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Articles by Miranda Marquit

3 Tips For Choosing A Financial Adviser

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When it comes to managing your money, sometimes it makes sense to get a little help. The right financial adviser can help you create the right financial plan for you, and provide you with solid budget suggestions.

A good financial adviser can help you figure out what you need to do next to keep your finances successful, from recommending a retirement savings program to helping you find the right investments for your income portfolio. Choosing a financial adviser can be a little bit trickier, though. Put some thought into it, and use the following 3 tips to help you make your decision:

1. Fiduciary Responsibility

choosing a financial plannerOne of the best things you can do is look for someone who is required to show fiduciary responsibility. This means that the financial adviser has to put your financial well being ahead of other considerations — like his or her potential commissions. While even a fiduciary might not husband your money as well as you might like, you can still trust this type of adviser a little more than someone who can put his or her own financial interest ahead of your own. Consider using a Registered Investment Advisor, or some other certified financial planning professional who must act as a fiduciary.

2. Reasonable Fees

Another consideration is the fees charged. There are a few options when you are choosing a financial adviser. Some advisers charge a flat hourly fee, or charge a flat fee for certain planning packages. Others charge you a percentage of the assets you have under management. Still others make money on commissions from products that they get you to use.

Carefully consider which fee structure works best for your situation. You should also look for those with more reasonable fees. Remember that there might be management fees and transaction fees. Research fees as closely as you can, and look for an adviser that charges reasonable fees, and that recommends products with relatively low fees.

3. Personality

You also need to be able to trust your financial adviser. Consider the personality involved. Often it makes sense to sit down and have an “interview” with a potential investment adviser. What are your first impressions? Do you feel comfortable with this adviser? Do you think that he or she knows the subject, and understands your situation?

Consider checking references of other clients. You can also check up on licenses and certifications. You are sharing personal financial information with your financial adviser, and allowing yourself to be guided. You really do need to be comfortable with him or her — and with the situation.

However, you should also consider that you might not want to choose someone who is a friend or relative. Even though you might trust him or her, you might not want to deal with the social ramifications of working with someone who has such a personal relationship with you outside the professional relationship. Working with someone you know means that you might not feel comfortable switching if you feel your finances demand it. It's often a good idea to keep these relationships separate.

Keeping Sight Of Your Retirement Goals

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As humans, we often see things in the now. Sometimes, it can be hard to look beyond what is happening right now and see the big picture of the future. It can be easy to forget long-term benefits as we look at short-term possibilities.

However, if you want to reach your goal of a successful retirement, you need to remember the long-term, and spend some time focusing on the big picture things.

keeping sight retirement goals

Don't Let Current Worry Push You into Poor Financial Decisions

One of the worst things you can do is let short-term worries push you into making poor financial decisions. It's easy to panic when the stock market drops. Everyone else is freaking out and selling. Before you join the herd, though, think about the long-term. Over time, the stock market tends to gain. So, if you have well-chosen investments in your account — investments with solid fundamentals, or index funds that track the market — you are more likely to weather the downturns.

Instead of panicking and selling, consider whether or not you should stay the course. Chances are, especially if retirement is still 15 to 20 years away, that your portfolio will recover in the long run. If you panic and sell, you could easily end up missing out on some of the opportunities that come with buying more at a discount, and reaping the benefits later.

Be Wary of Using Your Retirement Account as an Emergency Fund

When times are tough, it can be tempting to ease the current situation with the help of a little extra infusion from the retirement account. It is possible to borrow money from your 401k, and even use your Roth IRA as an emergency fund, without incurring tax penalties. However, while this might be a short-term solution to your current worries, you might not benefit in the long run.

Having that money taken out of your account results in an opportunity cost. You are no longer earning interest on the money, and there is no getting that time back. With the 401k loan, you will probably pay it back (with interest) in order to avoid the tax penalty. However, when you withdraw contributions from your Roth IRA, it's difficult to find the will to repay the money, since there are no penalties for withdrawing your contributions.

Remind Yourself of the End Result

Make it a point to remind yourself of your end result. Sometimes, when we are in the moment, and concerned about what's next, we make snap judgments that put the future at risk. Instead, take a step back, breathe deep, and consider your alternatives. While you might have to turn to your retirement funds at some point in order to stave off a true financial emergency, consider other options first. Can you make more money? Are there ways to cut your expenses?

Really think about how your current actions can affect your future. Realize that there is a very real chance that you end up with serious problems related to your retirement finances if you allow what's happening now to throw you off your long-term goals. Remember the big picture, and take steps to ensure that what you do now will keep you on track.

3 Helpful Tips For Choosing A 529 College Savings Plan

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One of the best ways to build wealth over time is to invest. Investing can help you amass wealth at a faster rate than you would likely be able to otherwise. This holds true whether you are saving for retirement, or whether you are saving up for college.

