Archive for the ‘Savings’ Category

Retirees, Turn Your Passion Into a Business

More seniors are venturing into the start-up world. Learn how you can launch your own business in retirement.

By Eleanor Laise, From Kiplinger’s Retirement Report, July 2015
For a growing number of seniors, retirement means business—start-up business, to be precise. Starting a business in retirement can be a way to pursue a passion, enjoy an intellectual challenge or simply boost your income. Perhaps you’ve done some consulting as a side gig and want to expand the business. Or maybe you have been downsized and are having trouble finding a new job.

If you are on the brink of retirement and thinking of launching a business, “your age can be a very positive factor,” says Ellen Thrasher, who recently retired as director of the U.S. Small Business Administration’s Office of Entrepreneurship Education. With a wealth of work experience and good-sized nest eggs, many seniors are well positioned to succeed as entrepreneurs.

People age 55 to 64 accounted for 26% of all new entrepreneurs last year, up from 23% in 2013 and 15% in 1996, according to the Ewing Marion Kauffman Foundation. More and more people want or need to continue working into their later years and they’re saying, “I don’t mind working longer, but I want to do it on my terms,” says Michele Markey, vice-president of Kauffman FastTrac, which provides training programs for entrepreneurs.

But older entrepreneurs also face unique challenges. Because they don’t have decades to recover from a small business going bust, older entrepreneurs must be particularly vigilant about minimizing risks. They should keep a tight rein on start-up costs, avoid heavy debt loads, research the target market and choose a business structure that will protect their retirement savings from a business meltdown. Before diving in, seniors may want to test whether they’re really cut out for the entrepreneurial life—perhaps by volunteering at a business incubator where they can help mentor younger entrepreneurs.

Some seniors stumble into the start-up world by accident—but then become hooked. Elizabeth Isele, 72, was 56 when she launched her first enterprise. She had retired from the publishing industry in New York City and moved to Maine, planning to do some editing and teaching. But when a publisher asked her to help create Web sites, Isele started researching what the Internet was all about—and realized how much seniors could benefit from it. So she launched an organization to provide computer training to seniors. “I was an accidental senior entrepreneur,” she says.

Once bitten by the entrepreneurial bug, Isele became committed to sharing her know-how with other seniors. She has since launched two new ventures focused on helping seniors launch their own businesses: eProvStudio and Senior Entrepreneurship Works. With training, seniors can “understand they’ve been thinking entrepreneurially their entire lives,” even if they’ve never started a business, Isele says.
Get educated

Your first step in exploring entrepreneurial life: Seek out training and mentoring that will help you determine whether you’re cut out to be an entrepreneur, give you feedback on your business ideas and cover some details of launching a business.

The Small Business Administration offers free online courses designed specifically for encore entrepreneurs. AARP offers online tools that help seniors assess whether entrepreneurship is a good fit for their personality and financesstartabusiness. Also check your local community college for courses on writing business plans and other small-business topics.

You can also find more in-depth training designed specifically for encore entrepreneurs. Kauffman FastTrac, for example, offers a 30-hour program for boomer entrepreneurs. The course is available through community colleges and other institutions nationwide.

SCORE, a nonprofit organization supported by the SBA, lets you connect with a small-business mentor by e-mail or participate in online workshops as well as providing in-person training and mentoring. You can also visit Small Business Development Centers or Women’s Business Centers, both overseen by the SBA. Find centers and other resources in your area.

Next, assemble a “kitchen cabinet”—a team of advisers who can give honest feedback and poke holes in your business plan. Include colleagues or acquaintances who have expertise you lack, perhaps in finance or marketing.

Choosing a business

The best businesses for older entrepreneurs are “not capital intensive,” says James Bruyette, managing director at Sullivan, Bruyette, Speros & Blayney, a wealth management firm in McLean, Va. If you launch a consulting business out of your basement, for example, you’ll likely avoid risking savings that you can’t afford to lose.

