The Four Essentials To Learn Before Investing

If you’re thinking of making your first investment, it’s natural to hesitate. You may be thinking: is this the right time to buy? Prices go up and down and if you don’t have experience of following the tickers it can be hard to know whether or not you’re about to make a mistake.

Well, the good news is there are four essential pillars that should be in place before you commit a penny of your hard-earned cash. Get these right first, and you’ll be on the road to making the right choices with your money.

Step one: how much time do you have?

The most basic mistake a novice can make is to invest without a plan. You wouldn't set out on a road trip without knowing where you want to end up, so before you commit your funds, you’ll want out figure out your end game. Knowing how much money you want to make is only one side of the coin. Understanding this from the very start can prevent any major setbacks looking forward. 

Investing

On the flip side, you need to figure out how much time you have to make that money. For example, are you going to need funds in 10 years when Junior goes to college, or do you need cash soon to meet an IRS demand? Your personal situation is going to determine the route you take. Once you know how much time you have, you can ask yourself the next question.

Step two: how much risk can you handle?

There’s an adage that you should never gamble more than you can afford to lose. That said, some investments are riskier than others. Once you know your end game, you’re going to want to assess your own appetite for risk.

When it comes to investing, there’s a well-documented relationship between time, risk and reward. Your own tolerance for risk is probably one of the most important factors in your success so, rather than guess, you should look to the end game you already set yourself to help you figure this out.

For example, the more time you have to reach your goal, the more you can afford to take a risk, as the longer you keep your money invested, the more time there is to recover from any down markets or bad stock picks.

There’s even better news. Time is not only on your side when it comes to reducing risk. Having more time can also bring greater rewards. This is because the longer you have to reach your goals, the more you stand to grow your returns exponentially from compounding your earnings.

On the other hand, if you only have a short time to reach your target, then you’re better off going with a safer investment.

Step three: spread your risk

There’s a reason we don’t put all our eggs in one basket. If the basket falls …Well, you get the picture. No matter how well you figure out how much time and risk you have to play with, any potential rewards are negatively impacted if you simply stick with one stock, one industry or one asset type.

Once you figure out your appetite for risk you can begin to allocate your funds to different asset classes. This is where some initial investor education is critical, because it literally pays to know which types of investment hold the greatest risks and the greatest potential rewards. Here are the three main asset classes:
  • Cash and money market funds. Your main goal here is stability. This is a very safe investment, meaning you are unlikely to lose money, but the returns are small. The main risk here is that you could earn money more slowly than inflation rises.
  • Bonds and bond funds. This is the investor’s middle ground. Examples might be US government bonds or international bonds. The goal with this type of asset is to get a moderate return for a slightly higher risk. The main risk here is due to the fact that bond prices fall as inflation rises. This means that if inflation rises too far, the issuer may not pay promised dividends or be unable to pay you back your principal.
  • Stocks and stock funds. This is the riskiest type of investment but brings the greatest potential reward. The risk here is around falling stock prices, due to poor company performance or negative market sentiment. The stock market is very jittery and sentiment can be affected by all kinds of adverse news stories, political events far away and sometimes even the weather. To add to this, falls in stock prices can be much deeper than falls in bond prices. 
So, these are your main classes of asset. If you had a very long time to reach your investment goals you light get away with a stock-only portfolio, but as a general rule, when allocating your funds, it pays to spread them across all three investment classes. There is no magic formula here, the mix will depend upon your own personal appetite for risk and your personal end game. 

As well as spreading your investment across asset classes, when building your portfolio, it pays to spread within asset classes. For example, domestic and international currency or bonds, varying industry types and so on.

Step four: understand your costs

So now here’s the bad news. Every investment comes with a price tag and, even worse, the money that you pay out to costs will compound over time. For example, paying 2% of your principal investment may not seem like much of a loss, but once your returns start compounding, 2% is going to be a lot more money.

So it’s critical to understand what you’re paying and how to manage your costs. Counter-intuitively, funds with lower costs tend to outperform those with higher costs.

So, if you’re wondering if it’s the right time to invest ask yourself: have I ticked off this four-point checklist? If the answer’s yes, well there’s no time like the present.

