So, as previously stated, savings is obviously important, but how do you go about doing it? Well for all of you that are disciplined savers you really don't have to worry what type of an account to place your funds in to (unless you are worried about what kind of interest rate you are getting). For everyone else that may be tempted to dip into their piggy banks without having sufficient cause, there are, arguably, four ways to save your money: Bank Savings Account, Mutual Funds/Stocks, CD's, and Permanent Life Insurance. Let's take a quick overview of each of these common ways to save.
Savings Account: Money you place into a normal savings account gains very little interest but is completely accessible, with very minor restrictions. If you are lucky you may be getting .3% interest on your account and interest is technically taxable if you have a significant amount of capital gains.
Mutual Funds/Stocks: Typically, I would treat these as two seperate entities, but for now lets just put them in the same category. These accounts can obtain significantly higher gains then a savings account (possibly 3-4%), but you take a risk in losing money as well. The power of never going backwards in terms of your money is key and the gains you make are still taxable. If you are not proficient in the market or do not have someone overseeing your funds, this may not be the best avenue to take.
CD's: CD's are great for those who can't keep their hands out of the cookie jar. CD's give you a safe and relatively high interest rate averaging between 1.5-4% and prohibits you from withdrawing the funds for a designated period of time. Average CD's last from 6 months to 36 months with varying interest rates. This is a great way to save, but if you don't have atleast $5,000 to place into the account then it really isn't worth the time it takes to accumulate gains.
PLI: Permanent Life Insurance may not be the first thing that comes to mind when you are thinking of saving money, but it is, in fact, a savings vehicle. Money is put away in the form of a premium payment every month, quarter, or year. Granted you are purchasing insurance, but the policy also maintains a cash value alongside of the typical death benefit. This cash value can be accessed at any time the policy is enforced and some of the interest rates can get as high as 8%! Of course, this rate looks phenomenal, but you do have to remember that PLI is a long-term investment that entails complete discipline in paying your annual premium. A good attribute of this account (in comparison), however, is that the interest is completely tax-deferred, so you can keep more of the gains you receive from the policy.
Well there you have it, the four ways to save those precious green-stamps of yours. Always remember that diversification is key and having a combination of all four of these approaches would be ideal.
later days
Sunday, May 22, 2011
Sunday, May 15, 2011
Renting vs Buying: An insurance explanation
After a recent post one of my friends inquired about the differences between Whole-Life and Term Insurance, so I decided to inform the masses.
Think of term insurance as if you are renting an apartment for 10, 20, 80 years. The premium that you pay every year is cheaper then whole-life, but you must remember that you are only purchasing a death benefit (money is delivered to your beneficiaries after you die). Term policies expire after a certain time period and so you must renew the policy or purchase a different one just like the lease being up on an apartment. *note that you can convert most term policies to whole-life (permanent) insurance after 1 year of having the policy.
Whole-life insurance is like purchasing a house. You would pay more for your insurance, but you own it forever until the day that you die. After the first 10-15 years of having your policy your insurance costs should be paid off by your premiums and after that your money will be growing exponentially, just like having equity in a house. The money that is within your policy is known as cash-value and can be borrowed against as if you were taking a loan out against yourself. You not only have a death benefit, just in case something were to happen to you, but you also have access to money while you are alive as well. The beautiful thing is that if the loan against your cash-value isn't paid back (which most of the time it isn't) the balance of your loan will be subtracted off your death benefit and the remainder is till delivered to your beneficiaries. Example: Say you are 50 years old and you decide to go through a mid-life crisis and purchase a Corvette and borrow $50,000 against your cash-value (and have the funds to do so) of your $500,000. The money, plus whatever the company's interest is (we'll say 8%), we'll be subtracted from the death benefit. So, if heaven forbid, you were to pass next year your family would be looking at getting roughly $446,000. Not too bad right?
Hopefully this sheds some light on the topic and if you have any specific questions feel free to comment or shoot me an email.
later days.
Think of term insurance as if you are renting an apartment for 10, 20, 80 years. The premium that you pay every year is cheaper then whole-life, but you must remember that you are only purchasing a death benefit (money is delivered to your beneficiaries after you die). Term policies expire after a certain time period and so you must renew the policy or purchase a different one just like the lease being up on an apartment. *note that you can convert most term policies to whole-life (permanent) insurance after 1 year of having the policy.
