All posts by Patrick

If you die without a Will, the law says that you have died “intestate,” which means that you left no instructions as to how your property is to be divided and distributed. In these circumstances, this article will show you how your property will be distributed to your surviving relatives or your wife and children. Even if you want your property divided according to provincial law, you should still have a Will because it will reduce delays and expenses involved in wrapping up your affairs.

What is a Will?

A Will often called a “Living Trust,” is a legal document that dictates how your property is to be divided after your death. Some people choose to make a Will for their own benefit while others may use their Will to transfer property to their spouse, children, or a charity. It is also a common practice to name someone to act on your behalf as an “Administrator of the Estate.” This person is responsible for the proper execution of your Will. It is important to specify in the Will who will be appointed as the Administrator because this person will be the only person authorized to distribute your property according to provincial law and estate laws in the province or territory in which you lived.

Why do people make Wills?

People sometimes make Wills for the following reasons: They want to be sure that they and their family members are legally protected from possible lawsuits from other family members (or even themselves) that could arise from any potential estate disagreements. They might have young children who are minors, or they may have a spouse or child who is incapacitated, mentally disabled, or who is ill and might die within a short period of time. They might have parents or other adult relatives who are facing financial problems, or they might be senior citizens. They might have some reason or other that might have to be considered by the courts regarding their property.

Problems that arise when someone dies without a Will

If someone dies without a Will, the law doesn’t have much say about how the property should be divided. While there are provincial laws that spell out the types of property that should be distributed according to provincial law, the law doesn’t really spell out how it should be done. It does say that the only factor in deciding how the property should be distributed is whether the deceased person intended it to be distributed according to provincial law or on the understanding of a personal representative. So here are some of the questions that might arise if someone dies without a Will: Does the property have to be divided in the order in which the deceased owned it? The answer to this question depends on the date of death.

What Exactly Happens If I Die Without A Will?

Here are some key points that you need to know about how your property will be distributed if you die without a Will: Unless you have a surviving spouse or dependent children, your property will be divided equally among your four remaining living children and your surviving spouse or dependent children. Your surviving spouse or dependent children can’t have any other children before your death, but they can have other spouses, boyfriends, or girlfriends after you die. This is a result of the “step-up” provision, which allows surviving spouses to keep certain property that they had earlier inherited from you. You can inherit a piece of property outright, and it will be distributed equally among your heirs, without a Will.

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What Exactly Happens If I Die Without A Will?

Here are some key points that you need to know about how your property will be distributed if you die without a Will: Unless you have a surviving spouse or dependent children, your property will be divided equally among your four remaining living children and your surviving spouse or dependent children. Your surviving spouse or dependent children can’t have any other children before your death, but they can have other spouses, boyfriends, or girlfriends after you die. This is a result of the “step-up” provision, which allows surviving spouses to keep certain property that they had earlier inherited from you. You can inherit a piece of property outright, and it will be distributed equally among your heirs, without a Will.

Who Will Be In Charge Of My Estate?

The law allows each province or territory to choose to handle the distribution of your property. Generally, your province or territory will make a recommendation of who will be responsible for your estate if you die without a Will. If you live in a province that is not listed, you should still make a Will. Who Is On My Estate? Each province has a division of wills that is responsible for managing the probate of your estate. In Ontario, the government’s General Division of Wills handles these matters. By registering with the General Division, you appoint them to take care of your estate upon your death. These persons then form the General Division’s executor and administrator. These persons are in charge of organizing your estate and your distribution of your estate.

Who Will Take Care Of My Children?

For many of us, including parents, children are the most significant, cherished family members. It would be shocking if one of these loving children lost everything. In order to address this possibility, you must have a Will. If you don’t have a Will, your property will be divided according to the following provisions: If your spouse dies first, then his/her estate, which includes your children, will be taken care of first, even if you have separate wills. If you have separate wills and your spouse died first, then his/her children will be taken care of first. If you have no children, then the property will go to a designated charity. If you have a minor child, then the child will be left to your spouse, and the minor child will be taken care of first.

Who Will Get My Estate?

There are several ways your family can receive your property. The surviving spouse will inherit the entire estate, including your real estate, personal effects, and remaining money. Your spouse will have the benefit of your remaining income tax-free until you are buried or cremated. You can tell the decedent to set up a living trust so that the spouse will be named as the beneficiary in your Will. Even if you have children who are no surviving children, they can be named as beneficiaries under a living trust because children are considered legal persons for the purposes of intestate succession. Even if you don’t have any children who are now living, you still may want to have your estate divided equally among your children after you die.

What happens if you die intestate?

In the case of intestate deaths, a judge determines how the estate is distributed. Typically, a family court judge will appoint an executor, a person who is appointed to look after the will of a person who died without a Will. An executor is usually a family member or a close friend who will carry out the terms of the will. An executor is often paid to do his or her job, which is usually quite complicated because executors are tasked with doing tasks that most of us would rather not do. The executor will investigate the contents of your estate. They will look into bank accounts, investments, and real estate, as well as a credit union and insurance accounts. An executor can pay your bills and settle your estate without having to go to court.

How to make a Last Will and Testament

If you have not made a Will, you will have to create one in the circumstances described below. Making a Will takes time, and making one in the wrong way can cost you more than it should. The more time you spend on writing it, the better off you are. You can write it in a few hours or even a few days if you work hard, but do not make the mistake of taking a few weeks or months to do it, as that will add more delays to the process. If you do not have a Will, your property will be distributed according to the law of intestacy. This is the law that requires that your property be divided equally among your heirs.

Conclusion

Get a Will done or change your Will to reflect the current law on your property. Not only should you have a Will, but it is very important that you read through the information that this article gives you and be prepared for the eventuality that you might die without one. No one wants to die in a legal limbo; it may be one of the greatest fears of all.