5 Ways to Increase the Value of Your Home

Selling a home is easily one of the most stressful things somebody has to go through. From preparing it for a sale, to finding your next home to purchase, there is an endless amount of steps you must go through to come out profitable. 

In order to make as money as you possibly can from the sale, you’ll need to greatly increase the value of your home, which can be done in the 5 easy steps listed below!

1. Curb Appeal

Your lawn is the first thing somebody sees when looking at your house, whether its done driving by or through a showing. It is imperative that you make it stand out, or at least spruce it up a bit, to give off a good first impression. 

House

One way to get a great curb appeal is my touching up on your garden. Some ways of doing this include planting flowers, redoing the fence, adding small lawn furniture, or adding seasonal decorations. Additionally, you should make sure that branches and hedges are trimmed, and the lawn remains freshly cut. 

2. Renovations

One sure way gaining value to your home is by making any necessary renovations You’ll want to prioritize these changes to fit both your financial situation, as well as your time frame. 

When getting renovations done to your home, you need to do a cost-benefit analysis to make sure you’ll be getting a good reward for all the money that you put in. It wouldn't be worth it to spend a fortune of money on something that doesn't necessarily need to be done. 

Possible renovations include repainting rooms that have outdated colors, replacing old or damaged windows, getting new and modern flooring, etc.

3. Simplify Your Home

When people come to view your home, they want to imagine themselves living in it. It’ll be hard for them to do so if your clutter lays all around the house. Simplifying your home to the bare minimum would allow potential buyers to imagine their new life there, and likely increase your chance of making a sale.

When simplifying your home for showings, it is not necessary to buy new furniture or decor. All you need to do is reduce items down to the bare essentials, which basically consists of furniture, with a few decorations here and there. 

Aside from ridding of unnecessary clutter, you’ll want to vacuum, dust, and mop your home regularly to keep it feeling fresh.  Additionally, you want to make sure that your home is always smelling good. Offering simple snacks and drinks at a showing is another tip that often times helps individuals make a sale. 

4. The Kitchen is Key 

The kitchen has been deemed one of the most influential determining factors of a home sale. Whether it be the size, cleanliness, or modernness of it, it remains of the most crucial aspects of any home. This is why it is so important to not only have yours cleaned out, but to also make sure it also stands out. 

If you have a tight budget, some easy and cost-efficient ways to make your kitchen more appealing is a quick paint job or some new curtains. However, if your kitchen is badly outdated, you may want to consider spending a bit more, perhaps on new counters or floor tiles. 

5. Hire an Inspector

Upon completing everything you feel as though you should have, you'll want to hire an inspector to finish analyzing all the aspects of your home that can’t necessarily be seen from the surface. This could range anywhere from termites, to rotting dry wood. In any case, such occurrences could deter you from making a sale, or cause you to have to lower your asking price. 

It is best to get these things looked at well before putting your home on the market. In doing so, you’ll be better equipped to make a good sale. 

Once you've modified your home and, as a result, increased its value, you’ll want to list it in on the Multiple Listing Services, also known as the MLS. The MLS is, in simple terms, an accumulation of all home listings in a given area. To view an example, try checking out the Illinois Flat Fee MLS

With access to the MLS, you’ll not only be able to reach out to a large number of potential buyers in your area, but you’ll also be able to save up to thousands to the commission that would usually be paid to the real estate agent. 

Understanding the Basics of Taxes and Personal Pensions

A major part about becoming financially independent is really understanding the basics of your financial responsibilities. Once you've covered general knowledge about taxes, pensions, savings, and all of your assets, you can make positive choices that will make you financially self-sufficient. A deeper knowledge behind your money, and how to responsibly spend it and save it, will always be beneficial in the long run. 

Get to know your finances and you can invest in your future, your family’s future, and your financial freedom. When do you pay taxes, how much of your income can be tax free, and what you can write off are all good basics to comprehend. The fundamentals of your pension savings will cover how you form a great pension plan and how much you and your employer both pay into it. 

Once you really know these simple facts, you can focus more on how you’ll spend all the money you’ll save with your great financial choices. 

