Independent Financial Advisers are professionals who offer unbiased advice on financial matters to their clients and recommend suitable financial investments.

It is a financial advisors obligation to look at a client’s entire portfolio. Per “know your customer” rule, advisors should take the time to understand the client’s existing portfolio as well as risk tolerance, time horizons and financial goals and objectives. In a pure, Modern-Portfolio Theory sense, it is accepted that diversification and asset allocation have been proven to increase long-term rewards and reduce short-term risk. Additionally, clients who achieve their goals with limited or manageable risk are happier clients. Therefore, it is important for financial advisors and investors to think outside their routine “box” of investments and be aware of ALL the ways to offer their clients true diversification.

Advisors should recognize that true diversification extends beyond a portfolio that holds even a carefully balanced array of market-traded assets. There are a wide variety of “alternative” investments that include things like mortgage deeds or notes, real property, liens and foreclosures, hard-money lending private equity investments, start ups, to name a few*

Typically, the vast majority of institutions offering IRA services do not allow for their clients to invest in alternative investments, and therefore do not promote the fact that clients can choose from a wide variety of investments options outside of traditional markets for their Retirement Account. Be aware of the large brokerage firms that claim to offer clients “self directed” IRAs. These accounts are typically only self-directed in the sense that clients make the investment decisions and choices independently (e.g. without the advice or discretion by the provider). In these institutions they restrict the “type” of investments to publicly traded investments.
Prudent advisors and investors should be aware of the opportunities outside of market-traded assets, opportunities that are available within a self-directed retirement account (SDRA). These assets typically have no or low correlation to the financial markets. This means that they can provide more diversification in a portfolio while giving the client more investment options overall. Many investors have a better understanding of alternative investments and, therefore, may feel more secure in “investing in what they know”.

To better serve clients needs and put client’s best interest first, if an advisor doesn’t actively offer their clients the opportunity to invest in alternative investments, they should at least be aware of other investment options and ideally be able to refer the client to someone who does.

*Some restrictions apply. It is important to consult with a professional regarding
IRC Pub 590 regarding regulations before investing.

**Securities offered through USWA, LLC, Member SIPC, and advisory services through USFA, LLC, a registered investment advisor.

By: Laurie Bachelder

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Step 1: Spend less than you earn

Perhaps the simplest financial concept is the toughest for us to conquer- spend less than you earn. After paying your living expenses (bills, loan and mortgage payments, cost of food, charitable contributions, taxes, etc), you can begin to save and invest toward your future. If you are spending more than you earn, you must find a way to change this. You may even need to change your lifestyle- drive a more efficient car, eat out less, live in a smaller home, cancel your cell phone, etc. Make a commitment to your financial success to spend less than you earn. This may take a lot of discipline, but is an essential first step towards your financial wellbeing. Once you spend less than you earn, you will be on your way to reaching all of your goals.

Step 2: Prepare for an emergency

Before doing any actual investing, you need to establish an Emergency Fund (cash held in an account for emergencies). This fund can be used for various emergencies, but, its main purpose is to pay your living expenses in the event of a sudden loss of income. That is, if you lose your job, you will still be able to pay your bills without having to abruptly withdraw money from your investment accounts. A relatively conservative amount to keep in your Emergency Fund is that equal to 6 months of living expenses.

Step 3: Determine your goals

Would you take a road trip without an ultimate destination? How long will the trip take? What should you pack? In what direction would you drive? These questions are easily answered once you know where you are going. The same is true for investing. Before any investments are actually purchased, you must know your ultimate destination- you must create a list of your goals.

Determining your goals and writing them down will serve as the foundation for a proper investment plan, allowing you to customize your investments to each specific goal. Some examples of “goals” are: retirement, college, buying a house, taking a vacation, and buying a car.

In writing down your goals there are a few pieces of information you must identify. You must know the following about each goal: name (NAME), time until realization (TIME), cost in today’s prices (COST), planned contributions (PAYMENT), and current money saved for this goal (PV). Below is an example of a goals list:

NAME – TIME – COST – PAYMENT – PV – RATE

Retirement – 30 years – $2,500,000 – $1,000 mo.- $350,000 – ???

College Kid 1 – 12 years – $100,000 – $500 mo.- $20,000 – ???

College Kid 2 – 10 years – $100,000 – $500 mo.- $22,000 – ???

Buying a Boat – 6 years – $30,000 – $150 mo.- $0 – ???

