Archives for 2012

Is Your Portfolio Balanced?

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.

Are You Making Money Decisions While Impaired?

By Miranda Marquit Leave a Comment

When you make a decision, it's important to think clearly. This is especially true when it comes to making money decisions. However, there are a number of ways in which your ability to make sound decisions can be impaired. Whether you are investing, or trying to decide whether or not you want to buy something, you need to watch out: Impaired decision making can cost you thousands of dollars over your lifetime.

Emotions

When your emotions are fully engaged, it's much harder to make a good decision. When you feel really good, it's easy to be careless with your money, buying things you wouldn't normally buy, and feeling as though you can handle more risk. On the flip side, fear can be just as detrimental, encouraging you to sell low after buying high when you are worried about the stock market, or missing out on an opportunity because you were to scared. Before you make a money decision, consider whether or not your emotions are impairing you.

Peer Pressure

There is a lot of pressure to be like others, and to live their lifestyles. Whether you feel like you have to buy the same expensive dinner as your friends when you go out, or whether you think that you need a bigger TV in order to fit in with the neighborhood and impress your family, caving to peer pressure can become expensive. On top of that, it can lead you to make spending decisions that are incompatible with your financial priorities. Then, you are stuck with little money — and the stuff you have might not even be what you want.

Physical Needs

Your physical state can affect your mental state, and your ability to make decisions. Interestingly, feeling hungry can lead you to think that you want other things, too, even if you are considering non-food items. This can mean that you might think that you want to buy something, even if you don't. Also, being hungry might mean that you make decisions quickly so that you can get on to having food and sating your hunger. Impulsive and impaired: Not a recipe for good money decisions.

Other physical conditions can affect your ability to make good decisions as well. When your body is tired, you can be irritable, anxious, and your thinking processes might not be as clear as they should be. Physical pain and discomfort can also impair your decision making abilities.

Decision Fatigue

It's also possible to make progressively worse decisions the more you make. It's called decision fatigue, and researchers think that it changes the way we consider different situations. As you make more decisions, your ability to make good decisions is eroded throughout the day. This means that you might be better off making money decisions earlier in the day, before the petty decisions of the day wear you down.

Before you make a money decision, stop and consider how you might be impaired. Once you recognize that you might be impaired, you can re-evaluate what you are doing, and possibly put off making the decision until you are in a better frame of mind, and better able to make good money decisions.

Finding Alternative Methods Of Getting What You Need

By Miranda Marquit 3 Comments

We live in a society where it's fairly easy to simple to just head over to the store and buying something when we want it. Indeed, we often pay money for things without stopping to think that there might be a better way to acquire them.

You don't have to buy new all the time in order to get a good value. Here are some alternative ways to get what you need:

Buy Used

There are plenty of goods that you can buy used, and it's not just used cars that work well. Head to the local thrift store, or look in the Classifieds or online for items that you want to buy. You might be surprised at the quality of products you can get used. Check out estate sales and garage sales. Many people also have yard sales as they plan to move. This can be a great opportunity to purchase items in good shape. Before you buy new, consider whether or not it makes sense to buy used, and then make those purchases.

In some cases, you might not even have to buy. Craig's List and Freecycle are both full of items that people are getting rid of for free — and the items might even be in good condition.

Barter and Swap

You can also barter and swap for what you need. Since the recession, many people have started bartering and swapping for the things that they need. If you have some old exercise equipment that you don't want, you might be able to exchange for some yard tools that you are looking for.

It's also possible to exchange a service you can provide for other services, or even items. I have exchanged writing and editing services in the past. They key with bartering and swapping, though, is to make sure that you can come to an agreement in which all parties feel as though they are getting a good value. This can be a great way to save money on purchases, and stretch your dollars further.

Rent Items You Won't Need More than Once

In some cases, it makes sense to rent something that you'll only need to use once, or for a specific project. You might even be able to get out of paying money at all if you can borrow it from a neighbor (just make sure that you let your neighbor borrow things when he or she needs them). Renting something for a single use cost less than buying the item, and it prevents you from having another thing to clutter up your home.

Do You Really Even Need It?

