Money & Investing - Banks.com

One of the cornerstones of retirement planning is investing. Indeed, it is important to have a good investment portfolio if you are planning on retiring well. This investment portfolio can include a number of investments, including stocks, bonds, mutual funds and other items. And one of the popular additions for retirement planning has been the variable annuity.

Right now, though, the variable annuity has been taking a hit. With interest rates low, they aren’t paying as much. Well, the old-fashioned variety of annuity isn’t. But there are newer variable annuity choices that include such benefits as:

• Wide investment options.
• Guaranteed lifetime withdrawal.
• Better death benefits.
• Bonuses for premiums that you make.
• Lower expenses associated with the variable annuity.

If you have a variable annuity, consider upgrading it rather than getting rid of it. If you simple turn it in for the cash, you will have to pay income tax, possibly a surrender fee and even a penalty if you are younger than 59 1/2 years old. This could completely destroy any sort of value that you would get from cashing it in.

Instead of cashing in your variable annuity, think about the 1035 Exchange. This is a law that allows you to upgrade your annuity, without penalties. Here is what Investopedia explains about the 1035 Exchange:

Under Internal Revenue Code Section 1035, the IRS will let you exchange one annuity for another one, income-tax free. The catch is that the funds must pass directly from the old annuity contract to the new annuity contract. In other words, you cannot accept a check for the old annuity to buy the new one.

You’ll also have to keep the owner and annuitant on the new contract the same as under the old contract, although you can change these once the exchange is complete. In addition, there is no limit on the number of old variable annuity contracts you exchange for new contracts.

Shop around at different companies for a variable annuity that best works for you. Then, instead of getting rid of your old one, make a change for the better.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: retirement planning, variable annuity, investing blog, investment portfolio,
IRS, investments, 1035 Exchange

One of the important things you need to be aware of when it comes to investing is your risk tolerance. You should know how much risk you can take — and this includes your emotional tolerance for risk as well as the tolerance your investment portfolio has.

Risk tolerance: Financial risks

It is often easier to figure out your financial risk tolerance. Before you add an investment to your portfolio, you run the numbers. Financial risk tolerance is how much you can afford to lose, and still be in good shape financially. For those who can afford to lose a great deal of money (or for those who are younger and have more time to make up for losses), the financial risk tolerance is higher. The key is to avoid taking on risks that will leave your finances in ruins.

Risk tolerance: Emotional risks

While it would be nice to say that investing is something that is objective and purely numbers-based, you know this isn’t the case. Emotions play a part in your ability to invest. Some people, even those with a high financial risk tolerance, are worriers. Emotionally, they are concerned about losing money and worry that they picked the wrong investments. If the emotional stress is too great for you, then you need to adjust your investment strategy accordingly.

Progressive investing strategy

In order to handle both the financial and emotional risk tolerance you have, you can engage in progressive investing. In this strategy, you start out with very conservative investments that have lower risk. You get used to managing those investments and learn how investing works. As you gain more experience and knowledge, you can start to slowly add riskier investments.

There is no one right way for everyone to invest. You need to evaluate your own investing strategy and style, and work with what is comfortable for you.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: risk tolerance, investment portfolio, investing blog, Fed rate decision,
investing strategy, investments, progressive investing

The stock market is mixed this morning, as new data comes in. Worries over the financial sector (thanks to news of bank failures and crackdowns) are renewing themselves again. Additionally, oil prices are rebounding after declining overall for a few days. Increased oil prices usually weigh on the stock market. Investor’s Business Daily reports on some of the movers today on the stock market so far:

GMX Resources (GMXR) gained 2.85 to 71.34 in fast trade. The oil and gas producer is working on the right side of a new base.

Group mate EOG Resources (EOG) climbed 5.30 to 105.71 on brisk volume. It’s trying to recover from a 37% sell-off, but the stock has met resistance.

On the downside, Big Lots (BIG) fell 1.68, or 5%, to 31.38 in heavy trading, despite beating views and raising guidance.

LDK Solar (LDK) slipped 0.81 to 49.25 as it pulled back from a seven-month high. The Chinese solar wafer maker rose 9% Monday on a strong sales outlook.

With economic data mixed, investors are wary of where to go next.

One of the best things to do in times like these is to carefully evaluate some value stocks that are likely to pull through the current bear market. This are stocks of companies with strong fundamentals. Strong fundamentals mean that the underlying strength of the company’s management and business model will pull the stock through these tough times.

The reason now is the time to buy such stocks is that you can get them for a lower prices. At some point, the stock market will rebound (it always does; over time the stock market gains overall) and when it does, the solid stocks that you buy now will provide you with some tidy gains. The trick, of course, is choosing the stocks that will make it through this particular difficulty.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: stock market, stock market news, investing blog, value stocks,
bear market, investments, oil prices