3 Excellent Personal Finance Books that everyone should read

Although money management is a skill that anyone can develop, the problem is that most young people (and some people that aren’t so young) lack basic money management skills. This is the reason that there is so much credit card debt, high interest loans and a shortage of retirement and savings plans.

In many cases the skills needed to fix these financial problems are easy to learn and, with the right information, can be learned quite quickly. To that end, what we’ve put together for you, our dear readers, today is a list of 3 excellent personal finance books that everyone should read. These are all extremely popular books that have been reviewed by financial experts and given two thumbs up by all of them. (Heck, some of the financial experts use the ideas they gleaned from the very books we’re going to show you.) We’re not getting paid by any of the authors by the way, we just think they’re excellent personal finance books. Read them and learn. Enjoy.

As far as motivational literature is concerned, there’s one man who stands above all others and, indeed, his book is known as the’ granddaddy’ of all personal finance literature. When Napoleon Hill wrote Think and Grow Rich he wrote it from direct experience. The fact is, his ‘law of success’ philosophy was learned over a lifetime of money dealings and, in the author’s own words, “cost a fortune in the process”.

Mr. Hill dared to ask his readers the question ‘what makes a winner?’, something that at the time of its publishing was extremely bold. His book, which was originally published in 1937, has been updated several times and, although there are still lessons from the likes of Thomas Edison and Andrew Carnegie, there is also contemporary and anecdotal information from today’s financial winners like Bill Gates and Richard Branson. If you’re going to start reading personal-finance books, you’d be hard-pressed to find a better book to start with.

If you’re looking for a book filled with success stories that will inspire you and no-nonsenseinfo that’s much more than the usual  crop of quick fixes, The Total Money Makeover: A Proven Plan for Financial Fitness by author Dave Ramsey is the book you need. Ramses book is famous for not only providing an excellent, easy to follow finance information and advice but also for the way it gives people hope that there is indeed a way to achieve financial freedom or get out from under tremendous debt (when necessary).

What’s refreshing about Ramses book is that, while definitely a true blooded American, he doesn’t let any of the myths of the American dream get in the way of his common sense advice. In his opinion, all the American dream has done is fuel massive overspending and the resulting massive debt . As far as Ramsey is concerned there’s really no sense in trying to ‘keep up with the Joneses’ because they’re all broke. Instead he offers  straightforward advice that anyone can use to take care of their finances, avoid debt, increase their savings and invest for retirement.

When author T. Harv Eker wrote his ground breaking book, Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth, one of the first things he did was make an incredibly bold statement. “ Give me 5 minutes and I can predict your financial future for the rest of your life!” Mr. Eker’s belief is that by identifying a person’s “money and success blueprint” you can tell, in just a few minutes time, what their financial situation will be for their entire life.

Eker theorized that it doesn’t matter the background that a person has, whether it’s in marketing, stocks, world finance, sales or what have you, if a person’s money blueprint is not set to achieve a high level of success, they never will. Even further, a person who doesn’t have a highly successful money and success blueprint can receive a lot of money, such as an inheritance or the lottery, and in almost all cases they will go back to being poor within a few years. Luckily there is good news, as a person’s money blueprint can be reset so that an automatic and natural success pattern will be created.

These are 3 of the best personal finance books ever written and will give the average reader a real jump-start to their finance education.  Read at least one and you’ll be more informed than the average college graduate about money, finances, investing and wealth. Read all three and, while it won’t guarantee that you’ll be successful, it will help you much when you get there.

The Dangers of Minimum Payments

Credit cards are treacherous. You’ve probably heard this before, from your parents or in the newspaper. But when you’re standing with that tiny piece of plastic in your hands at the mall, it’s easy to forget that every swipe equals more cash out of your pocket down the line. It’s even easy to forget when you get your bill in the mail and your eyes scan the paper looking for the magic word: minimum payment.

Of course, not every lender uses minimum payments to keep borrowers in check. Some sites offer temporary loan solutions that are meant to be paid back in their entirety at the end of a given period of time. Others don’t offer minimum payment options, and instead you’re responsible for paying a set amount of money on a regular basis. There are benefits and drawbacks to each, but too often people find themselves stuck in a minimum payment cycle, doomed to pay off their cards little by little for the rest of eternity.