Consider your appetite for risk. While opening a jewelry store can be a roll of the dice, you may be able to sell items on eBay or Etsy with minimal risk. A franchise can also make sense for some risk-averse entrepreneurs, Markey says, since the business has already been established and there’s marketing help and other support available. Many franchises are home-based and don’t require a storefront.

Consider how much time you want to put into the business, your energy level and your medical condition. Talk to your family about whether they’re comfortable with the amount of time and money you’ll be devoting to the business.

Talk to business owners in the industry you’re considering to be sure you’re realistic about the demands of the business. Some people consider starting a bed-and-breakfast, for example, because they want to spend more time with their family, Markey says. But “the realities of the B&B don’t give you more time with your family,” she says.

When you’ve settled on your idea, write a business plan, which should include your budget, goals, marketing concepts and other details. The SBA offers a step-by-step guide to writing your plan .

Read more at http://www.kiplinger.com/article/retirement/T049-C000-S004-retirees-turn-your-passion-into-a-business.html#sefQ2e1GTwfFe60J.99

 

Smart Savings Tips for New Grads
You got the degree. But do you have a sound savings plan for life beyond college?

By Janet Bodnar, June 13, 2014

A new bevy of graduates has burst out of the college cocoon. But how prepared are they to face financial challenges in the cold, cruel — and expensive — world outside? CNN recently interviewed me on the subject, and my answers reflect the advice that Kiplinger gives in our special Starting Out Guide for Millennials. Here’s a sampling:

See Also: Our Starting Out Columns for Young Adults
Q. Many young people look at you as if you’re crazy if you suggest laying the groundwork for home buying and retirement when they’ve just graduated. How crucial is it to start financial planning right off the bat?

You really don’t have much choice. Assuming you’re fortunate enough to get a job soon after graduating, one of the first things you’ll likely be called upon to do is sign up for your employer’s retirement plan (if you’re not automatically enrolled) and decide how much to contribute and where to invest the money (see Free Money for Retirement). You may not have any immediate plans to purchase a home, but it’s critical to begin building a solid credit history so you can qualify for an attractive interest rate when you’re ready to buy (see How to Get Your First Credit Card and Save for a House).
Q. What are some of the basic financial and investment concepts young people should grasp in the one or two years following graduation?

Most important is the time value of money, for a number of reasons. At this stage of your life, time is arguably your biggest asset. That means that thanks to the magic of compounding, small amounts set aside now can grow into big piles of cash later (see Start Saving Now). Also, when you’re investing for the long haul — for example, a retirement that is 40-plus years away — you can afford to take reasonable risks in pursuit of higher returns by investing in the stock market (see Start Investing Wisely).
Q. We’ve heard so much about student-loan debt and the tough job market. How do new grads navigate those economic factors and still get their personal finances off to a good start?

The best way to handle student loans is to set up a manageable repayment plan that fits your finances; if your circumstances change, you can always change the plan (see Don’t Stress Over Student Loans).

 

As for the job market, be proactive about your search (see Job-Hunting Tips for New Grads and  How Students Can Improve Their Chances of Getting a Job). Do an honest assessment of your skills to see if you have what it takes to qualify for jobs that are in demand. If you need to acquire additional knowledge, be a strategic student. Don’t head back to grad school (and potentially acquire more debt) unless you’re in a field that will pay off (see Advanced Degrees Worth the Debt). You may be able to acquire skills free by taking a massive open online course (MOOC), such as those offered by Khan Academy, Udacity or Coursera (see 6 Things You Must Know About E-Courses).
Q. A lot of new grads are going to ask, “How can I save for the future when I’m broke now?” What practical advice can you give them?
Many new grads make the mistake of thinking, I’m living paycheck to paycheck. I don’t have money to put aside. Or they think they need to make more money before they have enough to start saving. But that never works; the more you make, the more you tend to spend. The best way to save is to have someone else do it for you: Contribute automatically to your retirement plan at work, or have your bank deposit a portion of each paycheck into your vacation account. You’ll never miss the money if you don’t see it, and even small amounts will add up (see  How to Stretch Your Money).
Read more at http://www.kiplinger.com/article/college/T023-C002-S003-smart-saving-tips-new-grads.html#wUsDwCi0PwMyj3SE.99

The Basics of Investing in Mutual Funds

Learn how funds work and how to use them to set up a well balanced portfolio that’s right for you.