Step 4: Invest

After determining your goals, you can begin to invest toward achieving them. Doing so means calculating the annual rate of return (RATE) needed to achieve each individual goal. For example, you may need a 7% rate of return to achieve your retirement goal, while only a 5% rate of return to attain your college goals. Thus, your actual investments may be significantly different for each goal, but will be tailored to each individually. (There are online resources and calculators that offer assistance computing your required rates of return.)

When purchasing investments, you need to buy those that will collectively earn the annual rates of return necessary to reach your goals. You may choose to invest on your own, use an investment advisor, or search for a broker/dealer to assist you with your investments. No matter how or where you invest, there are a few things to remember:

o Put it in writing: Writing down your goals and how you will invest to achieve them is very important and will serve as a framework for decision making during uncertain times in the future.

o Use Index Funds: There are thousands of different investments to choose from (for example: mutual funds, stocks, bonds, and annuities). Index Funds give the greatest advantages for reasons of cost, performance, simplicity, transparency, and diversification.

o Get some advice: Paying a little for the advice of an investment professional can be very wise. There are even investment advisor firms online that will tailor your investments directly toward your goals for you.

o Be unemotional: The financial markets fluctuate up and down- so will your investments. If you have any goals that are less than 5+ years away, you may want to invest these funds into something very conservative (such as a money market or certificate of deposit).

o Rebalance periodically: Accounts should be rebalanced annually to keep in balance with your goals.

Final thoughts

When investing toward your goals, you need to make sure that no unforeseen circumstance prevents you from reaching them. Insurance is a very useful tool to assure your goals are realized regardless of what situation may arise. Through analysis, you can determine which goals are at risk for not being achieved should you get sick, become disabled, or pass away. Having enough money to pay for your goals regardless of death, disability, health problems, or any other unforeseen circumstance is an essential part of a solid financial plan.

In addition, estate planning serves an important role when planning your finances. A will, trust, or power of attorney can enable you to keep your plan in motion far beyond your living reach. (Please consult an attorney to discuss your estate plan.)

Having a solid, well-designed plan for your finances is something you can accomplish. With a little time and effort, you can be on your way to spending less than you make, establishing an Emergency Fund, and tailoring your investments to each of your specific goals. Plan your finances wisely, and then commit yourself to your plan.

By: Jonathan Citrin

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Internet and electronic trading have revolutionized the way a common man investor can invest in the markets. We use the term markets very loosely and need to understand specifically the options we have. Each of these markets needs specific skills and knowledge. All are not the same. Each investor need to identify his /her goals , skill set, level of interest and then choose an appropriate investment route.

Stocks are probably the largest in all financial investment mediums. There are several stock exchanges where one could buy stocks through a variety of on line and offline stock brokers. There are also direct purchase options for shares. This involves buying shares directly from companies by avoiding charges etc through share transfer agents such as “Computershare”. Bonds are debt instruments where an investor buys a part of the debt through a Bond. This gives a fixed rate of return for each period, quarter, half year or annual. You could again buy a bond through an on line or off line broker. Purchase of shares and bonds requires one to develop certain skills in understanding markets, terminology, identifying safe investment opportunities and so on.

Mutual funds are a method for the investors to participate in stocks and bonds. Mutual funds collect small amounts from investors pool it into a large fund and actively manage their funds. The returns after deducting expenses and taxes are reinvested or paid out as dividends. Investors spend less effort as the mutual fund money managers manage the investments for them. There is a lower risk due to diversity of stocks and bonds held by a balanced fund. Mutual funds are actively managed and hence have a higher expense quotient. The friction caused by purchases, sales and brokerage also adds to expenses.An index fund is passive, just tracks a market and has less expenses.

Derivatives are a more recent phenomenon. It is named as a derivative as it is derived from underlying assets. It is very speculative and has potential for huge gains or huge losses. Common examples are forward contracts, options swaps etc. This needs a very high level of sophisticated skills and understanding.

Participation in any investment needs skills and knowledge. Most of it is gained while actually investing. There are a number of free resources for one to learn. Paper trades- where one trades on paper and not with real money are a way of getting knowledge without burning a hole through your pocket.

By: Easwar Koovappadi

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Some of the safest investments are bonds. A bond is a “security” which gives the holder a financial claim on the issuer. This claim protects the holder in circumstances in which the issuer is unable to pay the amount due. There are various types of bonds that you can purchase. Bonds are similar to Certificates of Deposit. Instead of being issued by banks, however, bonds are issued by the Government or private companies. Depending on the type of bonds that you buy, your initial investment may double over a specific period of time.

