Personal Finance Answers

Archive for the ‘Financial Planning’ Category

There are numerous tasks of a company that are being outsourced today, from a company’s main services offered to the market to a company’s human resources duties. However, there is one that has been around since the birth of the concept of outsourcing as it is one of the internal corporate tasks that need expert attention and this is none other than finance and accounting outsourcing. It would be permissible for the general public to assume that accounting is one of the major solutions being outsourced today.

Most people would only think about accounts receivable, accounts payable and general accounting upon hearing the words finance and accounting outsourcing but it seems that there is another degree to it that is on the rise, which is financial planning & analysis. This particular branch has been present for the past few years but it is outsourced less frequently as it has not yet penetrated the market compared to the more popular ones.

A recent study by Everest Research Institute suggests that financial planning & analysis has a significant movement in terms of finance and accounting outsourcing contracts. The market research firm reported that between the years 2005 to 2009, the sealed contract renewals included a financial planning & analysis scope. In addition to this, it was also mentioned that the key players in the contract signing are from the manufacturing and retail industries.

Global leaders in outsourcing offering this kind of service, such as Genpact (NYSE:G), Wipro (NYSE:WIT), Infosys (NASDAQ:INFY), and Accenture (NYSE:ACN), are now enhancing their Financial Planning & Analysis capabilities since they are seeing that there is still room for improvement and there is a great possibility that this specific degree of outsourcing will see a boom in the coming years. Vengroff, Williams & Associates, a global service provider for order to cash processes, predicts that finance and accounting outsourcing will gain higher value this 2011. Accenture (NYSE:ACN), which is one of the companies mentioned above, has added another set of services to offer the market, to be delivered through their facilities in Cebu, Philippines. These services are focused on non-voice solutions which consist of finance and accounting solutions, among others.

However, as great as the idea of outsourcing financial planning & analysis may sound, it seems that not all countries are capable of extending their services yet, since there is a certain level of expertise needed to perform such tasks. This particular branch of finance and accounting outsourcing requires a higher level of expertise and training, compared to that of the other offerings under the same category. Taking into account the Philippines, the country may be regarded as one of the top destinations for outsourcing, especially for contact center solutions, but still financial planning & analysis outsourcing is still at its infancy in the country.

In the coming months and years, we may expect that the popularity for this degree of finance and accounting outsourcing service will increase and that the countries that promote outsourcing will be fully capable of extending their services to companies around the globe.

Read more...

As our client, The Retirement Group must be able to work with your company’s benefits administrator. A major administrator that we work with is Fidelity Netbenefits. The Retirement Group has no affiliation and neither are endorsed by Fidelity or Netbenefits. However, we have become specialists in navigating the Netbenefits website and can easily aid clients in accessing their benefits information.

Fidelity Netbenefits created an easy to use site to help members of Fidelity Investments view and manage their 401(k) savings plans. This site, http::/netbenefits.fidelity.com, enables its investors to direct all aspects of their 401(k) plan from the comfort of their own home.

Upon logging on to the site, you will be taken to the Home page where the balances and portfolio total of your retirement accounts are shown. If you have other Fidelity investment accounts they may be accessed here as well. Several functions exist on this Home page to help navigate through this site easier. Quick Links is used to retrieve important account information more directly and the Your Profile tab allows you to view your personal information, specify mailing preferences, and more. A Netbenefits tour is available if you want to learn more about how to manage your account and plan for retirement.

To get a better understanding of your investments, you can view the Your Portfolio section under the Savings & Retirement tab. Here you can look at your investments in each of your accounts in more detail. If you want help in making a more informed decision about your investments, third-party research is on hand under the Portfolio Research section of the site. Under Portfolio Analysis you can get a better picture of what you own. This section provides you with your overall asset allocation and can compare it against other investment plans to check its performance.

Netbenefits has made their site easy to follow so you can manage and take action of your investments as you like. Investors can instantly check their current rates of return, view performance summaries, and check online statements up to 24 months prior. Along with that, investors can make adjustments to their paycheck deductions and change future contributions without difficulty.

Planning resources provided in the Tools & Learning box under the Savings & Retirement tab benefit to investors. You can find links under this section that will help further prepare you for retirement and any other important goals you may have.

