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In order to increase the avenues for investment abroad, Indian mutual funds were allowed to invest in rated securities in countries with fully convertible currencies, within the existing limits. Earlier such investment was only permitted in ADRs/GDRs issued by Indian companies in overseas markets.

A road map for developing Separate Trading for Registered Interest and Principal of Securities (STRIPS) has been prepared. The Reserve Bank is actively pursuing the creation and development of the STRIPS market which, in addition to providing more flexibility in managing interest rate risk, would help in addressing the asset-liability mismatch problem of banks/institutions.

Banks with typically short maturity funding can hold short duration STRIPS (i.e., coupon STRIPS) while the longer duration STRIPS can be held by insurance companies and pension funds, etc. To facilitate the market for STRIPS (which are essentially zero coupon bonds (ZCBs), the tax anomaly that existed in respect of ZCBs has been removed by Central Board of Direct Taxes (CBDT) in a notification issued in February 2002. Accordingly, ZCBs are now to be taxed on a total return basis by treating the marked-to-market gains to the holder during the assessment year as taxable.

Issues of Foreign Currency Convertible Bond were allowed under the automatic route up to US $ 50 million. The Indian companies were permitted to raise the 24 per cent limit on Foreign Institutional Investors investment to the sectoral cap/statutory ceiling as applicable. As announced by the Finance Minister in his Budget speech for 2002- 03, FIIs’ portfolio investments will hence forth not be subject to sectoral limits for foreign direct investment except in specified sectors.

After accumulation or distribution takes place, a stock moves into new territory, either high or low, showing that the stock has been absorbed or distributed and that a new move is starting. The big profits are made in the runs between accumulation and distribution. Therefore, you make more money by waiting until a stock plainly declares its trend than by getting in before it starts. It is just like a race. It often takes fifteen or twenty minutes to get the horses away from the post, but once “they’re off” the race is over in two minutes. It is the getting ready that takes the time, the run is soon made, once the firing line is crossed. What difference does it make whether you buy a stock 10, 20 or 30 points above the bottom so long as you make profits? The same with selling short. It makes no difference how much the price is down from the top. Wen it breaks out of the distributing zone, it is a safe short sale and you will make quick profits. Get the idea of prices out of your head. Forget about the bottoms and tops; trade to make profits, not to try and catch the bottom or top eighth. The insiders do not do it, and you can not hope to do better than the man who makes the market.

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This is the second book in the Rich Dad series. Robert introduces the four quadrants and shares with the reader how each person in each quadrant operates. He goes on to explain the changes needed for a person to get from the E or S side of the quadrant to the B and I side. He cited the benefits which come from being on the B and I side which will lead to financial freedom compared to being on the E or S side. The last seven chapters illustrate how you and I can get onto the financial fast track through constant and consistent actions recommended by Robert.

After reading this book, I am well informed of the type of changes I need to undergo and what it takes to get to the B and I side of the quadrant. It’s a total mindset and behavioral change as I myself operate out of the E quadrant. The activities carried out by a person on the B and I side will not make any sense to the person on the E or S side. Some of the many new ways of thinking emphasized in the book that I have to adopt are:

• Working for free: There will not be any positive cash flow coming in during the initial period of a startup.
• Delayed gratification: Many people want to solve their money woes instantly. But it’s only through patience and diligently increasing our financial intelligence that we will be rewarded later on by taking small steps each day.
• Investing is not risky: Without the proper knowledge and skill, many people will find investing risky as they have lost money previously in the stock market or mutual funds through some unreliable source. To them investing is like gambling.
• Finding mentors: They are there to guide you through your journey. They are people who you can turn to when you run into trouble.
• Making mistakes: Expect things to go wrong and learn from the mistakes made. Losing is part of winning.
• Time is your most valuable asset: The rich spend money to save time whereas the poor and middle class spend time to save money.

