Category Archives: General Investing

General Investing

How an IRA Differs From a Roth IRA

There are a lot of differences, and even more similarities, between a traditional and Roth IRA, but the key factor in how the two differ is in your future, and current, tax obligations.

An IRA is an independent retirement account, which means you set the account up on your own and maintain it on your own, whereas a 401k is set up through your employer. You can go to a financial institution and with the help of a financial adviser, or your own knowledge, choose every detail on how your money will be invested. This is true with either type of account.

A traditional IRA, in terms of taxes, is set up very similarly to a traditional 401k. Your contributions to the account are taken from your income before taxes are taken out. The percentage of your income that you owe to taxes each year changes depending on your income bracket. If you make less money you pay a smaller percentage of your income to taxes. Because your contributions are taken out before taxes are taken out your income level lowers, which may lower you down to a lower tax bracket, meaning you owe less money in taxes this year. When you withdraw from your account after you reach retirement age that you’ll then be paying taxes on this money. So, if you believe you will be withdrawing small amounts of money/having a lower income in retirement, then you may prefer to put off paying taxes on this income until you reach retirement age.

With a Roth IRA your contributions are taken from your income after taxes are taken out. When you withdraw from your account after reaching retirement age you will not be paying taxes on your withdrawals. This means that you are paying taxes on that income now.

Of course, it can be hard to feel confident about what your income level will be in retirement, or in any of your investment decisions. For more answers you can always talk to a financial professional, or read more to better understand your options. Don’t let this fear stop you from investing, however, because the most important thing is simply that you are saving for retirement.

General Investing

Where to Invest Your Short term Cash

Where to Invest Your Short term Cash

By Larry Lane for Investorzoo.com

You have 6 months saved for your emergency fund earning a robust 1% interest. You think there’s got to be a better way to earn more interest. You turn to Cd rates, but the prospects of tying your emergency money up for 2 years for an extra 1% return aren’t an option. Desperate times call for desperate measures. It’s time to go shopping (for better returns on your money that is!)

Credit unions and community banks

Contrary to popular belief, in most cases you don’t have to belong to a union to take advantage of their specials and rates. In some instances, you can earn up to 5.5% on balances on amounts up to $35,000 by banking with small credit unions and community banks. Credit unions and small banks are in stiff competition with the national chains for deposits. On average, they currently offer higher yields than large banks on deposits and lower rates on loans and credit cards. You may also received reduced fees on bounced checks and overdraft protection.

Finding a high yielding savings or checking account

High yielding checking and savings accounts are available at some banks. Yes, there can be restrictions and residency eligibility. Rates can vary, and are subject to change as well. In most cases, you will have to make direct deposits, use their debit card 10 to 15 times per month, receive E-statements as well as use their online bill pay system. Failure to meet these minimums and your rate may drop to 0. You will have to do some research online to find a deal which is appropriate for your situation.

When I first joined Malvern Federal malvernfederal.com, they had a fantastic rate of 5.5%. However, the rate dropped to a still respectable 1.98% 3 months later. Here are their restrictions:

1) Use of their debit card a minimum of 10 times per month. To make sure I reach this requirement, I make sure I purchase gas in $5.00 increments during the month. Add in some purchases at the grocery store and getting to 10 transactions usually isn’t a problem by the middle of the month.

2) Direct deposit/Direct bill pay-Simply have your paycheck directly deposited or use Malvern Federal’s direct bill pay system.

Create a CD Ladder

For sums above $50,000, CDS and money markets accounts still offer the best combination of safety and yield. A good way to invest in a CD is to create a ladder of CDs with maturities that range from 1 and go up to up five years. This will enable you to take advantage of higher rates when you reinvest your shorter-maturity CDs, while still earning higher yields on longer-term CDs.

A little more Risk, a little More Reward

No uninsured financial instrument is bulletproof. Some short-term bond funds lost more than 20% last year. For the most part, the types of funds are designed to yield a few percentage points more than certificates of deposit and money-market funds. However, they do tend to experience great swings in net asset value (or NAV, a fund’s share price). As credit conditions improve, these funds have done very well this year.

