low-interest-rates

Use Low Interest Rates to your Advantage

Interest rates have been historically low for the past few years and the federal funds rate – which is what other interest rates are based on – is currently close to 0% and the Federal Reserve has mentioned that there are plans in place to keep it this low until at least 2023. 

When interest rates are this low, it provides you with the ideal opportunity to use them to your advantage. Here are some ways in which you can do this:

  1. Consolidate your Debt

if you’re unfortunate enough to be carrying balances on several credit or store cards, applying for and obtaining a debt consolidation loan can help get all of these repayments under control. Debt consolidation loans will often carry lower interest rates than those being charged on store and credit cards and you’ll also only have to worry about making a single repayment each month instead of juggling multiple installments. 

  1. Transfer Credit Card Debt

Should you not be keen on the idea of obtaining a consolidation loan, you may still be able to reduce the amount of money that’s being paid towards interest charges by using a credit card that has a lower interest rate. 

Some credit cards have introductory offers whereby you will only be charged interest after a predetermined period of time – and this can be anywhere between 12 and 18 months. If you’re confident that you’ll be able to repay your existing consumer debt within that time, this option could save thousands of dollars in interest charges. 

  1. Refinance Existing Loans

If you have an existing mortgage or student loan(s), now is the time to think about refinancing them wherever possible. Your new loan will carry a lower interest rate, which will save a fair amount of money over the long term. Whenever possible, see if you’ll be able to lock in the lower interest rate by means of a fixed-rate loan. 

  1. Purchase a Home

If ever there were a time to purchase a home, now would be it. While home prices have been steadily rising in some parts of the country, the historically low interest rates have made it easier than ever to purchase your very own piece of real estate. 

Before purchasing a home though, ensure that you’ll be able to comfortably make the repayments without going into debt if interest rates suddenly rise at a later stage. If possible, apply for a fixed-term mortgage to help prevent this from happening.

  1. Save or Invest More

Lower interest rates mean that you get to keep just a little bit more of your hard-earned money than before. However, if you want to use this windfall to your advantage, the best way to do so will be to place it into a savings or investment account. This will enable you to boost your savings without having to scrimp or save elsewhere in your budget. 

As you can see, there are several ways in which the currently historically low interest rates can be used to your advantage. If you’d like to learn more about investing any surplus funds you have, contact us today.

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retirement investments

Retire Financially Stress-free with these Investment Options

Although retirement is supposed to be the time where you can relax and enjoy the results of decades of hard work, this will only be able to be done successfully if the appropriate financial planning has been carried out ahead of time. While there’s no investment option that can be 100% guaranteed, below are some examples of savings options that will enable you to make the most of your golden years without having to worry about money all the time. 

Your Age is Crucial

Before jumping into any form of retirement-related investments, it’s essential that you take your current age into account. 

When you start nearing retirement age, you’ll need to ensure that investment choices lean more towards becoming more conservative and less aggressive or high risk. For instance, while in your 20s and early 30s, it’s still feasible to take bigger risks such as investing large sums in the stock market. However, upon reaching your 50s and early 60s, it will be better to work with safer options such as Certificates of Deposit (CDs) or immediate fixed annuities. 

Interest from Savings Accounts and/or CDs

In cases where interest rates are favorable, this can be another excellent option for making a safe investment towards retirement. However, it may not be possible to rely solely on this interest unless you also have a sizeable sum of cash invested in a savings account or CD because interest rates usually only reach as high as 3% on them. This means that for every $100,000 you have invested in them, you can expect to receive a mere $3,000 a year in interest – minus any account or brokerage fees that may apply. 

Bonds

When buying bonds, it means that someone else out there owes money to you and they will be paying you interest on a regular basis. When used alongside an already well-diversified portfolio, safer bonds like those issued by government and federal government agencies and other organizations that have proven to be financially feasible could provide you with an excellent source of retirement income. 

Immediate Fixed Annuities

If it’s a safer and more predictable investment option you’re after, immediate fixed annuities are a fantastic option. These will involve having a contract compiled upon purchase that will provide you with a specified and guaranteed amount of income over a specifically predetermined timeframe. Most of these will usually start paying out almost immediately – normally the month after purchase – and monthly thereafter. 

A few alternative reliable and relatively safe forms of income that can be relied upon during your golden years can include real estate investment trusts (REITs), income derived from one or more rental properties, and in some cases home equity. If desired, you could even consider taking on part-time employment that will not only provide a little extra cash; it will help keep your mind and body busy as well. 