This book is a must read for people who are thinking of embarking on the process of becoming financially free. I would also like to recommend that you read Rich Dad Poor Dad first if you have not done so. Rich Dad Poor Dad provides the financial basics and fundamental concepts needed for Rich Dad’s Cash Flow Quadrant Get it now!

Raymond Heng specializes in system testing, internet marketing, investment & Stocks/options trading. He writes articles during his free time and contributes them to ezines to share his knowledge with others. He loves travelling too. To read his most sought after articles and tour adventures, visit his web site: http://web.singnet.com.sg/~raindeer

Several people view stock market trading as a door to earn easy money. This is not true. Only people with a good luck could have profits if it was that easy. People involved in trading stock have do some research to make profit. Identifying the trends of the market is the key to success in stock market. If you are able to identify the trends in stock market trading, you can understand the behavior of a stock based on its past performance.

One of the basic assumptions of stock marketing companies is that the market has trends: primary, secondary (short term) and secular trends (longterm). Based on these trends, market watchers predict the value of shares. Traders use the trends to identify profit or loss.

Stock market can be a bull market or a bear market. A bull market indicates the presence of more buyers than sellers. This leads to increase in the value of shares. On the contrary, if the number of sellers is more than the number of buyers, the value of shares falls. It is said to be a bear market.

To identify a trend, you need to have information on two important factors of the stock market trading: price and volume. The price tells you about the direction of movement in the market and the volume tells whether there is movement in the stock market. There are cases when the volume of a stock is high and so is its price. This indicates an upward trend. In case of high volume and low price, it is a downward trend. Based on this, you may decide whether to sell or purchase stocks.

If you see regular downward days, the market is indicating a stall or upturn. It is wise to invest in stocks as prices are bound to jump back. Alternatively, if it has been a continuous period of high prices, the market is indicating lower prices in future. It is right time to exit from the stock.

Often, it happens that the stock prices are increasing or decreasing. This may look like a change to you. However, if you compare the volume and find that there is not considerable volume increase or decrease, you should not expect change in the stock market yet. While studying trends is a good habit in stock market trading, it is necessary to watch out for false signals.

Stocks, which are high in volume, for example mutual funds, tend to affect the movement of market. You can watch out for movement in such stocks to identify possible changes. Several online trading companies provide charts and trend indicators on their websites. These tools can be used to study the trends in stock market trading.

Pricing and Features for Sogotrade Investment Packages: online investment
Sogotrade Interest Rates and Fees: trading stock options

If you’re unfamiliar with terms like “financial planning” and “personal finance” and what they entail, then you probably need a financial planning book. Personal financial planning has been emphasized quite a bit lately through the various media channels, and terms such as those mentioned above have become buzzwords with how people seem to be going on about the importance of financial planning. Fact of the matter is, anyone who isn’t a financial adviser or a financial planner should have a financial planning book. To determine if you need a financial planning book, read the rest of this article. If most of the concepts presented seem alien to you, then you should get yourself a book today.

For those who are not aware of what financial planning is all about, it is a process by which a person works out the necessary steps to meet his expected needs and come up with countermeasures for the unforeseen circumstances he might encounter financially. Factors such as inflation and changing lifestyle need to be taken into consideration when coming up with a personal financial plan. When planning for your future financial needs, you need to know the technical jargon and concepts of certain financial instruments and how money works. Without adequate knowledge of any of these, it would be hard pressed for you to come up with an effective financial plan for yourself or your family.

Take debt for example. Are you aware that debt is one the major financial issues that people face today? Are you in debt yourself? Just how do you get out of debt? Most people who are in debt feel like they’re trapped in a vicious and endless cycle, especially those who borrow to pay off their debts. They feel like they have no way out; no way to be free from the shackles of debt that weigh them down financially. Getting out of debt requires careful planning, and adequate knowledge of how to make your money work for you. A book on personal money management can help you to come up with ways of how to manage your debts and eventually become debt-free.

