FINANCIAL ARTICLES

Most of the people I have met have not planned for their retirement as they say 'future is unpredictable and we need to live in present' but my dear friend's future is the outcome of present, our present will decide our future. When we think of retirement we generally think of old age, a period when you have to give up the job and sit at home doing nothing. Contrary to the fact, most of the retiree lives a very active life. We need to seriously consider out planning towards retirement because once we retiree our income stops coming but our expenses remain as it is and in some cases it rises with the rising inflation.
In this regard mutual fund has turned out to be the right answer for making retirement planning easier and safer. Mutual fund being managed by professionals is a key to effective retirement planning.

Some people like it. Some people don't but the fact is that retirement is a reality for every working person. Most young people today think cannot think of retirement as reality as they believe in 'living at present'. However, it is important to plan for your post-retirement life if you wish to retain your financial independence and maintain a comfortable standard of living even when you are no longer earning. This is extremely important, because, unlike developed nations, India does not have a social security net. In India people still depend upon bank savings and fixed deposits for retirement purpose, which is unfortunately inadequate.

Retirement Planning acquires added importance because of the fact that though longevity has increased the number of working years haven't, so you end up spending the last phase of your life without earning.
In simple words, retirement planning means making sure you will have enough money to live on after retiring from work. Retirement should be the best period of your life, when you can literally sit back and relax or enjoy your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. To achieve a hassle-free retired life, you need to make prudent investment decisions during your working life, thus putting your hard-earned money to work for you in future.
With the special features of mutual funds like Systematic Investment Plan, Systematic withdrawal plan, systematic transfer plan in addition to other unique features of different funds, the investor can easily plan for its post retirement requirements and ways to achieve it.

Unlike many other countries of west, in India we do not have state-sponsored social security for the retired people. While you may be entitled to a pension or income during retirement, but will it be sufficient post retirement.
Although the compulsory savings in provident fund through both employee and employer contributions should offer some cushion, it may not be enough to support you throughout your retirement. That is why retirement planning is extremely important for every one. More over with mutual funds the investors can actually plan for themselves and also achieve their planned objectives. As compared to direct equities this option of mutual fund is much safer for planning your retirement corpus.

There are many reasons for the working individuals to secure their future emergence of separate families and its attendant insecurity, increasing uncertainties in personal and professional life, the growing trends of seeking early retirement and rising health risks are among few important risks. Besides falling interest rates, also the sustained increase in the cost of living make it a compelling case for individuals to plan their finances to fund their retired life.


Planning for retirement is as important as planning your career and marriage. We need to take conscious and careful decisions to prepare for our retirement. Life takes its own course and from the poorest to the wealthiest, every one gets older with time. We get older every day, without realizing. With our coming old age we tend to become more understanding to the facts of life and realize the importance and impact of retirement. The future depends to a great extent on the choices you make today. Right decisions with the help of proper planning, taken at the right time will assure smile and success at the time of retirement.

In my words, retirement planning means making sure you will have enough money to live on after leaving your work. Retirement should be that period of your life, when you can sit back and relax. Retirement should bring more of enjoyment in your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. Most of the people live their worst life during retirement. To achieve a hassle-free retired life, you need to make right investment decisions during your working life, thus putting your hard-earned money to work for you in future. If you are not very aware of the investment that you need to undertake then you can easily take help of online advisers to help you with your retirement plan through mutual funds. The earlier you start the better it is for you.


Now retirement planning can be done with a single click and with the advice of a registered mutual fund advisor by Association of mutual funds in India (AMFI). Fill this retirement questionnaire to know your current financial situation and your investor profile which will help you plan for a worry-free retirement.
This is a no obligation free mutual fund advisory; investors can make informed mutual fund investment decisions with the expertise of our advisors.

If you have an email account, you know about all the scam emails you get. Scammers are getting braver and using the IRS name in their new tactics.

IRS Warning Taxpayers About New Email Scams

The IRS has begun warning taxpayers that it is seeing a surge in tax scam emails. Many of the emails even have the hubris to use the IRS name! Brave souls, indeed. Regardless, the scams seem to fall in the area of identity theft through phishing tactics.

