Tag Archives: savings & investment

Preparing for Emergency Expenses

Posted on May 18, 2012 by admin

Just like windfalls will come, and a person’s financial life will feel easy, emergency expenses will come as well.  Nobody likes it when sudden, unexpected expenses arise.  They are never planned, and they are always a source of anxiety and worry.  Regardless of how well a person manages their finances, at some point, they will experience an “emergency” that will require them to spend extra money.  Depending on how well a person is prepared, these can either be inconvenient, or devastating. While the majority of cash downfalls are unexpected, one can still prepare for them.  It is almost certain that at some point in a person’s life they will experience an accident.  They might total their car, incur high medical expenses, or have some other event that costs them a lot of money.  Nobody wants it to happen, but by preparing for the unexpected, the individual can lessen the blow. Preparing is as simple as starting an emergency fund .  This fund should be kept in a savings or money market account, and it should have at least six months living expenses (many experts now say 2 years is actually better).  With each paycheck where there is no big, unexpected cash outlay, the individual just needs to save as much as they can.  Before the emergency strikes, make sure to have a plan on what to do. That plan should include using the emergency fund first.  This is why it exists.  As it gets close to being depleted it would be best to talk with a debt consultant.  For medical bills, most clinics will offer their consulting services free of charge.  For other bills, seeking out a debt consulting company with a good reputation is imperative.  Well before the emergency fund has even run dry the entire plan on how to get out of the debt and back into the positive should be ready and in place.  The very last resort anyone should consider is bankruptcy . Everyone dreams about, and often expects cash windfalls.  Every so often it feels good to find a $20 bill or winning the lottery. It is much more exciting to dream about the home on the lake, the fancy cars, and the personal butler.  Nobody ever expects, and subsequently many fail to plan for, a financial emergency.  The reality is that most people will have emergency expenses that deplete their savings rather than a big win that increases it.  For those who have taken the time to make a plan, and implement an emergency fund, the battle against the downfall will be much easier.  For those who fail to even consider it, they will have a much longer uphill battle to get back to a positive net worth. Continue reading →

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How to Handle Inheritances

Posted on May 12, 2012 by admin

At some point in everyone’s life they will have a relative that passes away.  When this happens they are often given something that their loved one once owned.  It could be as small as their favorite watch, or as large as the family fortune.  In any event, an inheritance comes along to many people.  Most of the time you expect it, but there are times when the amount that comes in is unexpected and you need to consider carefully how to handle the inheritance.  While the psychology of how the individual feels at the sudden influx of money is similar to that of other windfalls, they are often treated very differently. When a person has a wealthy relative, they usually expect to see some of that wealth come their way at the passing of the relative.  And long before it even happens, the individual needs to think about what they will be doing with the inheritance to honor their loved ones by not squandering their hard earned money. Many other windfalls are sudden and unexpected.  Often they are small (rebates, tax refunds, small gambling winnings, etc.).  If they are spent on frivolous items it is not a real big deal since there was not much to begin with, and often the money was won instead of earned or received as a gift.   Inheritances, on the other hand, are the result of someone else’s hard work.  Psychologically the heir feels they should use the money wisely.  In the end, the result should be the same as with all money that comes in.  It should be planned before it is even seen, and something as simple as 50% to savings, 25% to investing, and 25% on something spent now should be followed. For some the inheritance is too important to them to simply use on themselves.  Many people store the money away in savings or investments, and do not even use it.  They feel they do not deserve the money, and instead pass it along to their heirs.  There really is no wrong way to treat the inheritance money.  Keeping it in the family, passing it to heirs, or treating yourself to something nice are all acceptable.  The one caution is that if the amount is large, it can have the same effect as lottery winnings .  The recipient suddenly feels they have no care in the world, and they end up blowing all of it and bankrupting themselves. These large influxes are important to our psychology as humans.  What is even more important is the satisfaction that the money has not been wasted, and we have been able to use it wisely.  Inheritances are often very personal, unlike windfalls such as gambling winnings.  They are often treated with much more respect, and not blown. By making a plan on exactly how to handle inheritances, long before it is even seen, the recipient will help that to make sure the money is used as wisely as possible. Continue reading →

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Adding to Your Portfolio: Emerging Markets Investing