How about retirement? Do you know how much you need at the end of the day for your retirement fund? With increasing inflation and changing lifestyle needs, are you prepared for a costlier cost of living by the time you’re old enough to retire? Do you know what investments to consider when planning for your retirement? Should you bank on day trading or mutual funds? How about insurance? How will that help you financially at the end of the day?

So in summary, a financial planning book can help you understand the concepts that you’re required to know when coming up with an effective financial plan. A comprehensive book can cover anything, from basics like personal money management and budgeting to something even more complex like money market investments and insurance. If you find yourself having more questions about financial planning by the end of this article, then rest assured you do need a financial planning book. So get one today.

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ETFs, otherwise known as “Exchange Traded Funds”, are a fast-growing segment of the Finance and Investment Market which are moving towards supplanting Mutual Funds as preferred means of fund investing.

You probably know most of the ways available to trade the markets… Stocks, Forex, Options, Futures & Commodities, … plenty of trading choices to consider.

But for over a decade now – since the early 90′s, there’s been a group of funds that are now growing rapidly as more investors and traders become aware of their profit potential – that is, ETFs.

In 1996 there were about $16 billion in ETFs… then just over a decade later that number has sky-rocketed to in excess of $600 billion!

An ETF is a fund comprised of a group of stocks, bonds, or other investment vehicles similar to a mutual fund. However, unlike a mutual fund, ETFs trade like stocks allowing a trader to buy and sell during normal exchange trading hours. Hence you can have immediate access to your funds upon selling an ETF position during normal market hours anytime you want.

Whilst ETFs can be generally more cost and tax efficient than mutual funds, a commission cost applies in the same way as it would have when trading stocks. There are no minimum buy requirements or holding period requirements common to many mutual funds. Likewise, you can buy as little as 1 share of an ETF as you would buy 1 share of a stock.

In simple terms, this means you can get the diversification that a fund has to offer and the ability to trade in and out of the fund. This is a big deal, because you can virtually eliminate stock specific risk by trading a basket of stocks within the fund so that if one stock in the fund suddenly drops in price, the negative impact on a position you may have in the fund would be far less than if you had owned a position in the shares of that particular stock.

There are many different types of funds available. In the United States alone there are currently now over 600 funds, with more being added on a daily basis. ETFs include stock sector, country, currency, commodity, bond or other investment objective related funds.

Further, there are funds that have only short positions and are sometimes referred to as “short” funds, or “short ETFs”, which will increase in price as the short positions they hold go down in price.

Some funds are leveraged funds, meaning that when the stocks in their funds go up by say 5%, the fund could go up by 10% and short funds whose stocks go down in price by say 5%, could go down 10%.

ETFs are also a growing investment vehicle in international stock markets as well. A prospectus on each ETF is available and information on the individual holdings of an ETF can be found on Yahoo Finance and other financial related websites.

However, not all ETFs are suitable for trading as many are thinly traded or too volatile to be considered good swing trading vehicles. ETFs in the U.S. are created and maintained by sponsor companies subject to the approval and regulation of the Securities and Exchange Commission.

Success in any chosen field can only be gained by knowledge and practice. Knowledge is best gained from recognised experts in their field.

Nadine Huegel
http://www.squidoo.com/MoneyMarketMastery

It doesn’t take empirical research to know that many people are currently losing value in their revered IRA and 401(k) accounts due to the current economic instability. While the “good times” in the markets should certainly return to some degree, many people are looking at what they “think” is a new alternative. What is this “new” alternative? Well, it isn’t new at all…..individuals tax mistakes charge of their own retirement assets by self-directing.

In a July 1, 2007 piece by Ann Brenoff titled “self-directed IRAs turn to real estate,” Brenoff states that such plans “…let individuals determine what, when, and where to invest their retirement money. And they are catching on — in no small part thanks to the stock market’s volatility and the real estate market’s recent riches.”

Some would argue that even when the real estate market is not experiencing riches, there is great validity in investing in non-traditional assets, such as real estate. Not only is such an investment a truer diversification of one’s assets, but most people will experience that real estate has been a significantly proven commodity in long-term investing.

