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Wednesday, 25 May 2016

When retiring isn’t an option: 'I couldn't retire if I wanted to'.-By Lisa Scherzer

People just aren't prepared. According to a study on retirement confidence by the Employee Benefit Research Institute published last week, less than half of those surveyed have tried to calculate how much money they'll need in retirement, and 39% simply guess rather than doing a systematic analysis.

And it gets worse. Last month the New York Federal Reserve released a report that found that people over 50 are carrying more debt than they had in the past. It found that the debt held by younger borrowers dropped slightly from 2003 to 2015, whereas debt held by people between ages 50 and 80 spiked by 60% over the same period.
What types of borrowing play the largest role in the observed surge in debt at older ages?
The average 65-year-old had $27,259 in mortgage debt (including a home equity line of credit, or HELOC) in 2003. By 2015, that figure climbed 47% to $40,000, according to NY Fed data. The same age group carried $2,973 in auto loan debt in 2003, and $3,830 in 2015 – a 29% increase. Credit card debt levels remained around the same for 60- and 65-year-olds – and even dropped moderately – between 2003 and 2015. Student loan debt increased among 65-year-olds over the same period.
Yahoo Finance took an informal survey of retirees and those close to retirement age in New York recently to get a sense of how they view their retirement prospects. Some people we spoke with were in comfortable financial situations, while others (who you can hear from in the video above) planned to work as long as they possibly could. Whether because of considerable mortgage debt or because they’ve exhausted their savings to pay for their children’s college education, retirement isn’t on the near horizon.
Michael Barry, a self-employed farmer on Long Island, says he plans on working as long as he can. “I love what I'm doing. So I really enjoy it. And as long as I'm healthy. I intend to continue,” Barry, 65, says. “The other reason is that I couldn't retire if I wanted to, financially.”
Debt – especially mortgage debt, often the most costly monthly expense – can stand as an obstacle between retiring and having to continue working. Indeed, according to the Fed’s 2014 Survey of Household Economics and Decision Making, about 31% of non-retiree respondents have no retirement savings or pension.

It’s important to note that debt isn’t always a negative, even for near-retirees. Most homeowners benefit from a mortgage interest deduction. But the value of the deduction may drop when you retire. You might be paying far less interest on your loan, which means a far smaller mortgage interest deduction. (Here’s a more detailed look at the pros and cons of retiring with debt.)

“We try to help our clients understand the math, but at the end of the day, the qualitative aspects tend to be more important to people. We’re not worried about debt if it’s done right,” says Brett Horowitz, CFP and wealth manager at Evensky & Katz in Coral Gables, Fla.
Culled from yahoo finance

Tuesday, 24 May 2016

How to Invest When You Don’t Have a Lot of Money -Nikelle Murphy

Investment plans | Source: iStock

You’ve heard it before: saving for your future is one of the best things you can do. And even if you feel like you don’t have “enough” money to invest, it’s never too early to ask a professional for financial advice. You might think you need $50,000 in the bank before you can ask someone for help in managing your money, but the truth is it’s always a good idea to get an outside perspective on your financial goals and progress. The problem is, sometimes quality advice can be hard to attain.
Many traditional firms have minimum limits you need to reach in order to qualify for their investment or consulting services. Some won’t look at your account unless you have $10,000; others won’t let you in the door without a solid $50,000, $100,000, or more. If you’ve never seen any of those numbers in your savings accounts, don’t worry – there are still quality options you have to make sure you’re getting good advice on how to allocate the savings you have worked hard to accumulate.

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To get some advice about how to find those options, The Cheat Sheet asked for tips from Sheyna Steiner, senior investing analyst at Bankrate, and Jon Stein, the founder and CEO of Betterment, a robo-advising company with more than 125,000 clients who have invested more than $3 billion with the firm.
If you don’t have much money to invest and are just getting started doing your own financial research, it can be overwhelming to take the “DIY” approach and try to figure out what you should do based on competing ideas and theories in books and on websites, Steiner said. In that case, seeking professional advice can be a good way to start off on the right foot. “It can be great to get some direction if you don’t know exactly what you want to do,” she explained.
Stein said he used to manage all of his own money, but it was taking a significant amount of his time when he could have been doing other things. He saw a need for a new management model, and one that could be made available to anyone regardless of their savings. “It’s a frustrating thing that many of the ‘best’ advisors or ‘best’ investment opportunities are off-limits to a lot of folks. And it didn’t seem fair to me,” he said. As a result, he founded Betterment, which automates most financial transactions so that fees can remain low. Accounts are also managed in-house, so there’s no need to pay a third party to do the labor-intensive work, another factor that can drive up costs.
When you’re looking to get sound financial advice, here are a few tips the experts suggest you follow.