Posted on May 11, 2012 by admin

One of the more common asset classes among those who have a higher risk tolerance is emerging markets investing.  This sector is made up of businesses that are rapidly growing in countries that are now becoming industrialized.  It captures two of the areas that often see explosive growth: new businesses and new markets.  Emerging markets are primarily foreign and overseas, and often they are called developing markets. The biggest reason people invest in companies from emerging, or developing, markets is the potential for explosive growth .  While all new companies, as long as they do well, tend to grow rapidly before leveling off, putting them in developing markets will cause them to grow even faster. While many people with a high risk tolerance will benefit from having some exposure to emerging markets, most will not want to have their entire portfolio wrapped up in them.  These stocks and funds offer a great way to diversify to capture gains found throughout the world.  Diversification is the best way to negate risk in a portfolio, so having some money in each asset class will help the investor to see higher returns and less volatility. Nearly all of the emerging markets are in areas of the world where the standard of living is much less than that of the United States.  A good percentage of the people that live in these areas live in poverty.  When a person invests in the companies, they are helping to expand that economy and ultimately start to bring them out of poverty. The drawback to emerging markets investing is that the investor is taking on much more risk than if he or she were to invest domestically.   New companies themselves carry a lot of risk of failing within their first few years.  Add that to the fact that they are in locations where the culture may look down upon their business, and the risk of losing money increases dramatically.  Many of these countries also have governments that are not fully established, and they are wrought with corruption.  If a company is not in line with the government’s ideals, they may put too much pressure on them until the company folds.  The risk comes in many different forms, but for the investor it ultimately boils down to risk vs. reward .  The more risk, the higher the potential reward. Emerging markets investing can be a source of growth in a portfolio.  They can also be a source of great losses.  So the individual investor needs to understand that they will not always see outstanding double digit returns.  That is not to say that these investments are not any good.  They are important part of any portfolio.  The key is to find good companies that have a good business model, and invest in those.  For mutual fund investors Morningstar.com will point you in the right direction to a good high quality fund.  Emerging Markets is a great way to capture growth. Continue reading →

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Washington DC CD Rates Survey for the week May 07, 2012

Posted on May 11, 2012 by admin

According to a recent Primerates.com survey conducted on May 07, 2012 of Washington DC CD rates offered by the area banks & credit unions, Washington DC’s largest financial institutions offered short-term savers 6-month CD’s with rates between 0.05% at Wells Fargo ( www.wellsfargo.com ), and 0.30% at Bank of America ( www.bankofamerica.com ). Meanwhile, Suntrust Bank ( www.suntrust.com ) was providing the highest 2-year and 5-year CD’s, with rates of 0.65% and 1.29% respectively. CD’s are typically insured up to $250,000 by the FDIC. As CD’s mature, banks typically re-price the rates on deposits. Make sure that you track when your CD’s mature so that you can roll them over into new CD’s and keep your money working as hard as possible.   Banks 6 month 1 year 2 year 3 year 4 year 5 year Capital One 0.10% 0.15% 0.20% 0.45% 0.65% 0.75% Wells Fargo 0.05% 0.05% 0.55% 0.90% 1.15% 1.15% Bank of America 0.30% 0.35% 0.40% 0.60% 0.85% 1.10% Suntrust Bank 0.25% 0.40% 0.65% 1.00% NA 1.29% PNC Bank National 0.10% 0.20% 0.35% 0.40% 0.75% 1.00% Citibank 0.15% 0.25% 0.30% 0.50% 0.75% 1.00% Manufacturers & Traders Trust 0.15% 0.25% 0.25% 0.40% NA NA HSBC Bank 0.10% 0.10% 0.20% 0.20% 0.60% 0.60% Virginia Commerce Bank 0.20% 0.35% 0.50% 0.75% 1.00% 1.24%   Rates from banks, thrifts and credit union were posted on their websites on the date indicated for a $10,000 certificates of deposit meeting the specific holding requirement. Data is believed accurate at time of collection, can change without notice, and will vary. Contact a specific institution for current rates. Continue reading →

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NYC CD Rates Survey for the week May 07, 2012

Posted on May 11, 2012 by admin

According to a recent Primerates.com survey conducted on May 07, 2012 of NYC CD rates offered by the area banks & credit unions, NYC’s largest financial institutions offered short-term savers 6-month CD’s with rates between 0.05% at Wells Fargo ( www.wellsfargo.com ), and 0.50% at Hudson City ( www.hcsbonline.com ). Hudson City ( www.hcsbonline.com ) also offered the highest 2-year CD, with a rate of 1.08%, while the highest 5-year CD was offered by TD Bank ( www.tdbank.com ), with a rate of 1.74%. CD’s are typically insured up to $250,000 by the FDIC. As CD’s mature, banks typically re-price the rates on deposits. Make sure that you track when your CD’s mature so that you can roll them over into new CD’s and keep your money working as hard as possible.   Banks 6 month 1 year 2 year 3 year 4 year 5 year JP Morgan Chase 0.20% 0.25% 0.40% 0.50% 0.50% 1.00% Bank of America 0.30% 0.35% 0.40% 0.60% 0.85% 1.10% Citibank 0.15% 0.25% 0.30% 0.50% 0.75% 1.00% HSBC 0.10% 0.10% 0.20% 0.20% 0.60% 0.60% Wells Fargo 0.05% 0.05% 0.55% 0.90% 1.15% 1.15% Capital One 0.10% 0.15% 0.20% 0.45% 0.65% 0.75% TD Bank NA 0.70% 0.80% 0.90% 1.00% 1.74% Hudson City 0.50% 0.74% 1.08% 1.27% 1.47% 1.71% Sovereign Bank NA 0.15% 0.20% 0.30% NA NA PNC Bank 0.10% 0.20% 0.35% 0.40% 0.75% 1.00%   Rates from banks, thrifts and credit union were posted on their websites on the date indicated for a $10,000 certificates of deposit meeting the specific holding requirement. Data is believed accurate at time of collection, can change without notice, and will vary. Contact a specific institution for current rates. Continue reading →