Personal Pensions

Let’s start with a straightforward answer to what a pension plan is, and which one is best for you and your future retirement plans! A personal pension is an important financial planning tool. You take a certain amount of money and invest it regularly into a portfolio. That portfolio will then take your investment and help it grow during your working years, so that you can enjoy it when you plan to retire!

If you don’t have a retirement pension with your employer, you can always invest into a private pension plan. You can choose to manage the portfolio yourself. Diversifying through bonds, stocks, or simply letting it grow through an interest plan. This will take research, a thorough understanding of the risks involved, and the best kind of investments for a good long-term return.

You can also choose to have a pension management company handle your retirement plans for you. This is great for people who understand the value of saving for your retirement, but don’t quite get the ins and outs of investing. Save your private time and let professionals help you reach your financial goals!

Pensions are an investment into yourself, your loved ones, and your future happiness. You can research various plans, but you should also understand the different variables for what you’ll need when you DO retire. 

Taxes

Taxes are a part of living in a modern society. We pay into the care of our roads, our government, our water, and so much more. Taxes are taken from your personal income, your property, and your day to day purchases.

Income tax

Filing your taxes can be a delicate dance. You have to know your due date, the various items you can claim for deductions, what bills and receipts to keep, health insurance, and so on forever. Planning ahead for your taxes is an essential part of financial understanding. Especially in your younger years!

Things you can claim in your taxes that you may not have known could be deducted!
  • Health Insurance. If you pay for private health insurance, you can get the cost of your insurance premiums deducted from your taxes. This is if your medical expenses for the year have gone over 7.5% of your income. 
  • Charitable Giving. If you've given more of your fair share into the hands of the less fortunate, you can deduct those charity checks from your taxes! From a $12,000 check to fight breast cancer, to items for a bake sale, look into what you can deduct for being a good person!
  • Business expenses. If you work for yourself, you can typically deduct anything that you use on a daily basis for your business. That doesn't mean you get to write off your computer every year! But it does include larger purchases, everyday purchases, and even GAS!
Get to know what you can and cannot save from your taxes by doing a little research, finding what applies to YOU in YOUR life, and get to saving. 

Taxes can be tricky though. It typically pays to pay for someone to do your taxes for you. This will not only save you time, but could also pay for itself in deductions and raising the amount of your yearly return! Professional tax experts are extremely familiar with tax laws, the smallest of write-off qualifications, and even are held responsible if your taxes are called up for review!

Finding the Right Balance

A general understanding of what a pension is, what you can save on your taxes, and the benefits you’ll reap in the long run are certainly helpful. Planning for your future will not only be beneficial to you in the long-run, but will help you get a better grasp on financial freedom!

How to Choose the Right Credit Card for Your Personal Use

A single credit card may not be equipped to fulfill all your desires. The uniqueness of human needs may compel you to pick one card over another. While a certain card may stand up to your financial needs, others may not fit in with any of them. Finding a single card that matches multiple needs may seem like hunting a needle in a stack of hay. You must identify with the primary reason behind filling out your application. It will help you compare the features of all cards that meet your lifestyle requirements.

Steps to Identify the Right Credit Card Are Mentioned Below:

1. Keep an Eye on Your Credit Reports

Prior to applying for your credit card, you must study the ways in which a creditor views you. You must also go through your credit history. Begin by checking your credit scores with the credit reporting agencies. You may check these scores regularly and seek alerts on each change pertaining to the FICO® Score. Find an easy access to your credit scores via your current bank accounts and credit cards. Look out for free copies of your credit reports with your credit card issuers.

credit card

The credit scores are bound to vary from 300 to 850. You should spot any error occurring in your report very easily. Identifying errors can help in pulling up your credit scores and enhance your creditworthiness.

2. Determine if You Wish to Achieve Reward Points

Achieving travel or cash back reward points is quite natural with some of the popular credit cards. You may even earn considerable reward points with your airline credit card once the balance is met in full every month.You’ll need to stick to a budget-friendly repayment plan for meeting your balance in full. Don’t forget that these cards carry much higher APRs than usual. Otherwise, your interest amount will offset the value of rewards that you achieve. 