By the editors of Kiplinger’s Personal Finance, Updated January 2014
Funds offer plenty of benefits to busy investors. Here’s everything you need to know to make them work for you.

See Also: Our Favorite No-Load Mutual Funds

Why Mutual Funds?
For investors without much experience or time to devote to building a portfolio, mutual funds offer advantages that simply aren’t available anywhere else.

Sales Loads and Other Charges
Learn about the expenses funds charge and which ones you can avoid.

Focus on Categories
A fund’s performance depends on what it buys. Each category carries its own level of risk … and reward.

Build a Solid Portfolio
A balanced collection of funds will serve you better than a collection of the latest high fliers.

Start Your Search
From first choice to final check, here’s how to find the best funds for you.

Tips for the New Fund Owner
What paperwork to keep, how to track your investments and when to say “sell.”

Hang onto Your Profits
Keeping careful records, and understanding cost-basis rules will prevent you from overpaying your taxes.
Read more at http://www.kiplinger.com/article/investing/T041-C000-S001-growing-a-fund-portfolio.html#SDcRoJzQClbVQOWw.99

 

FUND BASICS – Start Investing

From first choice to final check, here’s how to find the best funds for you.

By the editors of Kiplinger’s Personal Finance, Updated January 2014
Funds offer plenty of benefits to busy investors. Here’s how to start finding the right ones to add to your portfolio.

See Also: The Basics of Investing in Mutual Funds

Your first step is determining whether you’ll pick funds entirely on your own or rely on the help of a broker, financial planner or other adviser.

If you seek help, you will likely pay a load when you buy your fund shares. Studies show that the commission does not buy better fund management. In general, loads compensate the sales people who sell the funds to their clients.

If you’re picking your own funds, there’s no point in paying a load for advice that you haven’t gotten. On the other hand, if you go to advisers for help, don’t begrudge them the commission you owe for their advice.
If you decide to stick with no-load funds, you will slice the universe of funds you need to consider roughly in half. Once you find a no-load you like you can purchase shares directly from the fund company, or through a discount broker, which may or may not charge its own transaction fee (see the Kiplinger 25 center for our favorite no-load funds).

Study Past Results

This is arguably the trickiest part of the process, because past performance is no guarantee of future returns. Not even the best and brightest beat the averages every year.

Focus on three- and five-year returns rather than one-year figures. A ten-year return is even better, especially if the fund is still managed in the same way (and by the same person) now as then and hasn’t changed in some fundamental way. The longer a manager has achieved superior results, the more confident you can be that those numbers are meaningful.

Concentrate on the consistency of a manager’s return. Even five-year results can be exaggerated by one spectacular year.

Examine how a fund has done each year of the period you’re looking at relative to its peers or against an appropriate benchmark index (such as the S&P 500 index for large-company funds or the Russell 2000 for small-company funds).

Incidentally, there may be times when it makes sense to invest in funds with less-than-stellar records. For instance, aggressive-growth funds that invest in small companies with strong earnings momentum have performed poorly over much of the past three years. If you want to invest in such a fund because you feel those kinds of stocks are attractively valued or because you need to round out a portfolio, be prepared to accept a fund with poor recent results.

 

Who Runs the Fund?

Look at how long the most experienced manager involved in running the fund has been associated with the enterprise. If the current manager took over the job in the past few years, the fund’s long-term record is probably meaningless. This may not disqualify a fund from consideration, but it does serve as a yellow light.

How Risky Is It?

There is nothing inherently wrong with investing in risky funds. But if you are going to take big risks, you ought to be compensated with big returns. What you don’t want is a fund that takes big risks but delivers just so-so returns for more than a year or two.