Interestingly enough, real estate as well as other non-traditional assets have always been a permissible asset which can be held within an IRA or 401(k) plan. The problem is that most institutions that are selling the IRA and 401(k) investments are selling only stocks, bonds and mutual funds where they receive a commission….so, while it would be nice to think that they would direct you to such an opportunity, many in the financial services field either do not know that this is permissible OR have a selfish interest in not advising you about this possibility.

But what about if the individual is still employed at their company where their 401(k) currently sits? As Ms. Brenoff states, “but ERISA or no, the other thing standing in your way may be your employer. If your IRA is held in a company plan through your job, the plan’s guidelines may specify what type of investments can be made — and real estate is rarely among them. If this is the case, establishing a self-directed IRA isn’t an option until you and your employer part ways. Once you leave, you can roll over the funds in your IRA and 401(k) to a self-directed IRA.”

This is very true. Typically, most employer tax are exceptions with some larger employers) 401(k) plan documents do not allow non-traditional asset investments, as a general rule, one cannot take current 401(k) assets and self-direct these investments. However, once you have left employment, this opportunity certainly exists for you. And, if you are self-employed (even IF you are also a W-2 employee elsewhere) you have, in my opinion, a better advantage….the opportunity to create a self-directed (traditional or Roth) 401(k) plan. This type of plan will give an individual more options than an IRA.

And, while this is a growing trend, it will only continue to grow as an option to individuals. As capital markets expert Steve Heideman states, “Not that all individuals should or will self-direct, but what I have seen with the clients that I work with who self-direct is that they have the option of having true checkbook control of their assets. Not only can they make the choice of what non-traditional investments they may choose to invest in, but can maintain their investments in the “traditional” tax of stocks, bonds and mutual funds. We are finding that more and more of our clients are asking us to assist them in this process.”

But, Brenoff concludes in her piece, that experts such as Jeff Nabler of the IRA Association of America, strongly urge people to consult a professional adviser before moving their money into one. “For one thing, the tax laws concerning self-directed IRAs are complicated — and likely beyond a layman’s interpretation. Mistakes can be costly; early withdrawal penalties may be imposed if funds are misused,” Brenoff stated.

Welcome to the world of self-directing… it is a journey that, for some, will be an extremely gratifying experience.

John R. Park is President of PGI SelfDirected and co-founding Partner of Fulcrum Investment Network (http://www.fulcruminvestmentnetwork.com)

What a difference a year makes. People entering retirement early last summer had a strong market to boost their nest eggs and cushion any anxiety over their life transition. On July 19, 2007, the Dow Jones Industrial Average hit a record high, closing above 14,000 for the first time. To the extent that the subprime crisis had even registered, most observers expected the damage to be contained within the housing sector.

The investment outlook has darkened since then, however, especially for those who may not have decades ahead to smooth the effects of volatility. Regardless of how the markets perform, most retirees count on withdrawing income regularly from their nest eggs, while preserving as much of their principal as possible.

On an institutional level, foundations face a similar task. Congress requires them to give away at least 5% of their assets each year; their challenge is to grow principal to keep pace with inflation, so they can meet commitments to grantees and cover operating expenses. It’s like retirement… in perpetuity. “The problems of the retired investor and of the endowed institution are very closely related,” says Laurence Siegel, director of research in the investment division of the Ford Foundation. “Both seek to produce an income stream that grows with inflation.”

You don’t need to invest your clients’ nest eggs exactly like the Rockefeller or Ford Foundations-to say nothing of Harvard or Yale. In fact, most investors can’t act like Harvard or Yale, despite the books and articles that espouse to teach how-they just don’t have enough money. But foundations and endowments can teach advisors strategies for constructing and maintaining retirement income portfolios. Here’s a look at how.

All-Important Allocation

Retirement income planning didn’t even exist a couple of generations ago. Through the mid-20th century, most people didn’t have a decades-long retirement, for the simple reason that life expectancies were shorter. People stopped working, lived a few years on Social Security and then died. Later on, in the 1980s, retirees could pack their portfolios with double-digit-yielding Treasury bonds and bank certificates of deposit and live comfortably off that income. During the same decade, as inflation cooled, a bull market began that persisted for the rest of the century.