Whole-life insurance is like purchasing a house. You would pay more for your insurance, but you own it forever until the day that you die. After the first 10-15 years of having your policy your insurance costs should be paid off by your premiums and after that your money will be growing exponentially, just like having equity in a house. The money that is within your policy is known as cash-value and can be borrowed against as if you were taking a loan out against yourself. You not only have a death benefit, just in case something were to happen to you, but you also have access to money while you are alive as well. The beautiful thing is that if the loan against your cash-value isn't paid back (which most of the time it isn't) the balance of your loan will be subtracted off your death benefit and the remainder is till delivered to your beneficiaries. Example: Say you are 50 years old and you decide to go through a mid-life crisis and purchase a Corvette and borrow $50,000 against your cash-value (and have the funds to do so) of your $500,000. The money, plus whatever the company's interest is (we'll say 8%), we'll be subtracted from the death benefit. So, if heaven forbid, you were to pass next year your family would be looking at getting roughly $446,000. Not too bad right?
Hopefully this sheds some light on the topic and if you have any specific questions feel free to comment or shoot me an email.
later days.
Saturday, May 14, 2011
Keep on truckin'
Who wants a job!? Don't you wish it were that simple? Well in this day and age it can be. I know, I know, "the job market is tight right now, no one is hiring, the economy has gone to hell," are all typical excuses that you hear on a daily basis and although there is some truth behind them, it shouldn't deter you from trying. All of you have some skill set that specific employers are looking for, you just need to get in front of them.
Rule number 1 would be to apply to as many jobs as you can (within reason) in the fields that you want to work in. The more practice you can get filling out applications and conducting yourself in an interview the better chance you will have in obtaining the position you want.
Rule number 2 is to get your name out there. If you don't already have a LinkedIn profile you may be a couple steps behind the rest. Upload a current resume, maintain and correspond with your network, and keep up to date with job postings.
Rule number 3. Do it yourself. If all else fails and you are sure you tried your 'darndest' to get a job, make yourself a position. Entrepreneurs flourish in an economic downturn and although it takes sometime to get started, the rewards will greatly outweigh the time put into the business. This option isn't for everyone, but it is still a plausible option nonetheless.
What ever you decide, just don't give up. Perseverance is one of the greatest attributes to have in a time like this and I am especially talking to you college grads. Keep at it and you'll be fine.
later days
Rule number 1 would be to apply to as many jobs as you can (within reason) in the fields that you want to work in. The more practice you can get filling out applications and conducting yourself in an interview the better chance you will have in obtaining the position you want.
Rule number 2 is to get your name out there. If you don't already have a LinkedIn profile you may be a couple steps behind the rest. Upload a current resume, maintain and correspond with your network, and keep up to date with job postings.
Rule number 3. Do it yourself. If all else fails and you are sure you tried your 'darndest' to get a job, make yourself a position. Entrepreneurs flourish in an economic downturn and although it takes sometime to get started, the rewards will greatly outweigh the time put into the business. This option isn't for everyone, but it is still a plausible option nonetheless.
What ever you decide, just don't give up. Perseverance is one of the greatest attributes to have in a time like this and I am especially talking to you college grads. Keep at it and you'll be fine.
later days
Friday, May 13, 2011
Being remembered
This comes from a chat I had with a professor I had my spring semester of my freshman year at Baldwin-Wallace. I had not been in close contact with him much after my freshman year, but he gave me his best wishes at graduation and relived classroom moments with me where I had either impressed him or made some sort of impact on him and the class. First thing is first, I thought the professor was supposed to impact the student (which most of them had), but not necessarily the other way around. This made me feel great as I planned to receive my diploma in knowing that a professor from four years prior remembered my classroom anecdotes, where I sat, and could pin-point the discussions I participated in. Now, this member of academia is now part of my extended network, I have his contact info, and I plan on letting him know of my progress post graduation.
