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Retirement Planning – Should I Have a Mortgage In Retirement?

March 14, 2015 By Staff Leave a Comment

[jwplayer file=”http://www.youtube.com/watch?v=ACB0m9yubrU”]

http://www.harborwa.com Retirement planning. On the last video I asked you if what you thought to be true about retirement planning turned out not to be true, when would you want to know?

For those of you who said immediately, you’re gonna love this video where we talk about another question that should be asked but never is, and that is….

Should I have a mortgage in retirement?

That’s the question that should be asked, but it never is because people always just assume that a primary goal should be to pay off their mortgage by the time they retire. Let me first digress and go over the psychology of where that thinking started.

This thinking hails back to the great depression. So let me give you a very basic, very brief history lesson to understand why this retirement belief system was ingrained in the American public. Back during the roaring 20’s the exuberance and speculation on Wall Street got rampant to where people were making so much money hand over fist without really having to do anything.

So people thought the boom would never end. But, of course in the crash of 29, that’s exactly what happened. The stock market crashed, and the resulting depression caused runs on the banks. Then to raise some cash to try and stay in business the banks started calling their mortgages. Back then a lot of mortgages were callable, meaning that the bank could call the homeowner and demand payment on the full mortgage balance at any time with 30 days’ notice.

So a lot of homeowners started getting these 30 day notices, and if they didn’t have the cash to pay off their mortgages they got foreclosed on. It was at that point that having your mortgage paid off became a central theme to financial independence so the bank couldn’t take your home away from you. That’s what ingrained the mentality of you always want to have your mortgage paid off once you get to retirement.

Now, that was a very different time, financially. But as it tends to happen, that set of retirement planning beliefs got passed down from generation to generation to generation. Today, mortgages are not callable. As long as you make your monthly mortgage payment, the bank can’t take your home.

So, let’s go back to my initial question and think about what happens when you accelerate payments to your mortgage, or pay cash for a property. You’re putting your money into your house and it’s earning a zero percent rate of return. And I would submit to anyone to prove me wrong. Most people think that’s not true because if the house appreciates in value then your equity increases. Ok, that’s fine, but home equity is different than the actual cash that you put into your house.

When you have a mortgage, there are only 2 ways your equity can grow. One is, the house appreciates in value. That has nothing to do with the money you put into the house earning any sort of rate of return. The house is going to appreciate or depreciate in value regardless of whether or not you have a mortgage.

The only other way to increase equity or reduce the mortgage balance is to make principal payments and pay down the mortgage. That’s it. Once your money is inside the house, it’s not earning anything, it’s just sitting there.

You have no control. The value of the house will go up and down based on market conditions regardless of the amount of dollars you’ve parked inside of those walls.
And as far as access, I mean try taking some siding or a 2 by 4 to the grocery store and buy some food. Now that’s ridiculous, but what I’m getting at is you need to turn that equity into cash to be able to actually use it.

So you have to go to a lending institution, like a bank, to borrow against the house to get cash. And I see this all the time with all the estate planning I do, where people are property rich and cash poor.

See once a house is paid off the banks are in control of the cash, not you. So just ask yourself, when you’re in retirement, who do you want to be in more control of your cash, you or the banks?

If this video made sense to you, and you want to make sure you have as much control over your money in retirement as possible, I’d love to have a short conversation with you. There’s no pressure and no obligation.

I can reached at 1-800-889-1290

http://www.harborwa.com
Video Rating: 5 / 5

Personal Finance Advice That Should Not Be Missed

July 9, 2014 By Staff Leave a Comment

Finances are something that every adult deals with. Every part of your day requires that you make any number of financial decisions, so it is important that you get a handle on your finances as soon as you can. Here are some great personal finance tips to keep you going in a positive direction.

When you have the desire to spend money on something you hadn’t budgeted for, redirect the money into your savings account instead. When you’re tempted in a store to buy something you don’t really need, think about how much better it would be to use that money to pay down your debt. At the first chance you get, add the money you were about to splurge with, into your savings account.

One smart way to save money is to remember that you don’t need a brand-new car. Cars depreciate very quickly, and a used auto that’s just a few years old will cost you much less than a new one. Make sure you do your research and verify the reliability of a used car before you buy it, though.

There are a lot of things that we have become accustomed to having that are not necessary. When budgets get tight, these are the first things that need to go. Your high definition sports package, while entertaining, is not necessary for your survival. Trim the fat from your spending and reap the benefits of saving instead.

Have a plan for dealing with collection agencies and follow it. Do not engage in a war of words with a collection agent. Simply ask them to send you written information regarding your bill and you will research it and get back to them. Research the statue of limitations in your state for collections. You may be getting pushed to pay something you are no longer liable for.