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Adding Socially Responsible Investments to Your Portfolio

Posted on May 7, 2012 by admin

More people are considering making socially responsible investments as a way to do well and do good at the same time.  This method of investing involves putting money into companies that have a proven track record of sustainability and ethics.  They are companies that look out for their employees, care for the environment, and have it written into their business plan that they desire more than just profits, but to see people prosper. Companies that are looking out for their fellow humans and the planet they live on strike a chord with many people.  People want to support those companies, so they buy stocks and bonds from them.  In doing so they encourage the companies to continue to expand and they encourage other companies to get in on the game.  Perhaps the most compelling reason the investor chooses to put their money into these companies is that it makes them feel good. There are some great benefits that come from socially responsible investing.  In the end the company benefits everyone, not just their own bottom line.  That means even those people who do not invest or work for the company get a benefit.  The planet stays healthier if the company has a green commitment.  This means future generations will have less pollution to worry about.  And the investor benefits by seeing their portfolio grow (these investments still carry risk) when the company does well.  They do not have to sacrifice their return in order to be responsible. The biggest drawback of choosing socially responsible investments is that there are significantly fewer options.  Since this is a relatively new area, there are not too many companies that are on board with it yet.  When the investor does find a company that has a great socially responsible business plan, they may find that the company focuses too much on it, and not enough on profits.  This will cause the investor to lose money, and ultimately they may take their money somewhere else. The decision to make socially responsible investments is a personal choice.  There is no wrong way to invest, and ultimately the purpose is to watch your portfolio grow.  For those who are interested, they can find stock or mutual funds that are from companies that match their values.  A little research beforehand on how financially fit the company is, what they have done in the past, and what their goals are in the future goes a long way to smart investing.  Regardless of who the investor is, socially responsible investments can make up part of any portfolio. Continue reading →

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Adding to Your Portfolio: Domestic Investments

Posted on May 6, 2012 by admin

The most popular investments are classified as domestic investments .  Most people think of the U.S. stock market when they think of investing, and on the U.S. Market are all companies that are based here in the United States.  While there are many other ways to invest, domestic markets are a great place for those who want to take more risk than being in bonds, but less risk than being invested in foreign markets.  Domestic investments can be sub-classified as small, mid, and large-cap, and as the size of the company goes up, the less risk it holds. There is a reason that the domestic market is so popular.  There are often good returns, without as much risk as investing in overseas markets.  While investing overseas carries added risks of cultural risk and corruption risk, the domestic markets keep these to a minimum.  This way they can provide more stable investments. People often invest in local markets because they are more familiar with the companies that provide them goods and services.  By investing in domestic markets they are keeping more of the money in the United States.  This means for a better U.S.-based firms that require capital, as well as investment returns for the individual investors. Blue chip stocks offer a more stable investment for those who wish to remain aggressive.  They will often pay dividends, and are not quite as likely to fail as smaller companies, or foreign companies.  Perhaps most importantly, to the psyche of the investor, is brand recognition.  People are more likely to invest in a company they know, than one they have never heard of. The downside to investing in domestic markets is that all the companies are located in one country.  This means that if the country has a recession, the investments will most likely go down.  Spreading money out into different markets can help to negate some of that risk.  While stability may be one of the benefits of investing in domestic markets, it is also one of the drawbacks.  The risk/return tradeoff shows that taking more risk will often result in greater returns.  So investing in safe domestic companies will often result in smaller rewards. Domestic investments are an important part of anybody’s portfolio.  The dividends will help to stabilize the returns, and the safety of the companies will negate a lot of the risk.  Those who want to be very aggressive, should keep some of these investments in their portfolio, but spread the money around too.  Finding good solid companies or mutual funds will help the investor make wise decisions.  Reinvesting the dividends will allow them to see maximum growth in companies located right here in the United States. Continue reading →

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Pittsburgh CD Rates Survey for the week April 30, 2012