If you are looking for a way to increase your chances of helping your child pay for college, you can use a 529 college savings plan to set money aside. While there is the risk of loss, there is also the potential to build up some wealth — especially if you start relatively early.

Five years ago, I opened a 529 account for my 10-year-old son. I contribute monthly, and it has been gratifying to watch the account grow over time. By the time he uses the account, when he is 20, there will be 15 years worth of savings and growing with the power of compound interest.

As you consider your 529 plan options, here are three things to keep in mind:

tips 529 college savings

1. Choose a Plan that is Versatile

Look for a plan that is fairly versatile in terms of where you can use the money. Most 529 plans are set up by states. However, just because a 529 college savings plan is set up by a particular state, it doesn't meant that you have to attend school in that state. Many plans allow you to contribute if you live out of state, and you can also use the money to pay expenses at thousands of educational institutions across the country.

Make sure that the plan you choose is versatile, so that your child has more options when it comes to deciding which school to attend. Look for a versatile plan, with fewer restrictions.

2. Look for a Variety of Investment Options

One of the reasons I like the 529 plan I use for my son is that there were a number of investment options to choose from. The plan offered a number of index funds and ETFs. Some plans only offer a few investment options, so you are limited. This can be very disappointing, especially if there is a particular fund that you are interested in. Choose a 529 plan with a variety of investment options that fit your needs. Simple investments, like index funds and ETFs, can give you a big advantage, while offering a degree of diversity, and a lower risk. Don't choose a plan that limits you to investments that you aren't thrilled about.

3. Avoid Plans with High Fees

Just as costs are coming down for various funds, it's also possible to find 529 plans with low fees. Compare the fees charged by different plans. The higher the fees, the lower your real returns. While you can't completely avoid fees, you can reduce what you pay in fees. You can save on fees when you choose low-cost ETFs and index funds for your 529 plan. Before you commit, look at the fee schedule so that you understand what you will pay for the privilege of investing.

Chances are that you can find a 529 plan that offers you versatility, various investment options, and low fees. Many states are trying to make their plans attractive to investors, and that is to your advantage. Do your homework, and you will be more likely to find a solid 529 for your child's college education money.

4 Savvy Tips For Better Organizing Your Financial Life

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Things seem to run smoother when you are better organized. This is true whether you are planning a birthday party for a friend, a wedding, or your finances. When your financial life is organized, you are more likely to stay on track — and less likely to be wasting money.

If you are ready to take charge of your financial life, streamlining it for better effect, here are 4 actions you can take:

1. Consolidate Your Accounts

It can be difficult to keep track of several accounts in various places. Recently, I decided to finally consolidate my Roth IRA accounts. I transferred the amount I kept in one Roth IRA (with high mutual fund fees) to another. It makes sense to consolidate accounts when possible in many cases. Having your investments spread out can dilute their effectiveness.

Consolidation can also make sense for your other accounts. I find it easier to manage my finances when I have my checking, business checking, and personal line of credit with one bank. (I did go elsewhere for savings, though, because I wanted a higher yield.) Think about how much work it is to manage your accounts across several institutions, and then change things up to better reflect your needs.

Don't stop with bank accounts, though. You can also consolidate your insurance. Many insurance companies will offer you a discount if you purchase auto insurance, homeowners (or renters) insurance, and life insurance from the same company. Bundle your insurance, consolidating to one company, can save you money, and make it easier for you to manage your insurance.

2. Automate Your Finances

Another great way to organize your financial life and streamline your money is to automate your finances. Match up your income with your bills, and arrange to have what bills you can automatically deducted. You can even automate your investments, retirement account contributions, and emergency fund savings.

You do need to be careful when you automate your finances, though. Double-check that your money comes out after your paycheck is firmly deposited. That way, you will be able to ensure that you have the funds to take care of everything. One of the worst things is to miscalculate when automating your finances and find that you are racking up huge fees.

3. Ditch Your Smaller Holdings

Instead of holding on to small stock, sell and reinvest elsewhere. Over time, thanks to losses, company splits, and other reasons, you might find that you have several small holdings just sitting there. Re-evaluate your need for them. Then, consider reinvesting the proceeds in a low-cost fund or ETF. Your money will work more efficiently for you.

You will have to determine whether or not you owe capital gains, though. If you sell at a loss, you can deduct your investment losses against your income. Get a tax deduction, and beef up your more effective investments at the same time.

4. Reduce Your Credit Cards

While it's possible to manage several credit cards without getting into debt, you could probably be more efficient. Evaluate your credit situation, and your rewards cards. Choose cards that offer rewards programs that are generous, and that you can use. Consider asking for credit limit increases on credit cards you plan to keep if you are worried about the reduction in credit availability. That way, you can cancel without as big an impact. Focus on one to three cards that will really give you a solid benefit.

