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5 Quick Steps to Improve Your Finances in 2018

Losing weight and improving one’s finances are almost always at the top of most people’s lists of New Year’s resolutions. It makes sense to look out for your physical and financial health so you can enjoy life to the fullest. Following through on your resolutions is usually the tough part — it takes changes in certain behaviors, discipline and time to experience and maintain the results. This is as true for financial planning as it is for losing weight.

If improving your finances is one of your New Year’s resolutions, here are five steps you can take starting Jan. 1:

Immediately Pay Down Holiday Bills and Credit Cards.

Many people splurge on holiday gifts, parties and travel in December, but the bills will come due in January. Resolve to pay down those debts quickly to avoid large interest charges on your credit cards.

Set a goal to pay off the total amount on one card within a few months, if not sooner. If you or your spouse expects a bonus check from your employer in early 2018, use at least some amount from this check to pay down debt. Finally, start by paying off the credit card with the smallest balance. Even though this card may not have the highest interest rate, paying off the total amount on one card will provide the motivation to keep paying off the others.

Build an Emergency Fund.

Everyone should have at least three to six months of their living expenses set aside in a cash savings account. This number should be higher when you are retired, such as one to three years of spending needs, and should be coordinated with your overall investment mix. In order to accomplish this goal when you are working, set up an automatic draft from your paycheck into a separate savings account. This account can be used for emergency car and household expenses and will help avoid piling up new credit card debt on top of the existing debt from the holidays.

I personally use an online bank for my savings account. Online financial institutions often pay higher interest rates on cash and CDs than traditional brick-and-mortar institutions. Here’s another tip: Consider using different banks for your savings account and your checking account. It’s a little less tempting to access your savings account when the spending impulse strikes if it’s not at the same place as your checking account.

Increase 401(k) Retirement Plan Contributions.

The amount each person can contribute to a 401(k) retirement plan is increasing by $500 in 2018, to $18,500 for individuals under age 50 and $24,500 for people 50 and older. Everyone who is working should resolve to save an extra $500 for retirement this coming year.

If you are getting a raise going into 2018, increase your 401(k) savings rate by the amount of your raise if you are not funding your 401(k) to the maximum already. This is a discipline I have followed since receiving my first paycheck at age 22 — I kept increasing my 401(k) savings rate each year until I was able to reach the savings limit, and I’ve never looked back.

Let’s say you are getting a $5,000 raise in 2018. If you save this amount annually over the next 10 years, and at an average annual investment return of 5%, your retirement savings can be over $60,000 higher. That could buy you a shiny new car in retirement.

Rebalance Existing 401(k) and Retirement Account Investments.

In addition to adding to your retirement account, review your existing investments in January to ensure a reasonable mix of stocks and bonds. With equity markets at all-time highs, the percentage of your funds in stocks may now be higher than you planned. Over time, an investment account that is overweight in stocks can grow substantially, but during a recession or stock market downturn your balance can suffer, too.

If retirement is right around the corner for you, it’s especially important to consider the amount of stocks or stock mutual funds you are comfortable owning. Finally, while you are logged into your retirement accounts, check to see that your beneficiary designations are correct and up to date.

Review Home and Car Insurance Policies.

Over the last five years, the consumer price index for auto insurance has gone up over 20%, compared with the overall CPI of 4.5% during this period. Many insurance companies raise auto and home insurance premiums each year, and even small increases can add up over time.

I recommend sitting down with your insurance agent every three years to make certain you are taking advantage of any discounts available, and that you have proper coverage, given changing asset values. Managing risks and protecting your assets is an important part of financial planning. Also, review the deductible amount on each of your auto and home policies. This move can significantly lower premiums now. If you have an adequate emergency fund built up, you should be able to cover a higher deductible in the event of a loss.

It’s time to make New Year’s resolutions stick. Look out for your personal and financial well-being this coming year. You’ll find that making small progress will empower you, and motivate you to reach your goals. And the following year you may just resolve to keep your 2018 resolutions going!

13 Useful Retirement Planning Tips for Entrepreneurs

While retirement may not be on your mind currently as an entrepreneur, the sooner you start planning for this milestone, the better. Before anything else, you need to consider the ways that you will be able to save for your retirement while also keeping your business running today. So, what tips or tricks can you employ to ensure that you will be financially able to retire when ready?

A. Set Up a Roth IRA

You may not have a company 401(k), but you should take advantage of the long-term benefits of a Roth IRA, which will grow and compound over time (tax free) and be removed (again, tax free) when you are at retirement age. - Jeff Epstein, Ambassador

A. Opt for a Solo 401(k)

If you are a business with no full-time employees (other than you and your spouse), you are eligible for a Solo 401(k), also known as the self-employed 401(k). The benefit to this is that you can contribute up to $50,000 of business income pre-tax ($100,000 if you set up a plan for yourself and your spouse). In 2016, I was able to cut my tax bill by $19,500 thanks to this benefit. - Bryan Kesler, CPA Exam Guide

A. Invest in Technology

Put 10 percent of your annual income into the top performing technology stocks. The compound return rate will give you millions after 20 years, especially if you increase your salary or income over the years. - Duran Inci, Optimum7