Ginnie Mae funds

Technically, you can’t call Ginnie Mae funds cash substitutes, but they are very close to it. Ginnie Mae funds own packages of home mortgages. These funds kept their value through the financial crisis. That shouldn’t come as a surprise because Ginnie Maes are backed by the full faith and credit of the U.S. Government, making them much sounder than other mortgage-related investments. Check out the Vanguard GNMA fund. This fund did very well last year in 2008, returning a little more than 7%.

If you’re not out to find the next Google, or gamble to reach out for double digit returns, check out some of the above options. They will keep your emergency fund safer than the roller coaster stock market.

The article above is information of a general nature and the information provided may not apply to your personal situation. Please consult your financial planner or licensed professional for investment advice.

General Investing

How to Invest in Gold on Just a Small Budget

Here are some different ways to get into the gold market at very little cost.

Buy Old Gold Jewelry

As funny as it may sound buying old gold jewelry is an excellent and easy way to get into investing in gold – especially for those on a budget. Old jewelry is often referred as scrap gold, the price of the scrap gold item will always reflect the current price of gold. For example someone has an 18k wedding band that weighs 3 grams. 18k gold is 75% pure gold mixed with other metals. The gold price per gram at the moment is around $35. 18k gold is therefore $26.50 per gram so the ring is worth $79.68. As the gold price gold up and down so will the value of your ring in proportion to the amount of gold in it. So you have just made a gold investment for under $100. If you buy 10k or 14 rings then obviously it will get cheaper. The trick is knowing the scrap gold value of an item. If you go to the website linked below there is a Scrap Gold Calculator that will calculate the value of any scrap gold item. Scrap gold can be bought easily on Ebay or try your local coin shop or second hand jeweler. You don’t want to be paying more than 10% above the scrap gold value of the item though.

Buy Old European Coins

Over 100 years ago almost all European countries had gold coins in circulation, these coins contain small fractions of pure gold in them. An Austrian 1 ducat for example has just over one tenth of an ounce of gold in them. A half British Sovereign has 0.1177 of an ounce of pure gold – pricing them at just over $100. The only draw back with these coins is calculating the current value because they all have very odd amounts of gold in them. If you go to the website linked below the gold calculator will calculate the current value of any of these coins.

Buy Silver

Silver is also a precious metal and its price tends to rise and fall with that of gold (see link below for explanation of the Gold to Silver Ratio). It is also much cheaper than gold with an ounce costing under $20 at todays prices. What is even better is junk silver coins – old US coins such as Kennedy Half Dollars , Morgan Silver Dollars, Peace Dollars and So On. The great thing about these coins is that they are very low denomination for example a Mercury Silver Dime will cost you under $2. Its value will always reflect the price of silver and you can keep adding to your collection even on a very small budget. You want to find a dealer that will sell you these coins in small quantities, try your local coin deall or once again Ebay is a great place. The trick with these coins also is to know the current silver value of each coin you are thinking of purchasing. Go to the In Gold We Trust website and their calculator will give you up to the minute prices on all junk silver coins as well as scrap gold prices and values on most other silver and gold coins

General Investing

L1A And EB5 Immigrant Investor Visas Compared

The fifth preference employment based visa (EB5) was created in 1990 as a way for foreign investors to gain United States permanent residency (and eventual citizenship if desired), through an investment in a new or pre-existing American business that sees the creation of at least 10 new full-time jobs for American workers. The L-1A Visa allows a manager or executive from a foreign nation to enter the United States for the purposes of furthering their business. In this article we will take a closer look at the L1-A Visa and the EB5 Immigrant Investor visas to see how their paths to a Green Card Visa compare and contrast.

L1-A Visa – As defined by the government’s website, the L-1A nonimmigrant classification: “enables a U.S. employer to transfer an executive or manager from one of its affiliated foreign offices to one of its offices in the United States. This classification also enables a foreign company which does not yet have an affiliated U.S. office to send an executive or manager to the United States with the purpose of establishing one. The employer must file Form I-129, Petition for a Nonimmigrant Worker, on behalf of the employee.”