It is important for all of you to make great impressions on the people that you meet, not only in college, but throughout your life. You never know who is going to remember you and for what reasons, so make them all good ones if possible. If you are in school, make sure you are avidly participating and meeting with some of your professors outside of the classroom to aid you in planning for the future. If you are out, however, make a great impression on those at your workplace, the clients you have relationships with, and the people you meet on a day-to-day basis. Doing this will keep you conscious of your behaviors as well as allow you to exponentially extend your network.
later days
It is important for all of you to make great impressions on the people that you meet, not only in college, but throughout your life. You never know who is going to remember you and for what reasons, so make them all good ones if possible. If you are in school, make sure you are avidly participating and meeting with some of your professors outside of the classroom to aid you in planning for the future. If you are out, however, make a great impression on those at your workplace, the clients you have relationships with, and the people you meet on a day-to-day basis. Doing this will keep you conscious of your behaviors as well as allow you to exponentially extend your network.
later days
Wednesday, May 11, 2011
Saving for a rainy day
How many of you out there are planning on taking on a full-time job and buying a house/renting an apartment right out of school? If you are one of the overwhelming majority of college students still seeking employment you are probably doing the complete opposite. You're living at home with mom and dad and working part-time so you can still afford to do some fun things this summer right? Of course! Well, working part-time is a great way to keep those green stamps flowing in, but where is that money going? You probably don't have too many expenses, especially if your parents love you enough to not charge you rent, so it may be going to a car payment, cell phone bill, gas, and personal expenditures on a credit card perhaps. Is the rest going into savings and if so what kind?
You should be paying yourself first and then using what's left for your fun this summer. What this means is essentially budgeting backwards in comparison to what you're used to. If you are making, let's say, $400 a week this summer, you should be setting aside atleast 15%-20% (being conservative) of that and putting it into some sort of savings that is growing interest (this means that putting it in a piggy bank in your room is unacceptable). After you pay yourself for the week then you may use the rest of your money to go to the movies, go out to eat, or have fun with friends. If you are not disciplined enough to keep the money in a savings account that is "accessible" you may want to look into placing the money into accounts like mutual funds, permanent life insurance, or (if you have enough cash) purchasing some CD's. These accounts will force you to keep the money in savings and growing with interest. Saving in this way will give you the cash accumulation you need to achieve some of the goals we were talking about yesterday. Sticking with a regiment like this will deliver almost $2,900 in just 6 months! And, if you are making more then $400 a week kudos to you and you can expect to see even higher results from your savings plan.
later days
Pete
You should be paying yourself first and then using what's left for your fun this summer. What this means is essentially budgeting backwards in comparison to what you're used to. If you are making, let's say, $400 a week this summer, you should be setting aside atleast 15%-20% (being conservative) of that and putting it into some sort of savings that is growing interest (this means that putting it in a piggy bank in your room is unacceptable). After you pay yourself for the week then you may use the rest of your money to go to the movies, go out to eat, or have fun with friends. If you are not disciplined enough to keep the money in a savings account that is "accessible" you may want to look into placing the money into accounts like mutual funds, permanent life insurance, or (if you have enough cash) purchasing some CD's. These accounts will force you to keep the money in savings and growing with interest. Saving in this way will give you the cash accumulation you need to achieve some of the goals we were talking about yesterday. Sticking with a regiment like this will deliver almost $2,900 in just 6 months! And, if you are making more then $400 a week kudos to you and you can expect to see even higher results from your savings plan.
later days
Pete
Tuesday, May 10, 2011
First and Foremost
As a recent college graduate (recent meaning two days ago) I am looking back at some of the things I learned throughout my four years at college and even prior during high school that has brought me to where I am today. Those of you that are in the same boat and are recently departed from academia or have even had a few years since you have been in a college classroom, this is for you. Whether you think so or not, you learned a lot throughgout your college career in the classroom, within your internships and jobs, and from conversations with professors and peers you met. I charge all of you to take what you have retained and APPLY it. If you still have your notebooks and laptops that were used in the classroom or at work, look at them! The knowledge that was bestowed on you should not be lost just because you received your diploma; this is when you need it most. Especially those of you that still have no idea what you want to do with your careers (the majority of college graduates), you should be using the experiences you had to aid you in the decision-making process. You have a lot ahead of you, this is just the next step, so take advantage of this time while you are still determined and have that thirst for "more." Treat life still as if you are in school and dedicate your time (especially during the summer) to focusing on what you want to achieve. Write your goals down on a piece of paper and read them every day twice a day and I guarantee you they will evolve into commitments, and later into achievements.
later days
Pete
later days
Pete
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