Posted on May 4, 2012 by admin

According to a recent Primerates.com survey conducted on April 30, 2012 of Pittsburgh CD rates offered by the area banks & credit unions, Pittsburgh’s largest financial institutions offered short-term savers 6 month CD’s between rates of 0.12% at Fidelity Savings Bank ( www.fidelitybank-pa.com ), and 0.15% at Dollar Bank ( www.dollarbank.com ). Washington Financial Bank ( www.mywashingtonfinancial.com ) has the highest 2-year and 5-year CD rates, with 0.80% CD and 1.60% CD respectively. CD’s are typically insured up to $250,000 by the FDIC. As CD’s mature, banks typically re-price the rates on deposits. Make sure that you track when your CD’s mature so that you can roll them over into new CD’s and keep your money working as hard as possible.   Banks 6 month 1 year 2 year 3 year 4 year 5 year Citizens Bank of Pennsylvania NA NA 0.40% NA NA 1.00% Dollar Bank 0.15% 0.25% 0.50% 0.65% 1.00% 1.10% Northwest Savings Bank NA 0.30% 0.45% 0.60% 0.95% 1.15% Washington Financial Bank NA 0.40% 0.80% 1.05% 1.35% 1.60% Fidelity Savings Bank 0.12% 0.21% 0.41% 0.56% 0.91% 1.15%   Rates from banks, thrifts and credit union were posted on their websites on the date indicated for a $10,000 certificates of deposit meeting the specific holding requirement. Data is believed accurate at time of collection, can change without notice, and will vary. Contact a specific institution for current rates. Continue reading →

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San Antonio CD Rates Survey for the week April 30, 2012

Posted on May 4, 2012 by admin

According to a recent Primerates.com survey conducted on April 30, 2012 of San Antonio CD rates offered by the area banks & credit unions, San Antonio’s largest financial institutions offered short-term savers 6 month CD’s between rates of 0.05% at Wells Fargo ( www.wellsfargo.com ) and 0.30% at Bank of America ( www.bankofamerica.com ). USAA Federal ( www.usaa.com ) offered the highest 2-year CD, with rate of 1.10% while Compass Bank ( www.bbvacompass.com ) offered the highest 5-year CD, with a rate of 1.75%. CD’s are typically insured up to $250,000 by the FDIC. As CD’s mature, banks typically re-price the rates on deposits. Make sure that you track when your CD’s mature so that you can roll them over into new CD’s and keep your money working as hard as possible.   Banks 6 month 1 year 2 year 3 year 4 year 5 year USAA Federal NA 0.86% 1.10% 1.31% 1.50% 1.66% The Frost National Bank 0.20% 0.25% 0.40% NA NA NA Bank of America 0.30% 0.35% 0.40% 0.60% 0.85% 1.11% Wells Fargo 0.05% 0.05% 0.33% NA NA NA Broadway National Bank 0.20% 0.25% 0.70% 0.80% 1.00% 1.26% Compass Bank NA 0.50% 1.00% NA 1.25% 1.75% Texas Capital Bank 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%   Rates from banks, thrifts and credit union were posted on their websites on the date indicated for a $10,000 certificates of deposit meeting the specific holding requirement. Data is believed accurate at time of collection, can change without notice, and will vary. Contact a specific institution for current rates. Continue reading →

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Riverside, CA CD Rates Survey for the week April 30, 2012

Posted on May 3, 2012 by admin

According to a recent Primerates.com survey conducted on April 30, 2012 of Riverside, CA CD rates offered by the area banks & credit unions, Riverside’s largest financial institutions offered short-term savers 6 month CD’s between rates of 0.05% Wells Fargo ( www.wellsfargo.com ) and 0.70% at Onewest Bank ( www.owb.com ). Compass Bank ( www.bbvacompass.com ) has the highest 2-year and 5-year CD rates, with 1.00% CD and 1.75% CD respectively. CD’s are typically insured up to $250,000 by the FDIC. As CD’s mature, banks typically re-price the rates on deposits. Make sure that you track when your CD’s mature so that you can roll them over into new CD’s and keep your money working as hard as possible.   Banks 6 month 1 year 2 year 3 year 4 year 5 year Bank of America 0.30% 0.35% 0.40% 0.60% 0.85% 1.11% Wells Fargo 0.05% 0.05% 0.33% NA NA NA Union Bank 0.20% 0.30% 0.50% 0.60% 1.01% 1.50% Citibank 0.15% 0.25% 0.30% 0.50% 0.75% 1.01% Provident Savings Bank 0.15% 0.20% 0.50% 0.80% 0.90% 1.25% Compass Bank NA 0.50% 1.00% NA 1.25% 1.75% Onewest Bank 0.70% 0.85% 1.00% 1.15% 1.25% 1.55%   Rates from banks, thrifts and credit union were posted on their websites on the date indicated for a $10,000 certificates of deposit meeting the specific holding requirement. Data is believed accurate at time of collection, can change without notice, and will vary. Contact a specific institution for current rates. Continue reading →

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