Maybe that’s a little dramatic. But the fact of the matter is, minimum payments are meant to keep the consumer (that’s you) paying interest to the big guys. Minimum payments rarely cover more than the interest you’ve accrued for a billing cycle, allowing your interest to keep piling up without paying off the principal. That means that with the right interest rate you can keep paying the minimum payment for years without making the slightest dent on the money that you actually spent.

If you’re in a tight spot, maybe minimum payments are the way to go for a bit. Sudden job losses or medical bills can make it hard to survive, and that’s exactly what credit cards were made for. But if you’re ever hoping to increase your credit score so you can buy that house or car you’ve been dreaming about, there’s a couple things to keep in mind so you don’t fall victim to the minimum payment cycle.

  1. Don’t pay more than your minimum payment on all of your credit cards – This may sound counter-intuitive, but if you’re planning on getting your credit back in order, don’t try to pay off all your cards at once. If you have more than one, choose the card with the highest interest rate to put the bulk of your money towards and pay the minimum payments on the rest. You’ll be saving the most money by doing it this way and you’ll see the results much faster.
  2. Try not to spend more than you can pay back. – If you only signed up for a credit card to increase your credit rating but have the means to pay for your purchases in cash, try to only use your card to the extent that you can make one payment at the end of the month and bring your balance back to zero. If you avoid getting in debt in the first place, your life will be a whole lot simpler.
  3. Do the math. – When you get your bill in the mail, do the math to figure out how long it would take you to pay off your credit card doing only the minimum payments. Then figure out how long it would take if you added a bit more each month. When you see the amount you’ll be saving in interest, you’ll be amazed – and much less willing to stick with your previous minimum payment method.

How to dig your way out of student debt. Part 2

Welcome back for part 2. The subject today is student loan debt and how to dig your way out of it. In part 1  we talked about some of the consequences of not paying your loans on time. They were going to be looking at your options to continue paying, avoid those nasty collection agency people and keep your credit score from taking a big hit.  So if you’re ready, let’s get started. Enjoy.

If you have federal loans, including Perkins, Stafford and Grad Plus loans, you’re in luck because you’ve got a number of options that you can use. (Keep in mind that the Perkins loan differ somewhat from the other two options. Check with your school to be sure.)

The first plan that’s offered is called the Standard Plan and, if you choose to use that one, you’ll be done paying off your loans after 10 years and 120 equal payments. For those people who can’t afford payments that high now but expect to be making more money  in the future, there is the Graduated Plan. With this one, your payments are lower in the beginning years and higher towards the end of the 10 year span. Keep in mind that, even though you’re paying less during the beginning of the plan, you’re going to be paying more interest overall for the Graduated plan.

For those people who owe $30,000 or more to the federal government there is the Extended Repayment Plan. This plan gives you 25 years to stretch out those monthly payments and they’ll be much lower per month but the overall cost will be higher. Depending on how much you owe, you can also consolidate your federal loans through the federal Direct Loan program which will extend your payments from 12 to 30 years.  (If you’d like to research more about this, surf to www.loanconsolidation.Ed.gov)

If your federal debt outstrips your annual income you may wish to look into Income Based Repayment Plans, a payment program that is definitely better than the 1st two and, in some cases, will reduce your payment as far down as zero. If your total debt exceeds your annual income you will probably qualify and, after 25 years, any debt that you have remaining is automatically forgiven. You will owe taxes on the forgiven amount however, and if you end up getting a much larger salary, the standard plan will be used to calculate your payments from that  point onward.

If you’re a police officer, a public defender, a public school teacher or are in some way working in the public sector, after 120 payments you may qualify to cancel any remaining debt that you have that was accrued on or after 1 October, 2007. You must have federal Direct Loan program loans in order to be able to qualify and you can consolidate FFEL loans into that direct loan program. With this program be forgiven amount is also tax-free.

If you suddenly become unemployed, you’re attending college at least half-time, you’re experiencing some type of economic hardship or  you are in the military on active duty, you automatically have the right to defer any federal loan repayments for as long as three years.

Finally, if deferment is an option in your case, you can ask your lender for a forbearance. Remember that with the federal loan you can also suspend payments for 12 month periods at least three times, depending on the amount of money that you owe the federal government and the amount of money that you earn. You may not qualify but you should definitely ask because it’s in the lender’s best interest to give you the time you need to get your finances in order. Also keep in mind that during forbearance  interest will accrue.

