Wise preparation for inflation is a necessity in many nations if one wants to save for retirement. Generally, a fixed rate mortgage, owning gold, or holding property can be a good method of hedging against future inflation. The US currently has inflation under 3%, which is significantly lower than many other nations.
15.Jan.10 
Financial Planning 
Comments (0)
A recent video by CNN money suggests that a good benchmark for preparing for retirement is to set a goal of having one’s investments reach 5 times that of their salary by the age of 40. So, if one were making $65,000 a year, the goal would be to have $325,000 in investments.
Additionally, they recommend setting a goal for age 50 to have investments worth 10 times that of one’s salary and about 20 times one’s salary by 60. Assuming one can achieve a 7% return on their investments, they should see a doubling of their money every 10 years. Under this method CNN claims that at 65 one could begin withdrawing 4% of their investments each year permitting them to take home 92% of their previous salary, a very comfortable amount to live on.
Financial planning is never an exact science – during 2009 it was not uncommon for many people at age 40 to be unemployed, so this benchmark would be of little assistance to them in planning for the future. Likewise, someone making minimum wage at age 40 will struggle to save much for retirement while someone making 6 figures would be perfectly fine not having anything saved at age 40.
The most important concept is that one plan. With the new year approaching, now is a great time to sit down and plan for the next decade, when and what to save, and how aggressively you’re going to need to save in order to be comfortable in your retirement years.
photo credit: anotherloverholenyourhead
Tags: investments, savings
28.Dec.09 Financial Planning Comments (0)
Most economists agree that a certain amount of unemployment is normal and indicates a healthy economy. This frictional amount tends to hover just above 4%. Once unemployment starts to climb much above that you begin to see a troubled economy.
With the exception of the mid-west, our country has been climbing quickly towards a 10% national unemployment rate. The last 2 years have seen unprecedented unemployment in many of America’s largest cities.
A visual timeline of the unemployment trend can be viewed here.
10.Dec.09 Financial Planning Comments (0)
As the end of the year approaches, it’s good to look back and make sense of the mistakes made to ensure they are not repeated in 2010.
Here’s ten financial mistakes to avoid:
Not diversifying. Seeing many stocks drop 50% or more in the recent financial upheaval left many with depleted retirement funds. Owning a diverse mixture of investments can help offset the bad years and hedge towards equal gains in good ones.
Not investing: The only thing worse than seeing your retirement drop 50% is not having one at all.
Early Adoption: New technologies can be great fun, but they can also be costly mistakes. Just ask anyone that bought an HD-DVD player for $1,000.
Playing Penny Stocks: Investing in Penny stocks can bring overnight gains of 100% or more. More frequently than not it results in a total loss.
Investing in FOREX: Foreign exchange markets are extremely risky. One example, a 13% CD offered on the Icelandic Crona ended up costing investors $6,000 or more.
Not Fighting: Whether it be a wrongful tow, a denied insurance claim, or a simple overbilling standing up for yourself and fighting yields better returns than doing nothing.
Buying Cars (or anything) based on monthly expense: The monthly payment should not be your primary method of determining your purchase. Actual price should.
Buying things on credit: If you cannot afford it, save until you can. Buying things based on expected earnings or promotions often results in large credit card debt.
Not getting credit: Credit scores require a credit history. Failure to ever get a credit card can make getting a mortgage impossible.
Buying a Condo: While condos can be great buys for many, those that bought just before the bust saw their value drop by as much as 90%, along with skyrocketing HOA fees.
photos: futureback credit: {Guerrilla Futures | Jason Tester}
dvd credit: hainteractive
car credit: Police_Mad_Liam
card credit: apesara
04.Dec.09 Financial Planning Comment (1)
Americans with an AGI of less than $75k are eligible for a $400/per person stimulus credit. The making work pay stimulus has been attracting noticeably less attention than other stimulus offerings. For those that have normal paychecks the stimulus is applied directly through reduced withholdings. Those that are self employed, do not have withholdings, or otherwise need to claim the credit may do so by filling out an IRS schedule M and requesting $400 on their 1040.