Other valuable resources that Netbenefits provides are articles and workshops relating to financial planning. A calculator is at hand to help you estimate your net pay, expenses, payments, etc. With the complexity of present-day 401(k) plans, all of these resources are central factors to consider.

Today, millions of people contribute to their 401(k) plan provided by their employer. As a defined-benefit retirement plan, employees set aside part of their income that is then invested to build savings for the future. However, 401(k) plan facts can differ greatly from company to company. This makes it vital for employees to evaluate their plan and its options to make sure it is customized to fit their individual needs.

Read more...

A cOmmOn rule of thumb when planning for retirement is to save 10% of your gross income during your working years. Since this rule of thumb has been around for a long time, it’s logical to question whether it’s still an appropriate guideline. Several trends suggest that it is probably on the low side:

fewer individuals are covered bY definedbenefit plans. The 10% guideline anticipated that a retiree would receive a defined-benefit pension as well as Social Security benefits. But a substantial portion of the work force is no longer covered by a defined-benefit pension.

the social securitY sYstem will face increasing pressure in the future. By 2037, due to the unprecedented number of baby boomers that will be retiring, benefits will need to be reduced by approximately 25% to equal revenues collected unless changes are made to the system (Source: Social Security Administration, 2009).

life expectancies are continuing to increase. Average retirement ages have been decreasing while life expectancies have been increasing. currently, at age 65, the average life expectancy is 82 years for a man and 85 years for a woman, compared to 78 years for a man and 81 years for a woman in 1950 (Source: Journal of Financial Planning, August 2008).

plans for retirement have changed. Another common retirement planning rule of thumb is that you’ll need 70% of preretirement income during retirement (Source: Money, January 2009). however, that guideline assumed a relatively inactive retirement lifestyle. Increasingly, retirees view retirement as a time to travel extensively or engage in expensive new hobbies. All these trends point to the fact that future retirees will be responsible for providing more of their income for a longer period of time. Thus, you should consider higher, not lower, savings rates. While 10% of income may sound like a lot of money, consider how many years you expect to work compared to how many years will be spent in retirement. Assume you start working at age 22, work until age 62, and then die at age 82. Thus, you work 40 years and are retired for 20 years – for every two years you work, you need to support yourself for one year in retirement. contrast the current situation with a typical scenario in 1950.

At that time, the average retiree worked 47 years before retiring for nine years. Thus, that person worked over five years to support one year of retirement.

For many people, then, the answer may be to extend their working years. In the above example, if you wait until age 70 instead of age 62 to retire, you will work for 48 years and be retired for 12 years. Thus,

you will work four years for every year of retirement.

These stark realities don’t mean that you can’t retire, just that you need to plan carefully. Thus, you should start saving as much as possible, as soon as possible, for your retirement.

Read more...

Increasingly, companies offer to buy out older workers with early retirement packages. When times are tight, they justify it by citing that younger workers are cheaper to employ. If you’re offered an early retirement window, here are some important factors to think about before accepting any buyout …

The income factor. Take a look and see if you might be able to take early distributions from your 401(k) starting at age 55 without a penalty. Under certain circumstances, you can. Now, if you have a pension plan, the income distributions will likely be age-weighted, so accepting an early retirement package may lower your pension income down the road.

The insurance factor. Most companies don’t package health insurance coverage along with that severance pay. (It would be nice if they did.) So after 18 months of COBRA, you will have to start paying premiums on a private health insurance policy. (You could also arrange coverage through your spouse’s policy.) As for life insurance, some employers will actually offer to sustain it for early retirees, but the coverage can be inadequate and the cost will likely be passed on to you.

The adjustment factor. A golden handshake can be really jarring to your life. If the writing is on the wall and you have no choice but to take it, don’t be surprised if it takes 6-9 months to settle down to a new lifestyle, a new community, or a new job. If you depend totally on your job for your satisfaction in life, or if you haven’t done much financial planning early in life, you might be surprised at how entrepreneurially you have to think (if you want to remain employed) or how fast your financial mindset has to change from accumulation to preservation. If you get a large bonus as part of the buyout, you have to consider the tax consequences and your options for tax deferral.