When writing checks or using your debit card, always write down your purchase in your check ledger. You don’t have to do your subtracting at the very moment you make the purchase, but do make note of it. Calculate your expenses at least once a day. In this way, you will never be overdrawn.

Give money to charities. In most cases, you should be able to claim the full amount that you donated, on your taxes. Make sure that you donate your money to a charity that is recognized by the IRS. Give to charities early in the tax year because this is when non-profit organizations need money the most.

Monitor your accounts for signs of identity theft. Purchases you don’t remember making or credit cards showing up that you don’t remember signing up for, could all be signs that someone is using your information. If there is any suspicious activity, make sure to report it to your bank for investigation.

Use these tips as ways to keep your finances in order, and slowly you’ll start to find your financial situation improve. Once you have your finances under control, you’ll find that your life starts to improve as well. Make a financial plan, stick to it, and watch how your life begins to unfold in a fresh, new way.

Managing Your Money What Every Investor Should Know About The Stock Market

March 10, 2014 By Staff Leave a Comment

Although virtually anyone can invest in stocks, it makes the most sense to approach investments with a level head and an artillery of helpful research. Don’t be impulsive or impatient when playing the stock market or else, you won’t profit as much as you can. Read this article for more tips!

Pay less attention to the various market voices that are trying to bombard you with data on price points. This will allow you to gain more information on the performance of the companies you currently invest in or plan to invest in, giving you the chance to make smarter decisions.

It does not take a fortune to invest in the stock market. In fact, you can start a solid portfolio with only 0 to 00 dollars. This is a great way to introduce yourself to the market without worrying about losing too much money. It is a fine way to learn.

Learn investment jargon. You must learn about various types of stocks, bonds and funds, in order to avoid making costly mistakes. You can visit many investment websites, read books or watch videos, in order to learn the proper terminology. This world is very “lingo-based,” so take the time to learn it. If you need further clarification, ask a broker.

If you are investing at a serious level, you may want to consider looking into technological advancements. Many people that made a huge return after investing considerable little in the stock market, were the ones that believed in a new idea or invention. The growth on a new product is often exponential. This technique is somewhat risky, but pays off very well if you pick the right stock.

To make your stock market investing more efficient, try a good stock management software package. Tracking stock prices and trends can be mush easier when you use your software to generate the information you need. Add your own personal notes for company information and analyze your data regularly. The cost of these software products is worth the investment.

Remember that stock prices are reflections of earnings. In the short term immediate future, market behavior will flucutuate depending on news and rumor and the emotional responses to those, ranging from enthusiasm to panic. In the longer term picture however, company earnings over time wind up determining whether a stock price rises or falls.

Keep in mind that bear markets represent buying opportunities, both generally and specific. The entire stock market is usually depressed during this time, meaning blue chip stocks are more accessible than usual so you can snag them for long term holding. Also keep an eye out for short term holds that traditionally do well in down economies, like movie theaters, dollar stores and so called sin stocks like alcohol and tobacco.

Don’t get discouraged if you make a bad trade. Everyone makes bad trades every once in a while. Instead of being upset or discouraged, take the opportunity to learn from your mistake. Why was it a bad trade? How can you learn to spot a similar bad trade in the future? Use it as a learning experience.

You should aim to look over the status of the stocks that you own regularly and consistently. If you do not do this, then you will not know how your stock is doing. Timing is everything when it comes to the stock market. You do not want to become obsessed, but you can certainly watch over your stock regularly.

In order to achieve success with your penny stock investment, aim to subscribe to as many online stock newsletters as you can. These can give you a wide list of potentially profitable penny stocks, as well as market analysis, stock tips, and other such statistics. These newsletters can help you to ensure success with your investment.

Buying and holding good stocks is better than engaging in heavy trading of what might seem like better stocks. By keeping your turnover low, you can minimize what are termed as frictional expenses. These include, commissions, spreads, management fees, capital gains taxes and a number of other expenses that devour your returns. Low trading means low fees.

Investing in the stock market isn’t only for people who have a degree in business or finance, but for people who have good research skills and some determination. Use the tips in this article, as well as some outside research to choose the most profitable companies for stock market investments!

Your Portfolio What You Should Know About Stock Market Investments

March 8, 2014 By Staff Leave a Comment

Investing your money in the stock market can be one of the wisest things you can do, in order to secure your financial future for yourself and your family. But it isn’t without certain risks, so wise investors always take the time to do the research and to carefully consider each transaction. The advice in this article can help you to make investments that will pay off for years to come.

Do not panic and make an unwise move just because one of the stocks that you are invested in has lost a little money. One of the biggest mistakes you can make is taking all of your money out too hastily and have the stock skyrocket at some point after that.

