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With the hard work and attention that you are exerting towards your career and earning a decent living, wouldn’t it just be sad to wake up one day, when you are old and gray, to find out that you do not have much funds to live by? Not a few people end up this way. It is a sad fact that a lot of people, despite racking up hundreds of thousands of dollars in annual income during their heyday, end up with bank account balances that are not enough to sustain their lifestyle in old age. Do not let this happen to you. The young and productive person that you are now is the best person who can ensure that the way you live during your sunset years will not be compromised. With wise retirement income planning, you can ensure that you will be able to enjoy your life during old age and, if the economic environment works to your favor, maybe even have some money left over for the next generation to enjoy.

Retirement income planning is not all that difficult to do. The right financial discipline and some wise investment decisions can result in successful accumulation of funds for use in later years. Starting a savings plan now is one of the steps that you can take to start your retirement income planning. To know how much you have to save for, determine how much income you would need if you were to retire now. Using the inflationary factor, compute for the income this would amount to by the time you reach your retirement age. The resulting figure should be the amount that you should target to accumulate. There are several retirement income planning instruments that you can take advantage of. The internet could present a wealth of information about these instruments and what they could do for you. If you are not confident about your financial management skills, you can try contacting a certified financial planner for assistance in getting you on track with some retirement income planning tools that match your financial needs and your investment appetite.

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We do not want to keep working for a living until the time we die, or do we? Consider this – what if you could work only for ten years and then be able to enjoy the same lifestyle without having to work again for the rest of your life? Yes, you can. With the right financial discipline, anyone should be able to achieve this. This is the concept of money at work. Without you having to work whether for an employer or your own business, you can enjoy the same income from yields that your money earns for you. But, before you can put your money to work, you have to make enough money to allow you to take advantage of the various investment opportunities around. Every cent that you save today counts towards the accumulation of money available for you to invest. You have to start saving now to invest and not to spend.

There are ways to save money that you can practice everyday. Yes, even with today’s tough times, you can still employ these ways to save money for a better life down the road. One of the first things you should do is to evaluate your own financial statement. Take a look at your income and your expenses. Go into this in detail. Once you have an idea of how much money comes in, how much money goes out, and what expense items your income goes to, you can already look at the ways to save money. Examine the expense items in your itemized list and then come up with a budget. One of the best ways to save money is to treat the amount of money you intend to save as an expense item. Pay yourself first. When your income comes in, set aside your savings already and have the discipline not to touch it. Small things like brewing your own coffee to take in a flask to work with you instead of stopping at the corner gourmet coffeeshop, and walking the few extra blocks to the grocery instead of taking a cab are just some of the easy ways to save money everyday.

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As the old saying goes, “You judge a horse by its track record,” and that is probably true in most instances. However, it is not necessarily true when assessing the performance of mutual funds. Using past performance to determine a fund’s future performance is much like looking behind you to see ahead. It is not exactly an effective measure.

There are several companies that assess mutual funds and assign them ratings based on specific criteria. Quite often, those criteria consist of viewing the fund’s past performance over a five year or ten year period. However, this method has not proven to be effective in determining how a fund will perform in the future. So, short of polishing up the ole crystal ball and calling in to the psychic hotline, what is the conscientious investor to do?

Morningstar is one of the first companies that springs up when folks start talking about mutual fund ratings. As the most popular fund rating company, Morningstar uses a star system to rate funds, with five stars being top performers and one star being poor performers. However, the crux of Morningstar’s ratings system is on past performance and that system may prove to be somewhat flawed.

Another source of fund rating is Lipper Leader Fund Ratings. Lipper uses five criteria in ranking mutual funds: total return, consistent return, preservation, tax efficiency and expense. They do factor in past performance, but the system seems to be more focused on analytical formulas than on past performance. Interestingly, investors must register with Lipper in order to access the fund rankings while Reuters uses Lipper rankings, yet allows immediate access to the information.

Business periodicals such as Business Week often publish their rankings of mutual funds, often on an annual basis. Business Week, for example, does publish the “Mutual Fund Scorecard” annually in their magazine, but it can be accessed online at their website. On the website, the Scorecard is updated monthly.

There are many magazines for business and investing that publish stock picks and mutual fund ratings. Some publish the information on an annual basis while others do so monthly. A discerning investor will be able to decipher the information and make an educated decision based upon the information from these publications as well as other sources.

Schwab’s One Source Select List uses “rigorous criteria” to establish a list that is published quarterly and outlines their version of top ranking mutual funds. While the Schwab name is well known and trusted in the business and investing community, the disclaimer that precedes the ratings seems to be longer than the explanation for how the experts established the ratings. However, they do have an easy to understand table that lays out all the information on each fund. They even draw you pictures to show your risk level on each fund.

The bottom line here is that if you want to use ratings as a method of selecting the mutual funds in which you want to invest, it would be wise to assess several different sources with different ranking methods and see which mutual funds consistently rise to the top. Using just one rating source may not be an entirely effective method if you wish to invest wisely.

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Article Source: http://EzineArticles.com/?expert=Christopher_W_Smith

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What are bonds and how do they work?

Before you start investing in bonds there are particular things that you must understand. If you do not have a clear understanding you may purchase the wrong bonds, at the wrong maturity date.

Three key factors to consider when purchasing a bond are the par value, the maturity date, and the coupon rate.

The par value of a bond refers to the amount of money you will receive when the bond reaches its maturity date. In other words, once the bond matures your initial investment will be returned.

The date your bond reaches its full value is its maturity date. On this date, you will receive your initial investment, plus the interest that your money has earned.

Corporate and State and Local Government bonds can be ‘called’ before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the interest that it has earned thus far. Federal bonds cannot be ‘called.’

The coupon rate is the interest that you will receive when the bond reaches maturity. This number is written as a percentage, and you must use other information to find out what the interest will be. A bond that has a par value of $2000, with a coupon rate of 5% would earn $100 per year until it reaches maturity.

Because bonds are not issued by banks, many people don’t understand how to go about buying one. There are two ways this can be done.

You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a brokerage, you will more than likely be charged a commission fee. If you want to use a broker, shop around for the lowest commissions!

Purchasing directly through the Government isn’t nearly as hard as it once was. There is a program called Treasury Direct which will allow you to purchase bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid using a broker or brokerage firm.

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You have to do something today to make sure that you will have enough funds when you retire from employment. It does not really matter whether you are a simple employee or a businessman. The target retirement income amount may vary but the fact remains that we all need some amount of money to live on during the time when we are no longer able to work for a living. An Individual Retirement Account or an IRA is one of the instruments that you can use to take charge of the way your retirement income instrument is set up. An IRA allows you to choose from a host of retirement acounts and employ a variety of investment strategies in order to come up with the kind of retirement income accumulation that you intend.

As compared with a 401k plan, an IRA provides more options and allows for more flexibility. This means that you are not limited to particular investment instruments or investment strategies that are put in place by your employer as in the case of 401k plans. Those whose employer 401k programs are set in place and managed using sound financial planning analysis are in good shape. Those, however, who would much rather make the investment decisions themselves would be better off with their own personal IRA. This makes not only stock and bond market instruments but other instruments as well including index funds. An individual account would be a good option for you if you are financially savvy and know how to read the economic scenario quickly. You have to know how to do your own financial planning analysis if you are to maximize earnings on your IRA. You would not want to miss out on great opportunities to earn more on your money by having to dilly-dally around on an investment decision. It is important to have a good grasp of investment concepts when you decide to set up your own individual retirement account.

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