The Costs of Owning

All funds charge investors for the cost of management, sending out prospectuses and shareholder reports, legal services, accounting and other administrative matters. These costs are expressed by the fund’s expense ratio. An expense ratio of 1.00 means a fund extracts $1 a year for every $100 invested. (Performance results, incidentally, include these ongoing expenses.)

It’s always better to invest in a less costly fund. Expenses vary among different types of funds, so it’s important to view expenses in the context of a fund’s category. See Sales Loads and Other Charges for more information.

Is Size a Problem?

All things being equal, it is easier to manage a modest amount of money than a huge amount. Managers who invest in large, easily traded U.S. stocks or government bonds can hold many billions in assets without unduly hampering results. But funds specializing in small-company stocks or junk bonds might be overwhelmed by even $1 billion in assets. With small-company funds in particular, think twice about any fund with assets greater than $1 billion.

Study the Style

Once you’ve identified consistent, high-performance, low-cost funds with acceptable levels of risk, learn how the managers run them. The fund’s style will help you understand which market conditions are conducive to great returns and which are likely to hurt. See Focus on Categories for details on the different kinds of funds.

You’ll smooth the volatility of your overall portfolio if you choose funds from a variety of investment objectives and, in the case of stock funds, a cross section of investment styles. Request both a prospectus and a shareholder report. The prospectus contains information about the fund’s objectives, its strategy for achieving those objectives, and its risks.

A shareholder report will list a fund’s recent holdings. Also check management’s letter to shareholders. It sometimes contains useful information about the manager’s strategy or an assessment of his or her recent performance.

What’s the Yield?

In general, the higher the 12-month yield (that is, income distributed to shareholders the previous 12 months), the riskier the fund. Because bond-fund yields tend to be modest, low expenses are even more important.

Read the Prospectus

If a fund catches your eye, call the fund company and ask for its prospectus. Read the section on the fund’s investment objectives and policies, which tells you what types of securities it may invest in. Also be sure to read the sections that describe the fund’s risks and expenses to verify your research.

A fund’s annual and semiannual reports will give a snapshot of the fund’s recent holdings. Also look at which industry sectors a stock fund is emphasizing. If a fund says it invests in blue-chip stocks and you don’t recognize any of the names of the stocks in the annual report, that should set off an alarm.

Read more at http://www.kiplinger.com/article/investing/T041-C000-S001-start-your-search.html#gaZ29Ckl5hW6TB9R.99

6 Things You Must Know About Identity Theft

The number of victims is going up. Don’t become a statistic.

By Lisa Gerstner, From Kiplinger’s Personal Finance, June 2013

3 Things Not to Keep in Your Wallet
1. It’s no joke. The film Identity Thief poked fun at the perp, played by Melissa McCarthy, and her hapless victim, played by Jason Bateman. But the movie highlights how pervasive ID theft has become—and how easy it is for criminals to wreak havoc. “There are more people looking over your shoulder,” says George Milne, a professor of marketing at the University of Massachusetts, Amherst, who specializes in privacy. Still, you don’t need to lose sleep—or sign up for pricey monitoring services.
See Also: Is Your Identity At Risk?

2. Who’s stealing what. About 12.6 million people were victims of identity theft in 2012, an increase of more than one million from the previous year, reports Javelin Strategy & Research. One likely reason: a spike in Web site data breaches. LinkedIn, Sony and Zappos are among the high-profile businesses attacked in recent years. Javelin found that nearly one in four people who were notified that their data had been compromised in a breach became victims of identity theft last year. The fix: Create a variety of passwords so that a thief won’t be able to use a password stolen from one site to enter another. Passwords for your e-mail and financial accounts, in particular, should be unique. Create longer passwords that contain a mix of upper- and lowercase letters, numbers, and symbols.

3. What to watch for. Review your credit reports periodically and check each bank and credit card statement for unauthorized transactions. Bills from medical providers for services you never received could mean someone is posing as you to get treatment. Make a habit of shredding documents that contain sensitive information.

