As many private employers slowly reign in the cushy retirement benefits your parents might have seen (and retired on) back in the day, individual investors are becoming more involved in the planning and maintenance of their portfolio assets. Employer contributions are going the way of the dodo, making individual investment decisions more important than ever. Luckily, economists generally agree there are five ways to boost portfolio growth and give you more bang for your buck.
Use ETFs to Diversify
A handful of exchange-traded funds (ETFs) across vast sections of the market could make your portfolio resemble an overall benchmark index for the entire market. This investment decision doesn’t necessarily guarantee increased growth simply by growing faster, but acts as a diversified buffer that will most likely safeguard you from sharp declines by individual companies or commodities. In other words, ETFs can indirectly help your portfolio grow by lowering the volatility of your investments.
Remember, ETFs work best over the long haul, since growth will be more stabilized and slower-moving. Besides, you might as well just go with a straight market index. If the entire economy tanks at a rate of about 30 percent, there’s not much you would’ve been able to do had you done it alone.
Think Small for Big Gains
Established companies with large capitalization tend to move up or down the ticker at a slower pace than small cap companies. Small cap stocks work with a mindset similar to what you’d see with bonds rating below a C — there isn’t as much as a proven track record for success, they have higher risk, and tend to be dwarfed by those large cap companies.
But similar to those low-rated bonds, there’s a chance for big returns. On average, small cap US companies average 2.1 percent higher annualized returns compared to large cap companies since 1926. If you start dabbling in small caps overseas, you could expect to see an average annualized return of 5.8 percent over large caps from those same nations since 1970.
You might have a stellar portfolio full of nothing but blue chip stocks, high returns, and big dividends. But no amount of market success can excuse unreasonably high management expenses. Whether you’re trading by yourself, working with a broker to analyze and study the market, or leaving the decisions up to a mutual fund manager, you’re going to end up paying fees that eat into your earnings. What good are high returns if you lose a significant portion of them to things like commissions and administrative costs?
Keep those expenses down; don’t pay for fees that don’t have the interest of the portfolio at heart. Consult the Forbes profile of Ken Fisher, CEO of Fisher Investments for more details on how to cultivate your investments intelligently.
Think Like a Woman
UC Berkeley professor of banking and finance Terry Odean published a revealing report: women make better trading decisions than men. Single women beat single men by 2.3 percent when making investment decisions, and investment groups earn 4.6 percent more on average when the women call the shots. Women make more than men because they trade far less than men, and they’re patient in terms of adversity. Odean’s findings seemed to indicate men tend to make decisions somewhere between the realms of irrationality and overconfidence. Think like a woman, avoid the chatter, and cut back on impulse decisions.
Do Your Homework
The stock market is like a language. It changes over time, it can be misunderstood, and it has a certain cadence to it. Financial alchemy is a peculiar science, one which requires a good deal of study into its history, jargon, and great leaders. The more you understand fundamental analysis tools, the better you’re going to average year after year. Before you invest in an ETF, mutual fund, or REIT, take time to review its history and prospectus. If you want to know where something is going, find where it’s been before. Investors benefit when they take their time to review trends and past market indicators.
Carefully review your financial situation and long-term goals when making investment decisions.
As we approach the end of January you’ve probably gotten your W2s in the mail and are thinking about filing your tax return. If you are expecting a refund, you might even be well on your way towards completing it by now.
But what if you feel like you are paying too much in taxes. Maybe your refund isn’t as big as you were hoping. Or maybe your tax return says you have to write Uncle Sam a check. Nobody likes to do that.
There are ways you can reduce last year’s tax burden, even though last year is long gone. Here are two ways that you can either decrease your tax bill or increase your tax refund immediately.
Contribute Money to a Traditional IRA
If you haven’t already maxed out your IRA contributions for 2013 then you can contribute money to a traditional IRA that will be considered a 2013 contribution. You can make 2013 contributions all the way up until April 15th, 2014.
Every dollar you contribute to a traditional IRA reduces your taxable income for that year. Lower taxable income means you pay less in taxes. Let’s look at an example to clarify:
Pretend you make $70,000 a year (as a married couple), which probably places you in the 25% tax bracket. Let’s also pretend that you’ve looked at your taxes and you are supposed to pay the federal government $250.
You could write a check for $250 and move on with your life. However, you could also contribute $1,000 to a traditional IRA and put that money away for your retirement.