“If you have any feedback about what happens if you die without a will that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Swing training sits somewhere between day trading and trend trading. A swing trader holds the stock for a short to medium-term period of time. A swing trader, as the name suggests, looks for the ‘swings’ patterns in the price of the things they want to buy in the market.

Swing Trading Vs. Day Trading

Swing trading is a short-term trade. It usually lasts longer than a day but less than a month. That is why I previously mentioned, that swing trading is placed between day trading and buy-and-hold investment. A day trader holds the stock from few hours to a day but never for longer than one day while trend traders hold the stock from few weeks to months. Swing trading is between these two extremes.

Swing traders use technical analysis to find out tradable opportunities. For a time being, they study the price of the stock they want to buy daily and then they limit the time to 5 hours and study the timeframe in order to find better trade entry levels.

Another difference between day traders and swing traders is that the first group spends all day analyzing the price chart but swing traders only need to check out the swings of the price at the end of the day or for a 4/5 hours period of time.

That is why swing trading is suitable for those who are new in the market and they do not want to become a full-time trader. They can keep their own job and trade part-time.

How Does Swing Trading Work?

Swing traders focus on the individual swings of the market. The price in the market comes in waves. It might go up which is called upswings or it might come back down which is called downswings. Swing traders focus on the individual swings, the upswings, and downswings.

Swing traders almost always trade in the direction of the overall trend. So in an uptrend, they trade on upswings and in a downtrend, in a downswing. Beginner swings traders usually trade on uptrend which means that they trade on upswings. Because the price always can and might go up but it won’t come lower than a specific amount.

Swings traders work to get small wins that become a significant amount after a period of time. If they gain 4% profit per month it will be a great deal by the end of the year.

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Strategies for Swing Trading

Bull Flag on Daily Chart

This pattern is one of the most accessible and conservative patterns. A bull flag pattern happens when we have a strong uptrend in the stock. It is called a bull flag because when you look at the chart it looks like a flag on a pole and also for the reason that it is upward, it is called a bull flag. Most of the days, there are hundreds of bull flags to choose from. Choose the one with high volume upswings and lower volume of downswings.

When the trend moves higher eventually a pullback happens because the market needs a break. Then you should look for a bull flag. This bull flag is consist of a smaller range of up and downs. Tighter these rangers, higher the breakout. The bear flag is similar to the bull flag, the only difference is that in the case of the bear flag we have a downward trend.

The Mean-Reversion Strategy

When the market goes upward it will eventually come back down, this is the mean-reversion strategy in a nutshell. The market makes over-exaggerated moves on both sides. It will go up and then it will reverse it and goes down. These swings help us predict the next move of the market.

The Breakout Strategy

Breakout happens when the price goes higher than ever. Previously when the priced this point we had a reverse because this is a mean-reversion strategy, when the price goes it eventually comes down. But this time, it passes the reverse point and goes higher. It indicates that we have a huge demand or a buying potential, that is why the price might go even higher.

T-Line Strategy

T-line strategy is actually the same with EMA (8 Day Exponential Moving Average). Anywhere in the chart, you can set a moving average line (MA). You can make a line from one day to 500 days.

For the T-line strategy, you actually draw a line for 8 days. This is like the footprint of the price over previous days.

When the price reaches above the T-line then the price will continue to rise. When it is below the T-line it will go downward.

The Advantages and Disadvantages of Swing Trading

Advantages

It is not time-consuming

As previously mentioned, if you want to be a swing trader you do not need to quit your job and check out the market prices all day long. So if you are just entering this trading business, swing trading might be the best choice.

It does not tie down your capital for a long period of time

It will keep not tie down your capital for a bad stock for a long time, unlike long-term trading. Your capital will be tie-down from less than a day to a few days. That is not much.

Disadvantages

It is hard to figure out the timing

Even if you are an experienced swing trader, you might not be able to see the pattern and lose some opportunities.

There are overnight and weekend price changes

As the swing traders stay open for the night, they might experience price gaps. The only way to reduce these gaps is to trade smaller trade sizes without leverage.

Conclusion

Now that you know all about swing trading and how it works, you are able to decide whether this type of trading is suitable for you or not.

Remember that every type of trading has its own advantages and disadvantages, you cannot find a trade that is absolutely perfect. Swing trading is one of the best for beginner traders. So if you want to start trading, this one is a good first step.

“If you have any feedback about what is swing trading that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

A brokerage account is a taxable account for individuals so that they are able to sell or buy different types of investment securities. Investors use a brokerage account to buy and sell stocks, bonds, and mutual funds. You can use this brokerage account to transfer money because this account provides you with the ability to have access to the stock market and other types of investments.

A brokerage account is also referred to as taxable accounts. Because the money you earn using this account is considered a capital gain, therefore this account is taxed.

How does a brokerage account work?

Actually, it is so easy to open up a brokerage account. It is similar to the process of opening a bank account. If you are interested in having a brokerage account you should file an application from a brokerage firm. Then you need to submit your basic personal information; your first and last, your address, and the like. Then you have until your information is approved. After that, you will be able to charge your account by transferring money from your bank account. Then you are good to go.  You can use the transferred money to buy (and later on, sell) different types of investment. Remember that the money you earn from this account is considered capital earn therefore it is taxable.

The number of brokerage accounts that you have is not limited. You can have as many accounts as you want in the same institution, or if you prefer you can have several accounts in several institutions. The choice is yours to make.

Brokerage Accounts vs. Retirement Accounts

As previously mentioned, brokerage accounts do not offer tax advantages. So you need to pay your tax, which is why they are called taxable accounts. And because of the fact you are paying the tax of your income, there are few rules for these taxable accounts. You can pull out your money whenever you want no matter what the reason is. You can invest as much as you want. There is no limit in the amount of money that you are investing.