Of course, sometimes it's best to take a step back and figure out whether or not you actually need to buy something at all. For many of us, luxuries and wants have been artificially transmuted into necessities. Don't let your wants turn into needs. Instead, examine your motives. Figure out why you are planning to make the purchase, and decide whether it's really something that you need. Can you do without it? If so, you can really save by not buying it all.

3 Roth IRA Rules Benefitting Military Personnel

By Britt Gillette Leave a Comment

If you serve in the military, you have the option to take advantage of early retirement. Service of 20 years or more makes you eligible to retire with a pension of 50% or more of your military pay.

Unfortunately, 50% of military pay most likely isn't going to yield enough money to retire and live the high life. But it does get you a step closer to your retirement goal. If you're wise, you'll supplement your military pension with various forms of investment income, such as income from a rental property and cash flow from your retirement savings.

For members of the military, a number of options exist for socking away extra cash for retirement, and one of your best options is your Roth IRA.

A Roth IRA has always been a good option for your retirement savings, but with passage of The Heroes Earned Retirement Opportunities Act (The HERO Act), your Roth IRA now comes with additional benefits. Below are three Roth IRA provisions which uniquely benefit military personnel:

Roth IRA for Military Members

1) Non-Taxable Combat Pay Contributions

Only certain types of income are eligible as the basis for making a Roth IRA contribution. As a general rule, if you don't have taxable earned income, you can NOT make a Roth IRA contribution.

For years, this restriction on Roth IRA contributions prohibited military personnel from contributing income earned in a tax-free combat zone. But recent changes to the law now allow military members with non-taxable combat pay to use those same funds as the basis for making a Roth IRA contribution.

As a result, it's now possible for those receiving non-taxable combat pay to avoid paying taxes on their money forever.

For example, suppose you're 30 years old, and you received non-taxable combat pay this year. You received that money tax-free. If you contribute it to your Roth IRA, it grows tax-free until the day you take it out. As long as you wait to reach age 59 ½ and you meet the requirements of the Roth IRA 5 year rule, you can then withdraw those funds tax-free as well – meaning you'll never have to pay taxes on those funds!

2) Penalty-Free Qualified Reservist Distributions

If you're a qualified reservist, you can withdraw funds from your Roth IRA early without having to pay the 10% early withdrawal penalty.

So who constitutes a qualified reservist? Any reservist ordered or called to active duty after September 11, 2001 who serves in any one of the following:

Army National Guard
Army Reserve
Naval Reserve
Marine Corps Reserve
Air National Guard
Air Force Reserve
Coast Guard Reserve
Reserve Corps of the Public Health Service

While you can always withdraw your original Roth IRA contributions tax-free and penalty-free at any time and under any circumstance, if you withdraw earnings (capital gains, interest, dividends, etc.) from your Roth IRA prior to reaching age 59 ½ and meeting the requirements of the 5 year rule, you'll likely owe income taxes and a 10% early withdrawal penalty on those withdrawn earnings.

But qualified reservists are exempt from the 10% early withdrawal penalty, meaning they can make early withdrawals of Roth IRA earnings and only be subject to income taxes.

3) Servicemembers' Group Life Insurance (SGLI) Contributions/Rollovers

If you or one of your family members receive a military death gratuity or a Servicemembers' Group Life Insurance (SGLI) payment resulting from a death or injury, you can rollover all or part of the amount you receive into your Roth IRA.

The rollover must occur before the end of the one-year period beginning on the date you received the payment, and the amount of money from your rollover can not exceed the total amount of money you received from the death gratuity or SGLI payment reduced by any amount you contributed to a Coverdell Education Savings Account (ESA) or another Roth IRA.

As an added bonus, any military death gratuity or SGLI payment you contribute to your Roth IRA is disregarded for purposes of the 1-year waiting period restriction on Roth IRA rollovers, so if you have an old 401k or Traditional IRA you want to rollover, you don't have to wait a year before doing so.

Conclusion

A Roth IRA is a powerful investment vehicle for building up your retirement savings. For members of the U.S. military, additional provisions within the law allow you to derive extra benefits from investing in your Roth IRA.

While a defined benefit military pension is a nice reward for your years of service, you don't want to be completely reliant on it during your retirement years. Diversification is good advice, and your Roth IRA is a great place to start.