This would reduce your taxable income by $1,000, which would decrease your tax bill by $250. Now you don’t have to write anyone a check.
So basically you can either pay the government $250 or pay yourself $1,000 (which will be taxed later once you reach retirement age).
It is very important when you are adding funds to an IRA that you make sure to specify that the contribution is for the 2013 tax year. If you don’t specify the year, you could end up contributing towards your 2014 IRA, which will decrease your tax bill a year from now but won’t do anything for your current tax bill.
Also, it’s important to talk with a tax professional (that’s not me). Depending on whether you are single or married, if you have a retirement plan at work, and/or how much money you make during the year, you may or may not be eligible to take a deduction on IRA contributions.
Contribute Money to an HSA
Another option that may be available to you is contributing money to a health savings account. This is available to fewer people because you must have had a HSA last year and it is only available to people with high deductible insurance policies.
However, if you are like me and have an HSA then you can do the same thing here. Every dollar you put in the HSA for the 2013 tax year will reduce your taxable income, and therefore, your tax bill.
I might want to put $1k or so in there to pay myself back for my root canals and crowns. I actually prefer the money in my HSA because it’s like a retirement account that can also pay for medical bills today.
Again, I’m not a tax advisor and this may not apply to your situation. Please consult with a tax professional if you want to explore this option.
Pay Yourself to Lower Your Tax Burden
You can use one of these two methods to lower your tax burden. That means either writing a smaller check to the government or increasing your refund.
Oh, and you’re also saving money for retirement, health care expenses, or both. Sweet!
Readers: Do you have any other tips for decreasing last year’s tax burden?
According to LinkedIn professional survey of 2013, experts from content marketing and mobile development industries were in the biggest demand in 2013. So which industries will be the most active in hiring in the coming year?
To answer this question, it would be relevant to narrow down search criteria, focusing on local markets rather than on a global one. The situation in Pennsylvania, for instance, is quite different as most hired professionals are healthcare specialists and trade/service assistants. Additional information about job searches in Pennsylvania can be found at http://pennsylvania.jobtonic.com/.
Currently nurses are in the biggest demand. The Pennsylvania job market also lacks office workers and retail/service specialists. The demand for social media, programming and design experts is significantly lower; yet rapid technological development is still influencing the market. This means that IT-experts will be unlikely to find themselves out of work any time soon.
Oracle, .net, SQL, Android and iOS experts are in the biggest demand. C++, Java and other desktop developers are going to be much less popular in 2014, which is not surprising considering that mobile devices play a very important role in our everyday life.
Apart from medical, service, and software engineering sectors, the Pennsylvanian job market is in need of financial experts including accountants, financial analysts, and banking consultants. Overall the job situation for white-collar workers is very promising. 2014 has only begun, yet already plenty of large and mid-size companies are actively looking for a wide range of cubicle dwellers.
The overall situation for an average job seeker in Pennsylvania seems to be quite favorable. Those who are still out of work may want to reconsider their job seeking approach. One way to improve the chances of finding a job is to be more active with online listings. Plenty of sites, including Jobtonic.com, offer amazing career opportunities. This site shows you a long list of open vacancies in the US. Simply choose your state, city, and industry, and you are ready to get started. The site has a nice user interface, it is easy to navigate, and it offers e-mail subscription for the most determined candidates.
No matter how long you’ve been looking for a job, increasing your online presence could be what it takes to find your next career.
President Barack Obama has been in the news recently as he invited more than 100 college presidents to DC in an attempt to expand college access, especially to low income students.
“More than ever a college degree is the surest path to a stable middle class life,” Obama stated.
I have a few problems with this. First, when did the American dream change from “becoming a self-made millionaire” to having a “stable middle class life”? If he’s trying to sell college to 18 year old kids, dangling a “stable middle class life” in front of their nose isn’t much of a carrot.
Second, putting more kids in college doesn’t make sense. Either he’s not reading the numbers provided by the Bureau of Labor Statistics, or he’s just flat out ignoring them.
Here comes the research!
Job Growth by Education Level
Using data from the US Bureau of Labor Statistics, here is a table showing projected job growth between 2010 and 2020 by education level.
So we expect 20,460,800 new jobs in the next 10 years. Fantastic! And how many of those jobs require someone to finish a bachelor’s degree or higher? The answer is exactly 4,964,900, or just 24.3%. Hmmmmmm.