If you are investing money in order to have a saving for your retirement, then you probably would prefer retirement accounts like Roth or IRA to the taxable accounts. You can earn more money using retirement accounts but note that you cannot pull out your money before a certain age.

The basic knowledge you need in order to open up a brokerage account

To open up a brokerage account you need to pay attention to few elements in order to have a better experience:

Choose a brokerage account provider that suits you

Now that you have decided that you want a brokerage account, you need to choose a provider. There are two famous providers: online brokerage account and managed brokerage accounts.

If you prefer to manage your investments on your own, then you probably prefer online brokers. You can use their website to buy and sell different types of investments.

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If you rather want someone else to manage your investments then you would like the second option. Managed brokerage accounts come with an advisor. You can get help from a Robo-advisor which is a cheaper alternative for human investment advisors. These companies use computer algorithms to manage your account for you.

Know different types of brokerage accounts

Brokerage accounts are easier to master than retirement accounts because they have fewer special rules. Still, brokerage accounts have different types that you better be familiar with, before opening up your brokerage account.

Discount Brokerage

A discount broker is the most common type of brokerage accounts. It is mostly for the new users and it is most probably an online-only brokerage. You manage your own trading and as a result, you pay less amount of fee.

Full-Service Account

This type of account provides you with a dedicated broker who knows your financial status. You can call them or even book a meeting with them in order to discuss your portfolio. Obviously, as a result of this detailed and personalized service, you ought to pay higher fees.

Cash Brokerage Account

This type of brokerage account will not let you use the money you do not have. In other words, it won’t lend you money. If you want to buy a stock which is costs $5 then you should transfer at least 5$ to your account in order to buy that stock.

Margin Accounts

A margin account unlike a cash account will permit you to borrow money in order to make a trade. These loans are usually for more advanced trades. Margin accounts can be full-service or discount.

Conclusion

Just like anything else, trading also needs background knowledge. You just will not go to sleep one night and the next day, wake up reach. You need to gather information in order to have a better experience and more enjoyable trading.

In the case of brokerage accounts, you first need to decide whether you need a retirement account or a taxable account. If you want a long-term investment then you should go with a retirement account. If you decided on the brokerage account, you need to decide whether you want to manage your trades on your own or you prefer to have an advisor.

The last step is to decide on the type of brokerage account that you want to get. When you are done deciding about all of the named matters then you can open up your account using the provided guideline.

Do not forget that learning about trading does not end with opening up a brokerage account, it is the exact opposite. The learning process will just start from there. You need to think, learn and decide before every step you take to have a tremendous experience in trading and investment.

“If you have any feedback about what is a brokerage account wok and about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

What is Cryptocurrency?

You have probably heard a lot about cryptocurrencies such as Bitcoin, Ethereum, Bitcoin, Peercoin, Ripple, Cardano, Polkadot, Bitcoin Cash, Stellar (XLM), etc. More than 6,700 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. But, what exactly is cryptocurrency? How does it work?

A cryptocurrency is a digital or virtual asset based on blockchain technology. Cryptocurrencies are virtual or digital money that takes the form of tokens or coins. They are not generally issued by a central authority, like governments or banks; therefore, this defining feature of cryptocurrencies allows them to exist outside their influence and control. The name Cryptocurrency derives from the encryption techniques used to secure the network. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Any investor can purchase cryptocurrency through crypto exchanges like Coinbase, Cash app, and more. Investors can make money by mining Bitcoin or selling their Bitcoin at a profit. The total value of all cryptocurrencies on April 13, 2021, was more than $2.2 trillion, according to CoinMarketCap, and the total value of all bitcoins, the most popular digital currency, was at about $1.2 trillion.

How Does It Work?

To buy cryptocurrencies, you will need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereal.

If you are buying cryptocurrencies, actually you are buying the idea behind the coin, which is supported by blockchain technology. At its simplest, a Blockchain is a shared database (ledger) that everyone can access to verify transactions. It is extremely secure because the transactions are encrypted with 256-bit cryptographic keys. So all the information is kept in the decentralized ledger (the blockchain).

The ledger is public, but everything on the ledger is encrypted. This is how the system is able to be secure, but also public. Everything is encrypted using an algorithm that is, as of now, unhackable. Cryptocurrencies are inherently very safe but the vulnerability of cryptocurrencies lies not with the underlying technology but rather with people and institutions. Hackers trick the user into divulging access to the exchange, typically your email address and a password (via phishing) or the private key in your wallet. The most common way is to hack into your email account and then request a password reset to the exchange. To counter this risk, enabling multi-factor authentication has been recommended.

This post contains affiliate links. Please please read my Disclaimer for more information

The Pros of Cryptocurrencies

1. They have been admired for their transparency, anonymity, inflation resistance, probability, and divisibility. The advocates highly value their benefits of privacy, like protection for whistleblowers or activists in repressive countries. Some cryptocurrencies are more private than others. For example, Bitcoin has less privacy. While other cryptocurrencies such as Dash, Monero, or ZCash are far more difficult to trace.
2. They make it easier to transfer funds directly between two parties, without any need for a third party, like a bank or credit card company. In other words, a cryptocurrency is a medium of exchange that is digital, encrypted, and decentralized.
3. They are not under the influence of a central authority such as governments or banks. There is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are distributed among a cryptocurrency’s users via the internet.
4. Some cryptocurrency advocates love the technology behind it (called the blockchain) because it is a decentralized processing and recording system and can be more secure than traditional payment systems.
5. Some investors like it because their value is going up increasingly. They see cryptocurrencies such as bitcoin as the currency of the future. Some people even refer to it as a bar of digital gold.
6. Unlike the stock market, you can participate in the cryptocurrency market 24 hours a day, 7 days a week.