A. Buy Cryptocurrency

Cryptocurrency is a unique investment opportunity, but make sure you don’t put in money that you can’t afford to lose. It’s risky and volatile, but the payoffs can be great. For example, bitcoin is now trading over $7,000, and a couple years ago it was around $200. But bitcoin isn’t the only one seeing huge returns. Take a look at Ethereum and ICOs as well. - Jared Atchison, WPForms

A. Get a Pro to Help With the Details

Protect yourself from noisy amateurs with a clear game plan. There are thousands of strategies within the retirement plan space that allow generous benefits to be tastefully tilted to the entrepreneur or key executives, while providing an excellent employee benefit. Look for a specialist and have a 20-minute chat; you’ll be surprised at the huge tax perks along the road to building wealth. - Krzysztof ‘Kris’ Garlewicz, ProsperiFi, LLC

A. Include It in the Budget

Make it a budget line item. Many people don’t add it in as a critical need along with their monthly short-term costs. But it’s just as important, if not more. Putting it in the budget will mean you will have less to spend at Starbucks, the movies or the mall, but it will mean that you have a retirement fund when you need it most. - Andrew O’Connor, American Addiction Centers

A. Create a Monthly Recurring Income Stream

Monthly recurring income streams are great because they allow you to generate passive income and live a retired lifestyle without being solely dependent on the fluctuations of the market. You can set up monthly income streams by investing in rental properties, utilizing Airbnb or creating a SaaS business. - Syed Balkhi, OptinMonster

A. Save 10 Percent of All Your Earnings

Make this a standard about your approach to saving. Take 10 percent of your finances and place it into savings accounts or low-risk investments. This applies whether you are an entrepreneur or not. The effects are cumulative. As your wealth grows, real estate becomes a very worthy investment. - Nicole Munoz, Start Ranking Now

A. Use an App to Regularly Contribute Small Amounts

There are apps that let you save and invest for retirement where you take small amounts and incrementally add and buy into mutual funds that help build that retirement account, from even a little. Doing so can lead to larger amounts that grow even when you think it won’t amount to much. - Zach Binder, Bell + Ivy

A. Follow Einstein’s Theory

Albert Einstein is believed to have said that compound interest is “the most powerful force in the universe.” If you start young, that compound interest can work harder than any human ever could. I recommend buying a house as early as possible and putting in at least 10 percent. Don’t look at the account often and remember; that is not your money until you retire. - Tommy Mello, A1 Garage Door Repair

A. Don’t Bank on an Exit

While all entrepreneurs secretly (and sometimes not so secretly) dream of a big “exit” down the line, it’s dangerous to bank your retirement on that happening. There are a million reasons why you might not sell your business, so preparing along the way ensures you don’t have an “oh no” moment in your golden years. - Ross Beyeler, Growth Spark

A. Diversify and Never Retire

Diversify your activities and most importantly, never retire. A true entrepreneur will never reach a point of full satisfaction. Plus, it’s my personal belief that retirement is really not good for you. Any entrepreneur should diversify and when your financials allow it, invest in real estate for your peace of mind. It is best to invest in a new development and in an area that you believe in. - Adrian Ghila, Luxe RV, Inc.

A. Don’t Retire Early

Just step out of the day-to-day jobs and move into advisory or steering committee type positions. Chances are, if you are a successful entrepreneur, you’ll struggle to fully retire. It’s addictive work! Find ways to stay involved that are enjoyable and allow you to invest as much or as little time as you have. That way you can still enjoy retirement! - Baruch Labunski, Rank Secure

Retirement savings tips: 401(k) vs IRA

As the end of the year approaches and investors begin to take stock of their savings, one consideration they may want to take into account is how they should allocate money across 401(k) and IRA plans.

In a traditional, employer-sponsored 401(k) plan, employees can contribute tax-deferred money that is generally matched by a company up to a certain percentage. Traditional IRAs are accounts individuals set up independently, where earnings grow tax-free until they are withdrawn in retirement. For a Roth IRA, contributions are taxed first and then withdrawn tax-free, and a Rollover IRA allows individuals to transfer money over from employer-sponsored plans.

Here are some tips to help you navigate the retirement planning process.

Contribution levels

The maximum amount an individual can contribute to a 401(k) plan is significantly higher than what is allowed for an IRA. Beginning next year, the Internal Revenue Service (IRS) will increase the contribution threshold for 401(k) plans by another $500 to $18,500 per year. The maximum allowable, cumulative contribution per year across both traditional and Roth IRA plans is $5,500 or $6,500 for those ages 50 and older.


“Most of the time people work for an employer and obviously the easiest way to invest is to make it automatic … [that’s also] typically the most advantageous,” David Hays, president of Comprehensive Financial Consultants, told FOX Business.

IRAs can be useful for a variety of purposes, however, including higher education expenses for yourself or your children or a down payment for a first-time homebuyer. If funds are withdrawn for these purposes when an investor is under the age of 59.5, they can generally be exempt from the 10% distribution penalty.