4. Lock the door behind you. Don’t share your phone number or birthday on social media sites. Keep your computer’s security software up-to-date, and avoid sending personal data over unsecured Wi-Fi networks and Web sites. Set up alerts through your bank and credit issuers to notify you when large transactions—say, $150 or more—take place. Lock your smart phone’s screen with a password, and set up the ability to erase data remotely in case the phone is lost or stolen.
5. Monitor your child’s identity, too. Kids are attractive targets because crooks may be able to use a child’s information for years before anyone realizes something is amiss. Be on the lookout for unauthorized bills addressed to your child or calls from debt collectors. Have the credit agencies run a manual search of your child’s Social Security number to see whether it has been used. If you’re not sure why a school form requires your child’s Social Security number, don’t hesitate to ask.

6. And if worse comes to worst. If you suspect you’re a victim of identity theft, contact the organi­zation involved, such as a bank or credit issuer, and file a police report. Place a fraud alert on your credit reports by contacting one of the three major bureaus (Equifax, Experian or Trans­Union), which will notify the other two. Lenders will have to take extra steps to verify that you are the person taking out credit in your name. In more serious cases, a security freeze, in which lenders must get your permission to pull a report, may be necessary.

Read more at http://www.kiplinger.com/article/credit/T048-C000-S002-things-you-must-know-about-identity-theft.html#t8skYPSy1gSrZ0zl.99

 

When to Seek Help With Your Investments

We could all benefit from the guidance of professional financial planners from time to time. Here is a range of options, from free to comprehensive.

By Kathy Kristof, From Kiplinger’s Personal Finance, November 2014

In a perfect world, everyone would make his or her own investing decisions. After all, no one knows you better than you do. Plus, being a do-it-yourself investor means you don’t have to pay someone else to invest on your behalf. But sometimes even savvy investors need help. “You have to know the limitations of your own abilities,” says Jeff Reeves, editor of the investing-advice Web site InvestorPlace.

See Also: Do You Need a Financial Planner?

To invest solo, you need to be calm, disciplined and well educated about investment options, says financial planner Cicily Maton, of Aequus Wealth Management, in Chicago. You must also be able to set specific goals and track your progress. But most of all, you must have the emotional fortitude to suffer through market downturns without selling in a panic or suffering undue anxiety. “Ups and downs are as old as the market,” Maton says. “Even if you’re intellectually capable of investing on your own, you should get help if you find yourself worrying so much that you’re losing sleep.”

You can get assistance from many sources, but the costs and serv­ices vary widely. Here are some of the more attractive options:

Free

If you’re able to map out your plan but need help dividing up your assets and choosing specific investments, you may be able to get free advice from your discount broker or mutual fund company. Vanguard, for example, offers an array of online tools that help investors choose specific Vanguard funds based on their goals, risk tolerance and time horizon. Investors with more than $500,000 in assets can also get ongoing access to Vanguard’s financial advisers via computer-based video chats.
Inexpensive

Some online advisory firms, such as Jemstep and Betterment, also provide free portfolio evaluations and suggest ways to invest at a low cost—from a few dollars to about $250 per year if you have a balance of at least $50,000 (see Best of the Online Investment Advisers). These so-called robo-advisers are best for people who are just starting out. If you already have built up a portfolio of stocks and bonds, be careful. These sites may encourage you to sell your existing holdings because they don’t fit into their programs, which favor low-cost index funds. Selling what you’ve got—particularly when your investments are well considered—could be a mistake because you might trigger a tax bill and fail to improve your portfolio’s performance. The American Association of Individual Investors also offers model portfolios for the $29 cost of an annual membership.

Comprehensive

If you’ve amassed considerable wealth and need investment advice, you can pay for it in one of three ways: by the hour, via commissions or by letting an adviser manage your money and charge you a percentage of the assets. Each method has advantages and disadvantages.

Financial planners who charge by the hour can help with almost any question and can map out a great blueprint for you. They’ll generally charge $100 to $400 an hour for their services. But they won’t execute the plan. If you don’t have the discipline to take the next steps, you may need more hands-on help.