A video on the IRS’ channel on Youtube (The IRS is on Youtube!) explains the credit in better detail. It can be viewed here.
photo credit: alancleaver_2000
03.Dec.09 Financial Planning Comment (1)
A new stock exchange is experiencing astonishing growth on the African continent: the Somali Pirate Exchange. Having quickly grown from 15 to 72 ‘maritime’ firms, the exchange allows local residents to contribute supplies, manpower, or funding to piracy efforts. With 10 successful ransoms paid, the exchange has offered an impressive return on investment to financiers from Somalia and neighboring countries.
Taking place in a small fishing village, Piracy has dramatically affected the local economy. According to Reuters:
“Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output,” said Mohamed Adam, the town’s deputy security officer.
“The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”
With piracy efforts commanding up to $4,000,000, a single ransom plays a dramatic role in changing the wealth of investors. One investor in the recent Spanish ransom hijacking received over $75,000 for her investment of a rocket-propelled grenade.
02.Dec.09 Financial Planning Comments (0)
Warren Buffet is infamous for his investment strategies, favoring long holds of profitable companies to quick trades of speculative ones. His portfolio history is an impressive timeline of decisions made with incredible foresight.
The complete opposite of a day trader, his investment strategy focuses on long term goals. Proper budgeting for one’s personal finances can also benefit from good planning.
While many know of his success with Geico, few realize he has owned large portions of everything from See’s Candies to Fruit of the Loom.
Click here, or on the image to view full size.
16.Nov.09 Financial Planning Comments (0)
The price of gasoline tends to vary greatly here in the US. It generally jumps during the summer when demand is highest, then drops off during the winter. Sanctions, disasterss and other international events can also effect the price by reducing supply.
Those spending $3 a gallon at the pumps can take some refuge in knowing that they’re spending half what most Europeans spend on a gallon of petrol. Here’s a chart showing the ten most expensive locations to gas up along with the ten cheapest. As usual, Venezuala leads the world in price due to heavy government price subsidies for residents.
Sierra Leone leads the world with a gallon of gas running $18.40, again supply and demand plays a heavy part in the cost to the consumer.
Considering recent events with Iran, it’s quite possible that a change in gas prices will be forthcoming.
28.Sep.09 Financial Planning Comments (0)
After seeing rapid growth in a two-year period, Mint has been acquired by financial-software giant Intuit. An impressive valuation for a firm that began on a shoestring budget offering a free product.
The CEO of mint has written an interesting history of their company for TechCrunch. Some excerpts:
And so here we are two years later. We’ve attracted over 1.5 million users, found over $300 million in savings, managed $50 billion in assets, and helped people track nearly $200 billion in purchases. Most importantly, we’ve helped a lot of people better understand and do more with their money. Thousands of people have told us that Mint.com has helped them pay off debt, control their spending, manage job loss, and even resolve money disputes with their significant other…
…So that’s the Mint story. $0 to $170m in three years flat. While everyone else was doing social media, music, video or the startup de jour, we tried to ground ourselves in what any business should be doing: solve a real problem for people. Make something that is faster, more efficient, cheaper (in this case free), and innovate on technology or business model to make a healthy revenue stream doing it.
This integration of Quicken Online with Mint makes Intuit the owner of two of the largest personal finance software programs on the web.
photo credit: zolierdos
14.Sep.09 Financial Planning Comments (0)
A lot of attention is going to General Motors for their announcement that they will be accepting returns on most of their 2009 and 2010 vehicles. The program allows a buyer to return a vehicle after using it between 31 and 60 days and driving it fewer than 4,000 miles.
Upon return, a consumer is eligible for a full refund including sales tax, however dealer options, trade-in credits, and other options may not be refunded.
GM seems unconcerned that consumers may decide to simply use this program as a two-month free rental stating:
“We think if consumers give us a fair chance and look at the facts on the things that matter most to them, like design, fuel economy, warranty, and safety, our vehicles are the best choices and that’s what makes an offer like this possible.”
The program will only run until the end of November and is limited to one per household. It will be interesting to see if this program is successful or simply allows thousands of consumers to drive Cadillacs free of charge for two months. Of course, if it fails GM can always go with a tried and true strategy: lobby for another bailout.
11.Sep.09 Financial Planning Comments (0)