401(k) plans don’t provide those options, but Hays said the plans do offer loans for up to 50% of the vested account balance, or $50,000, whichever is less. Not all plans include this allowance.

Investment options and fees

While a traditional 401(k) usually offers limited investment options, IRA choices tend to be limitless, offering investors more flexibility to curate a unique portfolio.

In terms of fees, Hays said IRAs, which tend to be more on the retail side, sometimes comes with higher fees. With 401(k) plans, big companies can offer really low, competitive fees.


For a 401(k), if you are no longer working with an employer, you can generally withdraw funds if you are age 59.5 or older. In some cases, you only need to be over the age of 55. If you withdraw early, you will pay income taxes and a 10% penalty.

On the other hand, you can rollover your 401(k) savings into an IRA plan, should you choose to continue stashing cash away.

For IRA plans, the age 59.5 rule applies, and early withdrawal would also result in a 10% penalty on top of income taxes.

Find investment Zen: When to buy, hold and sell

There is a wealth of ways to invest your money, but let’s face it: you probably don’t have endless time to figure them all out. And with time at a premium, using energy to keep abreast of the ins and outs of your investment portfolio can seem impossible. Although Singaporeans are on average earning more each year, the global market hasn’t been as successful recently — and that’s enough to give anyone pause before approaching today’s complex investment landscape.

One way to get to grips with the investment climate is to take advantage of a smart investment tool, which can help to identify investment opportunities. Standard Chartered Bank now offers Personalized Investment Ideas (PII), the latest tool to give investors the info they need to grow their wealth. Thanks to technological advancements like this, you can invest wisely, and without giving up your valuable time.

When it comes to your investments, you have three potential options:


Taking risks with your money is not only daunting, but can keep you up at night if you’re not confident in your choices. Which investment is right for you? There is such a huge range of investment opportunities available that opting for a select few that compliment your needs can seem difficult.

Know this: There are times to invest aggressively and times to invest conservatively. If you’re just starting to build your portfolio, conventional wisdom tells you to take lots of risks since you have plenty of time for the market to right itself in the event of a downturn. If you are approaching retirement, however, now’s the time to stay safe with your investments and ensure you have plenty of funds to sufficiently support you later in life.


When all is said and done, investing money is not only about accumulating wealth. Your investment is where your heart is — whether that is making a better life for your family, establishing a solid future, or funding a business idea. That’s when holding your stocks could be your safest bet, but only if you feel confident in where your money is invested.

The global market is anything but predictable, so be aware of the current climate. Uncertain times can produce huge gains and huge losses, but without an intimate knowledge of where the market is headed, a fork in your investment road can be dangerous.

Although it is a passive investment strategy, holding can still produce gains in the long run — but that only works if time is on your side. With a 2016 average annual growth rate of 5.5% in South Asia, the market is showing positive numbers, but holding for too long could prevent you from significantly growing your portfolio.


Knowing when to let go of your investments can be tough, but there are signs out there that will alert you when it’s time. Big life changes can impact your investment goals, and your perfectly balanced portfolio can be thrown out of whack in an instant — perhaps by a marriage, retirement, or the birth of a child.

Knowing when to let go of your investments is just as important as knowing when to buy. Treat your portfolio like a living, breathing organism: when one part gets too big, it’s time to reallocate to avoid an uneven balance.

You may also need to sell to create liquidity. Perhaps there’s a property you’d like to invest in, or a business venture that is too good to miss. Whatever the case, selling your investments isn’t always a bad choice — but it must be done at the right time, in the right way, and with a vast breadth of market knowledge behind it.

Technology is working to make investing smarter, easier, and more profitable.

Technology-driven solutions can be the roadmap you need to know when to buy, sell, or hold — and exactly how to go about it. Software that offers bespoke solutions for each individual is essential.

The benefit of having smart investment tool crunch numbers for you, as well as a team of real people with real investment knowledge keeping an eye on things puts you in a strong position to make the decisions that work best for you. The market can change quickly, and your investment software should adapt just as fast, ensuring you’re well equipped to grow your wealth effectively.

How do you tell when it's the right time to retire?

How will I know when it's the right tie to retire? Is there a barometer that experts rely on to know when it's the right time to go?--B.K.

I don't know of any generally recognized gauge or barometer for calling it a career, but I can tell you that the decision to retire definitely isn't just about reaching a certain age. I recently took personal finance guru Suze Orman to task for suggesting as much when she recently asserted in no uncertain terms that "70 is the new retirement age -- not a month or year before."

She's right that many people may need to stay on the job longer these days to accumulate a large enough nest egg to support them in retirement. But to say that 70 -- or any single age, for that matter -- is the right age to retire? That's far too simplistic. The decision to retire involves too many subjective factors that can vary significantly from person to person to be boiled down a single number.

So how can you tell when it's the right time for you, given your specific situation, to make the transition from the work-a-day world to post-career life?

One place to start is by assessing whether you're financially capable of leaving the workforce. One major question: Do you have enough saved so that draws from your nest egg plus income from guaranteed income sources like Social Security, pensions and annuities will allow you to maintain an acceptable standard of living throughout a retirement that could last 30 or more years?

