these stories, make sure to double check with your connections to find out if the introduction was made.

You can't be too careful online. Make sure you pay attention, and if your gut is warning you, heed it!

Have you ever had someone try to scam you using your personal information found online?

TD Ameritrade Review: Highly Rated Discount Brokerage

By Mr. Money 2 Comments

In the past year I've reviewed quite a few online brokers on this site. Many of them were very highly reviewed by customers and industry press alike. One that stands out among the pack, however, even with all the other great brokerages out there is TD Ameritrade .

TD Ameritrade has received accolades from such publications as Barron's, Kiplingers and Smart Money. Their slate of investing tools, research and commitment to customer education is second to none. It's a great place to invest, especially for long term investors.

So today I thought I'd do an in depth TD Ameritrade review, examining the history of this company, talking about the multiple awards they've received, as well as ticking off some of the important details like fees, mobile options and more. So here we go.

History Of TD Ameritrade

TD Ameritrade has a history that goes back to the 1960s when it's investment banking business roots started via a company called Rahel, Knack and Co. From Wikipedia:

The company started as an investment banking business named Rahel, Knack and Co. in the 1960s in Omaha, Nebraska. It was purchased in 1975 by J. Joseph Ricketts, Robert Perelman, and David G. Kellogg, renamed First Omaha Securities, and became one of the first firms to offer negotiated commissions.

Ricketts acquired the company completely from the other two founders in 1981. The company became AmeriTrade Clearing in 1983. In March 1997, Ameritrade became a publicly held company. In 2005 Ameritrade acquired TD Waterhouse and was renamed TD Ameritrade.

TD Ameritrade has grown significantly since those early days inthe 60's and now they have over six million customers in the U.S. If you include international customers it's even higher.

TD Ameritrade is member of SIPC, which means your investments are protected by SIPC insurance up to $500,000 and $100,000 of it can be in cash. This means that you are protected against TD Ameritrade becoming insolvent, although this of course does not mean that you are protected against market losses. Investor beware.

Accolades And Awards

TD Ameritrade has consistently been ranked among the top brokerages in the industry. Among the awards they've received in just the past few years:

Kiplinger named them #1 Best online broker for 2011 and called them “a great value proposition for long-term investors“.
Barron's ranked TD Ameritrade #1 Best site for novices in their 2012 annual review of online stock and option brokers.
Barron's ranked TD Ameritrade #2 Best site for long term investing in their 2012 annual review of online stock and option brokers.
Barron's ranked TD Ameritrade #3 Best site for options traders in their 2012 annual review of online stock and option brokers.
Smart Money recognized them as the #1 discount brokerage firm, tied with one other company in SmartMoney's 2011 review of online brokers
Stockbrokers.com ranked TD Ameritrade #1 overall broker in their 2012 broker review.

So if you're a long term investor like me you can see that they're a great value proposition for us, as well as being rated #1 in many reviews on online brokerages. So you know they're going to be well worth a look.

TD Ameritrade Fees, Commissions And Minimums

One of the most important things when it comes to your retirement accounts are the fees, commissions and minimums on the account. Depending on how much you're paying, it can cut into your gains pretty significantly. TD Ameritrade has no account minimums, no maintenance fees and low costs when it comes to other things you'll need to do.

Stock Trades

TD Ameritrade has a low cost $9.99 stock trade, which is in about average or slightly above average for the industry. Considering all the tools and research you're getting, it's definitely a decent price.

Options Trades

For option trades, they also charge $9.99 per trade, plus 75 cents per contract.

Account Minimums and Fees

There are no monthly minimums, inactivity fees or account maintenance fees with TD Ameritrade

Broker assisted stock trades are $49.99. To see a full schedule of their fees, head on over to their site.

Want to open an account? There is also no minimum account funding level to open a cash account. The minimum is $2,000 to open an options or margin account.

Trading Tools

If you're looking for trading tools, TD Ameritrade has a bunch of great tools that you can access on their site. Their Trade Architect tool-set has custom charts, earnings and probability analysis, watch lists for your favorite stocks, as well as an integrated community to help you out when you've got a question.

TD Ameritrade's Thinkorswim Trading Platform was given the honor of being the number one trading platform by Barron’s, so you know that their tools will be helpful. Add to that the fact that they have award winning mobile trading apps. Apps are available for Blackberry, iPhone, Ipad, Android, or Windows phone. Making trades while not at home has never been easier.

If you need research, TD Ameritrade has reports available from Jaywalk Consensus, Research Team, Market Edge, S&P Columns, and S&P Research. You can also buy Premium reports from a variety of sources for an extra cost if you need more in depth analysis. Most people probably won't need that, but if you do, it's there.

Available Account Types

TD Ameritrade has a variety of investing and saving account types to choose from. You'll have the standard IRA and Roth IRA accounts along with a variety of other savings and specialty accounts.