The Cons of Cryptocurrencies

1. Their use for illegal activities, such as money laundering and tax evasion.
2.  Exchange rate volatility. The rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely. Bitcoin has experienced some rapid ups and downs in value, climbing as high as $19,000 per Bitcoin in Dec. 2017 before dropping to around $7,000 in 2021. It should be noted that a currency needs stability; however, it seems that cryptocurrencies don’t have such stability for now.
3. Vulnerabilities of the infrastructure underlying them.
4. It is very costly to produce a Bitcoin, which requires an increasingly large amount of energy. It’s estimated that 0.21% of all of the world’s electricity goes to powering Bitcoin farms. That’s roughly the same amount of power Switzerland uses in a year. It’s estimated most Bitcoin miners end up using 60% to 80% of what they earn from mining to cover electricity costs.
5. They are not immune to the threat of hacking. Several online exchanges have been the subject of hacking and theft.
6. Cryptocurrencies are designed to be free from government manipulation and control. However, as they become more popular, this key aspect of the industry has largely been threatened.

Conclusion

If you like the idea of day trading, buying cryptocurrencies, like Bitcoin, and then selling them when their value moves higher is a good option. But remember that cryptocurrencies are very speculative and volatile buy. To put it in other words, it is a very risky or aggressive investing strategy and you should have a good knowledge and market savvy about it to fully understand how it works.

As this network grows, it becomes more complicated, and more processing power is required. But aside from these concerns, you should also know that just having cryptocurrency exposes you to the risk of theft, as hackers try to penetrate the computer networks that maintain your assets. You have to optimize your equipment and technology to outcompete. If you are interested and determined to take part in this market, you should learn many things and choose the right platforms to make the best investments.

“If you have any feedback about what is cryptocurrency that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

A Municipal Bond explained:

A municipal bond, also known as a muni bond (or muni), is a government bond issued by a local government or its agencies. The issuers of such bonds are governmental entities (or a group of governments) at or below the state level, including state governments, local governments, redevelopment agencies, municipalities, special-purpose districts, school districts, and suchlike that have one of these powers at hand: 1. The power of taxation 2. The power of eminent domain 3. The police power. The governmental entities issue muni bonds to finance their capital expenditures and projects, covering the construction and renovation of highways, bridges, schools, parks, roads, hospitals, neighborhoods, and other infrastructure.

In fact, they are loans that investors make to these public organizations. To put it in other words, if you buy municipal bonds, you are lending your money to the bond issuer in return for a promise of getting regular interest payments, also taking back your original investment (or the principal). A municipal bond’s maturity date (the time in which the bond issuer returns your original investment) may be years in the future (i.e., even more than a decade) or in one to three years.

There are 2 general types of municipal bonds: 1. General obligation bonds 2. Revenue Bonds

1. General Obligation Bonds are backed by the government’s taxing power. These bonds have the full faith and credit of the issuer, which has the power to tax residents to pay investors. These bonds are generally riskier and offer a higher yield.
2. Revenue bonds are backed by revenues from a specific project or source like lease fees or toll roads. The bonds’ yields depend on the amount of revenue collected from these sources.

How Does it work?

Municipal Bonds pay interest to their investors, usually twice a year. The bond issuers repay the principal on the bond’s maturity date. You can purchase municipal bonds directly from a registered municipal bond seller or indirectly through a municipal bond fund.

The municipal bond rates are determined at origination by these three factors:

1. They follow the equivalent Treasury bond rate. By the way, the bonds issued by the U.S. Treasury are considered to be among the safest in the world. Since munis have a bit more risk, they will pay slightly higher rates than federal bonds.

2. Municipal bond rates depend on the bond issuer’s credit rating as well. The highest is AAA. Since they are also the safest, they pay the lowest rates. Lower-rated bonds pay a higher rate to compensate investors for the greater risk of default.

3. It depends on the length of the bond, whether it is long-term or short-term. Long-term bonds (for example, 10 to 30 years) will pay more than short-term (i.e., less than ten years) bonds.

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The Pros of Municipal Bonds

1. Municipal bonds are more risk-averse and more focused on preserving than increasing wealth. The bonds provide a conservative investment in which your capital grows slowly and steadily.
2. Muni bonds are exempt from federal taxes and most state and local taxes. The interest rate can also be tax-free for the residents of that state.

*Note that municipal investments are not always tax-exempt investments. There are cases in which the income generated by a municipal bond may be taxable. For example, a municipality may issue a bond that does not qualify for federal tax exemption. So conducting a preliminary investigation about their provisions is a must for investors.

3. They are free to trade at any time once investors purchase them.

4. The U.S. municipal bond market is unique for its size, liquidity, legal and tax structure, and bankruptcy protection by the U.S. Constitution.

The Risks of Munis:

keep in mind that like any investment, municipal bonds entail risk;

1. Because of their relatively low risk, they pay low-interest rates than other investment strategies.

2. When interest rates decline, the bond issuer may repay a bond before its maturity date, which is called Bond call (or call risk). Many municipal bonds are callable; therefore, if you intend to hold a muni to maturity, before having that, make sure that you know well the bond’s call provisions.

  3. Credit risk (or default). The bond issuer may encounter financial problems in paying interest rates or returning the principal in full. Investors need to know that sometimes governments lack the ability or willingness to return their debts. Credit ratings try to evaluate the credit risk of a bond compared with other bonds; nevertheless, a high rating does not give a 100% guarantee that the bond will have no chance of defaulting.

  4. Inflation risk. Inflation will be a risk for bond investors who receive a fixed rate of interest. Fixed income falls behind with rising inflation.