Take a personal day to fix your finances, streamlining and organizing. Then, it will be easier to maintain your finances going forward.

Make Saving Easier With Targeted Goals

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One of the ways that you can make saving easier for yourself is to set goals. When you have a target, it can be easier to stay motivated. Besides, it's almost always easier to see how far you've come if you actually know where you are going. Plus, knowing what you are working for can help you stay motivated.

How Targeted Savings Goals Work

Setting targeted savings goals is fairly straightforward. You decide what you want to save for, and then make a plan to achieve your version of success. This helps you break down your goals, and helps you create plans to help ensure that the most important items in your life are taken care of.

savings goals

Think about a goal that you want to reach. Do you want six months of expenses in your emergency fund? Do you want to reach the point where you are maxing out your retirement account contributions? Are you planning a family vacation? Do you want to re-do the flooring in your home? All of these represent savings targets that you can use. Think about how much money you need to reach your goal, and then determine your time frame. Do the math to see how much money needs to go in the pot to reach your goals.

If you want to save $2,000 in six months for a family vacation, you need to save $333.33 a month. This approach really helps you break down your needs. You can look for ways to cut out unnecessary expenses to help you reach your goal, or you can earn more money to help you achieve your ends.

The idea is to break down all of your savings goals down into manageable chunks. In some cases, you can even be contributing to different goals at once. As long as you stay organized, and you are sure about what you want to accomplish, you should be able to use various targeted accounts to help you save for specific goals.

Setting Up Different Targeted Funds

If you really want to take things to the next level, you can also use different funds to help you reach various goals. This works especially well for those who don't have specific goals in mind all the time, but still have a general idea of how they would like to use their money. If you want to be able to eat out regularly, or participate in other entertainment activities, it's possible to start up a fund for that purpose. This concept also works in terms of cars. You know you might need to pay for repairs, or for a new car, so adding to the car fund provides a target for your money, even though it isn't exactly specific. Add money to the fund regularly, and see that it is invested in assets that offer some sort of return that beats a savings account yield. Then, your money grows, while at the same time providing you with something that you can draw on when you want.

Think about how you can improve your lifestyle by planning ahead for splurges. In many cases, even if you don't have a specific goal to save for, saving can still be of benefit. You never know when you will need the money, and it can be available for you in the event that you decide that splurging might be in order.

How To Check Your Credit Report For Errors — And Get Mistakes Fixed

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Your credit history matters a great deal. From loan rates to getting some jobs, what's in your credit report can make a difference in your finances and in your life. If there is a mistake on your credit history, you could be impacted rather surprisingly. An erroneous negative item can bring down your score, and that means you could pay more in interest when you get a loan, or that you could end up losing out on some other financial opportunity, such as a better insurance rate.

Regularly check your credit report for errors, and fix mistakes that you find. That way, you stand a better chance of having an accurate score that lenders are impressed with.

Check Your Credit Report Regularly

You can get access to your free credit report at AnnualCreditReport.com. You are entitled to one free report each year from each of the three major credit bureaus, as well as reports from some of the other credit reporting agencies. Get your free report, and check it over. Look for discrepancies in your payment history (very important since this is the weightiest factor), as well as other inaccuracies, such as who closed an account, and personal information. Also, make sure that all of the loans reported are actually loans you applied for. An unexpected loan that you didn't apply for could be a tip off that your identity has been stolen.

Fix Mistakes on Your Credit Report

If you find mistakes on your credit report, you need to fix them. Negative items can impact your score to an alarming degree — especially if there are multiple mistakes, or if the mistake is a major one. Here are the steps you need to take to fix a mistake on your credit report:

  1. Contact the credit bureau in writing: Write a letter to the credit bureau, including your personal information, and the information that is inaccurate. Include a statement about what the accurate information should be. Some consumers like to enclose a copy of their report, with the offending item(s) circled in order to make it clear. If you have documentation, enclose copies (never originals) to back up your claim. Send the letter via certified mail so you can verify that the credit bureau received it.
  2. Contact the reporting creditor: If you want to speed things along, you can do so by contacting the creditor and talking about the mistake. You can contact by phone, but sending a letter, using the same info you sent to the credit reporting agency, can help, too.
  3. Wait for word: By law, credit reporting agencies have to investigate your dispute in a reasonable time period. Usually, the decision is made within 30 days. Wait to find out the outcome of the situation.
  4. Take action: If you don't agree with the action, you can appeal the decision. Or, you are allowed to include a note of explanation on your credit file so that others can see your side of the story. If the credit bureau says that you are right, and agrees to change the information, double check after a couple of weeks to make sure that your credit report is now accurate.

Don't let mistakes remain in your credit report. You want to make sure that everything is properly sorted before you apply for major loans. Otherwise, you might find that you have problems with your financial transactions. Check your credit report, and fix errors, and you'll have a better chance at smooth sailing.