It's difficult to answer that question with absolute certainty because of a variety of uncertainties, including how long you might live, the rate of return your investments will earn, what your expenses will be during your post-career life. And, indeed, research shows that many people don't have an accurate sense of whether they're on track to a secure retirement. Still, without too much effort you can come up with a pretty decent estimate of whether you've got the financial resources necessary to pull the trigger.

Start by doing a retirement budget so you'll have a realistic idea of the amount of income you'll need to cover your expenses once the paychecks stop. You can do a budget the old-school way with paper and pencil, but I think you'll find it a lot easier to use an online tool like BlackRock's Retirement Expense Worksheet, which lists more than four dozen different expenses, including both essential living costs (housing costs, transportation, food, health care, taxes, etc.) and discretionary expenditures (travel and entertainment, charitable donations, dining out, etc.). You won't be able to predict your costs down to the penny, but you can update and refine your estimate annually after retiring.

Once you have a decent handle on expenses, you can plug that figure, along with such information as your age, current retirement savings balance, the amount you'll collect from Social Security any other guaranteed income sources, into a good retirement income calculator that uses Monte Carlo analysis to estimate the probability that your resources will be able to generate the income you'll need for the rest of your life.

Again, we're dealing with approximations here; no tool can predict the future. But if after going through this sort of analysis you find that your chances of being able to generate the income you'll need are uncomfortably low -- say, less than 80% or so -- then you may want to postpone retirement until they improve or find other ways of tilting the odds in your favor, such as downsizing, taking out a reverse mortgage or paring your discretionary expenses.

As you're going through this financial review, you'll also want to take a look at your retirement investments. The single most important thing you want to do is ensure you're properly balancing risk and reward. During your career you have plenty of time to rebound from severe market setbacks, so you can afford to tilt your portfolio mix heavily toward stocks to generate higher long-term returns. In retirement, however, the combination of big losses plus withdrawals from your portfolio can increase the risk you'll outlive your nest egg.

So as you near and enter retirement, you'll likely want to scale back your stock holdings to prevent a market downturn from decimating your nest egg.

Just as there's no single retirement age that's right for everyone, neither is there a stocks-bonds mix that suits retirees and near-retirees. But you can get a decent idea of how to divvy up your portfolio between stocks, bonds and cash by completing this risk tolerance-asset allocation questionnaire.

But deciding the appropriate time to retire isn't just a numbers game. To make a smooth transition into retirement, you also want to consider how you actually want to live and whether you're socially and emotionally prepared to leave the work-a-day world. Do you have activities that will keep you occupied -- and better yet, make your time in retirement fulfilling and meaningful -- now that you won't have the structure of a job to plan your days? Do you have a solid network of friends and family to help you stay socially connected? Will you spend most of your time close to home or do you plan to travel? Do you expect to seek part-time or occasional work for pay or volunteer?

These are the sorts of issues I put under the general heading of lifestyle planning, and it's better that you look into them before you leave your job than after. That's especially true if you're thinking of working in retirement, as finding a job you'll enjoy and that pays an acceptable wage may be more challenging than you think.

It would be nice if after going through the process I've described, you could be sure to arrive at firm yea or nay on retiring. But things aren't always so clear. For example, you may find that you've got all the resources you need to call it a career, but you enjoy working too much to give it up now, which is fine. Conversely, you could come up short on financial readiness but because you feel you're simply unable to go on with your job you figure you're better off retiring anyway, even if that means scaling back your retirement vision.

And sometimes you may not have much of a choice. Almost half of retirees left their jobs earlier than they planned, according to the Employee Benefit Research Institute's 2017 Retirement Confidence Survey, often due to health problems, being laid off by their employer or because they had to take care of a spouse or other family member. Faced with such a situation, one person could decide to try to find work, any work, and postpone retirement. Another person may decide to retire and fashion the best post-career life as possible, given the circumstances. There's no one correct response.

Ultimately, deciding when to retire is really about deciding how you want to spend whatever time you have left in this life. So while I recommend that you weigh the issues I've raised above, recognize that neither I nor anyone else can know what the right decision is for you. This is a call you'll have to make as best you can give the circumstances you face.

Money saving tips - Expert says THIS is the worst way to pay for Christmas

Contactless card & family doing Christmas shopping

CHRISTMAS is approaching fast and the all too familiar feeling of pressure on our wallets is coming around quick.

The last thing you want at Christmas is the burden of how you’re going to pay for your loved ones Christmas presents or how you’ll afford the turkey.

There are certain things you ought to try to avoid when you pay for Christmas to make sure you don’t start a new year with bad debt hanging over you.

It sounds obvious but before you start spending, if you’re going to have to borrow make a conscious effort to spend less.

This doesn’t mean people will think you’re Scrooge; you just need to be savvy.

By making tweaks to how you pay for things, you’ll save yourself money and avoid the 2018 Christmas hangover.

Hannah Maundrell, Editor in Chief of revealed the best and worst ways to pay for Christmas.


Store cards: Not to be confused with loyalty cards, store cards are often flogged at the till with the promise of 10% off your next shop and the chance to pay later.