3. Decide on Whether a Balance Transfer in Necessary

A number of cards are there to match the specific needs of consumers that are attempting to reimburse their current balance or consolidate their debt. Few of the balance transfer cards are even issued for 0% APRs under their launch offers. This introductory period may even be extended up to 18 months just to ensure more savings while reimbursing the debt amount. You might need to meet a balance transfer fee, which is up to 5% of the amount of transfer. However, it might seem a bit tough for you to avail the most lucrative BT offers when your credit score is not up to the mark.

4. Visit a Few Comparison Websites

You must have understood why it’s necessary for you to find the right type of credit card for your needs. It’s in your interest to shop around and identify the best card for them. Based on all your needs, you’ll need to spend time doing some researches, posting your queries and answering various surveys.

A few comparison websites can help you compare all identical offers posted by the credit card issuers. The credit matching systems used by lenders offer certain opportunities for you to open a free account with them. You’ll find it much easier to compare offers that match your spending habits with that of your credit profile.

How to Control Your Household Expenses

Running a home is expensive. Whether you rent a property or have a mortgage, it is essential that you control the money coming in, just as much as you do the money going out. You need to have a complete understanding of where your money is going and what the reality is of your financial position. It’s not fun, it’s not pleasant, but it is necessary.

The average American has around $38,000 worth of personal debt (not including mortgages), which when you consider that the average wage is $44,564, you can see why sorting out your finances is a serious business. Living in denial about your financial situation is a dangerous game to play; it’s like a house of cards. Could you manage if you or your partner were unable to work through ill health, even for a month? As soon as you face up to your situation, the sooner you can improve your circumstances.

Review your finances

You need to invest your time in reviewing your finances. Begin by getting your latest bank statements, if possible, access the last three months’ worth. Doing so will enable you to calculate an average cost per month and will allow for extra expenses due to birthdays, vacations or other extraordinary costs.

Household Expenses

Create a simple excel spreadsheet and head the columns into where you've spent the money, for example, housing costs, groceries, insurance, utilities, fuel, clothing, phones,and entertainment. Don’t forget to include a column for miscellanea: things that don’t quite fall into a defined category. Populate the spreadsheet with the information from your bank statements. When you have finished, you will be able to see the total for each of the columns. If you have a partner, husband or wife, you need to repeat this process from their bank account too. If you have used three months’ worth of bank statements, divide each total of the column by three as this will give you the average spend per month.

Hopefully, what you see before you is not a great shock, although you may be surprised at where you have leaked money. Next, using the statements, identify the amount of income that you have had coming into your accounts each month.

How’s it looking?

Is your monthly income greater than the expenditure? If it is, congratulations! The difference between the two figures is what you could potentially save per month.

If your income is less than your expenditure, you are getting more into debt each month, and action needs to be taken to take positive steps to change your financial status. You also need to check and see how much outstanding debt that you have against you. Personal debt comes in many shapes and sizes, including credit cards, student loans, car finance,and mortgages, and to get your house in order, you need to tackle your debt.

Set a Budget

Now that you are clear about your income and outgoings, you will be able to see how much money should be attributed to each category of spending. Some categories such as cell phones and housing will be set each month, so they are easy to put a number on. Categories such as groceries and entertainment which are variable each month are less so, but this is where the savings can take place. When you reviewed your bank accounts, you may have identified subscriptions that can be canceled, or at least reduced. Contact utility, insurance,and cell phone providers to see if you can go on a better rate. It is incredible the discount that you can negotiate if only you ask the question!

Budget to allow you to have the necessities and accept that you are going to have to go without certain goods and products while you are on a mission to sort out your money. 

Life has a habit of throwing a curve ball, so you need to make plans for the unplanned emergencies such as your car requiring a repair, or a medical bill. These kinds of small but significant costs can be covered by a payday loan like those offered by Bonsai Finance. Although taking out a loan is not always ideal, and you may not want to do it, if you need to use your car for work, it makes economic sense to do so. 

Change your lifestyle

Enforcing a budget can be tough, so it's vital that you get all the family involved. Kids are more likely to engage with the cutbacks if they understand the whole picture. Rather than taking them for convenient,fast food when they are hungry, include them in choosing what food to make at home. They will moan, but they will soon get used to it, especially if they get to eat their choice!