Attention to the basics. If you have even an inkling that you might be asked to take an early retirement in the coming months, review your finances NOW. You want to wipe out as many debts as you can, build up your emergency fund, and avoid extravagances.

If you have questions about what to do in this kind of situation, just e-mail me or give me a call and we can talk about it.

Read more...

Debt Relief basically intends purging you out from overpowering and ghastly debts. When we first acquire a credit card we unremittingly fail to uphold a proper financial planning. The condition is the same everywhere and our compulsive shopping spree never comes to an end.But the realization strikes us late when we finally end up spending more than we earn. Even recession has immensely played its part. It has disfigured the economy and if we do not take correct practical steps we will never be able to emerge out this crisis.

Slowly we realize ourselves getting stacked with Credit Card Debt and it accumulates like never before. Then creditors stat off with their harassing phone calls every day. In such a situation there still is some help that will aid you in coming out from these liabilities. You can opt for several Debt Relief options available like financial planning, debt consolidation or direct contact with your creditors. But it will be really helpful in future if you do not decide on filing of bankruptcy. Depending on your circumstances one can choose from the list of Debt Relief options available.

You can also hire professionals who are attached to settlement firms and they work hard in reducing your unsecured debts. They help in talking and negotiating with your creditors and come to a conclusion that will be beneficial for both debtor and the creditor. They negotiate with your creditor on your behalf acting as mediators. They conclude with a reasonably low monthly plan which can be comfortably paid by the customer within some months or years.

This is the best way to get freedom from your Credit Card Debt. Not only this, these companies also help you waiver your actual amount up to 60%. These agencies have experts who guide you through debt negotiation and take you out of these wearisome debts.

But one important word of advice is to not directly approach settlement firms present in the market. In fact, initially attend a debt relief network. They have a list of the top rated companies that are legal and have established track record as well. They are all free of cost and the recommendation and advice offered is hugely beneficial.

It would be wise to utilize a debt relief network if you are considering getting a debt settlement. The top debt relief networks are only affiliated with the best performing settlement companies that are established and proven. LegitimateDebtSettlement.com is one of the largest and most respected debt relief networks on the market.

Read more...

Below are a few frequently asked questions as well as answers, regarding wealth management, financial planning and the financial industry.

Q: Are my portfolios positioned to endure another economic downturn? If not, how do we ensure that they are?

A: We are long-term investors, not market-timers. We look for long-term bargains and do not try to time the markets. We must allow for our portfolios to fall during downturns in order fully participate in the long-term benefits of our wealth management. Because of market cycle fluctuations, the money we manage should be viewed as long-term money. As for retired clients who take income from their portfolios, they need to understand our goal is long-term growth of income, not short-term market timing. That said, a normal by-product of favoring investments with higher-than-average dividends, cash flow, balance sheets and price-to-value fundamentals in normal market downturns generally provides a downside cushion.

Q: What is the impact of the U.S. dollar dropping in value, and how do we protect against it?

A: In addition to inflation, another result we anticipate from the stimulus actions of our government, namely extremely low interest rates and massive borrowing/spending, is downward pressure on the U.S. dollar. This phenomenon also has dual outcomes. A devalued U.S. dollar makes domestic goods and services less expensive to countries with stronger currencies, which should make American businesses more competitive globally and thus stimulate our economy. But for consumers at home, it means that nearly everything we buy will become more expensive due both directly to increasing costs of foreign products/labor and indirectly to increasing prices of purely domestic competing goods and services. Foreign-denominated assets, such as foreign-listed stocks and bonds, directly increase in dollar terms as the dollar falls. FIM Group, however, does not invest in foreign investments merely because we are predicting the direction of currencies. As a matter of fact, we require a higher margin of safety in the prices of the foreign investments we buy specifically because of the added risks currency fluctuations may present. We currently invest in foreign economies and companies that we feel are poised to benefit from local, global and company-specific factors, resulting in our portfolios benefiting from a weakening dollar.

Q: The financial industry has convinced many investors that “markets are efficient,” “you can’t beat the market” and several other “truths,” so why should an investor pay fees for active management?

