Planning For Retirement is Very Important
Planning for retirement is very important whether you intend to retire in twenty years or right now. It is a great idea to start saving as early as possible. Having financial problems when you retire can be your worst fears realized and no one wants that. The sooner you start to save for your retirement the more you will accumulate over the years towards your retirement nest egg. Retirement can be a great time in your life if you are not worrying over money problems the whole time. We spend many years making money to pay our bills and once it comes time to retire we do not want to be worrying over bills any longer.
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Matching Financial Goals to Investments
Before you invest one penny of your hard earned money, you should know two things: where you are now and where you want to go. Based on what you know about these two questions, you should set three types of goals: short term (less than 3 years), medium term (3 -7 years) and long term (longer than 7 years). If you you plan out your investments like this, you have the best chance of making every dollar work as hard as it can. These goals, when matched up with your current available assets will tell you what type of returns you need and consequently, what type of risk you should take.
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Tame Your Money When You're Young - So You Can Turn it Loose When You're Older
The phrase most often uttered, by the recent or soon-to-be retiree is, "I wished I had saved more when I was younger." How do you avoid the regret of the retiree? Start putting your finances in order now while still in your twenties. Learning about Personal Finance now will serve you the rest of your life. Mention personal finance to anyone who has never learned to manage their money and you will get one of two looks, either a blank stare complete with glazed eyes of a look of terror as if some monster is about to be unleashed. The first, because they think, Oh, gee I don't stand a chance of understanding this stuff".
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Roadmap For Your Investment Journey
We cannot imagine taking off on a long journey without knowing where we are going. If we do know where we are going, very few of us would make the trip without looking at a map and figuring our how we will get there. Astoundingly however, most of us do just this with our longest and most important journey--our road to a financially secure future! Why we act like this is the subject of another article but here, let us lay out some guidelines on how to make our roadmap. The first thing you need to do is put together your Personal Balance Sheet & Income Statement.
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Two Kinds of Retirement Plans
If you are an employer you may offer several retirement programs to your employees. Excluding those plans established for highly compensated employees (HCE)-for 2009, an HCE is anyone who was a 5-percent owner at any time during 2008 or 2009 or anyone who receives in excess of $110, 000 in compensation during 2009 and, if elected by the employer, is in the top twenty percent of employees based upon compensation-excluding those kinds of arrangements, there are fundamentally two types of plans that may be offered to employees. The first is what is generally referred to as a traditional pension plan-otherwise known as a defined-benefit arrangement.
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Are You Sure to Have a Wealthy Retirement?
Are you sure to have a wealthy retirement? Most people say sure, I've got everything planned out, banking on their work retirement plan that they put the minimum into, or thinking that it doesn't really matter how late they start, it is like it is just the thought that counts. Meanwhile, the economy is in the tank, people need money, and cut back on the amount they are throwing into their 401k. They are less than likely to invest outside of work, and are focusing on getting through their day to day lives instead of thinking about the future.
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Death and Taxes - Estate Planning Mistake 4
This is probably the most frustrating mistake for the executor to have to deal with. You've gone through the time, trouble and expense of drafting a bulletproof will. And then it's left in a household safe to which no one knows the combination or in a safety deposit box to which your executor isn't granted access. I've been told about cases where wills were left in a secret cubby in the closet, behind a wall and under floorboards. Please do not put your executor through this. They will be under enough stress as it is just managing the estate. No one wants to go rifling through someone else's bookshelves and sock drawers looking for the proper documents, much less obtaining court injunctions for access to bank deposit boxes or cutting through a locked safe.
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Death and Taxes - Estate Planning Mistake 1
Every year, billions of dollars are transferred from one generation to another in Canada. Unfortunately, many of us don't take the proper precautions to make sure our wishes are carried out in the event we should pass away. I've heard everything from "I don't want to think about a will right now" to "If I make out a will, I feel like something bad is going to happen to me." By ignoring the need to draft a comprehensive will, something bad will definitely happen to your family. Let me be the first to admit: At some point after I publish this article, I am going to die.
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Estate Planning Mistake 2 - Not Drafting a Will Properly
Occasionally, I'll have someone admit grudgingly that it makes sense to draft a will, but then they perform a near 180 by saying "I'll just buy a will kit from Grand & Toy." Or worse, "I'll just write one up myself and leave it in the jewelry box." Look, if you're going to do this, do it properly. Drawing up a will by your own hand ("Holographic Will"), can cost you even more than if you had done nothing at all. Not only are you leaving open the possibility that your instructions won't be interpreted correctly (e.g., defining exactly what your assets are, how they will be valued, how they will be divided, etc.
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Death and Taxes - Estate Planning Mistake 3
There's a lot of misinformation floating around about how certain assets are taxed when the owner dies. I've heard tell that RRSPs are not taxed if beneficiaries are named on the RRSP application. This is only partially true and if you think you'll be able to leave RRSPs to your adult child with no tax consequences, they are in for an unpleasant surprise. I've also heard tell that the principal residence passes free and clear to the named beneficiary. This is also only partially true. The principal residence isn't taxed at death but it is still part of the estate and thus subject to probate fees.
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