  5. Liquidity risk. It refers to the risk that the bond investors won’t find an active market for their municipal bonds. Therefore, the market for the bond may not be liquid, and quoted prices for the same bond may differ.

  6. Interest rate risk. Market interest rates have inverse relationships with the value of a bond. Interest rate risk is the potential that a change in overall interest rates will reduce the value of a bond or other fixed-rate investments.

Conclusion

Muni bonds are an attractive option for investors in high tax brackets; because they offer various benefits, risks, and tax treatments. Additionally, they are very suitable investment strategies for risk-averse individuals who prefer preserving their wealth to increasing it.

Although municipal bonds are less risky than other investment strategies, remember that they are not supported by the federal government and can sometimes default. Because of the different types of municipal bonds available and the fierce competition among dealers to gain a piece of the business, you should enter into muni investing carefully and cautiously.

It is better to consult with your financial manager to find out –based upon your financial goals and needs- whether it is appropriate for you to purchase municipal bonds or not. For more information, please visit The Municipal Securities Rulemaking Board’s Electronic Municipal Market Access
website.

“If you have any feedback about what is a municipal bond that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Do you want to know what exactly wealth management is in simple terms? How does it benefit you? How does it work? So, if you have these questions in mind, keep up reading this post.

Wealth Management

Wealth management is a holistic approach to wealth creation and sustaining wealth. If you have a wealth management plan and approach in your life, you will reach your financial goals and dreams in life much more easily; you will have better control over your money in the present and future life; you will have more financial independence and security, even in your retirement period.

Wealth management includes four components: 1. Financial life planning; 2. Building capital; 3. Managing capital; 4. Succession planning. 

1. Financial Life planning: some of the wealth management services in this area include:

1.  Life planning gives you more control over life and its expenses.
2. Making sure you have the rainy day fund, lifetime savings, college savings planning, retirement planning, etc.
3. Life planning provides a roadmap to achieve the things you want. It will help you to reassure that you will reach your goals and aspirations.
4. Life planning in wealth management focuses on planning your wealth to meet your life plan.

2. Building capital will cover a number of needs such as:

1.  Investing intelligently, effectively, and timely.
2. Maximizing your capital in the few years of employment and introducing investment vehicles and plans such as target-date funds (TDFs), 401(k), Roth 401(k), Roth IRAs, etc.
3. using tax shelters
4. Providing research-based financial advice to help you decide what to invest in. To help clients get the most from their investment plans, wealth management pros will draw on their market-leading research.
5. Recommend the type of investment journey that suits you well according to your personality, risk tolerance, needs, goals, etc.
6. Managing your portfolio on your behalf, freeing your time for other activities and pursuits in life. Moreover, there will be constant reporting and ongoing communication between financial advisors and their clients.

This post contains affiliate links. Please please read my Disclaimer for more information

3. Managing capital

1. Creating a balance between your income, capital preservation, and capital growth objectives.
2. The management of risk by using diversification strategy or insurance. Investment should be diversified across all assets –i.e., cash, stocks, bonds, equities, and so on.

Why Is Wealth Management Important?

In the lifetime, we may encounter different financial questions and dilemmas. Do I have enough money to retire? Which investing strategy is the best one for me?  How can I maximize my capital? What is the best way to minimize my taxes? And immeasurably more other questions.

If you make a wrong decision based upon false information and advice, it will cost you –and your family members- dearly. Moreover, financial management is very daunting for some people; thus, you should hire a financial advisor or wealth manager.

What do the Wealth Management Professionals do?

Generally, wealth managers take the following actions:

• They talk to their affluent clients to gather specific information and then analyze their unique financial situation. They take the time and effort to understand your household expenses and cash flow, to help you manage your wealth effectively and appropriately. They ask about your tax situation, medical expenses, family expenses, your expectations, and even more personal questions to customize your life and wealth plan. In other words, without building personal relationships with their clients, wealth management professionals will not have an outstanding performance.
• These professionals try to understand their client’s financial needs and goals that matter most to them. They help their clients transition from their current financial situation to where they wish to be.
• Having had good knowledge and expertise in the financial area, they offer advice and recommendations; create a financial plan; help their clients overcome difficult monetary decisions and dilemmas.
• They are very experienced in dealing with large sums of money and managing multiple assets over different accounts.
• They will help you invest your money in securities and investment strategies that will enhance and protect your wealth.
• They improve your portfolio performance by using tools and strategies that enhance your passive income and allocate your assets wisely.
• They are in contact with you to make sure that you stay on track.
• They offer individualized and unique financial services for their clients. To do this in the best possible way, they build long-term relationships with their clients. Wealth management professionals should be at your disposal throughout your life.

Conclusion

On the whole, the question “what is wealth management?” Can be captured by asking yourself what does it mean to live a good life and leave a good legacy? It is all about your financial needs and goals and deals with your life and wealth plan. It may sound easy at first, but the reality is that the financial world is complex and fast-changing, with a wide range of choices available for you.  Therefore, you had better seek a wealth management professional.

Finding the right and trustworthy wealth manager will require some research. In addition, you had better look at the wealth manager’s immediate past performance. You can choose to go to wealth management firms, such as Pillar Wealth Management, JARDEN, and ST. James’s Place.

You should feel comfortable with the advisor you choose; the wealth management advisors should also consider your standards and specific requirements. If you do not see eye to eye with them, this long-term process will be stressful and frustrating and probably will be doomed to failure. Additionally, receiving the best insight and advice from the right and competent wealth management advisor will motivate you to take steps to achieve your life goals and aspirations. The right wealth management advisor will ensure a better future for you and your family.