A: It is indeed true that 80% of the so-called money managers (actually mutual fund managers are the universe used in such studies) under perform the average (i.e., the market indexes). But that does not mean markets are efficient. Nor does it mean that the approaches used by the mediocre managers are anything but mediocre. Mediocrity, plus mutual fund constraints, minus fees equals lackluster performance. No argument here. But what about the other 20%? Using this theory implies that on any Sunday every football team has the same odds of winning as every other team. It implies that Tiger Woods, Roger Federer or the New York Yankees have the same probability of finishing in the top half of the pack as the bottom. The fallacy in this logic seems obvious to most people when talking about sports or other fields, yet some still believe that investment success is random. Tiger, Roger and Mr. Steinbrenner all have systematic competitive advantages.

So do investment managers who employ time-tested techniques and skills such as favoring securities with the qualities mentioned above and avoiding securities that are either overpriced or have headwinds to overcome. Yes, Tiger misses the cut sometimes. Yes, managers with solid long-term performance have periods where they under perform some arbitrary index. But in the long run, time-tested disciplines provide better returns with less downside risk (on average!) than random investing. In the case of FIM Group, we missed the cut in 2008. But we have regained ground lost to most arbitrary benchmarks (such as the S&P 500) in 2009. Nevertheless, one year versus another is not what counts. What counts are long-term results. For readers who have not been with us for more than ten years, I encourage you to ask your FIM Group adviser to show you our ten-year returns for periods ending September 30, 2009, or ten-year periods ending 2008, 2007, 2006, etc. Past performance notwithstanding, we remain forward-focused. We manage in the present, employing the timely strategies such as those described above. But we remain flexible, with our ears to the ground, and willing to change course as conditions warrant.

Read more...

“…we’re talking about improving your business so the onus to find value in technology is actually on you!”

I just read Joel Bruckenstein’s 2009 Software and Technology Survey on Financial Planning’s website (read the article). It’s a great article and Joel did a lot of analysis to help us all understand what technologies people are and are not using. Reading this article raised a question in my mind… why are people NOT buying a particular technology? As an efficiency solution provider myself, I have some ideas why.

Whether you’re a technologist like myself, an IT professional or just the buyer of a new technology, it is reasonable to expect that saving people time and money would be an obvious reason to make everyone want to use it. But they don’t. Why is that? Here are the main reasons I encounter that apply to every one of us, including me: ignorance, return on investment (ROI) and a lack of realized value.

Ignorance

Let’s face it: when you encounter a problem it is much easier to ignore it than to try and solve it. Imagine stopping in the middle of a process every time you encounter an inefficiency, a lack of integration, a missing feature, etc. to find a better solution. You would never accomplish anything on time. When you’re busy and simply trying to complete a task the last thing you want to do is stop and find a better way. Therefore we remain ignorant of better solutions, better service or better features within our existing solutions. One of the best ways to solve this problem is to do what Joel concludes and put together a technology plan.

A good technology plan should start with an overview of your operations and processes, identification of your existing technologies that serve each process point and who on your team operates each step of your process. With the overview in hand, identify the process steps where you either don’t have a technology solution at all or your current solution is outdated or insufficient. Knowing which process steps need your attention will make it easier for you to plan for the technology that best fits your process flow. The last step to building a basic technology plan is to research the possible solutions and build a budget.

How To Assess ROI

There is this great fallacy when it comes to buying technology called return on investment (ROI). Every sales person wants to believe that if they can show you a really great ROI that you’ll get out your checkbook. It doesn’t quite work that way. You intuitively know that your return on investment may vary according to your actual usage of the solution, current costs without the new solution and whether you and your users will actually adopt the solution.

The better way to assess whether a solution will give you a return on investment is to decide whether you can live without the solution altogether. Of course you must consider the cost – spending $5,000 to save $500 doesn’t make a lot of sense. On the other hand, if the solution will increase your revenue by $10,000 while saving you $500 then spending $5,000 can make sense. If you feel you cannot live without the solution, then ignore the ROI numbers because the solution will be worth it if your budget affords the up-front cost. If you can live without the solution then you need to decide if the new technology will help you grow, enhance your revenue, improve your image or other intangible benefits that can’t be included in an ROI analysis.

Value – Perceived or Realized?