If you’re swimming in a sea of financial aid that we hope that the last two blogs have been helpful and have given you a number of ideas about how to go forward with your student loan problems. As with any financial problem, it’s always a smart idea to talk with lenders, be they private or federal government, and advise them of your situation. In most cases, they’d rather help you somehow then let you go into default.

The Pros and Cons of a Short-Term Loan

Short-term loans are unusual in the sense that if they are utilised in a sustainable way, they can be extremely helpful when it comes to your immediate financial needs. However, if you abuse this significant form of financial assistance, it can end up being a burden.

In other words, any cons involved in short-term loans will arise mostly due to your own incompetence or abuse of the loan. This article will take you through some of the advantages and disadvantages involved in short-term loans.

Pro: Instant gratification

In terms of requiring funds for emergency situations like medical situations or other calamities, short-term payday loans are perfect for your needs. If you’re a week or two shy of your wages coming in and you can’t afford to delve into your own pocket to deal with an unexpected expense, a payday loan will cover you until then, when you can repay it.

Some services offer instant cash sent to your bank account. There’s just an application form to fill in, as well as proof that you have a regular income and can afford the loan.

Con: You may have to pay higher interest fees

Bear in mind, the cons associated with short-term loans are regarded as potential disadvantages, because they very much depend on your own sense of responsibility. Similarly, if you are faced with high interest fees, this will most likely be because of your own credit history.

While some lenders calculate the interest rate on a daily basis, others apply monthly rates instead. The difference in the fees is dependent on a number of factors. There will also be differences in the cost of valuation as well as other legal fees and sometimes, early repayment charges.

Pro: Short-term loans are easy to get

Provided your credit history is sound and that you can prove that you have regular income, you can get funded by a short-term loan within a day’s time. Usually, you need to provide your name, address, mobile number, your income, bank account information and your debit card details to begin with.

After reviewing the lender’s terms and conditions, you could get approved for a short-term loan in a matter of fifteen minutes.

Con: Incurring fees for late repayment

Make sure you know what you’re getting into before you fill out your application forms and that the company you use is authorised by the FCA. If you’re not sure whether you’ll be able to pay the loan back in time, perhaps you should resort to other measures. Once again, this very much rests on your own sense of responsibility. If in doubt, seek alternative methods. If you’re sure, you can apply for a short-term loan here.

How to dig your way out of student debt. Part 1

Due to federal laws, bankruptcy has never been an option for people who are suffering from massive student loan debt. Although technically it was possible to claim bankruptcy and have your student loans forgiven, it meant proving to a judge that it would cause  extreme hardship and a ‘certainty of hopelessness’. In other words, very few people would qualify. The standard is the same whether you have a federal student loan or a private student loan but current legislation in Congress is seeking to change that standard, at least for private student loans.  The change would make them eligible to be discharged under rules that will be similar to those that apply to credit cards and other types of consumer debt.

Until that change happens, there are a number of federal loan programs that will help you to reduce your payments and, in some instances, qualify for forgiveness of your loans. If you have private loans, the good news is that many lenders are offering deals to their borrowers to keep their payments coming, rather than letting  them go into collections.

It was only a short time ago that lenders rushed to offer private loans to students, even those students whose credit wasn’t exactly sterling. Today those borrowers, who couldn’t afford their loans to begin with, are defaulting in droves. Mr. Joshua Cohen, an attorney who specializes in debt, believes that “ the industry is either going to take a bath or start coming after people”. Lenders, of course, wish to avoid that.

Many are beginning to offer interest-only repayments and other types of arrangements that lower payments for specific period of time. To see if you qualify you need to check your promissory note and see if this is a provision that’s been included. While this doesn’t work for everyone, it is definitely worth a try and should be talked about, if not negotiated, with your lender.

If you and your bank can’t reach an agreement you can ask them for forbearance, something that will allow you to make no payments at all, usually in increments of three months and usually for no more than a year’s time. While lenders are a bit less willing than they once were to sign off on deals like these, if you can prove that it will get you back on track they might just do it. It’s also important to remember that, in most cases, contacting your lender sooner is better than later, before problems become more pronounced.