1. Know your goals

Christopher Furlong/Getty Images

Knowing why you’d like to invest your money and how you’d like to see that money grow over time are both key to making sure you find a good match in an advisor. Many financial advisors will offer a free consultation, Steiner said, and it’s in that meeting where you can decide if your savings goals match up with what a certain advisor can do for you.
On top of that, setting those goals in a clear way is proven to help you stay the course and continue investing, Stein said. Whether you’re saving for retirement or want to pay for your children’s education, you and the advisor can work together to come up with a plan that fits your lifestyle and needs. “A good advisor, whether in person or a robo-advisor, is going to ask you about those goals,” Stein explained. This is also the time to talk about whether you’re comfortable putting your money into high-risk accounts (often with a potential for greater yield, but also a potential for more volatility), or if you’d like to stick to a conservative approach.

2. Ask about an advisor’s credentials

If you’re working with a person face-to-face, Steiner suggests asking them about their licensing. In particular, look to make sure they’re a CFP – a Certified Financial Planner. That designation is only earned through training, and will be an indicator the person sitting across the desk from you is qualified to help you decide what to do with your money. In addition, ask directly to make sure they’re also a fiduciary.
A fiduciary is someone who is essentially charged with acting in your best financial interests. If you’re new to investing, ensuring an advisor is operating under the fiduciary standard is a good way to make sure you’re getting the best possible advice for your goals.

3. Ask about the advisor’s paycheck

Source: Thinkstock

You wouldn’t ask most of your peers or business acquaintances how exactly they make their money. But in the case of financial advisors, Steiner says it’s a question you should be asking before you hand your savings over.
If you’re charged a flat fee for financial services, you can be slightly more assured that you’re not going to get biased advice, Steiner said. Though advisors who work on commission can also be working in your best interests, they might receive extra money for recommending specific products and services. While they might technically be an ok fit for you and your goals, those products can sometimes be more complicated or more expensive than other alternatives, Steiner explained. In this case, it’s especially important to make sure your advisor is a fiduciary, so they’re ethically bound to work in your best interests.
“If somebody recommends a complicated and expensive product, take a few days to look it over and get second opinion,” Steiner said. “Understand the fees and what it entails.”

4. Be patient

Steiner said she could have benefitted from the advice of an advisor when she first began investing. Instead, she put all of her money set aside for investing into an aggressive mutual fund during the tech boom, and subsequently lost it all when the bubble burst. She didn’t diversify her accounts in the way she probably should have, and paid the price.
No matter your tolerance for risk, Stein reiterated that it’s important to be patient with your investments, especially if you’re investing toward long-term goals. “Often, people who are new to investing expect their investment to always go up,” Stein said, but that’s not always the case. All investments (stocks, bonds, etc.) are volatile, and you could initially see some drops depending on the market. Instead of panicking when the market dips, use it as an opportunity to grow your portfolio, Stein suggests.

Additional resources and tips

If you’re particularly worried about costs, Stein also suggests investing in index funds, which he said are often less expensive and more efficient than mutual funds.
If you’re starting with a very low amount of money to invest – say you’ve only got a few hundred dollars set aside – Stein said to focus on putting as much money away as you can. “The biggest determinant of long-term net worth is how much you’re able to put away and save,” he said, adding that Betterment is building out its offerings to be able to provide clients with advice not just on investment options, but also how much they should be saving to reach their goals, and in which accounts that money should go.
If you have a 401(k) through your employer, you may already have access to free financial advice through that account, Steiner said. Use that, or cobble together a network that can provide a holistic view of your finances. Nonprofit organizations like the National Foundation for Credit Counseling can help you get a handle on your debt and savings habits, Steiner explained, while you can look for an advisor to help with the investment side of your ledger.

Culled from Money & Career Cheat Sheet:

Monday, 23 May 2016

German chemical firm Bayer makes $62B offer for Monsanto

BERLIN (AP) — German drug and chemicals company Bayer AG says it has made a $62 billion offer to buy U.S.-based crops and seeds specialist Monsanto Company.
Bayer said Monday that the all-cash offer values Monsanto shares at $122 each. It said in a statement that the acquisition "would be a compelling opportunity to create a global agriculture leader, while reinforcing Bayer as a life science company with a deepened position in a long-term growth industry."
Bayer had said on Thursday that its executives met recently with their Monsanto counterparts "to privately discuss a negotiated acquisition" of the specialist in genetically modified crop seeds.
Monsanto is headquartered in St. Louis, Missouri.

Culled from AP