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

Investment services seem to abound. There are a variety of brokers, from the guy at the bank who can arrange securities transactions, to Wall Street brokers to online discount brokers. All of these professionals offer a variety investment services that can help you make money.

But beware: Some of these investment services cost enough that they eat away at your earnings. It is important to consider the investment services offered, and whether it is worth paying for these services.

Three major investment services

According to Thomas Smith, CFP, CFA and his article on Investopedia, there are three major value components when it comes to investment services:

• Administration: This is probably the component that you will most likely need the most help with. Since you are unlikely to always have direct access to markets, it can be difficult to take care of the administrative aspects of investing. This also includes such items as compiling tax information (you can do it yourself, but it can take for-ev-er). Plus, professional administration can help you stay on top of regulations. Compare administration fees and commissions. You would be surprised at how these vary from brokerage to brokerage.
• Portfolio management. Acquiring investments is different from managing them. Administration services generally do not include investment portfolio management. This is something you can do yourself. It does take time and effort to build a good portfolio that is balanced and allocated for your needs, but it is possible that you can do it fairly well. Smith points out that many “professionals” are not terribly versed in portfolio management.
• Advice. Many people pay for investment advice. However, this is probably — in Smith’s view — the easiest area for you to get good value by taking care of it yourself. From investing books to information and news online, there are many resources available that can help you make good investment decisions. Just be wary of where you get your information.

With some careful planning and by choosing which investment services you pay for and deciding to do some of it yourself, you can build a good investment portfolio that isn’t devoured by fees and commissions.

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: investment portfolio, investment services, investing blog, portfolio management,
investment advice, investments