If you would like to find out more about making the right investment choices for your retirement, contact our team to schedule an appointment today. 

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kids-moving-out

Kids Moving Out? Ensure they’re Financially Prepared

Virtually everyone moves out of their parent’s homes eventually, and when your child announces that they want to become independent in this way, you’ll want to ensure that they will not only be able to do their own housework and other chores; it’s even more crucial for them to be prepared financially for this time of their lives. 

Below are some aspects your child should be made aware of with regards to making wise financial decisions after they’ve flown the coop. 

  1. Know how to Open and Manage Accounts

By this time, your child should have his or her own bank account – regardless of whether it’s at a physical bank or online. Teach them to keep a buffer amount in it that should only be accessed in case of a genuine emergency. This will help ensure that they don’t overspend or attract any late fees for bounced payments. 

It’s also important that your child know how to open and manage savings and/or investment accounts. This will help them to start preparing for retirement at the earliest age possible. 

  1. Learn how to Budget

Another aspect that’s crucial for your child to know is how to compile and stick to a realistic budget. When moving out for the first time, their budget should include rent, transportation (whether public or own vehicle is used), gas if they have their own car, insurance, food, utilities, clothing, emergency fund contributions and investment contributions.

  1. The Importance of Insurance

Paying for insurance may seem like a waste of money to your newly independent adult child. However, the importance of having health, disability and/or life insurance cannot be stressed enough – especially if your child can obtain these at discounted rates through their employers. 

Two other forms of insurance that are crucial include renters’ insurance and car insurance (if they own a vehicle). In the event of a fire or other disaster, having renters’ insurance will help cover the replacement of personal possessions that have been lost or damaged. 

  1. How to be a Savvy Shopper

Although you may have taught your child how to budget, it’s also a good idea to teach them how to shop in such a way that they get the most value for money possible – especially when purchasing groceries. 

Aspects such as planning meals around sale grocery items, buying non-perishable items in bulk and waiting for seasonal sales before purchasing clothing items can all go a long way in helping to stretch your adult child’s budget as far as possible.

While it may seem like a huge, complex world out there for your adult child to navigate without supervision for the first time in their lives, the truth is that learning how to manage money will be one of the most important skills they will ever need. If you’re unsure of how to get started with teaching your child about the basics of budgeting, saving and investing for their future, get in touch with our team today. 

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retirement-savings-tips

Having Realistic Retirement Expectations

Have you given much thought to what will happen once you’re no longer working? What pastimes or activities would you want to engage in? Will you enjoy finally being free of having to go to work every day or are you going to miss having the sense of purpose associated with full-time employment? 

Your overall happiness, wellbeing, and financial status are key points to think about at a time like this, and the tips below will go a long way in helping you set realistic expectations for this time of your life. 

  1. Don’t Assume that you’ll be Happy to Stop Working

Although everyone looks forward to the day they’ll be able to retire to some degree, not everyone is fully prepared for when they’ll wake up every day and not have to go to the office anymore. Several individuals work for many years, and suddenly having to give that up can leave them feeling empty or unfulfilled.

If you don’t stop to think about how you’ll deal with these feelings as they arise, you could find retirement to not be as enjoyable as you thought it would be. To deal with this, allow some time to think about these negative feelings and find ways to address them. For instance, if you were an accountant, consider providing your services to one or two of your existing clients each month. Over time, this will benefit you and your employer. 

  1. Know what you want from your Retirement

You need to spend a bit of time thinking about how you want your life to be after you stop working. Do you just want to relax at home or would you prefer to travel the country – or even visit other countries for part of the year? 

Knowing how you intend to spend your time is a crucial step in the retirement process, and being realistic about your financial situation, overall health and other mitigating factors will help you decide how much needs to be saved and invested beforehand to make your dreams come true. 

Keep in mind that it’s also quite normal for your retirement goals to change over time and as such, your savings and investment plans may need to be adjusted accordingly from time to time. 

  1. Get Started with Saving Now

Younger people seldom take the time to think about the amount of money they’ll need to retire, and when they do, they often make the mistake of thinking about the current cost of living – and forget to take inflation into account. When looking at how things have changed over the past decade or two, it’s safe to say that the level of inflation being experienced at the moment looks set to continue for quite a while longer. 

When planning your retirement savings, ensure that inflation is being accounted for; otherwise, you could find yourself struggling financially once you’re no longer working. Setting realistic expectations about your retirement right from the beginning will make this time of your life a lot easier to deal with. If you’d like to learn more about saving towards retirement, contact us today. 

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