Store cards can come with some benefits like discounts or invites to events, however if you're using them as a form of borrowing they are a big no.

If you haven’t saved enough for Christmas and plan to use store cards to pay for your shopping, it’s one of the most expensive ways of borrowing.

You’ll end up paying much more for your goods in the long run so try to avoid store cards at all costs.

Unauthorized overdraft: Unless you have a pre-arranged interest free overdraft avoids using them as much as possible.

Going into an unauthorized overdraft, or over your limit could cost you dearly.

There are lots of different fees you could be charged including daily fees which can be anywhere between £1 and £8 a day (with a monthly cap).

This is not a cost-effective form of borrowing and you could wind up paying double for your goods if you can’t pay back your overdraft quick enough.

High interest credit cards: If you’re using a credit card that charges you monthly interest – stop.

If you already owe money on the card you could use a 0% balance transfer credit card to move that sum into an account that doesn’t accrue interest for a certain number of months.

This would give you the chance to pay it off without the amount continuously rising.

Using a credit card that charges you interest should only be used if you’re disciplined enough to pay the full amount off at the end of the month.


Money you’ve saved: Ideally we’d have all saved enough to pay for Christmas entirely upfront.

If you have been squirreling away this is great, you won’t need to borrow, however if you’re disciplined you could still consider using a credit card to pay for your purchases to get section 75 protection.

Section 75 protection means your credit card provider is equally liable if things go wrong meaning they can help you get your money back if your goods cost over £100.

0% purchases cards: These credit cards let you borrow interest free for a certain number of months which is great if you haven't saved enough and they can help you spread the cost of Christmas.

You still need to keep up with your monthly payments and make sure you can pay off the card in full before the end of the interest free period.

If you take one out make a note in your diary to make sure you’re all paid up before the interest kicks in.

Rewards credit cards: If you have the money to pay for Christmas upfront but want the reassurance of Section 75 protection then a rewards credit card could be a good choice.

These cards offer you different benefits depending which you go for like supermarket or Avios points or even cash back.

They are only a good choice if you know you will be able to pay off your balance in full at the end of each month.

1 Investment to Rule Them All


A friend once asked me, “How do I start investing if I don’t have much money?”

That is a legitimate question, especially for students just out of college or working adults who have just entered the corporate world.

To answer my friend’s question, I jogged back my memory to recall out how I first started investing. I, too, didn’t have much money when I started my investing journey.

I remember all I had was the monthly allowance given to me during National Service, which I had squirrelled away diligently.

With the money I had, I invested in books on personal finance and stock market investing. I remember the first book I bought was Rich Dad, Poor Dad by Robert Kiyosaki. I also went for an investment course to help bring down the steep learning curve (I had no accounting or finance background from school).

Essentially, what I did was to invest in myself. By investing in myself and not on a broker’s hot tip, I accumulated the knowledge needed to navigate the stock market.

Warren Buffett, one of the most successful investors the world has seen, mentioned in an interview recently that the best investment you can make is one that “you can’t beat” and that is investing in yourself.

He said:

“Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet.”

By investing in ourselves first, we will have a proper foundation on which to build our stock portfolio. Without such knowledge, we might lose money from our investments without us knowing why.

Even after we have amassed the knowledge needed to invest in stocks, we should never stop learning.

In Tamil, there’s a saying that goes, “Known is a drop, unknown is an ocean”. There’s always something new to learn about investing every day since the stock market is very fluid.

6 Tips for Keeping Your Retirement on Track at Age 50

When it comes to preparing for retirement, 50 can be a pivotal age. At that age, most people are just 10 to 15 years away from leaving the workforce, and time is relatively limited to save for retirement.

But with a decade or more of work still remaining, you have enough time to make changes to your retirement savings strategy to ensure you reach your savings goals.

"Add up all of your life savings—your 401(k), your investments, the money under the mattress—and then divide that by 25. Could you live on that amount comfortably for one year?" asks David Rae, a certified financial planner and founder of DRM Wealth Management. "If the answer is yes, then you may be on track for retirement. If its no, it's time to sit down with a fiduciary financial planner to figure out what else you can do to secure your financial future."

Rae's formula of dividing by 25 is based on the assumption that people will withdraw about 4% per year from their retirement funds to live on after leaving the workforce.

With that in mind, here's a look at what retirement and personal finance experts say you should do at age 50 to maximize the likelihood of achieving your retirement savings goals.

1. Maximize Current Retirement Contributions

Maximizing your current retirement contributions is a common tip offered by advisers. It's one of the easiest steps to take to help increase the amount of money you're saving.

You can max out contributions to both personal IRAs and company-sponsored 401(k) plans.

"Starting at age 50 you're eligible to increase your 401(k) contributions by an additional $6,000 per year, and can increase contributions to IRAs or Roth IRAs by an additional $1,000 per year," says Matt Hylland, a registered investment adviser at Hylland Capital Management. "At age 55 you're eligible to save an additional $1,000 per year in a health savings account, which is a great retirement savings vehicle."