First and foremost, you should understand that the IRS does NOT send emails to taxpayers. Never, never, never! If you get an email from the IRS, it is a fake. Unconditionally! Do not respond to it under any circumstances. Do not click links in the body of the email. Take one action and one action only – delete it!

Since the turn of the year, the IRS has identified 99 new email scams targeted at taxpayers. All of the scams are aimed at bilking you out of your private information. Most try to do this by claiming your must provide information or your will not receive your tax refund. In some cases, the fake emails threaten you with an audit. Again, this is all false information.

Many people fall victim to the IRS scam emails because they click through to the site linked in the email. There, they find a site that appears for all intensive purposes to be the one published by the IRS. Make no mistake – this means nothing. Anyone can copy and republish a site. Yes, even the site of the IRS. It is pretty scary when you think about it. Best Buy, in fact, had major problems with this for some time.





So, where are these scammers? It should come as no surprise that few in the boundaries of the United States would have the nerve to try this. Instead, the IRS has tracked most of the scamming emails to other countries, but not necessarily the usual suspects. The countries include England, Italy, Japan, Germany, Australia and Singapore. Usual suspects include China, Aruba, Mexico, Indonesia and Argentina. Surprisingly, only a few have originated from the scam mecca of Nigeria.

The best way to beat scammers is to know the facts. The IRS does not communicate in any way with taxpayers by email. If you get an email purportedly from the IRS, it is a fake. If you have a nagging doubt, call the agency to find out if anything is up. Otherwise, delete that email!

Although the vast majority of exchanges occurring presently are delayed exchanges, let us briefly explain a few other exchanging alternatives.

Simultaneous Exchange
As mentioned previously, prior to Congress modifying the Internal Revenue Code as to exchanges and formally approving the concept of delayed exchanging, virtually all exchanges were of the simultaneous type. To qualify as a simultaneous exchange, both the relinquished property and the replacement property must close and record on the same day.

Some investors still try to accomplish simultaneous exchanges, primarily to avoid or reduce the payment of multiple closing fees or exchange fees to a facilitator. There is significant danger and legal exposure in this attempt since many unforeseen events can cause the closing to be delayed on one of the properties, leaving the investor with a failed exchange and the obligation of taxes that would otherwise be deferred.

For example, if the properties are located in different counties, it is highly unlikely that the closing can take place on the same day. If two different title, escrow, closing firms or attorneys are involved, it is virtually impossible for both to have the funds to close in their possession on the same day. For instance, with "Good Funds" laws existing in many states, an escrow holder cannot disburse funds not actually in his possession. Further, in directing an escrow holder to disburse funds for the purchase of the replacement property, it could be contended by the IRS that the investor had what is considered "constructive receipt" of the proceeds of the sale, and therefore taxes on the gain would be due.

However, the 1031 regulations contain what is referred to as a "Safe Harbor" provision, which does provide that in the event a facilitator or intermediary is used in a simultaneous exchange, and the transaction proves not to be simultaneous, the exchange will not fail simply for that reason.

Improvement and Construction Exchange
In some cases, the replacement property requires new construction or significant improvements to be completed in order to make it viable for the specific purpose the Exchangor has intended for the property. Such construction or improvements can be accomplished as part of the exchange process, with payments to contractors and other suppliers being made by the facilitator out of funds held in a trust account. Therefore, if the replacement property is of lesser value than the relinquished property at the time of the original transaction, the improvement or construction costs can bring the value of the replacement property up to an exchange level or value which would allow the transaction to remain tax free.

Business or Personal Property Exchange
Although our discussion in this tutorial involves the typical exchange of real property, Internal Revenue Code Section 1031 does allow the exchange of many types of property other than real estate. Investors may exchange, for example, rail cars, trucks, ships, classic cars or livestock, among other assets. Therefore, business exchanges are a common transaction.

While the basic exchange rules are the same, certain complications arise in classifying the non-real estate assets into one of several categories or SIC classes so that they meet the associated like-kind requirements.

