Investment Tips: Investment Type Suited for your Needs

There are tons of different ways to invest your money. The real question here is what type of investment is right for you? Looking for the most suitable investment type that will reap a good harvest is a daunting task.

One biggest element in growing your wealth is the value of return you will get on your investment. There are occasions where you may need to put your money somewhere for a while, although you won’t acquire very good revenue (short-term investments). Or you may also be willing to take a risk and consider a long-term investment that has a higher probability of maximizing your returns. Whichever investment type you choose, here is a guide to the most common short-term and long-term vehicles you might want to consider.

SHORT-TERM SAVINGS VEHICLES

Bank savings account: This is the most availed saving medium used by many people. Bank savings account has low monetary return but this is much more preferable than using your old piggy banks.

Money market funds: This have higher returns compared to bank savings account, however, certificate of deposit are much more preferable than money market funds when it comes to earning more.  Money market funds are designed with a maintaining value of $1 per share at all times.

Certificate of deposit (CD): The interest rate on CD’s depends on its fixed maturity date. The maturity date is fixed which means that you cannot get your money (there’s a penalty if you want to) not until the maturity expires. The accumulated interest plus the original amount will be returned once the maturity ends. It’s a specialized deposit issued by commercial banks and are usually insured up to $100,000.

LONG-TERM INVESTING VEHICLES

Bonds: This type of investment option is where an investor loans money to a government or corporation to finance their various projects and activities. In return, the investor will be the owner of the bond and the issuer who borrows the money for a defined period of time will pay a fixed rate of interest during the life of the bond.

Stocks: Stocks is a type of investment where a company or business allows an individual to own a portion of the company. The worth value in the market of the share is proportional to the company’s growth.

Mutual funds: It is an investment vehicle where investors pool their money to invest in securities such as stocks, bonds, money markets that money managers think as worthwhile. 

RETIREMENT PLANS

Planning for retirement should now occupy your mind. Nowadays, various special plans are created for retirement savings and many of these allow the early transfer of money from your paycheck before the deduction of taxes. If you intend to buy a home or pay for education, there are some retirement plans which allow early withdrawal of your money without penalty fees. In some cases, making retirement savings as collateral to borrow money from the account or apply for a low-interest secured loan is permitted too.

Individual retirement account (IRA): IRA’s are specialized accounts which allow the account holder to invest the money freely in any manner. In this type of retirement plan, you will not be taxed unless you withdraw your fund. If you meet certain requirements, IRA payments may be considered tax deductible.

Roth IRA: This type of retirement plan does not demand tax payments on your contributions and offers exemption from federal taxes when you decided to withdraw from the account.

401(k): Employers offer this type of retirement savings and most commonly a suitable choice for many people. 401(k) has tax advantages with the potential benefit of corporate matching.

403(b): This retirement plan is the nonprofit version of a 401(k) plan. There is also a so-called 457 plan offered by the local and state government.

Keogh: A tax-deferred special type of IRA for self-employed individuals or small businesses for retirement purposes.

Simplified Employee Pension (SEP) plan: A Keogh-based plan established by employers and self-employed individuals to provide retirement plans that are easier to administer compared to normal pension plans.

A closer look at stocks

Stocks have much better returns compared to bonds and other investment vehicles. Investing in stocks means being one of the many owners of a company, thus, you have a claim on every asset and earning the company generates. The higher your share, the greater your ownership stake in the company. The existence of stock market starts in the 16th century by Dutch corporations as a way for businessmen to finance their company using investor’s money. In return, the investor can claim ownership of assets and profits of a company as a part-owner.

What is common stock?

Common stock is the most prevailing type of stock most people choose since anyone can participate in buying this type of investment without imposing restrictions. When you purchase a common stock, you become a part-owner of the company with the power to vote or elect a board of directors. The board of directors is a group of individuals capable of influencing corporate policies and decisions for the growth of the company. If they want to fire the company manager, they can do so because they possess the power to manage the entire company. However, if the company doesn’t generate a positive income, the value of shares will decrease too. In the event of company bankruptcy, the stock will then become worthless.

Classes of Stock

Usually, the difference between the classes of stock is a number of voting rights assigned. As an example, Class B share can have a single vote for each share while Class A possesses 10 votes per share. This is often considered an unfair deal for many investors and they often avoid companies with this kind of strategy. And the reason for creating this is for the owner to retain the control over the business. They usually give the class of shares with the fewest number of votes to the public while reserving the class with the largest number of votes attached to it for the owners and major investors.

Investing Review: Creating Short-Term Savings in 60 Seconds

What if your air-conditioner suddenly decided to give up its ghost? Do you resurrect it (replace it with a new functioning unit) using a credit card and then scrimp on your meals for half a year in order to cover the cost of enjoying a cool summer and a warm winter?

Small and big accidents can happen and it helps a lot if you have the cash to insulate you from the worry and stress. Spend the next 60 seconds to learn how to create a short-term bundle of cash effectively.

Estimate your monthly expenses

The main purpose of having a bank savings is to have the cash to spend for essential needs in the event of unexpected or unfortunate life situations. Ask yourself then how much you would need in case that happens (Heaven forbid). It is as simple as asking yourself how much you spend every month.

You can add up what you spend monthly on your basic needs, such as food, house rental or mortgage payment, transportation cost and other expenses you regularly incur for yourself and your family.

Include an additional amount for unexpected expenses

This could include average surprises such as a broken pipe or substantial ones such as losing a job. Bring your budget up to take care of the usual needs you spend for while looking for a new job. Next, compute the amount you would have to raise during the time you would be unemployed by multiplying the monthly income you lost by the number of months (say, you would be job-hunting for 3 to 5 months). In addition, you can integrate whatever available cash sources you may have and other expenses to cover the needs of people who depend on you financially.