Mutual funds are also relatively safe. Mutual funds exist when a group of investors put their money together to buy stocks, bonds, or other investments. A fund manager typically decides how the money will be invested. All you need to do is find a reputable, qualified broker who handles mutual funds, and he or she will invest your money, along with other client’s money. Mutual funds are a bit riskier than bonds.

One of the safest, yet mis-understood investment vehicles with government guaranteed interest rates of between 12% and 50% with the potential for even more are Tax Lien Certificates.

Unpaid property taxes often create a cashflow problem for local governments. To solve this problem, local governments allow investors to pay off these taxes. The investors receive the government’s lien for property taxes.

Depending on state laws and competition, investors can realize returns as high as;

* 16% per year in the state of Arizona (Sec. 42-18053),

* 18% per year in the state of Florida (Sec. 197.172 (2)),

* 20% per year in the state of Georgia (Sec 48-4-42) and

* 50% per year in the state of Texas (Sec. 34.21 e 2)

Clearly, a rate of return guaranteed by a local government and backed by real property with the right of foreclosure is an incredibly safe investment with a very high rate of return.

By: David Brumbaugh

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Of course there must be a definite reason why online currency trading has transcended from being just a trend into a popular phenomenon today. With the number of investors looking into putting in some funds in the trade multiplying rapidly, the market has become one of the most viable options today. It has been reported that even currency changer websites have benefited from this sudden surge in investors pretty well.

Well one of the potential reasons is that forex trade has fewer rules than more traditional markets. This is simply because it is not grounded in just the one location. Investors from all over the world connect 24 hours everyday through the internet where a lot of buying and selling happens. Restrictions are likewise few and investors are considerably freer than their counterparts in stock trading or equity trading. This lack in restrictions also makes it possible for virtually anyone with a computer and an internet connection to participate in the buying and selling of currencies.

Investing has become especially easy with the availability of forex guides and websites that host currency changer software even for mothers at home or students looking for extra sources of income. There is a wide variety of strategies that investors can implement or formulate in order to be successful in foreign currency trading. One of these strategies includes taking advantage of the market’s leverage.

Other than all the obvious perks and benefits that forex offers its shareholders, the main support structure that brokers and brokerage houses offer make it all the more convenient for beginners to find their way around the market in as little time as possible. Training programs encourage investors to look beyond the currency changer when dealing with pairs of currencies for buying and selling. With a streamlined support system, trading currencies is starting to appear to be as easy as, say, paying your bills online.

These training programs often come with dummy accounts that you can leverage on and manipulate to get to know more about how the market moves. By participating in the training education programs and by doing a hands on approach through the dummy accounts, it should be fairly easy for anyone to easily learn the ropes in currency trading. Likewise, brokerage firms and forex brokers have made it infinitely easier for people to access the latest information, recent market updates, and analyses of the technical aspects, tips, general guidelines, and overall market observations by making these documents available for viewing online on their websites.

With all these benefits and advantages, what more can you ask for? Although it is true that there are risks involved in this trade, like any other market out there, these risks can be easily avoided by simply getting a firm grip on the concepts and principles that make the cogwheels of foreign exchange trading or currency trading run. Without this knowledge, you will have to rely on dumb luck or fate and sadly, that can only result to a whole lot of disaster.

By: Harrison Scott

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Savings Bonds are being offered to “investors” right now at rates ranging from 1.75% to 5% and at the same time the inflation rate has just risen to 2.2% from 2%. I understand that the people most attracted to savings bonds are those who are risk adverse. But call me crazy, I don’t see how someone who is a self-described financially risk adverse investor can justify guaranteeing themselves a negative return on their money – because that is exactly what they are doing at such low rates.

My experience managing investments tells me that there are some people who are literally petrified of losing money. And who really wants to anyways? But if you ask any financial advisor what the real
after-tax rate of return on your money is, they will tell you that you are in fact losing money if you invest at these low rates – particularly if the money is held outside a tax sheltered environment such as an RRSP or RRIF.

If you consider an investment at 2.45% for a year when you are in a 38% marginal tax bracket (depending on where you live this rate is for people who earn approximately $31,000 to $62,000 per year), and inflation is 2.2%, your return is really -0.67%. That means that on a $10,000 investment your one-year return is $9,933 – you lost $67. If your $10,000 investment were tax sheltered it would really be worth $10,024.46. You would have really made $24.46 – not the $245 you thought you made!

The purpose of investing is to get your money working for you, not the other way around. I can’t help but wonder if people who are so risk adverse that they always put their money in particularly “safe” investments simply aren’t aware they are really guaranteeing they lose money. The survey released with the launch of Canada Savings Bonds found that security of savings ranked as the number one priority for 68% of those surveyed – ahead of potential rate of return. But building in a negative return seems like we really need is to be more informed about where we’re putting our money – not “safer investments”.