 

Some advisers don’t charge you directly, but make money by steering you into products that generate commissions. They may make excellent recommendations. But because they only make money if you buy something, their advice can be tainted by their own economic interest. You should always ask these types of advisers how much they’re paid for the products they pitch you.

Fee-only planners usually charge a percentage of the assets you give them to manage. These fees often amount to 1% or more of your assets each year and come on top of the expenses you pay for the investments they buy on your behalf.

Of course, these costs may be well worth paying if your adviser can keep you on track, rebalance your portfolio as needed, and stop you from making rash and potentially costly moves. But be sure to check your planner’s credentials. Securities regulators have an online tool that can help at http://adviserinfo.sec.gov. Type in the name of your adviser or the name of his or her firm, and you can learn if either has had any regulatory scuffles. The Web site will also lead you to Form ADV, which tells you how an adviser is paid.

It’s also wise to consider occasionally whether you’re getting good value for your money. Is your adviser easy to reach? Does he or she give you good advice and keep you from acting rashly? If not, look around for someone better. For more, see Finding a Financial Planner Who’s Right for You.

Read more at http://www.kiplinger.com/article/investing/T023-C000-S002-when-to-seek-help-with-your-investments.html#DdljUUCqQsklGBBx.99

 

 

Divorce and Your Money

Take these steps to avoid financial disaster.

By the editors of Kiplinger’s Personal Finance, Updated January 2014

In the short run, divorce is an emotionally wrenching experience for all involved. In the long run, it can sow the seeds of financial disaster if one spouse lets the other dominate the process. Divorce is rarely fair. This information can help you make it less unfair.

See Also: Kids and Divorce

If you feel a split is imminent, take these steps first.

1. Consult a lawyer.

2. If you do not have a credit card in your own name, apply for one.

3. Apply for checking and savings accounts in your own name.

4. To protect money or investments held in joint accounts, withdraw half of the money. If you withdraw all of the money the court could order you to give half back. Another option is to change the signature authority on any joint account so that both of you must sign in order to complete a transaction.
5. Collect all the information you can find on your spouse’s bank accounts, mutual fund and brokerage accounts, pension plans and retirement funds, insurance policies, and any other financial asset, such as real estate.

6. Get credit reports for both you and your spouse.

7. Hunt up copies of state and federal income-tax returns from the past several years and make your own copies.

Your State Matters

In a divorce proceeding, reliable financial information is crucial. What you can do with it will depend on the laws governing divorce in your state.

Community-property states.

The community-property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin — consider any assets acquired during your marriage to be owned equally by husband and wife, and they will be split 50-50 in divorce.

Non-community-property states.

In the remaining states, so-called equitable-distribution laws govern the division of a couple’s assets. Some states divide only assets acquired during the marriage, while others consider everything available for divvying up. But marital assets aren’t necessarily divided equally. In some states the distribution laws take on a punitive aspect by considering which partner seems most at fault for the breakup.

 

Future pension payments, stock options, profit-sharing plans, and other deferred benefits also count as divisible assets. Federal law governing pensions and deferred-income plans provides some protection here. A covered worker can’t cut a spouse out of a share in such plans without the spouse’s written consent.

Alimony.

No matter where you live, alimony isn’t what it used to be. Now a husband or wife usually has to provide financial support to an ex-spouse for a limited time, usually two to five years. Alimony is ordered by a court on the basis of one spouse’s need or entitlement and the other spouse’s ability to pay.

Child support.

Every state relies on a standardized formula to determine a minimum level of child-support payments. Courts can award more if they choose. Federal law requires states to review child-support agreements from time to time and adjust them for inflation or changes in parents’ income.

Because child-support payments usually end when the child reaches 18, it’s a good idea to write an agreement making clear who will pay for the child’s college education. Also, if you are to receive child-support payments, insist that the paying spouse purchase a life insurance policy covering the term of the payments, naming you as the owner and beneficiary of the policy. Your ex-partner will also be unable to change the beneficiary without your agreement.