This is a guest post from Britt at http://www.your-roth-ira.com, the Web’s #1 resource for Roth IRA information.

Capital One 360 Remote Deposits Now Available: Does Your Bank Offer A Remote Deposit App?

By Mr. Money 7 Comments

Yesterday I heard the news that one of my favorite banks, Capital One 360 had just released a new remote deposit app for Iphone and Android devices.

I quickly downloaded the app to take it for a spin. I've got a couple of accounts with Capital One, and knew that I would most likely be using the remote deposit functionality on a regular basis. As a blogger I still get a lot of checks from a wide range of clients, and I need to make deposits more than the average Joe. What better way to deposit them than by quickly snapping a couple of pictures with my smartphone?

Today I thought I'd do a quick look at the Capital One 360 App and it's functionality, and then take a look at what other major banks currently offer some sort of remote deposits.

Capital One 360 Remote Deposit

Capital One 360 had announced that they were going to be releasing a remote deposit feature a while back when they were still with ING, but after they were acquired by Capital One, I'm assuming that the app got pushed to the back burner for a while. Well now it's been released, and it seems to work pretty well.

After you login to the app with your account login information, you'll be given the option to view your accounts, transfer money, find an ATM or deposit a check.

When you click on the “deposit” link, you'll be taken to the screen below, and prompted to “start”.

The app will advise you that the maximum you can deposit is $3,000 per check, and that you should ensure that you have good lighting when you snap your pictures of the check.

After you take and confirm the pictures of the front and back of the check, you'll be asked to confirm the amount of the check and which account you want it deposited in. When you're done you just hit “deposit” and your check will be deposited. Easy peasy!

You can also take a picture of the front and back of your check with a regular digital camera or scanner, and upload them through your Capital One 360 account on the web if you don't have a smartphone.

The Fine Print With Remote Deposits

There is some fine print when you're doing the remote deposit as far as how long it takes for the money to hit your account, what you can deposit, etc.

Capital One will only accept U.S. personal, business, and federal checks.
$3,000 maximum per check.
Checks deposited into Capital One 360 Checking for less than $500 – first $200 is available the next business day, the remaining funds are available after 2 business days.
Checks deposited into Capital One 360 Checking for greater than $500 – first $200 is available the next business day, the remaining funds are available after 5 business days.
Any deposit into a Capital One 360 Savings or Kids Savings Account – funds are available after 5 business days.

So deposits would typically be available between 2-5 business days.

Reasons Remotely Deposited Checks Get Rejected

There are times when a remote deposit might get rejected. Some of the reasons that Capital One gives for that include:

They can’t read your check
The corners of your check are cut off
The image is too light or too dark
Information on the check is unclear
Check is greater than the $3,000 deposit limit
You’re missing a signature on the back

So make sure to get a good snap of the check, and make sure it is for less than $3,000. And don't forget to sign it!

You'll receive an email notifying you when your remote deposit has been accepted. Until you receive it, hang onto that check – just in case!

What Other Banks Offer Remote Deposits?

Not all banks currently offer remote deposits, in fact it's still a relatively new feature in the banking sphere. The more popular banks that I know of that currently have remote deposits available in some form include:

Capital One 360: Capital One just released remote deposits via their app and by scanning in checks via their site.
Ally Bank: Ally doesn't currently have remote deposit via phone app, but you can scan in and deposit checks through their website. (App is in development)
Chase Bank: The Chase Mobile app allows you to deposit checks.
PNC Bank: Their Virtual Wallet app will allow you to deposit checks.
Charles Schwab: The Schwab Mobile Deposit app allows for remote check deposits.
USAA Bank: USAA Deposit@Home app allows remote deposits.

What If Your Bank Doesn't Offer Remote Deposit?

If your bank doesn't currently offer remote deposits, there is something else you can do. If you have a PayPal account, you can download the PayPal app which also has a remote deposit feature as well.

Just make sure your bank account is linked to your PayPal account (which it probably already is), scan the check in and then transfer the money to your bank account when it becomes available. Doing it this way will mean a delay of 5-10 days most likely, but if it's your only option, it is a decent option.

Do you currently use remote deposit with your bank account? Have you considered signing up for an account because of this feature? Tell us your thoughts.

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