L1-A Visa General Qualifications of the Employer and Employee – To qualify for L-1A classification in this category, the employer must

1) Have a qualifying relationship with a foreign company (parent company, branch, subsidiary, or affiliate, collectively referred to as qualifying organizations); and

2) Currently be, or will be, doing business as an employer in the United States and in at least one other country directly or through a qualifying organization for the duration of the beneficiary’s stay in the United States as an L-1. While the business must be viable, there is no requirement that it be engaged in international trade.

Doing business means the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad.

Also to qualify, the named employee must

1) Generally have been working for a qualifying organization abroad for one continuous year within the three years immediately preceding his or her admission to the United States; and

2) Be seeking to enter the United States to render services in an executive or managerial capacity to a branch of the same employer or one of its qualifying organizations.

Executive capacity – This generally refers to the employee’s ability to make decisions of wide latitude without much oversight.

Managerial capacity – This generally refers to the ability of the employee to supervise and control the work of professional employees and to manage the organization, or a department, subdivision, function, or component of the organization. It may also refer to the employee’s ability to manage an essential function of the organization at a high level, without direct supervision of others.

More information on the L1-A visa can be found at USCIS.gov.

EB5 Immigrant Investor Visa – In stark contrast to the L1-A visa, lays the EB5 Immigrant Investor Visa. According to the government’s web page, to qualify for the Eb5 Visa Program you must:

1) Invest or be in the process of investing at least $1,000,000. If your investment is in a designated targeted employment area (A Targeted Employment Area is defined by law as “a rural area or an area that has experienced high unemployment of at least 150 percent of the national average) then the minimum investment requirement is $500,000.

2) Benefit the U.S. economy by providing goods or services to U.S. markets.

3) Create full-time employment for at least 10 U.S. workers. This includes U.S. citizens, Green Card holders (lawful permanent residents) and other individuals lawfully authorized to work in the U.S. (however it does not include you (the immigrant), or your spouse, sons or daughters).

4) Be involved in the day-to-day management of the new business or directly manage it through formulating business policy – for example as a Limited Partner, corporate officer or board member.

We see in this comparison that despite the fact that the L1-A and EB5 immigrant investor visas both rely on certain job based requirements being satisfied; the two are very different in nature and offer disparate paths to a green card visa.

General Investing

Trading For Beginners Learn The Art of Investing in Stock Options

Investing in securities and debentures brings fortune but only when the investor has a fair understanding of the working of stock market. A majority of investors hesitate in putting their money in various securities just because they can’t find a fruitful opportunity. Though immense information is provided on the Internet regarding working of the stock market but simply reading articles written by eminent investors or consultants can only give you a clear picture of the stock market. To know about the recent developments in the stock market, you need to interact with experienced investors and traders. Trading for beginners starts with positive interaction with seasoned investors and traders.

People earn thousands of dollars every month by selling or buying securities. They invest in debentures and other stock market products. Those who have access to internal and vital information of the stock market can make money without investing large sums. This information is not available on Internet and neither is it published in the newspapers. To get a first hand report about the recent stock market development, you have to interact with stock market seniors. Trading for beginners invites all the investors to come to this place and share their views on the recent trends in stock market.

Stock market investment is an art that a few know. If you are interested in knowing the secrets of stock market investment then join the industry stalwarts in the trading for beginners. Here you have an opportunity to understand the basics of stock market investment by raising questions and listening to the serious debate. Books and Internet articles can only raise thousands of questions in your mind. There is no way you can contact an author and ask him questions that propped up in your mind after reading his book or article. But here you have an opportunity to raise questions and get answers.

A live debate or conversation between experienced investors is an opportunity for beginners to learn new things about stock market investment. Trading for beginners is hosted not to publish a book but to make public the tools of calculating the risk factors in various stock market products. Here you will learn to track good stock opportunities and also learn to determine the right time to invest in a security. The stock market is full of hopes, disappointments, fortune and disaster. You need to keep an eagle eye over all the stock market related issues to become a millionaire.