2. Consider Limiting Your Tax Exposure

There are fewer tax breaks on the horizon as you get closer to retirement, says Wayne Fisher of Fisher Financial Tax & Insurance Solutions.

If you're saving money in a government-recommended retirement plan such as a traditional IRA, 401(k), or 403(b), you'll eventually have to pay taxes on that money—and the tax rate may be much higher than you expect.

"Per David Walker, the former US Comptroller General, we're heading to a future where we'll have to double federal taxes or cut federal spending by 60%, which makes tax-free look pretty good, right?" says Fisher.

3. Carefully Evaluate Asset Allocation

As you reach age 50 and beyond, many advisers say it's time to start reducing the risk in your investment portfolio to protect it from market declines.

"Depending on your risk tolerance, you may want to look at adding bonds, annuities, CDs, or other safer options," says Hylland. "As you go through your fifties, the chance of your portfolio having time to recover following a major decline will decrease. By having safe investments, you can ensure that your equity investments have time to grow and recover if needed."

4. Drop Unnecessary Insurance

Many people purchase insurance coverage when their children are young or if their spouse depends upon their income.

But if your children are financially independent and no one else relies on your income, consider dropping unnecessary coverage, says Ryan McPherson, a managing member of Intelligent Worth.

"There's little need to pay for policies that have outlived their purpose," says McPherson. "Saved premium dollars can be directed toward retirement savings or paying down debt."

5. Evaluate Your Health Care Coverage

Part of keeping your retirement plan on track involves preparing for big expenditures such as health care. In fact, health care can be one of the most expensive parts of retirement, says Mark Painter, founder of EverGuide Financial Group.

"Make sure you have your health care covered, both in terms of health insurance and also potentially long-term care," says Painter. "You want to spend your money enjoying retirement and not simply paying medical expenses. It will be a lot cheaper to look at coverage at age 50 than when you are 65 or 70."

6. Create a Get-Out-of-Debt Plan

Debt and retirement don't mix. Start developing an action plan now to eliminate credit card bills and other expenses weighing you down.

"Come up with a plan now, while you have plenty of time to execute it to get out of debt," says Hylland. "Maybe you're an empty nester and can downsize your home and mortgage, or consolidate credit card debt and pay it off, or get rid of a car with a long and expensive loan. Create a plan today to get your debt eliminated as soon as possible."

No matter your age, you still have time to create an effective retirement savings plan. Find out if you're financially prepared for retirement and put these tips into action.

5 Biases and Fallacies that Make Us Terrible With Money

5 Biases and Fallacies that Make Us Terrible With MoneyHuman beings are intelligent people, capable of making good decisions, weighing all options and making a rational and well thought out conclusion. However, sometimes it feels like we act irrationally without even realizing we are doing it. In some cases, our brains are hard wired or pre-dispositioned to behave in a certain way if our conscious mind does not take over and think rationally.

Luckily, because of our conscious mind, we can override our natural evolutionary desire to act irrationally in certain instances. Here are 5 biases and fallacies that make us terrible with money and how we can overcome them.

1. Recency bias

Recency bias occurs when we base on current or future behavior or outcome on what has happened in the recent past. Put differently, whatever is happening now, will also happen tomorrow and the day after. Recency bias occurs because of our flawed and selective memory. Most people’s memories are not as good as they think and much of what we do remember may be distorted based on what we focused on and our emotions at the time.

Common examples of recency bias include: house prices have been going up each month for the past 2 years, so they are bound to continue going up. This stock/mutual fund has reported a gain each day this quarter, so it must be a promising investment. I have kept a steady full time job with the same company for the last 3 years; therefore I don’t anticipate this will change in the future.

Why It Is Dangerous

Recency bias is dangerous because it assumes future investment performance is based on past performance and puts a disproportionate amount of weight on this assumption. Some ways of you can minimize recency bias include:

  • Increase the timeline used to assess financial information. History is never an indicator of future outcome, but the further back in history you go to understand a topic the more you will be able to see trends and patterns of history. Trends and patterns offer better information than a few years or months of information.
  • Speak to someone with an opposing view and get their perspective. The recency bias can cause us to be closed minded to other possibilities and outcomes. Talking to someone with an opposing view can give us perspective. For example: if you are basing a decision on the fact that prices will go up, talk to someone that believes they will go down. Keep an open mind, but also insist in credible data to be used when disputing both sides. This experience may either strengthen your stance further or at a minimum, widen your perspective.

2. Sunk cost fallacy

Sunk cost is any cost that has been paid already and can never be recovered, no matter what the future outcome or business decision. It is a past cost that is not affected by a future decision. Sunk cost can also be the loss of time or non-monetary resources. The point is that they are not and will never be recoverable. Examples of sunk cost include: you paid $500 to get your 15 year old car fixed last week. Two weeks later, you discovered another problem that will cost you $2,000, but you have already decided last week to keep the car. The $500 would be considered a sunk cost whether you actually decide to go with your original decision to keep the car or decide to get rid of it. Another way example would be overeating at a buffet in order to get your ‘money’s worth’. Regardless of how much you eat, will not change the outcome of how much you pay.