Keeping Down the Cost of Divorce

Mediation.

In many cases, mediation can be a less expensive and much faster way to arrive at an agreement. A mediator will guide you through the process, not make decisions for you. Still, before signing a property settlement, you might want to have it reviewed by a lawyer to make sure you haven’t overlooked something. You can find a mediator through the Association for Conflict Resolution Family Section.

Do-it-yourself divorce?

Do-it-yourself divorce kits are available in many states. Use them for guidance, but don’t attempt a divorce on your own. If your situation is simple and you’re both eager to settle your differences and get on with your lives, then you can quickly arrive at an agreement in mediation or through your lawyers. Do-it-yourself divorces should be reviewed by an expert before they are finalized.

Read more at http://www.kiplinger.com/article/spending/T065-C000-S001-divorce-and-your-money.html#ahhSDbYtCopy1y01.99

 

Understanding Certificates of Deposit

They can be a great way to beef up your savings, but watch out for penalties.

By the editors of Kiplinger’s Personal Finance, Updated January 2014

CDs range from so-called time-deposit savings certificates — available in modest denominations at banks, savings and loan associations, and credit unions — to negotiable certificates requiring minimum deposits of $100,000 or more. They can be a great way to beef up your savings, but watch out for penalties. Here’s what you should know:

With a CD, you promise to leave your money with the bank for the term specified on the certificate, which may be as short as three months or as long as five years. In return, the bank pays you a higher rate of interest than it would pay on an account with no such promise, and it probably charges a penalty if you withdraw your money before the certificate has matured. Usually, the longer the term, the higher the rate. Interest rates, penalties, and other terms vary from institution to institution. Be sure to get a clear explanation of what you’ll have to pay if you redeem a CD early.

Also watch for the rollover provision. In some cases, the certificate will automatically be rolled over (that is, another certificate purchased for you) if you don’t notify the institution within a specified number of days before the certificate’s maturity.

You can reduce the risks of a long-term commitment — and take advantage of long-term rates — by staggering, or laddering, maturities, so that some are always coming due in the near future. Then, if you don’t need the cash, you can rotate the maturing certificates back into long or short maturities, depending on rates available at the time.
For example, if you have $2,000 to put in CDs, consider putting $500 each in a three-month, six-month, one-year, and two-year certificate. When the three-month CD matures, roll it over into a six-month certificate. Do the same when the first six-month CD matures, and continue rolling over so that you’ll always have a certificate within three months of maturity.

To protect against getting locked into a low rate or being caught short of ready money, arrange to have the interest from some of the certificates paid out on a quarterly or semiannual basis. You will lose part of the extra return you’d get from compounding, but if rates are volatile, that’s a relatively small price to pay for retaining your liquidity.

Read more at http://www.kiplinger.com/article/saving/T005-C000-S001-certificates-of-deposit.html#R9PIi40pXAg2ZxF9.99

10 Financial Commandments for Your 30s

 

After establishing a solid financial foundation in your 20s, use the next decade of your life to keep building and protecting your wealth.

By Stacy Rapacon, April 15, 2014
Your finances might have felt like a plague in your twenties, but thou shalt thrive throughout your thirties and beyond.

Our list of Financial Commandments for your 20s helped you find your financial footing and establish a solid foundation. Now that you’re older and (hopefully) wiser, this list of goals will help you continue to build your wealth and blaze a path to financial security.
1. Advance your career.

In your twenties, you developed a marketable skill. Now it’s time to apply that skill to increase your earnings.

Research potential career paths for workers with your skill. Identify the types of jobs and companies where you might fit. Consider whether you should go back to school for an advanced degree (or if some free online courses can help boost your career). You might even consider moving to a city where you can find more opportunities in your field.
Sharp career turns can be worthwhile but also risky. You’ll need a financial plan to keep your budget steady while you’re changing course. (See Quit Your Job the Right Way.)