“If you have any feedback about what is wealth management that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Have you ever thought about the financial well-being of your beloved ones when you pass away? Do you care what will happen to your kids or assets if you die? Yeah, I know these are bitter questions, but they must be asked. Well, will and trust are two legal instruments that can provide you and your family members some peace of mind dealing with these resentful questions and issues. They can help your loved ones avoid potential financial hardship. Indeed, no one knows what the future has in store for us, so it is essential to make your estate plan.

What Is a Will?

A will is an official legal document that declares one’s wishes for his/her money and property after death. It guarantees that your money and assets will pass to your intended inheritors.

Five Reasons You Should Have a Will:

1. If you do not have a will, the law will decide upon the distribution of your money and property; and this can be contrary to your wishes. However, if you have a will, there is a better chance of getting things to happen in the way you want.
2.  If you don’t have a will, the distribution of your estate (money, property, possession, and all these things together called your ‘estate’) will be time-consuming, costly, burdensome, and nerve-racking.
3.  It can reduce the amount of inheritance tax.
4. You can also use it to tell people about your other wishes, e.g., about how and where you want to be buried.
5.  In your will, you can choose a guardian for your minor children. Moreover, if you have a pet that you love, like your own child, you can ensure that someone takes care of your pet after your death.

What Is a Trust?

A trust is a legal relationship in which one party (known as a trustor or grantor) gives another party (a trustee) the right to the ownership of a property or assets for the benefit of a third party (i.e., the beneficiary).

Two Basic Types of Trust:

1.  Revocable (or living) Trusts can be changed by the grantor. Usually, a revocable trust turns into an irrevocable trust after the death of the grantor.
2.  Irrevocable Trusts cannot be changed or modified.

What Is the Difference Between a Will and Trust?

1.  The most important difference between will and trust is the way the estate is held. When you write a will, you mention the name of heirs or beneficiaries together with the property that they will receive. In a trust, you also name your beneficiaries along with the property they are to receive, but the property must be transferred into the trust for their benefit.

*Now, you may ask that what is the difference between an heir and a beneficiary? Though people use these two terms interchangeably, there are differences between them:

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 An heir: a person who is related to the deceased by blood; it also includes a spouse.

A beneficiary: one whose name is explicitly mentioned in a will, trust, or insurance policy to receive property or financial assets. A beneficiary can be not an heir; for example, a friend, a long-term but unmarried partner, ex-spouse, a stepchild, a charity, or even a pet can be a beneficiary.

If a person dies with no will or trust, it is usually heirs who inherit assets, including one’s spouse and children, and in some cases, his/her parents or siblings.

2. The second difference between will and trust is probate. Probate is the official and legal proving of a will. This process varies according to place and situation, but generally, it is very time-consuming, expensive, and controversial. A living trust does not pass through probate, while a will can. In other words, trust helps avoid probate.

3. A will can be contested and challenged in the court, but a trust can not. In other words, will have a contentious nature.

4. Unlike a will, a living trust goes into effect once you create and sign it; while you are still alive. But, a will can be effective only after your death.

5. In a trust, you can not choose a guardian for your minor children, but in a will, you can do this.

6.  Trust gives you more control over the distribution of assets and property.
Put differently, trusts give more control over when and how your assets are distributed.

7.  There are different forms and types of trust.

8. Creating a will is much easier and less expensive than a trust.

Should I have a Will or Trust? Which One Is Better?

Choosing between a will and trust is a personal choice, and it depends on many personal factors (though some attorneys recommend having both; because each one has a different and separate function). Overall, to answer this question correctly and appropriately, you have to assess your situation, your goals, and needs at the very beginning of this process.

If you have minor kids and want to choose a guardian for them after your death, you must have a will.

• If you have an heir or beneficiary who is underage or has a mental disability (i.e., one who is unable to manage finances), setting up a trust is a good choice.
• Four Online Legal Services for Making a Will or Trust:
• LegalZoom: A simple trust done online with LegalZoom costs less than $300
• Nolo’s Quicken WillMaker & Trust
• Trust & Will
• Wiling

Conclusion

If you want to make an estate plan, it is a good idea to consult an attorney first. They have good expertise to offer assistance and answer your specific questions. Remember that having both a will and a trust is a true gift for your family members and friends, showing your care and love for them.

“If you have any feedback about the importance of will and trust that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Transportation costs for many people worldwide are between the biggest expenses, maybe greater than housing and even food. Only a few people are lucky to live near to work, schools, shops, so can walk to their destination. However, your transportation costs should not squeeze your monthly budget. Fortunately, there are many ways to save money on transportation.

How to save money on your transportation costs

1. Walk

Many people use the car even for short distances, and walk only because parked their car. A study from the University of Glasgow showed that people of different ages rather drive than walk for distances greater than 15-minute by walk, specifically in the situation that they have a car and parking space is easily accessible.

Walking is free and also available to everyone in most places. Walking, besides saving money compare with automobile trips is an easy way and the cheapest one to achieve good health. While walking people can see the circumstances and can also think.

2. Replace Cars with Bicycles

Many countries encourage people to ride a bicycle and open certain lanes for bicycling. Walking or pedaling a bike, in addition to saving money, creates significant notable health benefits. Although, regarding the costs, time, and safety considerations of biking, ride a bike is not possible for everyone.

3. Public Transportation

The expenses of operating a small car, including maintenance, fuel, and parking, can be more than the food budget of many families. In case you do not want to give away the automobile completely, you can replace it with public transportation. Small cities often provide scheduled bus services, and big cities combine bus services, rapid light rail, and commuter rail systems that are vast and cheap. Many of the public transportation systems set space for passengers to load their bikes for short-distance trips.