Today, the picture is decidedly more complex. People are living longer than ever. The life insurance industry has adopted new actuarial tables reflecting this: As of January 1, 2009, all policies must be issued with rates that extend through age 121, replacing tables that end at age 100. And the markets are less friendly. Market watchers predict that stocks may languish for years in a range-bound market that provides none of the oomph of the bull market that ended in 2000.

Meanwhile, people’s spending needs haven’t changed-if anything, they’ve risen, as healthcare costs have exceeded inflation-and inflationary pressures have mounted. Yet 30-year Treasury bond yields hover under 4.50%.

Recent research reinforces the importance of asset allocation in retirement as one of the safest, most efficient ways to meet long-term portfolio needs today. Because of compounding, more than half of every dollar that’s withdrawn from a defined contribution plan comprises investment returns generated after retirement, according to a study conducted by Russell Investments and released last month. The study looked at a prototypical 25-year-long retirement of a 65-year-old who dies at age 90. Out of each dollar the retiree withdrew from a defined contribution plan, 10 cents came from contributions made to the plan while working, 30 cents came from investment returns generated prior to retirement, and a full 60 cents came from investment returns generated after retirement. “The pool of assets is so much bigger after retirement,” says Bob Collie, director of investment strategy for Russell. Post-retirement investment returns account for an outsize portion of each dollar withdrawn from a defined contribution plan simply because the asset pool is larger in retirement, and because people’s longer lives are putting their money to work over longer horizons than before.

Today’s long life expectancies mean that an overly conservative asset allocation won’t go the distance for most retirees. Indeed, advisors recognize that only their wealthiest clients can derive a secure retirement from, say, bond ladders. “You can’t do it with bonds alone, because that would erode the assets,” says Thyra Zerhusen, manager of the $1 billion Aston/Optimum Mid Cap Fund and of a New York-based foundation’s portfolio, which she declined to name and which she runs the same way as her mutual fund. When Zerhusen began managing the foundation’s portfolio, it had roughly 70% of its assets in bonds and the rest in stocks. This breakdown mirrors the traditional retirement portfolio. But longer life expectancies, lower bond yields and a potentially stagnating stock market have zapped the effectiveness of this allocation. Zerhusen persuaded the foundation’s finance committee to adopt the inverse allocation, and today the portfolio is roughly 70% stocks and 30% high-quality bonds.

Alpha Alternatives

The foundation portfolio Zerhusen manages is unusual in that it doesn’t have an allocation to alternative investments. “We only buy what we understand,” Zerhusen says. Her expertise in identifying undervalued and misunderstood mid-cap stocks has helped the foundation meet its annual operating goals, which involve withdrawals of 8% to 10% per year, without sacrificing principal.

Most large foundations and endowments (foundations are mandated to give away a minimum of 5% of their assets per year, while endowments are not) have at least a quarter of their assets in investments outside of traditional, long-only publicly traded equities and bonds, Siegel says. “Alternative investments are, in principle, a more efficient way of generating alpha (if the manager has skill) than traditional, long-only investments,” he writes in an email message. “This is because short selling, the ability to leverage and use derivatives, the ability to lock up funds for long periods of time, and other features of alternatives each contribute in various ways to portfolio efficiency (the expected return per unit of risk taken).”

The Harvard and Yale endowments have about 50% of their portfolios in alternatives such as private equity, hedge funds, real estate and commodities, according to Frontier Capital Management, a Boston-based investment management firm. At $34.6 billion and $22.5 billion, respectively (as of the end of fiscal year 2007), Harvard and Yale’s endowments could weather any liquidity challenges that this high alternative allocation presents. But less-capitalized funds and private foundations without access to new money from alumni or other contributors (and whose circumstances are more analagous to those of retirees) could face trouble in a bear market if they allocate such a high percentage to alternatives, Siegel says. Margin calls or forward commitments on private equity can force the selling of assets, and there are fewer liquid assets to choose from if a large chunk of the portfolio is in real assets. Similarly, your clients will have less flexibility in their income withdrawals if they have too much allocated to real assets.