As far as going into default, you simply have to miss one private loan payment in order to be seen as being in default while, with federal loans, you can be quite a few months past due before that happens. With private loans, the first thing that’s going to happen is that a collector will start calling, looking for their money. If this doesn’t work a third-party collection agency usually takes over. Luckily, the Fair Debt Collection Practices Act was enacted by the federal government, to protect American citizens from collection agencies and their sometimes abusive collection tactics.

On the other hand, the federal government can tap into your resources much more easily if you do go into default, whereas private creditors are forced to go through the court system if they want to collect your debt. Until such time as that actually happens, there’s nothing that they can do to touch your money. Your specific state’s statute of limitations covers defaults, and the average is six years. If you decide to sue and you lose your case, the creditor can garnish your wages, wipe out your bank account and put a lien on your house.

And the last rather scary note will end of part 1. In part 2 were going to look at all of the options that you have to deal with your student loan debt, lower your payments and, in some cases, get out from under them completely. Make sure to bookmark our website and come back here to see us soon for part two. Have a great day.

Why You shouldn’t Ignore Your Credit and Credit Score

The phrase that’s certainly getting the most buzz these days is ‘living debt-free’ and, while it’s definitely something that most people should aspire to, many people make the mistake of thinking that living debt-free means living credit free. Indeed, many people still consider credit something that ‘happens’ to them rather than something that they can build, manage and protect like an investment portfolio.

There are quite a few people who just don’t like the idea that banks and other financial organizations collect information about them and use it to figure out whether or not they are worthy of being borrowers. Not only does it feel unfair but it also makes correcting mistakes rather difficult. That being said, consumers should also realize that having a solid and positive credit history can have a positive impact on their lives  and in most cases it is much better to have this credit history then to have no credit history. Here are a few reasons why;

Without any type of credit history your possibility of getting a home mortgage is going to be greatly reduced. In some cases the only choice that a person with no credit history has is to either rent an apartment or home. The extra problem here is that, when renting, many times you will be forced to pay a huge upfront fee in order to be able to move in if you have very little or no credit history. If this is the case you may be forced to put down a huge deposit, find one or more roommates or possibly even convince a friend or family member to cosign the lease agreement with you,  All problems that could be avoided with a decent and positive credit history.

Without a solid credit history, if you get into a financial crunch such as losing your job or getting hit with a big medical bill, you may find that you have very few options to get emergency cash and stave off bankruptcy. Without a solid credit history you may be forced to consider a car title loan with its annual interest rate of approximately 300%, or a payday loan which can A whopping 400% interest rate to keep you out of the poorhouse. In many cases these will be the only options available for people with poor or no credit history.

If you’re planning on going on vacation and you’d like to book a hotel in advance, purchase airline tickets online or reserve an automobile, it’s going to be very difficult to do that if you don’t have credit and at least one viable credit card. In many cases you’ll have to  jump through all sorts of hoops in order to be able to reserve your room and your car and, in general, you’ll end up paying more money than if you were able to make these purchases using your credit card and booking online as well as in advance.

Are you looking for a job? In today’s economy, with unemployment at a very high rate, it’s very possible that you said ‘yes’. If that’s the case, not having a solid credit history may make it harder for you to find that job and, although some states have enacted laws to limit it, many employers are accessing credit reports today as a prerequisite to hiring a new employee.

If you’re keen on opening your own business and you need capital, finding that capital is going to be very difficult if you don’t have a solid line of credit and at least a decent credit history. The fact is, if you have a strong credit profile you’ll be able to borrow money at  a more attractive interest rate and leave more of your disposable income to invest in something else.

Simply put, credit can be used as a powerful wealth building tool. If you can qualify for an auto loan you may well be able to get a better car and a better paying job because of it. Credit will help you to get a mortgage and become a homeowner, one of the cornerstones of wealth and long-term financial stability. Tracking your spending, earning rewards and building a solid credit profile can easily be done when you have a credit card or two and you promptly pay them off at the end of every month. This can also help you  to get through tough times when cash is tight, if necessary.

The only thing that you need to do in order to build good credit is to spend responsibly. That means not using credit cards like they’re cash (because frankly they aren’t) and realizing that, if there’s no cash to pay for what you want to purchase, you  should definitely consider not making said purchase.

Yes, managing your credit requires a bit of hard work and diligence but the payoff can be quite high and lead to a  better life on many levels. It’s for that reason that you should make an effort to build a solid credit history, even if you’re not a huge fan of credit cards.