If you include the Associate’s Degree and the “some college” jobs (which are really weird to me. It’s hard to imagine an employer who is not willing to hire a high school graduate, but is willing to hire a college dropout), then you’re up to 7,648,000 jobs, or 37.4%. Still not very high.
In 2012, 2.1 million high school graduates enrolled in college. Again, this is all data provided by our benevolent government. So if we have 2.1 million kids starting college each year from 2010 to 2020, we are going to have 21 million people ranging anywhere from college dropout to PhD, and only 7,648,000 new jobs. Not good.
Also keep in mind that 2.1 million per year is only high school graduates. There’s actually going to be quite a bit more college educated people when you include the non-traditional students.
So we are expecting under 8 million new jobs for college educated people, and a low estimate of 20 million newly minted college graduates and attendees. It looks like we are set up to have a preponderance of over-educated individuals.
Except we have that already. How many more reports do we need telling us that Twice as Many College Grads in Minimum Wage Jobs as 5 Years Ago, 53% of Recent College Grads are Jobless or Underemployed, and the Job Picture Looks Bleak for 2013 College Grads.
There Just Aren’t Enough Jobs for College Grads
If we think back to that table of jobs by education level in 2020, we expect 12,782,800 new jobs in the next 10 years for people with a high school diploma or less education. That number jumps to 14,025,900 jobs when you include those who attended college but never receive an Associate’s Degree or higher.
Why borrow tens of thousands of dollars if you will just end up graduating from school and getting a job that doesn’t require a degree?
Even when you account for all the baby boomers retiring (although many aren’t in a financial position to retire even if they want to), there just aren’t enough jobs for all the currently unemployed college grads and all the new ones we’ll be churning out in the future.
Maybe Barack Obama hasn’t seen these numbers. Or maybe he’s not very good at math. Or, maybe he has seen these numbers, he is good at math, AND he still wants to get as many people into college as possible.
But why would anybody want to do that?
College (And Student Loans) are Big Business
Have you been on a college campus recently? If so, you’ve probably seen a construction site. It doesn’t matter which college you go to; pretty much all of them are getting brand spankin’ new buildings. Why? Because enrollment keeps going up. People still believe you need a degree to get a good job, which is not surprising when people like the president are screaming it from the mountaintops.
If people start paying attention to the numbers and look at all the unemployed college grads, they might decide to skip college. If enough people do that, colleges start losing money. That means no more new construction. That means college professors getting laid off. That means bad news for the education business.
And then there’s student loans.
Why would the government want people taking out student loans, even if there’s a good chance they are going to default on those loans? Because even in default, student loans are insanely profitable for the US Government.
The government loans the money, they make money on the interest.
They also act as the collections agency, so loans in default are charged fees that make even more profit for the government.
Finally, the government created the laws that make student loans immune from bankruptcy, so they will literally take your tax return, garnish your wages, or even take it out of your social security check until they get their money.
The only way to get out of student loan debt is to pay them off, or die. (see the infograph at below)
College is for Some People; Not for Everyone
In general, we have too many people in college. We have too many college graduates. We have too many kids who will enter college over the next few years. Many of these people will become underemployed or unemployed, and many of those same people will be paying off their student loans for decades.
With that being said, college is EXACTLY the right choice for some people. We need college educated individuals to become the next generation of doctors, lawyers, engineers, nurses, teachers, and more.
If you are a young person and you decide to go to college, do it because you have enough money and/or scholarships to avoid student loans, or if you know what you want to be and that job requires a degree. Don’t do it because Barack Obama, your parents, or anyone else tells you that “you should”.
If “you should” is your main reason for going to college, then actually you shouldn’t.
It might not be too tough for you to assume that structured settlements markets are a recent development in the financial sphere. However, you assumption would be wrong, as most of the premier players in the annuity selling and purchasing markets have almost 20 years of operational experience.
It was actually in the mid 1990s that the structured settlements purchasing industry got entrenched, in direct response to the increasing demand of annuity owners who wanted to sell off their long term cash inflows for immediate cash. However, this is nothing as compared to the gravity of other misconceptions and myths that are prevalent among people, in terms of what they think about structured settlements purchasing markets.
1. Attorneys are reluctant to suggest structured settlements to people because the latter are likely to encash them anyways
The above is a well spread myth about structured settlements. However, if one were to observe actual facts rather than assumptions, the results of the same would be that almost 95% of people having structured settlements stick to the annuity plans. The 5% who opt for immediate cash by selling off structured settlement annuities do so only because of severe changes in their financial conditions post the structured settlement scheme. In fact, the attorney ideally wants to suggest a financial recourse that can provide for the complete financial security of the client. So, a structured settlement that can be encahsed if justified by the severity of the situation proves to be the safest option from the attorney’s point of view.