While this is a simple enough process for the experienced facilitator, it can be thoroughly confusing for the uninitiated Exchangor, making the selection of his Intermediary or facilitator extremely important to the successful structuring of the exchange.

If you desire additional information regarding business or personal property exchanges, please consult an experienced tax professional to first determine the classes of properties available to be exchanged. Then, remembering that all personal property must be exchanged within the same class (locomotive for locomotive, collectible art for collectible art, pizza oven for pizza oven, etc.), assign values for the various assets within that class. These collective values, will then reflect the value of the total exchange.

Also, some personal property and business items are not exchangeable. Most notable in this group are such items as goodwill or inventory

Again, as mentioned above, do not undertake the planning of a business or personal property exchange without the assistance of an experienced tax professional. In any business exchange, the time and money you invest in planning will be well worth it when your transaction is deemed qualified.

Reverse Exchange
The reverse exchange is actually a misnomer. It represents an exchange in which the Exchangor locates a replacement property and wants to acquire it before the actual closing of the relinquished or exchange property. Since the Exchangor cannot purchase the replacement and later exchange into property that he already owns, he must find a method to acquire the replacement property and still maintain the integrity of his exchange. Reverses are typically accomplished in two formats based upon transaction logistics and the financing needs of the Exchangor.

The Scenario A strategy is utilized only when the Exchangor requires traditional financing to complete his acquisition of the replacement property. Since few lenders would lend dollars to the Exchangor with the facilitator on title, it is necessary for the facilitator to warehouse or hold the title to the relinquished property. In this approach, the exchange is complete at the moment the Exchangor accepts the title to the new replacement property. However, with the prospect of the exchange being complete, it is necessary to balance equities between relinquished and replacement, prior to closing. In other words, upon closing the replacement, there must be an equal amount of equity in the replacement property as is expected to come out of the later sale of the relinquished property. Then, at the time of the later sale of the relinquished or exchange property, any debt is retired and the Exchangor is repaid any dollars which he advanced for the replacement property acquisition.

In Scenario A, the facilitator, with the aid of a loan from the Exchangor, acquires the replacement property and warehouses or holds the property title until such time as the relinquished property is sold and the exchange can be completed.

At this point we need to insert several caveats regarding reverse exchanges. They tend to be more complicated than other exchanges and because they involve the holding of title by a facilitator, they require extensive planning. Also, since the reverse exchange strategy was specifically excepted from the Treasury Regulations, they should be considered an aggressive form of exchanging. Do not undertake a reverse exchange without the assistance of an experienced and knowledgeable facilitator or Intermediary.

Delayed Exchange
Generally, when one discusses exchanges, the type of exchange referred to is the delayed or Starker exchange. This term comes from the name of the Exchangor who was first challenged for a delayed exchange by the IRS. From this tax court conflict came the code change in 1984 that formally recognized the delayed exchange for the first time. As mentioned earlier, this is now the most common type of exchange.

In a delayed exchange, the relinquished property is sold at Time 1, and after a delay, the replacement property is acquired at Time 2. The following will represent the traditional rules and time constraints for completing a qualifying delayed exchange.

Like-Kind Property
Property that qualifies for exchange under Section 1031 must be "like-kind", which is defined in the Regulations as follows:

a) Property held for productive use in a trade or business, such as income property, or
b) Property held for investment.

Therefore, not only is rental or other income property qualified, so is unimproved property which has been held as an investment. That unimproved property can be exchanged for improved property of any type, or vice versa. Also, one property may be exchanged for several, or vice versa. This means that almost any property that is not a personal residence or second home is eligible for exchange under Section 1031. Even the vacation home that is used for that purpose part of the year, and is rented part of the year, is considered "mixed use" property and may be exchanged under 1031 for other mixed use property.

Although the vast majority of exchanges occurring presently are delayed exchanges, let us briefly explain a few other exchanging alternatives.

Simultaneous Exchange
As mentioned previously, prior to Congress modifying the Internal Revenue Code as to exchanges and formally approving the concept of delayed exchanging, virtually all exchanges were of the simultaneous type. To qualify as a simultaneous exchange, both the relinquished property and the replacement property must close and record on the same day.