There are two ways to be sold on a product: the perception of its value or the realization of its value. Perception of value is formed during the sales and research process. Asking others how they use the product, reading about the most popular solutions and hearing anecdotal success stories all contribute to your perception of the solution’s value. Then you buy and hope it lives up to the value you perceive. The other way is to realize value before you buy. Realizing value is usually achieved during a free trial when you can see the solution in action and see the results for yourself. For example, with our end-user product, Quik! Forms Library, you can try the fully-featured software for 14 days for free and within the first few minutes of generating forms you’ll realize the value of the solution and know whether the solution is for you or not.

A primary reason you didn’t buy or use a technology is due to a lack of value, whether perceived or realized. To improve your business with technology you must overcome the hurdle of finding the value in a given solution. Obviously the person or website telling you to look at the technology may need to do a better job of conveying value but we’re talking about improving your business so the onus to find value in technology is actually on you! Take the free trial and really try out the solution. Talk to other users. Read the testimonials and case studies. Find the value and see what Joel is talking about when he says “What are you waiting for?”.

What was the last technology purchase you didn’t make?

Thanks for reading,

Richard Walker

Read more...

It becomes a challenge to manage the monthly expenditures, every month we plan to budget our expenditures but finally someway of the other we cannot keep a proper track. The solution is possible and at present the budgeting software is in high use. The process of money making is simple, it is not just spending hard earned bucks but it is the management of the earned bucks that can make a clear difference. The online budgeting software is now in high demand and people from different corners of the planet are using this tool for better money managements.

The online budgeting software is the solution when you plan to track and understand the monthly expenditures. The software can be used after installing it in the personal computer or even just online. It is not at all a hassle to monitor and curtail the monthly expenses including Rent/Mortgage, Grocery, Utilities, Phone, Entertainment, Clothing, Medical, and all other associated expenditures. Each of such expenditures is tracked per month and off course a running average is maintained for each expense over time. This basically facilitates us just to check how much we spend on average for particular items.

The online budget trackers are usually tailored in such a way that it becomes easy to enter all the essential expense related data. The main screen reflects all of the averages and monthly totals. This way we can maintain a detail overview of the monthly totals and at any point of time we can have a quick view of the personal expenditures. Besides all these, the data that is provided is indeed important. The expenditures of few previous months are reflected and it becomes easier to track the month of highest and lowest expenditures. It is entirely hassle free to use the online budgeting software.

Still, while buying or using personal budgeting software it is prudent to make a comparative analysis between the different available versions of the online budgeting software. The different budgeting software can be purchases online and people are largely using them for better management of personal expenses. The online personal budgeting software can be used just by joining. The joining fees can be paid through secured payment gateway.

After joining online budgeting software, particular number of transactions is provided to the users and for using and accessing the software more than the scheduled facility, extra payments need to be done. Various online articles and journals are interesting and these journals can be accessed for clear insight on the budgeting software. In case of doubts regarding these online tools, it is possible to send across the electronic mails to have better idea from the providers. A comparative analysis before buying such software that helps in budgeting can safeguard from any wrong step.

Read more...

