Financial Planning, Retirement Plan, 401k, Investment Blog

Financial Planning, Retirement Plan, 401k, Investment Blog

401k

Do I Still Need a 401k?

Posted February 13, 2011 by Bernz

After hearing about the severe financial hit many people have taken with the recent financial turn, and with stories of people losing all their investment in their 401k many people wonder if a 401k is still a sound financial instrument.  From the start let’s point out what a 401k is, an investment strategy designed to help you supplement your income during retirement.  A 401k is not guaranteed, just as stocks are not guaranteed, but this in and of itself does not mean that a 401k is really a risky place to invest your money.

The presumed tax benefits of a 401k are one of the major reasons why people continue to invest at least part of their money in a qualified retirement account.  The amount that you divert into the 401k is not taxed, and over the course of the 30 years or so that a 401k is designed to hold your money you can accrue a relatively large savings on your income tax.

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Posted in 401k, Investing Strategies, Retirement Planning | No Comments »

Borrowing from your 401k Plan – Is it always the wrong thing to do?

Posted April 7, 2009 by Bernz

When times are tight, sometimes we need to dip into our savings to make ends meet. If the money you are bringing in from your paycheck is not enough to pay your bills or the interest you pay on credit cards or other debts gets too high you will have to get the money from somewhere. Or even personal reasons such as health and family issues.

Over the last few years, many people have used all of the equity in their homes by taking out home equity loans and now because of falling home prices they often owe more than their homes are worth. This has led consumers to look for other sources of cash to pay their growing debt and one of these sources is borrowing from their 401(k) plan.

I remember about 9 years ago when I had to borrow money from my 401K plan and use that money for down payment of a home. The original term of the loan was 15 years though I was able to repay that loan in a little less than 5 years time. It really was not a bad decision after all as my home have already doubled in value since. It was a decision that I had to make at that time for family reason.

More information on 401K plan and why you do not have to do what I’ve done………….. (more…)

Posted in 401k, IRA, Retirement Planning | 1 Comment »

Financial Literacy- Does It Still Work?

Posted March 30, 2009 by Bernz

Financial literacy means being savvy with your cash flows and understanding your financial transactions in order to make better decisions that will protect and increase your wealth. Many feel that financial literacy is no longer useful or relevant in the face of our current economic meltdown. They feel that, no matter what consumers know or do, they will be hurt in this recession.

However, financial literacy is more important than ever. Understanding your financial position and how to navigate through tough economic times will give you a leg up in ensuring your financial security.

The people who will survive and thrive in today’s economy are those who have a handle on their personal finances. They know what they own and what they owe and they know where the cash is coming from and going. Every dollar that comes in has a name- meaning they know exactly where it is going.

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Posted in 401k, Debt, Estate Planning, Financial Education, Financial Goals, Index Funds, Investing Basics, Investing in Real Estate, Investing Strategies, IRA, Life Insurance, Loans, Mutual Funds, Retirement Planning, Roth IRA, Saving for College, Saving Money, Simple IRA, Stock Market Investing, Tax Reduction, Traditional IRA, Wealth Building | No Comments »

Retirement: Do You Plan on Working After Age 65?

Posted March 23, 2009 by Bernz

A generation ago, it was taken for granted that people would work hard at their jobs until their 65th birthday, then retire to a life of leisure. Most companies provided their long-term employees with retirement plans that made their post-work years comfortable.

Today, however, workers are navigating a whole new employment landscape. Jobs are more transient than they once were. Workers are changing jobs and employers more often. Retirement packages are not a given any more and employees are lucky to find one that provides fully for the retired life. (more…)

Posted in 401k, Career, Estate Planning, Financial Goals, IRA, Retirement Planning, Roth IRA, Saving Money, Simple IRA, Traditional IRA | 1 Comment »

Valuing Your Home: Lost Home Equity Can Bite You

Posted March 11, 2009 by Bernz

It’s hard to go a single day without hearing or seeing a headline shouting about the mortgage crisis. High foreclosure rates and tighter lending practices are causing the inventory of houses for sale to increase and the number of sold houses to decrease. This has created a drop in average housing prices as the supply outstrips the demand.

What does that mean to you though if you have no intention of selling your house tomorrow? It can mean plenty and can even land you into financial hot water. When the average sales price declines in a neighborhood, the decreased value is also attributed to the occupied houses in the area. If, for example, housing prices come down 20% this year in your community, it means that your house is worth 20% less.

The main party that will care about that is your mortgage company. They have loaned you the money to purchase the house of the basis of its value at the time of the loan. Now that the value has decreased, the loan-to-value ratio has gone up which means the mortgage company is taking on more risk than they had initially intended. The value of your home may now be even less than the balance of your mortgage. This is called “being upside down” on your mortgage. If the mortgage company had to take your house back and sell it, they would be out of pocket for the shortfall.

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Posted in 401k, Financial Education, Investing in Real Estate | 1 Comment »