Some investors still try to accomplish simultaneous exchanges, primarily to avoid or reduce the payment of multiple closing fees or exchange fees to a facilitator. There is significant danger and legal exposure in this attempt since many unforeseen events can cause the closing to be delayed on one of the properties, leaving the investor with a failed exchange and the obligation of taxes that would otherwise be deferred.

For example, if the properties are located in different counties, it is highly unlikely that the closing can take place on the same day. If two different title, escrow, closing firms or attorneys are involved, it is virtually impossible for both to have the funds to close in their possession on the same day. For instance, with "Good Funds" laws existing in many states, an escrow holder cannot disburse funds not actually in his possession. Further, in directing an escrow holder to disburse funds for the purchase of the replacement property, it could be contended by the IRS that the investor had what is considered "constructive receipt" of the proceeds of the sale, and therefore taxes on the gain would be due.

However, the 1031 regulations contain what is referred to as a "Safe Harbor" provision, which does provide that in the event a facilitator or intermediary is used in a simultaneous exchange, and the transaction proves not to be simultaneous, the exchange will not fail simply for that reason.

Improvement and Construction Exchange
In some cases, the replacement property requires new construction or significant improvements to be completed in order to make it viable for the specific purpose the Exchangor has intended for the property. Such construction or improvements can be accomplished as part of the exchange process, with payments to contractors and other suppliers being made by the facilitator out of funds held in a trust account. Therefore, if the replacement property is of lesser value than the relinquished property at the time of the original transaction, the improvement or construction costs can bring the value of the replacement property up to an exchange level or value which would allow the transaction to remain tax free.

Business or Personal Property Exchange
Although our discussion in this tutorial involves the typical exchange of real property, Internal Revenue Code Section 1031 does allow the exchange of many types of property other than real estate. Investors may exchange, for example, rail cars, trucks, ships, classic cars or livestock, among other assets. Therefore, business exchanges are a common transaction.

While the basic exchange rules are the same, certain complications arise in classifying the non-real estate assets into one of several categories or SIC classes so that they meet the associated like-kind requirements.

While this is a simple enough process for the experienced facilitator, it can be thoroughly confusing for the uninitiated Exchangor, making the selection of his Intermediary or facilitator extremely important to the successful structuring of the exchange.

If you desire additional information regarding business or personal property exchanges, please consult an experienced tax professional to first determine the classes of properties available to be exchanged. Then, remembering that all personal property must be exchanged within the same class (locomotive for locomotive, collectible art for collectible art, pizza oven for pizza oven, etc.), assign values for the various assets within that class. These collective values, will then reflect the value of the total exchange.

Also, some personal property and business items are not exchangeable. Most notable in this group are such items as goodwill or inventory

Again, as mentioned above, do not undertake the planning of a business or personal property exchange without the assistance of an experienced tax professional. In any business exchange, the time and money you invest in planning will be well worth it when your transaction is deemed qualified.

Reverse Exchange
The reverse exchange is actually a misnomer. It represents an exchange in which the Exchangor locates a replacement property and wants to acquire it before the actual closing of the relinquished or exchange property. Since the Exchangor cannot purchase the replacement and later exchange into property that he already owns, he must find a method to acquire the replacement property and still maintain the integrity of his exchange. Reverses are typically accomplished in two formats based upon transaction logistics and the financing needs of the Exchangor.

The Scenario A strategy is utilized only when the Exchangor requires traditional financing to complete his acquisition of the replacement property. Since few lenders would lend dollars to the Exchangor with the facilitator on title, it is necessary for the facilitator to warehouse or hold the title to the relinquished property. In this approach, the exchange is complete at the moment the Exchangor accepts the title to the new replacement property. However, with the prospect of the exchange being complete, it is necessary to balance equities between relinquished and replacement, prior to closing. In other words, upon closing the replacement, there must be an equal amount of equity in the replacement property as is expected to come out of the later sale of the relinquished property. Then, at the time of the later sale of the relinquished or exchange property, any debt is retired and the Exchangor is repaid any dollars which he advanced for the replacement property acquisition.