How to Overcome Sunk Costs

Overcoming the sunk cost fallacy can be difficult because we place more pain in our losses than we do pleasures in our wins. This can cause use to continue make even more bad decisions in hopes of recouping our losses. Continually putting money into a dying business or investment is another example of the sunk cost fallacy. Here are a few tips to overcoming the sunk cost fallacy:

  • Know in advance a dollar amount or percentage you are willing to lose before you decide to get out. Having a floor value helps to minimize the emotion around this fallacy that can result in dumping more money into a bad decision. For example: if this investment drops more than 10%, I will sell my holdings and walk away. If this business produces a loss for more than 3 years, I will cut my losses and close the business.
  • Give yourself the opportunity to fail, but also provide yourself with an out. Put differently, never put all your eggs in one basket. Making mistakes is a part of life, but when it comes to financial decisions, diversification in your investments can help minimize the impact of this fallacy.

3. Gambler’s fallacy

The gambler’s fallacy is the mistaken belief that if something happens more frequent than normal during a period, it will happen less frequently in the future. Gambler’s fallacy is opposite to the recency bias. If things are going too good, surely they are bound to go bad soon. Alternatively, if things are going poorly, surely they are bound to turn around soon. Gambler’s fallacy is what keeps people continually losing money in the slot machines or buying lottery tickets, because surely there can only be so much bad luck that at some point, good luck will come.

Why Is It Dangerous

Gambler’s fallacy is dangerous because it gives little regard to probability or distorts how probability works in the mind of the person that is hoping for the desired outcome. For example, when you flip a coin, there is a 50/50 chance it will be heads or tails. If you flipped the coin 7 times and it always came up as heads, the 8th flip would still have a 50/50 chance of showing heads or tails. Assuming this probability would be skewed towards tails would be incorrect; the probability would still be 50/50.

Some ways to reduce gambler’s fallacy include:

  • Avoid financial decisions that rely entirely on probability. For example: gambling, buying lottery tickets etc. In many instances, these probabilities are stacked against you.
  • If probability is all you have to go by, make sure the probability is stacked in your favor. This doesn’t remove the possibility of incurring a loss, but it does hedge some risk.

4. Buyer’s remorse

Buyer’s remorse is the sense of regret after having made a purchase. It is frequently associated with making an expensive purchase. It may stem from fear of making the wrong choice, guilt over extravagance, or a suspicion of having been overly influenced by the seller. We have all experienced buyer’s remorse at some point in our lives and it is not a good feeling. Some practical ways to avoid buyer’s remorse include:

  • Implementing a waiting period. Set a waiting period for the purchase of items over a certain dollar amount. Typically, we get buyer’s remorse over more expensive purchases. However, expensive can mean different things to different people. Figure out what your dollar threshold is and the length of time you are willing to wait before making a purchase. Typically you want to wait at least 48 hours (2 days) or more for major purchases. Waiting to make the purchase allows you to think more carefully about the decision. It also removes the opportunity of making a purchase based on feelings as our feelings are always changing and never constant.
  • Know the return/exchange policy before you buy. Even if you have no intention of returning the product, it is important to understand what the companies return policy is. What if you purchased the item but it did not work as you would have hoped? What if you found a better priced alternative? Make sure you know what type of exit strategy you have available to you (if any) and how much time you have available to act.
  • Check your budget and assess the timing. You may have implemented a waiting period and even been comfortable with the return policy, but if the budget does not allow the purchase then you may still find yourself with buyer’s remorse. Make sure you are not financial strain after making the purchase. Review your budget to know what you can realistically afford.

5. Confirmation bias

Confirmation bias occurs when we favor information which confirms our pre-existing beliefs and biases. Confirmation bias narrows our understanding and perspective because we fail to read, listen to or understand differing views. Examples of confirmation bias include: watching a particular news channel that only align with your political views. Reading financial information from bloggers or companies that agree with our views on spending, saving and investing.

Confirmation bias is not inherently bad, but reading and listening to information that we already agree with does not increase our learning or expand our perspective. Ways to reduce confirmation bias include:

  • Consciously making an effort to read or listen to other people’s views even if we do not agree with them
  • Understanding the perspectives of both sides before making a decision
  • Putting you in the other person’s shoes and looking at things from their perspective.

Money-Saving Tips for Millennial College-Entrepreneurs

Growing up during the last major recession means that today’s millennial college entrepreneurs are already in the savings mindset. They’ve learned how to live with less than previous generations, which has made them much more conscious of how much things cost. Unlike other generations, they’re looking to offset the cost of things like tuition, housing, food, entertainment, and healthcare expenses.

Knowing where they are going and what they want means that millennials are also empowered to say no to paying too much or relying on credit too often. That’s why this new breed of young entrepreneurs is constantly on the lookout for money-saving tips.

Growing up with technology has also enabled these entrepreneurs to do price comparisons online and access deals and discounts for everything from appetizers to phone cases.

However, there may be some unfamiliar money-saving tips that can help millennials. The millennial wants to save money in areas that aren’t essential to launching their burgeoning startups but can further their frugal ways.