2. When a person sells off his/her tax free long term annuities, he/she is bound to pay the taxes on the payment he receives from the structured settlement purchasing company
It’s sad to note how people are misled into continuing with their crawling annuities when immediate cash requirements stare them in their face, all because they are fearful of having to unnecessarily pay taxes on encashing their tax free annuities. However, it is clearly specified in the taxation laws that tax free annuities, if converted into immediate cash, will not attract any taxes.
3. All it needs to woo a person having structured settlement annuities into selling them off is a late night TV commercial!
There could hardly be anything more distant from the truth. The very nature of Structured Settlement Transfer Acts ensures that a person having structured settlement annuities has several routes to retract on his/her plans of selling the annuities. So, even if somebody makes the choice to sell instinctively, there is a lengthy period of processes, acknowledgements and approvals that provides ample opportunity to the person to retract.
Apart from the ones mentioned above, there are some other myths prevalent in the industry. It is wrongly believed that the structured settlements purchasing industry is not regulated, whereas there are several federal and state laws governing their practices. Also, the high rate of approvals from the court tends to raise suspicions among whistleblowers, something which is unfounded.
The above article is contributed by Alex H. Alex is a seasoned blogger who covers range of topics from personal finance to sports fitness.
Now that I’ve been at this blogging thing for over 3.5 years, I have learned a thing or two about website design. It was painfully obvious that I needed to redesign Thousandaire, and I’ve finally done it.
The changes are substantial and yet subtle at the same time. I actually made the change last week and haven’t seen a single comment or twitter mention about the new design (except for when I asked people to go look and tell me if they notice anything).
The Homepage Shows Full Posts
I used to a have a big fancy slider at the top of my page, which I thought was really cool and professional looking. In reality, it just put my content one more click away from my readers. The slider is gone and now you can read the full text of my posts right on the homepage.
Research has shown that people simply ignore homepage sliders, and I personally love blogs that give me the full posts without having to click again. This was the biggest thing I wanted out of my new design.
I Have a Recommended Products Page
There are two reasons for this page. First, there are a lot of great products that I highly recommend. Some are investment products like Lending Club. Others are services like Angie’s List I use for my house when I’m hiring contractors. I also recommend the new theme I’m using on this site, and other stuff I love like my shower mirror.
The second reason for this is that most of these links are affiliate links, so if people click on them and buy something, I get a percentage of the sale. My goal is to be self employed one day, so I’m trying to generate a little more money from this site. Of course I only recommend products I actually believe in, so the fact that I might get a commission is just a nice bonus.
I’m Down to Just 3 Post Categories
You may notice that there are three links in the navigation bar: “Personal Finance”, “Politics”, and “Life”. When I really thought about what topics I cover on this blog, everything fit into one of those three.
If you are someone who enjoys my personal finance stuff but hates my political posts, you can just use that personal finance link to see the articles you enjoy most. I want to make it easy for people to find exactly what they are looking without sorting through 100 categories.
My Newsletter Signup Is More Prominent
The last major change I made was to make my newsletter signup much more prominent. It’s in the top right corner of the header, and I’ve also added a pop-up to ask readers to subscribe to my newsletter after they’ve read a post (don’t worry, you can turn it off).
My email newsletter is great because it lets me communicate directly with my readers. They don’t have to remember to come to the site and check for new posts; they just get it in their inbox. Sure, this might decrease the traffic actually hitting my site, but I’m more concerned with happy readers than site statistics.
If you aren’t signed up for my newsletter, you can do it right here:
Look Around for More Updates
I’ve only covered the main changes to the site. There are actually quite a bit more changes if you look around.
I updated the About page to reflect my new life situation and the updated goals of the site (with a new picture of me and a really hot chick). I updated my Lending Club Profit Calculator to look a little bit more fancy. I did other stuff that I can’t think of right now, so you’ll just have to click around and see.
I hope you like it, and please give me your honest feedback. I won the Plutus Award for “Best Designed” site two years ago and I was a finalist last year, so I was a little afraid to “mess with success” but I really do feel this is a better design.
Readers: How do you like the new site? Let me know in the comments.