Some advisors have embraced the use of alternatives. “In portfolio design, the ultimate goal is to have investments that are not correlated,” says Greg Plechner, principal and senior wealth manager at Greenbaum and Orecchio, a fee-only advisory firm in Old Tappan, N.J. “With alternative investments, you’re able to attain that.” Greenbaum and Orecchio allocates an average of between 15% and 20% of their clients’ portfolios to alternatives. Retired clients have a slightly smaller allocation to alternative investments, he notes, since their fixed-income portion is higher.

The firm’s clients with more than $1.5 million to invest have access to private investment partnerships, while those with less than $1.5 million can access similar strategies through exchange-traded funds and notes, and institutional share mutual funds. For example, the firm uses PIMCO CommodityRealReturn Institutional, Vanguard Energy ETF, and Rydex Managed Futures Fund for market-neutral exposure.

Choosing private equity and hedge fund opportunities requires considerably more due diligence than does selecting investments sold on an exchange, as the former have far fewer reporting requirements. Greenbaum and Orecchio employs three full-time professionals whose sole job is to evaluate private investments and do the related legal work.

Endowment Products for the Rest of Us

Over the past year, the financial services industry has introduced new products to help consumers generate retirement income and to capitalize on the wave of retiring baby boomers. Endowments inspired the design of at least one of the new retirement income mutual funds on the market: The Vanguard Managed Payout Funds, launched in early May. The three funds of funds target payout rates of 3%, 5% and 7%, respectively, while maintaining capital, and in this approach function something like a university endowment, Vanguard executives say. The underlying funds are Vanguard stock and bond funds, and other investments, including REIT and TIPs (inflation-protected Treasury bonds) funds and commodity-linked investments.

Vanguard’s approach contrasts with that of Fidelity Investments, whose new payout mutual funds are designed to liquidate an investor’s principal by a target date. Vanguard chose its approach because “there was a sense generally that there’s a strong desire among retired clients to preserve their capital in liquid form for the duration,” says John Ameriks, a Vanguard principal and economist. Vanguard’s research among the company’s mutual fund shareholders reveals that many older people continue to save in retirement. “It’s very hard for people to turn on a dime in retirement,” Ameriks says. “They’ve been saving their whole lives.” In other words, even if your clients aren’t saving enough for retirement, their saving habits are nonetheless ingrained.

According to the Vanguard funds’ prospectus, the 3% payout fund is expected to appeal to investors who want to see their capital and payouts increase over time and seek only a modest current payout from their assets; the 7% payout fund, on the other hand, is expected to appeal to those who need a greater payout to satisfy immediate spending needs. While the payments and capital on the 7% fund are not expected to keep pace with inflation, Vanguard will seek to preserve the fund’s original value. The 5% fund is designed to provide long-term inflation protection and capital preservation. The funds could function as the investment vehicle of a small endowment, and in fact, Vanguard has fielded a few inquiries from such institutions, Ameriks says.

The funds’ payout rates are targets, not guarantees. “These products are not annuities,” which offer a guaranteed income stream for life, Ameriks notes. “There are positives and negatives to that.” The company believes that positives, such as liquidity and flexibility, outweigh the lack of a guarantee. Indeed, annuities have failed to gain widespread acceptance in the marketplace largely because consumers are loath to relinquish access to their principal.