Tips on how to Prioritize Your Budget

When you consider that 2 of the basic financial rules that all people should follow are tracking their expenses and placing limits on their spending it’s quite surprising that many Americans still don’t have a budget and use it regularly. The fact is, a budget will force you to prioritize your decisions, make better decisions and keep you on financial track. Another fact is that there isn’t one size or type of monthly budget that fits all families. With that in mind it’s important to know exactly which expenses are most important and to base your budget and your priorities on this information. The tips that we’ve provided in our blog today should help you to do just that. Enjoy.

One of the first steps to creating a budget is to determine which of your expenses are non-negotiable. These are expenses like your rent or mortgage and the utility bills that come with them as well as car loans and so forth. They are non-negotiable because they definitely need to be paid every month no matter what. Determining these expenses will help you to determine exactly what you have left over for other, negotiable expenses like your gym membership, dining out, purchasing new clothes and so forth.

One of the biggest problems in the United States today is habitual overspending. Indeed, when you consider that $82 billion worth of new credit was racked up by American consumers in the last two years alone, you can see how gigantic a problem this actually is. Eliminating this debt on  an individual basis is best done by paying off the credit card or loan with the most expensive balance and highest interest rate first, repeating this down the line as you pay them off. It’s also vitally important to make at least the minimum payment (and make it on time) and when you can, pay more than the minimum.

Of course one of the most important (and simple) things that you can do is to simply stop accruing more debt. Unless a new credit card or loan is going to somehow help you  pay down your debt, there’s really no reason to  take them out. Simply put, debt reduction is a process that takes a good bit of time, diligence and even a little bit of sacrifice. (Sometimes a lot of sacrifice.) Adding to your debt continuously is going to get you nowhere fast.

One vital task that needs to be accomplished when you’re starting a budget is to identify your savings goals and incorporate them into your budget plans. Do you need an emergency fund? How about a fund to pay for your child’s education? Do you want to purchase a house in the next five years? All of these questions need to be answered and, if you can figure out approximately what the amount of money is that you’re going to need, you can figure out how much you’ll need to save every month in order to reach a goal.   For example, if you would like to save $30,000 to use as a down payment on a new home and you would like to do it in 10 years, you’ll need to save $250 a month.

One last bit of advice is simply this; expect to make mistakes. We’re all human and we all make mistakes once in a while, especially when it comes to money. Knowing this, give yourself a little bit of extra ‘wiggle room’ in your budget when you’re creating it so that, if you eventually do go over budget, it’s not going to ruin all of your plans. If you put an extra 5% aside every month in your budget to cover those times when you either make a mistake or make an impromptu purchase you won’t end up paying for it for months down the road.

As we said before, many people don’t have any type of budget set up that they use to control and keep track of their finances and expenses. If that’s you, we strongly urge that you use the advice and tips that we’ve given you here today and also go back and take a look at some of our other many blogs about budgets and budgeting. Best of luck and we’ll see you back here real soon.

The best ways to choose mutual funds – Part 2

Hello and welcome back for Part 2 of our 2-part blog series on how to choose the best mutual fund. We hope that Part 1 was able to give you some valuable info and advice that you have already used in your efforts to choose mutual funds that are best for your financial lifestyle and, if you are ready for more, we are as well so let’s get started with Part 2. Enjoy.

When investing in mutual funds is always a good idea to do some type of qualitative analysis. Morningstar, a Chicago-based investment research firm that compiles and analyzes fund, stock and general market data, has a 5 tier scale that they use that gives their customers an idea about how a mutual fund is achieving. Using this a prospective mutual funds buyer can see some of the factors that have changed over time for a particular fund, information that will definitely give them better odds for success.

It is also important to weigh the impact that any fees will have on your overall gain when evaluating a possible mutual fund choice. For example, if one fund costs 1% but you have another that costs 0.1%, the former fund is going to have to make up 0.9% of the difference when picking stocks, something that is not easily overcome by many fund managers.

There are index funds that use market benchmarks to track how well they’re doing including Standard & Poor’s 500 index. These are generally cheaper than actively managed funds that, in order to outperform the index, need to rely heavily on management talent.