In Scenario A, the facilitator, with the aid of a loan from the Exchangor, acquires the replacement property and warehouses or holds the property title until such time as the relinquished property is sold and the exchange can be completed.

At this point we need to insert several caveats regarding reverse exchanges. They tend to be more complicated than other exchanges and because they involve the holding of title by a facilitator, they require extensive planning. Also, since the reverse exchange strategy was specifically excepted from the Treasury Regulations, they should be considered an aggressive form of exchanging. Do not undertake a reverse exchange without the assistance of an experienced and knowledgeable facilitator or Intermediary.

Delayed Exchange
Generally, when one discusses exchanges, the type of exchange referred to is the delayed or Starker exchange. This term comes from the name of the Exchangor who was first challenged for a delayed exchange by the IRS. From this tax court conflict came the code change in 1984 that formally recognized the delayed exchange for the first time. As mentioned earlier, this is now the most common type of exchange.

In a delayed exchange, the relinquished property is sold at Time 1, and after a delay, the replacement property is acquired at Time 2. The following will represent the traditional rules and time constraints for completing a qualifying delayed exchange.

Like-Kind Property
Property that qualifies for exchange under Section 1031 must be "like-kind", which is defined in the Regulations as follows:

a) Property held for productive use in a trade or business, such as income property, or
b) Property held for investment.

Therefore, not only is rental or other income property qualified, so is unimproved property which has been held as an investment. That unimproved property can be exchanged for improved property of any type, or vice versa. Also, one property may be exchanged for several, or vice versa. This means that almost any property that is not a personal residence or second home is eligible for exchange under Section 1031. Even the vacation home that is used for that purpose part of the year, and is rented part of the year, is considered "mixed use" property and may be exchanged under 1031 for other mixed use property.

Although investing in mutual funds isn't the type of subject associated with wild parties and celebrations - it is something the serious investor should consider as a way of increasing their total worth.

"But what EXACTLY is a mutual fund" I hear you ask - "how does it work, who does what and how much do they cost?"

Hang on, slow down - one question at a time please.

What exactly is a mutual fund?

Mutual funds are sold in shares to the public, allowing them to own different percentages of the fund depending on the amount they invest.

Pay more = own more. Own more = get more $$ back again (theoretically)

Simple.

Stocks, bonds, money market securities and the like are purchased through the assets of these mutual funds in the financial markets. Shareholders indirectly own the assets held in the mutual fund, but the fund is guided by the investment company that finds the best way to earn the biggest return. (Indirectly owning the assets through these funds allows them to avoid the big tax hit.)


How does a Mutual Fund work?

Usually, mutual funds are also known as open-ended investment companies. This means that they constantly issue new shares and redeem existing shares, but not all mutual funds are open however. Some mutual funds are 'locked' where they no longer will take on new investors.

The fund's Net Asset Value is the key concept to understanding how a mutual fund operates. By this value you can determine the value of a share of the fund at any time. The market value of the fund's assets less any liabilities, divided by the number of shares outstanding is the formula to understand Net Asset Value.

If you work through that it will show you exactly how much each share in the fund is worth when you are looking to invest in them. By comparing this number over time you can see the returns earned in a percentage. This is generally all done for you on a funds website or on any of the mutual fund sites that feature stats.





Who does what?

Mutual funds basically take your money, combine it with the money of other investors like you and then invest the total pool of money in investments with the best possible return. The returns from the fund are then split to the accounts that bought in by the amount of shares that each person owns. The fund managers then take their cut based on the fees that they charge you and you get your return. These guys are worth it for the money they make you, so why not let them drive the car for a while and let you get the glory?

Different investment plans are a staple of the field, allowing investors to do so on a regular amount weekly, monthly, or however else you want to set it up. Continuously invested accounts tend to get a higher yield on average, but if you don't have the ability to do that, you can still make money. Dollar cost averaging should be your goal; it is the strategy of the top investment experts in the country.

How much do they cost?

Different mutual funds have different types of fees involved with them as well. Some will charge you an up front percentage of your investment (front load).