The average travelers can save $770 each month while self-serve, regular gasoline costs $2.75 per gallon and the monthly reserved parking space in a city center is about $155, the American Public Transportation Association said.

4. Share Rides

Before owning two cars in the same family become universal, sharing rides between neighbors was common. When people are traveling to or from the same place, carpooling is a great choice. Even in a location where using a car is necessary, you do not have to ride your car. Parents who pick up kids at school can manage to share the trip with other parents. The expenses will be split by drivers and cars or by passengers giving an agreed amount of money for travel.

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5.  Rent a Car Only for Special Occasions

Renting is often the most inexpensive way when you need a car just temporarily. Many people who are living in big cities rent cars for vacation trips or weekends away from the city. Rental companies often suggest special deals to attract more customers. Attention to their tricks in adding extra costs for car renting without customer recognition.

6. Reduce the Retail Price of an Automobile Purchase

While cutting the costs of automobile ownership, notice the following:

• One car ends up cheaper than two. Besides savings on the operating expenses such as maintenance and fuel, there are saving on insurance, licensing, depreciation, and interest charges on each loan to buy a car. There are advantages and disadvantages of having one car in a family, including the feasibility of saving hundreds or thousands of dollars each year.
• Small models are cheaper than large models. The expenses of owning a Ford Focus or Honda Civic are $4,548 per year, while the expenses of owning a larger Buick LaCrosse or Ford Taurus is $7,620 annually, the American Automobile Association (AAA) calculated.
•  Purchasing and operating a second-hand car is cheaper than a brand new one. The car that we drive, for some people, is satisfying some needs more than a safe, reliable, and inexpensive ride. Some individuals consider an automobile as a personal brand. Financial executives, for instance, often drive Cadillacs or expensive foreign cars. However, for many people car is just a vehicle to transport them from a place to another. For such people purchasing a used car in good condition can be a better option rather than buying a brand new car.
• Finding a car at a fair price. Some people use a car buying online service to buy a car; in this way, in addition to saving money and time, they will avoid bargaining with an aggressive car salesperson.

7. Save on Auto Insurance

One of the biggest costs for car owners is automobile insurance. According to the rules of most states, all drivers need to carry liability insurance to protect the public, and most lenders need comprehensive and collision insurance until their loan is repaid. The following steps help you to reduce your insurance expense without breaking the law or notably elevating your financial exposure:

• Choose your car make and model wisely. Insurance premiums for those models with high horsepower, high repair costs, and most possibly to be stolen are higher than the premium for a car with moderate horsepowers like a sedan or station wagon.
• Knowing the factors that impact your premium rate. Several factors affect car insurance. Try to manage those factors to reduce your premium and pay less.
• Review the insurance coverage. Various automobile insurance coverages are available including collision, comprehensive, gap, and liability. Sometimes you do not need all the coverages; for instance, comprehensive and collision insurance might be necessary on an old car.
• Pick higher deductibles. In case of a car accident, a higher deductible means a higher out-of-pocket cost. Good drivers select a $500 deductible over a $200 deductible and will save 15-30% in the collision and comprehensive insurance premium each year.
• Request discounts. Remember to utilize car insurance discounts for good drivers. Drivers who take courses in defensive driving or refresher driver training course qualify for a discount.

Conclusion

Overall, transportation expenses are among the most expensive things that families have to pay for. By reading this article you learn a lot of ways to save money around transportation costs. Take care of small or big changes that you can make in your transportation methods to keep more money in your bank account.

“If you have any feedback about how to save money on transportation that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

401(k)

401(k) plan is one of the greatest ways for employees to save for retirement. The government allows companies to offer retirement saving accounts -such as 401(K) accounts- indeed with some advantages to encourage people to save for retirement. However, if you are self-employed, you can also have a similar account for your retirement, known as a solo 401(k) or solo Roth 401(K).

What are 401(k) plan advantages?

1. It is a tax-advantaged retirement account.
2. It is a company-sponsored account.
3. Federal law protects 401(k) retirement plans.
4. You can get matching funds that I will explain below.

Two Basic Types of 401(k) Accounts:

1. Traditional or Regular 401(k) is a pre-tax retirement investment. Meaning you will later pay tax on that money when you withdraw it in retirement.
2. Roth 401(k) is a post-tax investment. This means that you have already paid your taxes; therefore, when you withdraw your fund, it is all yours –tax-free!

How does 401(k) work?

When you sign up for a 401(k) account, you set an amount or percentage that automatically will be taken out of your paycheck to fund the account.

Suppose you receive 100,000$ per year and contribute 10,000$ to your 401(k) account. With traditional 401(k), the amount you contribute to your 401(k) fund is deducted from your taxable income. For example, in this case, your total taxable income for the year would 99,000$. The money that you put into a 401(K) account is tax-deferred; meaning you don’t pay taxes on it until you withdraw it in retirement. Therefore, your money in your 401(k) account can grow without being taxed. However, with traditional or regular 401(k), you eventually have to pay taxes on your withdrawals.

On the other hand, some companies offer Roth 401(k) for their employees. With the Roth 401(k), your contributions are not tax-deferred. It means that whenever you get your paycheck, first, the taxes will get taken out from your salary or wages check, and then you will fund your Roth 401(k) with whatever is left. In other words, your contributions are made with after-taxed money. The bottom line is that your contributions are made with post-taxed money. So while Roth 401(k) does not give you any tax benefits today, it will give you huge tax benefits later on; because your withdrawals will be tax-free, and all will belong to you.