Get into the habit of going grocery shopping with a list and stick to it. Avoid the aisles where you know you will be tempted by things not on your list. Buy non-branded products; there are some that have the same ingredients as the big brands but without the need for you to pay for the label. 

One of the hardest things about trying to reduce household expenses is getting over the feeling that you are being deprived of something. Not being able to go and watch the game or go out for dinner can mean that you end up resenting the whole process; however, you just need to adjust your expectations. You can still watch the game with friends, just not in a bar. Instead of going out for a meal, eat at home and go out for dessert. By making lifestyle tweaks, you’ll soon be able to see a healthier bank account.

Don’t just complete this exercise as a one-off. Periodically review your expenditure to see where more savings can be made. A visual representation such of a bar chart of the savings you have created is a great motivator to continue the good work, set yourself a target to reach and agree on something to do to celebrate, perhaps even a full meal out!

How to Protect Your Family’s Future

When we have a family to care for, planning for and protecting your assets becomes even more imperative. There are many assets you have to consider when writing a will or setting up a living trust, such as:
  • Your savings
  • Any valuable objects, jewelry or heirlooms
  • Your pension
  • Your business – if applicable 
  • Stock market investments
  • Your property
Writing a will, though, can seem like a complicated and arduous task, and before you even start writing one, you need first to decide who gets what. What’s more, there is nothing stopping your will being taken to probate, where your wishes could come undone.This is when a living trust can be greatly beneficial.

Family’s Future

The following guide is going to help you work out the basics of writing your will and setting up a living trust so that you can live the rest of your life with peace of mind.

Decide who gets what

Before you visit a solicitor, you need to outline the basics of who gets what. This means, first and foremost, deciding on the assets you have, and then assigning them to someone or an organization. When determining the beneficiaries, you may include:
  • Family
  • Friends
  • Charities
  • Your partner or spouse 
However, be sure that your wishes align with your spouse or partner’s wants before continuing.

Estimate the value of your assets 

Assets that are easier to value include your savings and your valuables. Once these have been dealt with, you will then need to tackle the harder assets: pension, business, property, and stock market investments. Lastly, you will then need to consider the sentimental items you wish for people to have. 

If the value of your estate is significant and your last wish is to avoid probate, then one of the benefits of a living trust is that it avoids a trip to the probate court. By having a living trust rather than just a will, or a will at all, your assets will be distributed as your wishes. If you require assistance with organizing your assets, you can hire the help of a professional and knowledgeable estate planning attorney

Heed extra caution with your pension

Before you list your pension as an asset, you will need to check the rules. The value of your pension depends on the scheme, and in some cases, you may not be able to include it. 

Know how you want to split your assets

If you have more than one child and an extensive number of family members, you may want to leave part of your savings, etc. to specific members. There are many types of legacy requests you can make, such as:

A pecuniary bequest 

“I leave $1,000 to my daughter.” This means you leave a fixed sum to your selected person.

A specific bequest

“I leave my vinyl collection to my son.” It means you leave a certain item, which you own, to your person of choice.

A reversionary bequest

“I leave my share of the house to my husband if he survives me. However, if he does not survive me, then it will be passed on to my son.” Instructions specifying what happens if the person you leave it to dies before you.

A residuary bequest

“I leave half my estate to my sister.” Means you leave a certain percentage of your estate to your person of choice. The amount the person receives, though, depends on the value after debts, costs, etc.

A living trust

“I leave my share of the house to my wife for the rest of her life. When she passes, however, it will be passed over to my son.” A living trust means you can dictate who gets your property, for instance, after you die, as well as who inherits it once that person also dies. If you wish your real estate to avoid court, you need to get it titled in the name of a living trust.

How to protect your beneficiaries

You may wish to safeguard your bequest, especially if you are leaving something to someone with disabilities, mental health issues or a child. Many people will set up a trust, which means what you leave can be managed by people you trust.

Once you've decided on your assets

With your assets valued and you know who gets what, it is time to contact professionals to help draw up your will or living trust. If you have a large estate, then you will want to safeguard your estate with the protection a living trust offers. The last step is, if you wish to, to discuss with your family about choices beforehand.