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Pension tips to combat retirement worries
Retiring is supposed to be the time when you can sit back and relax after years of hard work, but for some people retiring is not plain sailing. As it has been reported in the news recently, there are a growing number of people struggling to survive on their pensions.
Although many people will have paid in to a company or private pension plan over the years, some pensioners are finding it increasingly difficult to survive financially on their current income.
There has been talk of increasing the retirement age of 65 up to 70 as life expectancy increases and people need their pensions for longer than ever before.
So what can you do if you are worried about retiring? Well there are ways to guarantee you will have a sufficient income for retirement. For instance, if you have a large amount of capital gaining very little interest sitting in a current account, consider investing it to get a monthly or annual income.
You could put your money in to an ISA which allows you to invest up to £7,200, providing tax free returns on your capital. And if you are over 50, from October you can invest up to £10,200 from participating financial providers.
If you need easy access to your savings, then a savings account could suit your needs. You can get competitive rates of interest on many accounts from various providers and if you need your savings unexpectedly, you are not tied down to a long-term agreement.
An alternative way to provide an additional income could come through property investments. Although house prices have fallen in the last year, there is still money to be made in renting, if you have the hard cash available to buy a property this could be a profitable investment.
For those who have recently entered the world of work in the last few years, it is imperative you start thinking about your retirement now because the earlier you save, the easier your retirement will be.
It is likely your state pension income will not be sufficient enough to maintain the lifestyle you have been accustom to when you have been earning money, so consider an additional private pension plan.
Many companies offer employees the opportunity to pay in to a company pension plan, but there are also many other pension plans on offer from financial providers, so do your research before making a decision.
It is vital you do extensive research before deciding what financial route you are going to take. There are many providers who will say they can offer you the best deals, but probably the best way to do your research is to use independent comparison sites like www.moneysupermarket.com or www.fairinvestment.co.uk.
If you are still unsure about what you should do, discuss you financial options with an independent financial adviser who can give you detailed information to help your individual situation.
Roth IRA Investing: Helping You Laugh at Money Worries
Let’s face it. The financial situation that our country currently finds itself in is no laughing matter. But are you aware that long before the government set out to try to put smiles back on Wall Street, it set up a great way to help YOU laugh at money worries with Roth IRA investing?
It’s true. The programs established by the government for investing IRA money are truly financial bonanzas for those persons wanting to safely and effectively build wealth for the future. And with the generous tax savings options that come with these programs a person can truly laugh all the way to the bank.
Roth IRA investing is no different that traditional IRA investing. But I’ll get to that in a moment. However, the main difference between the two savings plans are the tax savings options.
If you choose to open a traditional IRA, your tax benefit is taken in the year you open the savings plan. You are allowed to deduct up to $5000*, the maximum contribution for 2008**, from your taxable income. Every subsequent year that you contribute to the IRA, you are allowed to take it as a deduction. Any earnings you make from your investments remain tax deferred until you withdraw them, along with your contributions, at retirement. At that time, applicable taxes will be owed.
In contrast, opening and maintaining a Roth IRA involves the use of money that has already been taxed. As with a traditional IRA, the $5000 maximum contribution cap still applies, but in this case, the earnings you make investing IRA funds remain tax free. When you withdraw your money (contributions AND earnings) at retirement, NO taxes will be due.
So what about Roth IRA investing? If you’re thinking that investing IRA funds in the unstable stock market is your only option, then think again. Most people that open IRAs don’t realize the vast choice of investment opportunities available to them, including mortgages, franchises, tax liens, partnerships, and private equity, to name a few.
Many people think they are not smart enough to make investing decisions. There are others who don’t want to be bothered with the paperwork. Financial institutions play upon these uncertainties because they make their money from charging management fees and earning profits from selling in-house investments.
There is nothing wrong with allowing a financial institution to manage your investments. Many people are happy with an annual 8% return. But when there is an opportunity to save those fees and earn those profits yourself by managing your own IRA, why wouldn’t you?
The truth of the matter is that self directed Roth IRA investing gives you the opportunity to hold a vast array of assets, including real estate, that can easily double or triple your initial investment. And remember, Roth IRA investing profits are tax free.
If you’re still unsure about investing IRA money yourself, you’ll be happy to know that there are companies that specialize in setting up self managed IRAs. Not only do they follow your investing instructions, but they take care of the hassle of the paperwork. This includes generating the required reports, and making sure your IRA is in compliance. In my opinion, this truly is the best of both worlds.
Make no mistake about it. Roth IRA investing is one of the easiest ways to save and earn money while getting a great tax break. If you are one of the smart people investing IRA money then it won’t be long before you, too, are laughing at money worries.
*Maximum individual contribution
**Annual maximum subject to change
Nicanor Castillo is a passionate advocate of building wealth through sound financial investments. In recent years, Nicanor has focused on socially conscious investing which empowers urban communities while achieving a guaranteed minimum return on investment. To find out how you can participate, visit http://www.irainvestingadvice.com.