Some will charge you a percentage of the investment when sold, this is a back end load. Then there are no-load funds which charge you nothing more than the annual operating fees. An individual should seek to only use the no load funds since it saves a lot of your money. There are really no advantages to using a loaded fund unless it offers some incredibly returns. But normally you can find the same returns by several different fund companies.

So hunt around, compare not only price but also service and past record to date. And remember - a mutual fund is still based on products themselves that can reduce in value as well as increase - so never invest more than you can afford to be without, just in case!!

If you think it is high time that you pay off all those debts, otherwise you may be inviting all sorts of troubles; secured debt consolidation loans can do the rescue job for you. Through availing secured debt consolidation loans you get rid of debt burden instantly as this new loan provides the finance at least equal to previous debts.

On taking secured debt consolidation loans, borrower gets rid of various monthly payments that he or she was making to different lenders. Previous debts are generally of higher interest rates and surge the burden of debt. Secured debt consolidation loan is taken at lower interest rate and therefore save money.

Secured debt consolidation loans are utilized also in clearing credit card bills, medical bills or other pending payments. One can use the amount also for home improvements, wedding or any expenses.

Borrowers are required to place collateral with the lenders in order to get secured debt consolidation loans. The collateral may consist of any property of the borrower such as home, car, and valuable papers. Main aim behind collateral is to provide a sense of security to the lender regarding the loan

Collateral can be an effective instrument in getting the required loan deal. It is the equity in the collateral that matters the most to lenders while deciding on loan amount and interest rate. Equity is value of the property minus the borrowings of the loan seeker. So, in case greater amount of secured debt consolidation loan is required, the lender will evaluate the equity. Higher equity makes it easier for the borrower to get a loan deal of higher amount at lower interest rate.<





Lenders normally provide an amount anywhere in the range of £5000 to £75000 under secured debt consolidation loans. For availing higher amount of loan, financial standing and credit history of the borrower also becomes important.

Secured debt consolidation loans are availed at lower interest rate. The borrowers can get a loan deal at cheaper interest rate if they search for the lenders online. Numerous lenders have showcased their secured debt consolidation loans products. Choose the loan package that best suits your budget.

Borrowers who are going through a bad phase can also avail secured debt consolidation loan. The loan enables the borrower to improve credit history when they pay off debts. Such borrowers should first pay off easy debt and get this development included in their credit report. To judge the risk involved in offering loan, the lenders give credit score to the borrowers. A credit score of 620 and above is viewed as safe while lower score makes lenders hesitant in deciding loan terms largely in favor of the borrower.

To gain maximum benefits from secured debt consolidation loans, borrowers must give special attention to the interest rate and loan amount and keep both of them lower.

House hunting can be a brutal affair, particularly if you don't know what you can afford before hand. No your price range in advance and you can avoid looking at really nice homes you'll never get. .

Mortgage – Monthly Payments

The biggest costs associated with owning a home is the mortgage. Unless you are filthy rich, you are committing to apportioning a significant amount of your monthly income to that dream home. In evaluating whether you can afford the mortgage, you need to consider the difference between the mortgage payment and what you are currently paying.

If it is a significant step up, will you be able to pay it now and in a few years? Under no condition should you assume you will be making more money in the future. Base everything on what you are making now.

When considering monthly mortgage payments, you also need to factor in the type of mortgage. Interest rates have been at historical lows for some time, but are starting to creep up. If you are taking the plunge on an adjustable mortgage, will you be able to make the payments if the interest rates increase over the next few years? In coming to a conclusion on this, you should assume the rates going up to the caps indicated in the mortgage for the relevant period of time. Again, you don't want to get stuck in a financial bind because you let your eyes overrule you brains when selecting a home.

Other Expenses

The pride of homeownership comes with a few extra costs. In gauging affordability, many homebuyers fail to take into account the twin evils of property taxes and homeowner's insurance. The expenses associated with each of these necessary items can be surprisingly high. In some states, property taxes can be an ugly surprise the first year of homeownership. Much like taxes, they are collected in a lump sum and can be thousands of dollars. If you fail to plan for them, your finances can become unbelievably strained.

Buying a home is absolutely the best move you can make if you're renting. Just make sure you can meet those payments without losing sleep.