Examine your trade confirmations carefully. When you place a trade through a broker, you will get a trade confirmation via mail or email. Examine it carefully, and if you find an error, contact the broker immediately to get it corrected. Also, hold on to your trade confirmations, as they are needed for tax purposes.

Stocks are much more than just pieces of paper, and you need to keep this in mind. When you’re buying a share, you are buying a share of the ownership in that company. Collectively, all of the shareholders own the company, and every share represents a claim on their earnings and assets.

Consider buying when you start to see prices fall. When prices of stocks that you own start to fall, your initial instinct will probably be to sell. While you certainly must understand your tolerance for risk and sell when it is necessary, falling prices might actually be the optimum time to buy. View buying stocks at a low price as your opportunity to get them on sale, and then try to sell when the prices are high to see a greater gain.

Do not set price targets for your stocks. Instead, you should set a stop-loss limit. It is always wise to plan for the worst, while hoping for the best. Because of this, whenever you purchase a new stock, set a stop-loss value at about 15 percent below your purchase price. This is the point at which you should cut your losses and sell your stock, before it becomes completely worthless.

The best thing for inexperienced investors to do is to work with a stock broker to set up the best portfolio for their particular needs. A broker can guide the new investor to safer investments, in order to avoid loss of their investment funds. Check out brokerage firms to compare costs and benefits.

Learn, understand and remember the difference between value and price. The stock price is what you will pay for it when you invest in your shares. The stock value is what you are assumed or expected to get in market returns down the road, in terms of growth of stock price. Value can also relate to the dividends that a company pays you for your stock shares.

Learn from your own mistakes. In the stock market, as in life, you will make mistakes. If you take some time to analyze your losses and learn from those mistakes, they can lead to big gains later in the game. Always look at what you did right, and what you did wrong, so that you can make educated decisions in the future.

Make sure that you understand the difference between being patient and being stubborn. Patience is when you watch the companies rather than the stock prices, and you allow the investments to play out. If you have bought a stock that has decreased in price, but the company hasn’t changed, this is patience. If you are constantly downplaying bad news or decreasing profits, this is being stubborn. You should always be patient, but never be stubborn.

As you already know, wise investments in the stock market can be the key to securing the future of your finances. That is why it is so important to invest the time needed, in order to learn how to make the most of your money. This way, you don’t have to learn the hard way by losing the money that you have worked so hard to earn and save. The tips in this article can help you stay on course, by only making wise investments.

Your Personal Finances Should Not Be A Mystery To You

February 17, 2014 By Staff Leave a Comment

Many people have trouble managing their personal finances. People sometimes find it difficult to budget their income and plan for the future. Managing personal finances is not a difficult task to accomplish, especially if you have the proper knowledge to assist you. The tips in the following article will help you with managing personal finances.

When trading your pairs, do yourself a favor and only trade one or two currency pairs. The more you have, the harder it is to keep up with all the times that you should trade them. By focusing on just a couple, you can effectively become aware of their trends and when to make a trade to make a profit.

File important financial documents where you can find them quickly when needed. This includes loan and mortgage documents, tax returns, insurance policies, and bank statements. It is stressful enough to suddenly need one of these documents without the added anxiety of not knowing where to find it. To be extra safe, keep copies of essential papers in another location, such as a safe deposit box.

Set up internet banking and online bill pay. Having your accounts and your bills online is a quick and easy way to see what you have paid and what you still need to pay, all in one quick and easy step. It takes very little time to pay and manage your bills when they are all in one safe place. You won’t lose track of things as easily.

Not only are older appliances less efficient at performing their job, but they can also be a significant drain on your monthly energy consumption. Newer high-efficiency models are a wise investment that can save you money and ensure that your home is a safe environment in which your family can eat, live, and play. Replace microwaves every decade, washers and dryers every thirteen years, and stoves and ovens every fifteen years.

Get a free checking account. If you have a checking account you have to pay monthly fees on, you could be wasting money. Instead, look for a checking account that doesn’t have monthly fees or per transaction fees. You may have to set up direct deposit with some banks to get a free checking account.

Read the terms and conditions from your bank, but most debit cards can be used to get cash back at the point-of-sale at most major grocery stores without any additional fees. This is a much more appealing and responsible option that over time can spare you the hassle and irritation of ATM fees.

Many of the bills that you have to pay every month can be moved around the calendar. Take advantage of this fact! The ideal date for your bills will depend on your individual situation. You may find it more convenient to put all of your due dates close together. On the other hand, spreading them out all over the month, might suit your budget better.

As stated before in the introduction for this article, many people have trouble managing their personal finances. Sometimes people find it hard to maintain a budget and prepare for future spending, but it is not hard at all when given the proper knowledge. If you remember the tips from this article, you can easily manage your own personal finances.

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