There you go. That rounds up the figure you have to save as an emergency savings account.

It is time to see into your future expenses, from 1 to 5 years

Having accomplished the first step, think of other cash needs you have in mind. Does your fence need repainting? Do the children need dental check-ups? Your family has always wanted to go to Hawaii? Such plans should find a place in your short-term savings account. Sit down and crank up the figures to derive an amount for the next few years.

Think about how fast you will achieve this objective

You need to raise the amount in the least possible time because emergency expenses are like thieves that strike when you least expect them. Determine how much you can comfortably spare monthly to that pot. You cannot afford to avoid this call; so for your own good, take it. Your survival rests on its being there to turn to. Having done that, you can then estimate your non-emergency short-term savings. (We have savings calculators you can use to do this.)

Decide where to put your stash

Consider how you can get your hands readily on the money you have kept away for any eventuality. No sense preparing for an emergency without the hardware being there when you need it. Hence, you must choose a secure place for your money – that is, it must not be an investment which is as fickle as the weather in Seattle. Here are the possible choices:

·         Money market mutual funds

·         High-yielding savings accounts

·         Money market accounts

For savings intended for expenses that we refer to as non-emergency (those which you really wish you could spend on a whim), liquid investments can provide a better return on your money. These include certificates of deposit. For more info on this type of instrument, check this out for articles.

Compare the various types of investments online

You can check out bank adverts in the media, compare national rates on Bankrate.com, find out how much your broker pays on cash in your brokerage account, know more about money market funds from iMoneyNet and ask your credit card union and your bank what they offer. Investigate the following:

·         What are the relative returns for equal time frames?

·         What are the prevailing interest rates?

·         Over what time frame do these rates apply?

·         What are the fees for buying and holding the investment?

·         What is the smallest investment allowed for attractive interest rates?

(Be careful of some institutions which attract investors with high rates too avoid getting scammed and to get your attention but bring them down once you negotiate. Look over the actual rates in the past at Bankrate.com to check how the interest rates change over time.)

Work the plan!

Time is running short, if you have not noticed by now. You need to have a short-term emergency savings today, not tomorrow! Do not wait until you find yourself paying an onerous credit-card debt incurred because your smartphone broke, the plumbing leaked, the wife got sick or the winds blew away your roof.

Bonus tip: Force your savings!

In case it is not your habit to save, you need not worry as an automatic salary-deduction or transfer can help you move in right away. Talk to your employer if the company can split your paycheck (direct deposit) into your regular account and your short-term savings account. Or you can have an auto-transfer from your checking account into your emergency account.

There is more, if you still have time.

Some valuable links for you – click away:

Where to keep your cash

Steps to take to build a cash-stash

Safeguard your finances for your peace of mind

Easy computations for figuring out a rainy-day savings

Where to find a high-yield account for your short-term savings (Our Banking collection can help you today)

Careconnect Health Insurance Group Review: 5 Top Sunscreen Mistakes to Avoid

Good news: Warm temperatures, backyard barbecues and trips to the beach are probably all in your near future.

Bad news: All those wonderful things mean you’ll be exposing yourself to the sun – and, maybe, raising your risk of skin cancer. May is Skin Cancer Awareness Month, and today, the first Monday in May, is Melanoma Monday. That means it’s a good time to make sure you’re taking steps to protect yourself from all kinds of skin cancer, including melanoma, which kills an estimated one person every hour in the United States.

It’s key to use sunscreen year-round to guard yourself from the sun’s harmful UV rays, says Katy Burris, MD, assistant professor of dermatology at Hofstra Northwell School of Medicine -- but it’s especially important when you’re spending more time outside and wearing less clothing. Unfortunately, she says, many people don’t get the full benefit of their sunscreen, thanks to some common mistakes. Here’s what Burris sees many of her patients doing wrong, and how to make it right.

The wrong way: You put it on and forget it.

To make it right: Reapply…and then do it again.

“The number-one mistake people make is that they think sunscreens are a one-and-done sort of thing,” says Burris. But sunscreen loses its potency quicker than you think. If you’re spending the day outdoors, reapply sunscreen to exposed skin every two hours. If you’re swimming or sweating, make that every hour.

The wrong way: You ration out your sunscreen.

To make it right: Don’t be stingy.

Think you can make a bottle of sunscreen last through an entire week at the beach? Bad idea. “The average bottle of sunscreen should only last two to three days for a single person when applied correctly,” says Burris. The rule of thumb when you’re using a sunscreen lotion: To cover your whole body, use at least enough to fill a shot glass.

The wrong way: You’re using a product you don’t like.

To make it right: Find one you won’t skip.

Sunscreen comes in lots of forms -- spray, lotion, stick. Any kind will do the job so long as you use enough, Burris says. “Some people under-apply because their sunscreen feels or looks greasy. It’s important to find one you like.” (You can find non-greasy formulas specifically for your face, for example.) Whatever form you choose, make sure your pick is labeled “broad-spectrum” and has an SPF of at least 30.

The wrong way: You wait until you’re in the sun to put your sunscreen on.

To make it right: Slap it on early.

Don’t wait until you’re lying on your beach towel to put on your sunscreen; it takes time for your skin to absorb its protective ingredients so they can go to work. Apply sunscreen at least 20 minutes before you’re exposed to the sun.

The wrong way: You think your dark skin will keep you safe.

To make it right: Always protect yourself.

Having naturally dark skin – or a tan -- doesn’t reduce your risk of developing skin damage from UV rays. Have you skipped sunscreen before without ending up burned? Even if your skin didn’t turn red, it may have suffered damage on a cellular level, raising your long-term risk of skin cancer. No matter what your complexion, it’s best to play it safe. Use sunscreen daily, check your skin regularly for physical changes and get an annual exam from your dermatologist.