My guess is that the average person still considers savings bonds to be investments, when really they should be treated like their name says – as savings. Savings and investments are different. Investments are for long term growth of capital and savings are for short-term needs. Sometimes we need a place to “park” some money for a specific purpose such as saving for a home, emergency funds, holiday money, etc. This is what savings are for. But, if we are so concerned about having enough capital for future needs, that we are afraid to “lose” any money, then savings is not the place for this type of money.

The logical way to proceed is to get educated on how to best make sure future needs are met and to work with someone who can offer some simple tips to reduce the effects of taxes and inflation. Here are a few you can ask about when you meet with your advisors:

Interest is fully taxable. Is there a more tax efficient way to invest in interest bearing securities – i.e., would it be better to hold them inside an RRSP or RRIF and have your equity mutual funds outside the registered plan?
Capital gains and dividends have preferred tax treatment and offer the potential for tax planning. Find out how this might affect your own personal situation.

Interest is “deemed” to have been earned in the year it was credited to your account, so if you invest in compounded investments, where interest isn’t actually received physically into your hands until maturity, remember you must still pay tax on the money you earned but haven’t received
yet – therefore you are out of pocket the tax owing with no cash received yet.
If you receive interest at the end of the year you will be paying tax on those earnings in April of the next year; however, if you receive interest at the beginning of the year, you don’t pay tax until the following April – therefore you hold on to the full amount of your earnings longer until you have to pay the taxman.

And finally, there are a lot of different types of investment risk – inflation and taxes are only two. The one most people really fear is stock market risk, because this is the one that is most frequently discussed. But if you consider this simplified example below you might understand why diversification – not just safety of principal, is really the ONLY way to reduce investment risk. Below shows how two investors, each with $100,000 invested for a 25-year period.

Mr. & Mrs. Conservative invested $100 000 into 8% Government Bonds which accumulated $685 000 over 25 years.

While Mr. & Mrs. Investor invested the same $100 000 into multiple streams.

Invested $20 000 into gambling in penny stocks causing a 100% loss and a $0 value over 25 years.
Hid $20 000 under their mattress with 0% interest creating a $20 000 return over 25 years.
Invested $20 000 in Treasury Bills at 5% interest. After 25 years yielded $67 000
Invested $20 000 in Corporate Bonds at 10% interest, yielding $216 000 after 25 years.
Invested $20 000 in Blue Chip Stocks at 15% interest, yielding $658 000 after 25 years.

Investors Total:$961,000

Difference: $276,000 more than the Conservatives

Maybe you don’t have $100,000, or maybe that’s all you have and you’re happy to still have your principal intact, but over time the erosion of purchasing power from taxes and inflation is a consideration that everyone needs to consider and every little bit counts. Find out how you can avoid unnecessary loss.

By: Tracy Piercy

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Good investments are always out there, but investment opportunities are not always easy to find. What’s important is that you find a good investment that fits your particular needs. This can be tricky business because it’s all a matter of trade offs, and most people don’t know investment basics.

A good investment for your friends might not be a good investment for you. For example, you don’t want to place bets on a penny stock in an account earmarked for future college expenses. Penny stocks are not investment opportunities; they are speculation.

Believe it or not, many people follow the lead of a friend when making investment decisions. They want to invest money where Ralph did because, according to Ralph, he made a lot of money in investment opportunities he found. As a financial planner I ran across this time and time again from new clients that were referred to me by existing clients of mine.

Here are the investment basics. You can’t have it all in any one investment. If you want growth (higher returns), you trade off safety. If you want high income or safety, you trade away high growth prospects. If you want the tax breaks offered by a retirement plan, you give up high liquidity (quick and easy access to your money without penalties).

So, when looking for good investments, make sure the investment fits your needs. If your kid starts college in two years, a bear market in stocks could change his or her plans if you had the college fund invested in stocks. If you are saving for a down payment on a house, the same holds true.

Rank your financial needs before you invest in anything. Always consider these five investment basics: liquidity, safety, growth, income, and tax advantages. No investment ranks high in all five categories.

A good investment for you depends on the investment basics that best describe your financial needs and financial position in life. For example, an IRA or 401k plan is great if you want to invest and earmark money for retirement. But you don’t want all of your money tied up in stock funds in a retirement plan. What happens if you need cash fast for an emergency?