Separate Your Business and Personal Expenses

As a startup owner, especially while you are at college, may be challenging to determine what a business expense is and what a personal one is. It becomes particularly sticky given the fact that you might be running your new business from your dorm or apartment.

However, it’s important to keep good records that separate these expenses and account for them in distinct ways. For tax purposes, keeping good records can deliver additional savings in the form of deductions while lowering your risk of being audited.

Software like QuickBooks allows you and helps you to set up separate records for your business and personal accounts. QuickBooks can also be set-up to track the “what if” category. The What-if category is, “what if a portion of my dorm room can apply to tax credit?” These are the money spending categories you’ll check on when tax time comes. Boom! You track it, you’ll know what questions to ask and it helps you understand how to separate and track various types of expenses.

Because you’re always on the go, it also helps to use an expense-tracking app like Expensify. This app manages every type of expense you have, makes it easy to divide up expenses, and even integrates with QuickBooks.

Reduce Expenses through Comparison Shopping

As a millennial you already do online comparisons. Would you eat at a restaurant without checking on yelp or some other verification site? Probably not. Go to a movie without reviewing? Never. For a movie, you check the review; the movie has your 5 star rating. Next steps, you click over and get the ticket — hop on maps if you haven’t been to this venue (which you also checked out) and you’re outta here.

You may not have realized how savvy you are to the many ways you can undertake cost-cutting and tracking exercises. As millennials you are connected in such a way as to get the word out online where the savings can be found in any business sector. Use this same process for your dorm room entrepreneur system.

Your search now includes ways to reduce utilities, internet, TV services, and more that previously seemed impossibly challenging. Many of these service providers didn’t have competition before, so you were locked into paying what they felt like charging.

With the advent of cable-cutting companies, you can now negotiate. You can also seek out comparison shopping websites designed to save you a bundle with convenient connections to reduced internet services. There are numerous deals out there, and having a platform like this can help you locate and leverage them quickly. Like that movie. Boom, 60 seconds, not hours.

Establish Credit to Build a Good Score

Your business may need to tap into funding to grow and expand. Investors may not be as interested in you, or you may not need much in the way of capital. This is where credit can help, even if you’ve previously avoided it. Some use of credit can not only provide necessary capital, but it also offers a way to establish the credit score you need to get access to more credit later on.

When it comes to accessing business credit, both your business and personal credit scores are checked. With little to no experience with credit, it’s important to educate yourself before making any decisions about what kinds of credit to apply for and how to use it. After all, you don’t want to do anything that ruins this score and costs you more money.

Companies like CreditSoup are there to help. CreditSoup, for example, offers an effective tool that you can tap for learning how to get a credit card. With how fast the millennial searches, you’ll know how to determine which cards are best for your situation, what your credit score means, and what it takes to raise your credit score. The better decisions you make about credit, the more you can use it to manage cash flow.

Tap Campus Resources

Your university has charged you a considerable amount of tuition for access to the campus, including all of its facilities. Make sure you get the best bang for those bucks. Colleges often have school sites and pages where you can advertise your business. These are also sources for finding individuals who can serve as brand ambassadors or work as interns.

Additionally, your school most likely has an incredible library for completing research. And yes, sometime it’s just a quiet place to sit and look online accessing information, and furthering your knowledge of your startup industry or business niche. However the library databases cost money for those not attending a school with paid subscriptions. Get as much of this intelligence as possible while it’s free, and do your compare right there on the spot.

Your university may also have a radio station or other channels to get the word out about what you offer. Even your classes and professors may be able to connect you with more assistance and networking opportunities to grow your business. Look at what’s available, and use as much as you can while you’re still attending school. Also, consider creating an advisory list with contact information that can be beneficial long after you graduate.

Leverage the Sharing Economy

We live and work in the sharing economy, which emerged in response to the recession and continues to be a valuable way to save money. Most social media sites host groups of individuals who are looking to trade items and equipment for other resources. Scour these sites for items and products that could be useful to your business. You can also offload all that junk you collected in college — it might be a treasure trove to someone else.

Besides these online social media groups — usually referred to as exchanges on sites like Facebook — other online sites, including Craigslist, offer opportunities to share, borrow, or trade things that might otherwise be too expensive. There are sharing sites for home and office items, clothing, transportation, and various services.

Go Crazy for Coupons

Coupons used to be all the rage for your parents. Your mom most likely clipped them from newspapers to use at the grocery store or to buy school clothes. While that saved money, carrying those everywhere meant they were frequently forgotten or lost.

Today, you can tap digital sites, coupon codes, and downloadable discounts. A quick search can find you immediate deals, and browser extensions like Honey can continue to hunt for you while you do other things.

There should be no shame in your money-saving game by taking advantage of coupons. It’s a great feeling to realize that you just saved a significant percentage of your purchase — no one wants to pay full price for anything.

Save, Save, and Save Some More

Those savings mean more money for other items; these strategies put dollars toward your emergency fund, savings account, or retirement planning. Here is a nifty macrs calculator to get there quicker. Best thing about all of this, they set your burgeoning company up for success today — and long after you’ve left school.

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