2. Rethink your budget.

You established a budget in your twenties and perhaps accumulated some savings. But your income and expenses, as well as your needs, wants and dreams, will likely change from year to year. Your budget will need to adjust to life changes such as getting married, having kids or starting your own business. “It’s a balancing act,” says John Deyeso, a financial planner in New York City, who works with many young adults (and is himself 37 years old). “Once you get into your thirties, you have more money and more goals, so how do you spread that around?”

You may need to cut spending in some areas to reallocate elsewhere. For example, when I got pregnant with my first child, I slashed spending on the “going out” line item—and added costs to my budget on a new “baby supplies” line item. (Happy hours were off the table anyway.)

 

If you’ve recently gotten a raise (congratulations!), you might consider ramping up your saving for emergencies (see commandment #5) and retirement (commandment #6).

3. Adjust your insurance coverage.

As your assets grow, you may need more insurance to cover them. Maybe you rent a bigger or more private space now. (Learn more about renters insurance.) Maybe you’re buying a house (and need home insurance) or car (and need auto insurance). Maybe you have some loved ones who depend on you financially (and you need life insurance to make sure they’re taken care of if anything happens to you). All of these situations call for additional protection.

Even if your situation hasn’t changed, you should periodically reshop your insurance policies to make sure you’re still getting the best deal. To compare auto insurance rates, try InsWeb and Insurance.com. For life insurance, you can check rates at Accuquote and LifeQuotes.com. If you’re changing jobs, be sure you understand your new benefits and how your health insurance premiums will differ from those at your old job.

4. Pay off nonmortgage debt.

In your twenties, you came up with a debt-repayment plan. Stick with it throughout your thirties, so you’ll enter your forties focused on building your nest egg for the future—not paying off bills from your past.

5. Increase your emergency fund balance.

Remember, your goal is to maintain three to six months’ worth of living expenses in your emergency fund. As your income and expenses go up, so should the amount in your emergency fund. Worried that all that liquid cash isn’t compounding as it might if invested in the stock market? Consider these ways to earn more interest on your savings.

 

The Essentials of Money-Market Accounts

They may pay higher interest rates than your checking account, but there’s more to consider.

By the editors of Kiplinger’s Personal Finance, Updated January 2014

Money-market deposit accounts (MMDAs), which are sometimes called money-market investment accounts, pay higher interest rates than some checking accounts do. However, the minimum-deposit levels are higher and transfers from the account are limited. MMDAs are meant for savings, not for funds to which you need ready and repeated access.

Institutions often charge fees if your account falls below minimum-balance requirements. Rates aren’t guaranteed; they change along with market rates.
Money-market funds
These are mutual funds that invest in very short-term debt instruments issued by corporations, banks and the U.S. Treasury. They can be excellent when you want to park savings someplace while you ponder longer-term investments. Because they are safe, many people have come to consider money-market funds as a permanent part of their savings plans, as well as a hedge against investment market risks. However, with short-term Treasury securities yielding almost nothing, now you will earn almost no interest on the funds you deposit in these accounts.

Although $1,000 is a common minimum initial investment, some funds are available for less, and virtually all accept smaller amounts for subsequent investments.
Most funds permit you to write checks on your account, although the high minimum for checks — usually $250 or $500 — makes money-market funds unsuitable for everyday bill paying. Shares are generally redeemable at any time.
Asset-management accounts
This type of account, which is offered by brokerage firms and banks, can be a good vehicle for managing your cash if you have a lot of it and feel you can use the other services such accounts deliver.

Both full-service and discount brokers offer cash management accounts to clients who have stocks, bonds, cash, mutual fund shares, or a combination of the four in their accounts. Customers get a line of credit, check-writing privileges on their money-market funds, and several other services. The fee ranges from $50 to $300 a year but may be waived if you have $100,000 or more in your account.
Read more at http://www.kiplinger.com/article/saving/T005-C000-S001-money-market-accounts.html#dB4jwUOyfkct0ipd.99


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