Don’t call Ralph’s financial planner and tell him you want what Ralph has. Instead, view every investment in terms of the investment basics. His investment opportunities might not be good investments for you.

By: James Leitz

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With such volatility in today’s business markets today, how can you make sure that your investments are safe and earning the type of returns you need to achieve your financial goals?

From the start, you should know where your investments are placed and what your investing on in detail. Second, you should realize that if you ever want to achieve the life you deserve, you need to take action. Knowing your investment goals from the beginning will help you keep your focus in tact and allow you to manage your available funds to its full potential.

So many years before I took a the leap of investing my money, having a nice decent job somehow made unhappy because the work always took me away from my loving wife. I started researching successful business America. I started looking for ways to have more time to enjoy with my family without having to compromise financial security. I found that in Tax Delinquent Investment.

It was in Tax Delinquent investment that I learned how to maximize my earning potential without a lot of risk or stress. It seemed like a better kind of security, more secured than a decent paying job. Through my experience in the world of Tax Delinquent Investing by means of land investing, the most important fact I can share is that investing in tax delinquent real estate is one of the safest ways to invest your money and earn an extremely high rate of return.

I want to invite you to the tax delinquent arena and show how you too can earn huge investment returns from little known investing strategies…

Always remember that county government manages the entire tax delinquent process so it is very safe and fair. The last thing the county wants is an unsatisfied tax delinquent investor. Without the investors, counties would not be able to collect the money they need to keep the county government operating. Each county in the United States has a process they use to remedy situations where property owners stop paying their property taxes. So typically a lien is placed on the property, in the form of a tax lien certificate, this certificate is valued at the amount of the back taxes plus the interest. A property owner still gets a chance to redeem this, if they eventually find means to pay it back but if they fail to pay it back during the given allotted time, called redemption period, they lose their entire property to the investor for the property taxes owed. Even if the delinquent property owners pay their tax bill, you, the investor, make an extremely high rate of return on your money. But investing in tax liens is just a small portion of tax delinquent investing there are more powerfully profitable little known investment niches’ in this field.

The best part is that tax delinquent investing does not depend on the economy, so there is zero investment volatility when you invest.

Riding the Tax Delinquent Investment train is more like a stroll in the part than a roller coaster ride. It does not go up, down and sideways with sharp turns like the stock market. Tax Delinquent Investing is like putting your car on cruise control in an open and wide road, sure to bring you to your final destination, financial security, safe, happy and alive.

By: Jack Bosch

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When it comes to investing money in the stock market, most people assume that they must have a professional handle it for them. This works for many people, while others are able to do a perfect job on their own.

But you have to realize that a financial advisor is there to help you manage your investments. He can take your investment money and put it in a wise place. But the overall picture won’t be served if you don’t tell the advisor about your overall financial situation.

You will find that most financial advisors will ask you about your debt, your job stability, your insurance, your wills or trusts. They do this for a reason. They understand that your investments can’t be optimized if you are at risk in some area. The management of finances doesn’t just focus on the stocks you hold, but the entire picture.

For example, if you have $20,000 to invest, but owe $15,000 in credit card debt, a good advisor will tell you to pay off your debt first. They would advise you have good life insurance, disability insurance and personal liability insurance.

Your financial goals will also play a role in the investment of your money in the stock market. Are you looking to make money in the long run or rather quickly? What is your risk level? Are you willing to gamble or do you like to play it safe?

Look for an advisor to ask you about your retirement plans and your sources of income. She may ask about your goals and dreams, how much you spend each year, questions about your family and your must haves.

This gives a financial advisor the accurate picture of your finances. Remember, one can’t just look at one category alone. Why invest your money and earn 10% over the long run when you are paying 18% in interest to a bank for credit card bills? You won’t be making money, you will be losing it.

There are many different types of financial advisors out there. Some are more qualified than others. Some create a financial plan for you and that’s it. Some help you implement the changes in your finances. Look for a certified financial planner professional that has a good reputation in your area. Take the time to interview and really consider if the person is someone you can open up to and trust.

Remember, when it comes to your investments, you are still the boss. Regardless of what an advisor think or knows, you still control your money. Don’t just give all of your financial well being over to someone else. Do the research and know what is going on with your money. Ask that you are contacted before changes are made in your account. Ask that things be explained so that you understand them. Ask to know each and every commission.

When it comes to investments, some people really benefit from the advice of experts. Many of us simply do not have the time to manage all the details on our own. Look at your finances, your goals and your family in deciding whether or not to use a financial advisor to help manage your investments.

By: Martin Lukac

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