Many experts will advise that you look at fees towards the end of your evaluation and not get too hung up on them too early in the process. In some cases fund managers may subsidize or even waive fees. Some investors make the mistake of screening out mutual funds based on either their fees or expense ratios before they consider the type of investment or the style of the mutual fund that they are preparing to buy, a costly mistake in some cases.

It is also advisable to be cautious when investing in a mutual fund that has had a high turnover rate. This rate is the percentage of holdings in a portfolio that have changed over the past year. If you find that a mutual fund’s holdings have changed completely over the course of the year through buying and selling they would have a 100% turnover rate. On the other hand, some will have a turnover rate that is less than 10%. The type that you choose depends on the type of investor that you are in the amount of risk that you’re willing to take. Most mutual fund experts will tell you that it’s best to seek out funds that have a turnover rate of less than 40% because those with turnover rate of 50% or more are going to have a difficult time producing a return due to the increased costs of trading.

It’s very important that you also take a look at the fund manager of any fund that you’re considering. If you find one that has a manager that has been there for at least five years you will more than likely have found a mutual fund that is been handled with consistency and discipline. Without the information that it funds manager can give you it can be difficult to determine the performance that a specific mutual fund will have. For example, if you look at the 10 year returns of a specific fund but the current fund manager has only been there for a year it’s possible that they are following a completely different strategy and that the previous 10 years’ worth of results mean absolutely nothing.

Speaking of a fund managers strategy, the simple fact is that a sound fund will generally not abandon its investment strategy, even when the current market would dictate that the approach was unwise. During the bear market of 2008 for example financial companies were hit quite hard but funds designed to include financials in their mix did just fine. The same thing happened in 1999 when  internet stocks were all the rage. Some fund managers purchased these even though they had no earnings. Simply put, it is unwise to deviate from a proven strategy solely based on what the market happens to be doing any particular time.

While we realize that these 2 blogs aren’t the end-all and be-all to mutual funds, we believe that they both included some very valuable information that the typical investor can use to determine what mutual funds will be the best for their portfolio. Just like with any other investment it is always important to  you do your due diligence, research your mutual fund choices as well as you can before you purchase and purchase with your head, not with your gut. Best of luck and make sure to come back and visit us again sometime very soon. See you then.

The best ways to choose mutual funds – Part 1

If you want to invest in mutual funds but you don’t know where to begin you’re not alone. With nearly 8000 different types of mutual funds that can be purchased either from a mutual fund firm, through some type of financial advisor, directly by the consumer or at a brokerage firm, the choice can be quite difficult and daunting. When you include all of the different types of share classes the number of mutual funds actually rises to just over 22,600 different kinds. It’s for this reason that we put together a small blog about some of the best ways to choose mutual funds. We hope this advice will be valuable in your search for the mutual funds that are best for your financial situation. Enjoy.

Lydia Sheckels, the chief investment officer at Wescott Financial Advisory Group in Philadelphia, PA  advises that people looking for mutual funds should definitely not be like the typical shopper who heads to their local grocery store without a list. What she is alluding to is that the typical mutual fund investor is much like a person without a shopping list who goes up and down the grocery store aisles trying to figure out exactly what they want to purchase. It might work for groceries but it’s not exactly a great idea went shopping for mutual funds. Better, she says, to know exactly what you’re looking for because if you don’t you will more than likely choose a mutual fund based on its latest performance, a factor that could very well change for the worse in the years to come.

Anyone who’s interested in investing in mutual funds should also take an honest account of the type of investor that they are. A conservative investor may not be able to deal with the fact that a fund can wildly go up and down in value whereas a more aggressive investor might be willing to tolerate this volatility as long as the manager of the fund is capable of generating excellent long-term returns.  There are also certain companies that some people may not wish to invest in due to moral or ethical reasons and those reasons should be kept in mind when investing.

It is believed that investment allocation is the  biggest determinant of a portfolio’s performance and accounts for over 94% of its return. It is for this reason that it is a good idea to have several different types of mutual funds in your portfolio. For example, there are many different types of asset classes that are represented by mutual funds and they all can perform differently. Having several different types, just like having several different investment vehicles in your portfolio, will help you will to protect your investment against losses.

It is also a good idea to become familiar with the different types of fund styles.  Mutual funds can be classified according to their investment style, the size of the companies that they contain and so forth. There are also small-cap, medium-cap, large-cap, value, growth and blend funds and you would do well to know which type that you want and how many before you make any purchase decisions.