Standard Accounts: Individual, Joint Tenants, Tenant in Common, Community Property, Tenants by the Entireties, Guardianship or Conservatorship.
Retirement Accounts: Traditional and Roth IRAs, Rollover IRA, SEP IRA, SIMPLE IRA
Education Savings Accounts: 529, Coverdell ESA, UGMA/UTMA.
Specialty Investing Accounts: Trust, Limited Partnership, Partnership, Investment Club, LLC, Sole Proprietorship, Corporate, Non-Incorporated Organization, Pension or Profit Plan for Small Business.

Open An Account With Award Winning TD Ameritrade

A Great Investing Option

TD Ameritrade is one of the first options I would recommend when opening an online brokerage account. They are definitely one of the most awarded and most recommended options by industry press, receiving countless awards for long term investors over the past couple of years. Their fees are low or in line with industry average, and the commissions are more than reasonable. They also have a great slate of trading tools, investing research and mobile apps.

Definitely put them on your short list of places to open your next online brokerage account.

Have you got an account with TD Ameritrade? Tell us about your experience with them in the comments!

Open An Account With TD Ameritrade. Get Details Here.

Is Your Portfolio Balanced?

By Contributor Leave a Comment

If you plan on living a comfortable lifestyle during your retirement years, figuring out a way to save for retirement is essential. Many Americans struggle to find a way to save money for retirement and many of those have trouble making sure that their portfolio is balanced. Without some balance in your portfolio, there's a good chance that you will not be able to get the returns that you need to retire comfortably.

Diversification

When saving for retirement, it is important to make sure that your portfolio is diversified to some degree. Diversification is a concept that deals with putting money into different types of asset classes and different investments so that your portfolio can weather the financial storms that may come along. If you put all of your assets into one particular stock and the company behind that stock goes out of business, you lose your investment capital.

If instead, you bought a few shares of the stock and then spread the rest of your portfolio out over several different types of investments, it would not destroy your portfolio when that company went out of business. By diversifying, you spread the risk of investing out a bit so that you have a better chance of success.

Asset Classes

While it makes sense to diversify your portfolio within the same type of investment, it is also wise to invest in different asset classes as well. For example, instead of putting all of your money into the stock market, you may want to put a portion of your money into stocks and another portion into bonds. You could put your money into many different asset classes such as currencies, commodities, and precious metals.

Funds

When you invest in funds, you get a certain level of diversification built right into the investment. Mutual funds, exchange-traded funds and hedge funds all use diversification strategies to protect their investors. They pool assets together and then use those assets to invest in different securities. By investing in these funds, you can more easily diversify your portfolio without a lot of knowledge of investing.

Getting Help

If you are unsure of how to diversify your portfolio and make sure that it is balance, you may want to get help from a professional. Cavalry Portfolio Services are professionals in the investment industry and can provide you with the assistance you need to ensure that your retirement funds are invested correctly.

How DRIPs Can Help Boost Your Retirement Portfolio

By Miranda Marquit Leave a Comment

There are a number of strategies employed when building up a retirement portfolio. Investing is one of the best ways to build wealth for retirement, as well as to help you do it in a way that beats inflation.

One of the ways you can boost your efforts to build up your nest egg is to use dividend reinvestment plans. These are great ways to automatically increase the number of shares that you own, and that can mean bigger profits down the road, when you are ready to sell.

DRIP to Boost Retirement

What Are DRIPs?

One option for your retirement investment portfolio is to use dividend stocks. You buy shares in companies that pay dividends, and you receive regular payments. Dividends are extra payouts, based on how many shares of the stock you own. If you 100 shares of a company that pays a $0.15 quarterly dividend, that's $15 every quarter, or $60 a year. There are investors that spend years building up a dividend portfolio that becomes large enough that the dividends they receive amount to a decent income stream. Dividend stocks can also work well in retirement portfolios, especially if you take advantage of dividend reinvestment plans (DRIPs).

With DRIPs, instead of receiving a monthly payment, your dividends are actually automatically reinvested in the stock. So, in our example, that $15 you get each quarter is used to buy more shares of the stock. If the stock is $30 a share, you end up 1/2 a share. By the end of the year, assuming the dividend and the share price remains relatively stable, you will have two extra shares. Of course, dividend payouts can change, and stock prices rise and fall. But the idea remains the same: You receive more shares of the stock without paying extra from your own wallet.

Building Up Your Retirement Portfolio

Over time, the extra shares that are automatically added to your retirement portfolio can really start to add up. Even if all you end up with is one extra share a year, over the course of 30 years, that adds up to 30 extra shares. This is just a basic example because the beautiful thing about DRIPs is that you add more shares to your portfolio, and that means that you have more shares that earn dividends, so you end up with more money in dividends, which can be used to buy even more shares. Over time, the effect actually compounds, so you will accelerate your ability to buy more shares, and earn more dividends, building your retirement portfolio.

Later, after a couple of decades, you will have more shares, even though you didn't directly buy the shares. Combined with a dollar cost averaging, DRIPs can be even more powerful in helping you save for retirement. You can end your DRIPs, and you can either use the dividends as a retirement income stream, or you can sell your shares (you'll have more of them) for a bigger profit. With a little careful planning, and by choosing the right dividend investments, you can build up a retirement portfolio that benefits you in the long run, and provides you with what you need to succeed.

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