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Matching funds

Many employers offer to match your 401(k) contributions. It means that if an employee puts some of his/her money into a retirement account, the employer will put some extra money in there too. Therefore, if your company offers you a matching contribution program, you must accept it; because it is like free money or a pay raise. Companies have different formulas and calculations to do that. The most common way is to match a percentage of an employee’s contribution, up to a certain limit. For example, an employer may match 25% of your contribution. It means that if you put 10,000$ in your retirement account, the company will match 25% of that (i.e., it will put 2,500$ there). It is like free money or a pay raise, and not taking advantage of that means you leave “free money” on the table and say: no, I do not want that.

 401(k) Rollover

What is 401(k) rollover? The question may arise if you have an old 401(k) from your previous employer; or if you have changed a job and are wondering what to do with your 401(k) account. In that case, you will have three options:

1. 401(k) Rollover: a 401(k) rollover is a transfer of money from an old 401(k) to a new 401(k) account or IRA (Individual retirement account).
2. Keep your 401(k) with your former employer.
3. Cash it out. Casing out a 401(k) is not usually a very good idea. Because if you withdraw your money before its due time, there are penalties for early withdrawals.

*if you don’t know which choice is best for you, depending on your unique situation, you may want to consult with a tax professional to make sure that you are making the right decision. Sometimes the wrong and unthought decision can cost you dearly.

Guide to 401(k) Rollover

1. You may roll over your old 401(k) to a new retirement account when you leave your job. There are two types of rollovers: direct and indirect. In a direct rollover, your previous money account is transferred electronically to your new account. In an indirect rollover, you receive the money in your fund to redeposit it. If you receive the money in cash or check instead of transferring it directly to the new account, you only have 60 days to deposit the fund into your new retirement account. And once more, remember that this must be done within 60 days. If you miss the deadline, you will be subject to withholding taxes and other penalties. Between direct and indirect rollover, the direct one (with no check) is the best.
2. Decide what kind of account you want and then open it; that is to say, decide which type of new retirement account suits you well. Note that your age –how old are you and how far you are from approximate retirement age- and your risk tolerance are among the important factors that should be taken into account in this decision.
3. You have to choose a financial institution, such as a bank, brokerage, or online investing platform to open a new retirement account.
4. See what is needed to begin the 401(k) rollover process.

Conclusion

Now you know that if your company offers a 401(k) plan or any contribution matching program, you have to accept it definitely and undoubtedly. The best way to reassure that your organization offers you this retirement plan is to go to your human resource department. If you work for a small company that does not have an HR representative, the next best person to talk about would be your boss or employer.

“If you have any feedback about how to roll over an old 401k that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

What Are Target-Date Funds?

When we are young, we tend to take more risks. However, as we grow older, we become more conservative and take lower-risk options. Target-date funds (TDFs) –also known as a lifecycle, dynamic-risk, or age-based fund- exactly do just that; they mix several investment strategies to help you take financial risks when you are young and use your target-date fund when you reach retirement age.

Let me explain with an example. Suppose you are a 25-year-old employee and intend to retire at the age of 66. Therefore, you start to invest in a target date 2060 fund (or if you plan to retire in or near 2035, you pick a fund with 2035 in its name). This target date in the name of the fund (i.e., 2060 fund) is the approximate date that you -as an investor- plan to retire and withdraw your money. At that time, you will use that money (or target-date fund) to cover your retirement expenses, such as your child’s college tuition, bills, healthcare services, etc.

How Do Target-Date Funds Work?

TDFs Work Through Glide path and Diversification.

If you want to invest in a target-date fund, you probably hear the word glide path. It is an investment roadmap; It will take you all along the way (i.e., from the beginning of your career until retirement), mapping out a mix of bonds, stocks, and other investments that are appropriate based on the target date. Like an airplane coming for landing, the glide path allows your savings to make a gentle landing into retirement by reducing the market risk (moving from aggressive to conservative investments over time).

When we are young and new at our job, retirement sounds very far away. That is why the glide path starts with a diversified mix of stocks and lower portions of bonds. As time passes, the glide path reduces the stock mix and adds to conservative and safe investments (such as bonds, cash, and cash equivalents). In another way, a target-date fund’s gradual shift to more conservative investments is called the glide path.

What Is Diversification?

Diversification is an investment strategy. If one kind of investment (e.g., stocks) has a bad year, other types of investments (e.g., cash and bonds) might have a good year. Put differently, diversification is another word for the expression “do not put all your eggs in one basket.”    Target-date funds use a diversification strategy. They consist of a mix of investments and change investment strategies over time. For example, they invest heavily in stocks in the early years but getting more conservative as time goes on.

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Benefits and Risks of Target-Date Funds:

Several Tips to Know about Target-Date Funds:

• In addition to choosing the right target-date fund, you should put the right amount of money into it. An under-funded nest egg will not cover your retirement expenses.
• You have to practice and improve your trading and investment skills before entering a real market.
• TDFs are not guaranteed against losses. However, they use diversification strategies. Thus, they are less risky than investing in individual stocks or bonds.
• Take care to select a TDF that aligns most closely with the date you plan to retire.
• Choose an investment strategy that best matches your risk tolerance.
• Check related fees and expenses. Compare different target-date fund fees and expenses using FINRA’s Fund Analyzer.

Conclusion

Retirement is a new stage of your life that needs preparedness and planning. Planning for retirement starts with thinking about your retirement goals and retirement expenses. For this, you should have enough money to meet your needs at that time. TDFs are increasingly one popular investment option for your retirement period. They are structured to help individuals invest in low risky, well-diversified portfolios that rebalance over time for retirement goals. In fact, you are trading savings today for security tomorrow.

Target-date funds are one of the good ways for investing your money; there is no doubt that they are better than not investing at all. But, you have other investment options that may work better for you than TDFs. Therefore, it is a good idea to consult with an investing professional you trust. An investing pro can help you in choosing the right path for you. However, remember that the final decision should always be yours.

“If you have any feedback about what are target-date funds that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.