Saving is basically putting aside money or a way to utilize your present income for future use. One saves for several reasons such as for a college education, buying a new car, for a new TV set you wish to acquire in three to four months time, for down payment on a home, or to provide for yourself when retirement comes.
As much as there are several reasons for saving, there are likewise many methods in which one can save. In most instances, the best method can be determined by whatever plans you have for the future.
1. Savings accounts. When saving for just a short period or for emergency purposes, consider opening a savings account passbook, as it is in this method that you can easily gain access to your funds.
Great for both long and short term savings, you can deposit and withdraw money to your account and earn interest, based on your average daily balance. A minimum balance is required to be maintained though, and you are charged with a penalty should you fail to maintain it.
2. Checking account with interest. Here one can benefit from checking account conveniences, while your deposits gain interests. Generally these types of accounts grants privileges such as limitless withdrawal and check writing, access to ATM and bill payments that can be done online.
This method typically requires a daily maintaining balance of at least $2,000.
3. Money market insured accounts. For long-termed goals, this method is ideal, as it generally offers a much higher rate of interest compared to a regular or standard savings account.
The interest rate usually is dependent on the amount of money in your bank account; larger balance means higher interest.
4. “CD” or Certificates of Deposit. This is a savings method requiring you to “loan” your money to your financial agency for a certain time frame, usually ranging from thirty days up to five years. Here, the longer the time span again, means higher interest.
Keep in mind that usually insurance companies offer better deals on interests compared to banks, so before you invest, compare rates first!
At certain times, when your goal is many years away, it can be a wiser decision to save money in a certain way that you are not drawn on using it other than the main reason for saving it. Deciding on the right financial agency such as a bank, credit union or insurance firm can bring about a lot of benefit in your finances.
Friday, February 12, 2010
5 Questions To Ask A Financial Planner
If you are planning to hire a financial planner to help in building your finances, then be sure to run the following 5 questions by them to ensure that they are the right planner for you:
1. “What qualifies you to do this job?” You're looking for a combination of factors in this answer. First, significant experience (I know planners have to cut their teeth on someone, but I wouldn't work with a planner who had been at it for less than five years). Second, an explanation of their specialty. Planners who were stockbrokers first may emphasize your portfolio over your life insurance; those who are CPAs may focus on your taxes, with stock picking or insurance planning coming second. Both of those things are fine, as long as their strengths coincide with your focus.
2. “Tell me about your current clients.” The best response is that the planner works with someone who sounds a lot like you, in profession, in income level, in family status. That's not to say most planners couldn't study enough to deal with a situation they haven't seen before. You just don't want to be the test case.
3. “How do you get paid?” Most compensation methods are acceptable, as long as the planner's willing to tell you about it in writing before you start doing business. You also want an estimate of what the planner believes doing the work for you will cost (ask that it be broken down into start-up costs and ongoing costs so that you'll know what the relationship will cost you over, say, a year).
4. “Tell me about your investment philosophy.” While it's true that a planner should take his cues regarding the amount of appropriate risk from you, it's also true that most have their own ideas about what does and doesn't constitute "a lot" of risk. You'll need to get very specific in your questioning here. Ask if there are certain stocks or funds that the planner believes should be a part of every portfolio. Ask about what asset allocation (the ratio of stocks to bonds to cash) the planner thinks is appropriate for you. You're trying to make sure that you and the planner have the same ideas in mind. Beware of a planner who seems to be trying to make your life too easy by essentially taking you out of the loop. No matter how much you trust your planner, you should want to see all account statements and to sign everything relevant to your money.
5. “I'd like to check you out before we start to work together; can you provide me with references?” “Am I going to find anything disturbing on your record?” Okay, so that's two questions, but they're both important. Sure, it's possible that the planner will give you the name of his three best friends. But it's also possible that those three friends, when called, won't give you the pat answers your planner expected. As for a background check, ask what organizations a planner is regulated by and call them to make sure there's nothing in his or her disciplinary history that you find disturbing.
1. “What qualifies you to do this job?” You're looking for a combination of factors in this answer. First, significant experience (I know planners have to cut their teeth on someone, but I wouldn't work with a planner who had been at it for less than five years). Second, an explanation of their specialty. Planners who were stockbrokers first may emphasize your portfolio over your life insurance; those who are CPAs may focus on your taxes, with stock picking or insurance planning coming second. Both of those things are fine, as long as their strengths coincide with your focus.
2. “Tell me about your current clients.” The best response is that the planner works with someone who sounds a lot like you, in profession, in income level, in family status. That's not to say most planners couldn't study enough to deal with a situation they haven't seen before. You just don't want to be the test case.
3. “How do you get paid?” Most compensation methods are acceptable, as long as the planner's willing to tell you about it in writing before you start doing business. You also want an estimate of what the planner believes doing the work for you will cost (ask that it be broken down into start-up costs and ongoing costs so that you'll know what the relationship will cost you over, say, a year).
4. “Tell me about your investment philosophy.” While it's true that a planner should take his cues regarding the amount of appropriate risk from you, it's also true that most have their own ideas about what does and doesn't constitute "a lot" of risk. You'll need to get very specific in your questioning here. Ask if there are certain stocks or funds that the planner believes should be a part of every portfolio. Ask about what asset allocation (the ratio of stocks to bonds to cash) the planner thinks is appropriate for you. You're trying to make sure that you and the planner have the same ideas in mind. Beware of a planner who seems to be trying to make your life too easy by essentially taking you out of the loop. No matter how much you trust your planner, you should want to see all account statements and to sign everything relevant to your money.
5. “I'd like to check you out before we start to work together; can you provide me with references?” “Am I going to find anything disturbing on your record?” Okay, so that's two questions, but they're both important. Sure, it's possible that the planner will give you the name of his three best friends. But it's also possible that those three friends, when called, won't give you the pat answers your planner expected. As for a background check, ask what organizations a planner is regulated by and call them to make sure there's nothing in his or her disciplinary history that you find disturbing.
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