Many people around the planet are still not aware of the money healing programs. The Money Healing Program deals with the motivation of people to promote the financial health of their businesses and personal lives. Money healing technique can bring up the ability to sustain as one among the best in the society and gain the idea how to live up with their own money. Every single day, our lives revolve around Money ,either we spend it, trot to the ATM to withdraw it, look at credit card statements and bills or consider borrowing it. If this ongoing, perennial activity is being done on a muddy path, then you slip and fall bad .On the other hand, the Money Management is much important to get by with intelligent concise placards and stride comfortably into your financial habitat. A important step in money saving direction is to build an impeccable credit reputation. How To Make A Good Credit:A good credit record is the integral part of the financial planning. Financial success is a lot about discipline and self-restraint and hence the money healing program provides the direction and meaning to financial decisions.The Money Healing program explains about the personal finance that includes the cash flow management, education planning, retirement planning, investment planning, insurance planning, tax planning, estate planning and business succession planning. One’s personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets along with personal liabilities like credit card debt, bank loan and mortgag.This enables for the prosperity of a good fortune.Planning often requires consideration of self-constraints in postponing some enjoyment today for the sake of earning money in future. To be effective, the plan should consider the individual’s current lifestyle, so that the pain in postponing current pleasures is bearable over the term of the plan. In times where current sacrifices are involved, the plan should help ensure that the pursuit of the goal will continue. A plan should consider the importance of each goal which brings abundant of wealth in life and should be able to prioritize each goal.Reduce Unsecured Debts:Money Healing program is also the resource for debt and credit related issues. Hereby defines about the debt consolidation, debt help, credit counseling and credit repair services. Debt consolidation helps by combining multiple debts into just one at a lower interest rate and people can consolidate all your monthly debts into single reduced monthly payment. All the unsecured debt can be reduced by 30-50%. It is a proven way of reducing all unsecured debts and reaching the status of financial independence. Hence shortly debts can be thrown off only through pre-planning of money spent in day-to-day life. Credit card debt is a cause of serious concern today as it is rising day by day at an alarming rate. The reasons for people to opt credit cards are they can easily get a credit card from any company and finally they find themselves in a huge financial mess. The only way to get relieved from credit cards and debts is to analyze every movement of spending money in life. And saving up money is the only way to earn more in life and get enriched.

Read more...

Keeping financial fitness is an art that many have not learnt. Having healthy finance means that you are living your life to the maximum with the amount of money that you earn, you are not short of finances at any given time and yet are able to save for the rainy day!

But there are certain things that go beyond our control! What if the economy derails and you are left out of your job? What if there is a downturn in economy and as a result Your employer resorts to cost-cutting measures and you find your salary reduced drastically! What if…

Recessions are now a reality that most of us have seen and there is no certainty when it is going to hit again! But there is nothing to lose your sleep about it! If you have done your basics correctly you would be able to inure yourself against recession completely. Let’s take this opportunity to discuss how this can be done!

Maintain an Emergency Fund

Most of us are lethargic to maintain emergency funds might be because we are wont to live from paycheck to paycheck. But it is always wise to maintain an fund to save you on emergency! Emergency fund should be 6-12 months of monthly expenses so in a case if you loss your job or become ill than your home can run on the Emergency Funds. Investing in insurance is a good idea and gives you the option of maintaining such kind of funds for long period of time.

Live within your means

It is always a good habit to live within your means. On the flip side it will save you from getting into debt. And then you can have enough to save for your future! You need to understand that your ability to earn will always fluctuate as what you are earning today will certainly go down after your retirement! But your habit to save will always keep you in better shape. So it is always better to cultivate the habit of living within your means and saving for the future.

Living within your means also refer that you shop very smartly. This means you need to understand what value passes on to you when you buy a thing. To determine whether a potential purchase is a necessity, ask yourself if you can truly afford the item, and do a cost-benefit analysis. You may find that some goods are just too valuable to pass up, while others are a waste of money.

Build up alternative channels of income

Building an extra channel of income is always a good idea. With job security so nonexistent these days, more jobs mean more job security. So if you lose one, you at least have the comfort of the other. So if you have been thinking about a consultancy business, or your own internet business, go for it.

Think of Long term Investments

So what if a drop in the market brings your investments down 15%? If you don’t sell, you won’t lose anything. The market is cyclical, and in the long run, you’ll have plenty of opportunities to sell high. In fact, if you buy when the market’s down, you will thank yourself later.

Diversify Your Investments

The basic tenets of investment require that you diversify your portfolio. Why? Because that gives you immunity against loss! How is that possible? Well have you ever seen the street vendor selling seemingly unrelated products like sunglasses and umbrella? After all, when would a person buy both items at the same time? Probably never – and that’s the point. Street vendors know that when it’s raining, it’s easier to sell umbrellas but harder to sell sunglasses. And when it’s sunny, the reverse is true. By selling both items- in other words, by diversifying the product line – the vendor can reduce the risk of losing money on any given day.

The same holds true for investment. Don’t put all your eggs in one basket! You need to diversify If you own a house and have saving accounts, put some money in stocks! try to build a portfolio of investment pairs that aren’t strongly correlated, meaning that when one is up, the other is down, and vice versa

Follow the five tenets and you will be proofing your finances not only during the recessions but every time no matter where the market is heading for.

Read more...