Since we all know that past performance is not a guarantee of future results, any past performance that you see touted by a mutual fund should of course be regarded with at least a small grain of salt. There are many financial experts who believe that fund rating systems that rely on past performance to determine future gains are not useful at all because of the  cyclical nature of mutual funds.

Of course as with any investment vehicle you would do well to do as much research into a particular mutual fund as possible, ask opinions from experienced financial advisors who specialize in mutual funds and use the regular amount of caution when making your investments. And, as with all investments, your best bet to come out ahead is to hold onto your mutual funds for as long as possible.

There’s much more to come so please make sure to come back soon and join us for Part 2. See you then.

How to Avoid Estate Planning Mistakes Before you Pass on

It was probably Jim Morrison, the infamous lead singer of the 1970’s rock group The Doors, who put it best “no one here gets out alive”. What he was referring to is that, no matter who you are, where you come from or how rich you happen to be, inevitably every one of us is going to pass on one day. Seeing as it’s inevitable, one of the best things that a person can do, especially if they have a lot of money, investments, land, homes and so forth, is to make sure that their estate planning is thoroughly taken care of.

Frankly, even if a person doesn’t have all that much money but has a home that’s paid off and a few bucks in a savings account, estate planning is something that is not only important to take care of before they pass but also will make for much fewer problems for loved ones who are left behind. With that in mind we put together a blog about some of the things that you should do as far as estate planning before you pass and how to avoid common mistakes. We know it’s not exactly an uplifting subject but, if you take care of it now, believe us when we say that your loved ones will be much better off after you’re gone. Enjoy.

Unless you’re actually a certified accountant or a practicing estate planner the first thing you’re going to want to do is contact a professional. Keep in mind that even professionals can make mistakes and research your options thoroughly. If you have knowledge of someone in your family that passed in the last few years and used an estate planner you may want to contact their family and find out who that person is. Remember, any mistakes that your estate planner makes probably won’t be discovered until after you’re gone, leaving your family to clean up the mess.

Here are a couple of examples: In Chicago there is a lawsuit underway due to the advice that an estate planning attorney gave his very rich client. This attorney suggested a ‘60 day rollover’ to be used with what would be an inherited IRA but, unbeknownst to the client, this is a severe no-no with the IRS. It only became clear after his death and so now his family is embroiled in a ridiculously large and costly lawsuit.

In Clearwater Florida a client was told that she should create a trust using a ‘fee simple’ method so that, if she were to pass away, her minor daughter would get the bulk of her inheritance when she became an adult. The problem; with the fee simple plan, if she passed away before her daughter was an adult her daughter’s new guardian, her financially irresponsible ex-husband, would have received a check for practically the entire amount of the residual balance left in her trust, an obviously bad idea that only came to light six years after the initial estate planner set things up.

When setting up your estate planning it is a good idea to take into account anything that could possibly happen and make sure that you have planned for as many contingencies as possible. For example, what would happen if the mother were to die first? How about the father? What would the situation be if both parents were to die at the same time? These aren’t pleasant things to have to contemplate but, when you consider that unpleasant things happen every day, it’s better to talk about them and plan for them before they happen.

Communication between family members that have been left behind is also vitally important. A great example of this is a family in Atlanta Georgia who, after their father had a massive stroke, moved him out of his house, sold the place, shut down all of his banking and checking accounts and had him live in their home until he passed away seven months later. It was only then, when going through his personal things and paperwork, that they found a $1 million life insurance policy. The problem; since the policy was being automatically paid for out of his bank account, and since they had shut down that account, the insurance policy had been canceled and voided due to non-payment and was worth nothing. Bye-bye $1 Million dollars.

Even for people that plan their estate and their affairs quite well and define who gets all of their major assets, there are times when seemingly non-valuable items will be fought over by surviving family members. It is for this reason, especially if a person has lots of tchotchkes, memorabilia or other collectibles, that these things are also put into the estate planning paperwork and given to specific family members.

At the end of the day the best thing that you can do for your family, especially if you have a large amount of assets, investments and money, is to thoroughly plan where it’s all going to go before you go. In this way not only will you have peace of mind while you’re still here but you’ll ensure that your family won’t tear itself apart squabbling over all of the assets you accrued during your life and after you’re gone.

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