But Then Again…

As much as retirees and foundations share similar challenges, there are some noteworthy differences between the two. For starters, individuals die. No one needs to produce income in perpetuity, as foundations endeavor to do. Retirees need to plan for at least 30 years in retirement, and annuities can insure they won’t outlive their assets. Amid the general unpopularity of these insurance products, advisors and their clients often overlook the benefits provided by risk pooling. “Annuities produce a much higher income than bonds or TIPs because the people who die help pay for those who survive,” Siegel explains in his email. In fact, you need 25% to 40% less capital to provide for yourself in retirement using risk pooling than you would structuring an investment portfolio on your own, according to a study by David F. Babbel and Craig B. Merrill of the Wharton Financial Institutions Center, co-sponsored by New York Life.

Annuity companies have introduced cash refund options that have increased their products’ popularity. This popular feature insures that investors’ heirs will receive money back after they die, yet it eats into the benefits of risk pooling. A 65-year-old male would receive 8% less income and a 75-year-old man 13% less from an immediate annuity with a cash refund than he would from one without, says Mike Gallo, senior vice president for retirement income at New York Life.

Another approach is to deconstruct the traditional annuity by layering a low-cost insurance guarantee on top of a separately managed account. In March, Pershing LLC launched such a hybrid retirement income product, which pairs a managed account solution with a lifetime income guarantee offered by The Phoenix Companies. The product, known as Lockwood Investment Strategies Longevity Income Solutions, or LIS2 for short, will ensure that investors won’t outlive their assets, says Len Reinhart, the former president of Lockwood who worked on the product design and now consults for Pershing Managed Account Solutions.

LIS2 features a 5% annual payout, after fees, which begins when an investor is 65 years old. The 5% rate is applied to the initial investment for a fixed dollar amount that stays the same each year. For example, an investor who puts $1 million into the product would get $50,000 each year for the rest of his or her life. The Phoenix Companies buys 10-year puts as hedges for the guarantee, which assures consumers of their fixed payout regardless of the underlying funds’ performance.

This structure will ensure that investors don’t become too conservatively invested in retirement, Reinhart says. “The whole point is for the client to be in an aggressive growth strategy,” he says. In other words, ensured of a guaranteed income stream through LIS2, retirees can invest the rest of their portfolios more aggressively. This argument is frequently applied to annuities as well.

Another major difference between retirees and foundations lies in their tax treatment. Private foundations pay an excise tax of 1% to 2% on investment income and realized capitalized gains, and endowments pay nothing. Needless to say, individuals don’t enjoy such favorable treatment at the hands of the Internal Revenue Service.

Furthermore, many retirement income strategies are not designed for their tax efficiency. For example, investors in Vanguard’s Managed Payout Funds receive a 1099 tax form each year stating how their monthly payments were generated for the previous year, whether by a combination of income, capital gains or a return of capital. This complex tax treatment means investors would benefit from holding these funds in a tax-advantaged account. If Lockwood’s LIS2 product is able to generate income payments through income or capital gains, then investors will be taxed at the 15% capital gains rate, Reinhart says. But if the account balance plunges and the insurance company must make the payments, the investor will be taxed at regular income rates. Investors who open an IRA account managed by Lockwood Capital Management and hold the LIS2 offering inside it would enjoy tax-deferred treatment on the income.

Advisors at Greenbaum and Orecchio actively work to minimize their clients’ tax burdens. If a client needs income, the firm uses iRebal rebalancing software to quickly determine how to use principal, income and rebalancing proceeds to generate the income in the most tax-efficient way, Plechner says. Clients with more than $1.5 million to invest may choose the firm’s ETF and mutual fund-based alternative investment strategy for tax purposes, he notes. Clients with alternative investments including hedge funds, private equity, venture capital and real estate receive a K-1 tax form that state the investor’s share of the partnership’s taxable income. The forms often come late, requiring clients to file an extension on their taxes, Plechner says, a hassle some wish to avoid.

Despite the most careful planning, many institutions and individuals will fail to meet their income goals at some point. Following a year of poor returns, a foundation can simply cut the size of its grants. Your clients’ bills, however, won’t disappear in a bear market. When clients fail to meet their income goals, they can cut their spending or increase their equity allocation, says Deena Katz, chairman of Evensky & Katz in Coral Gables, Fla. The choice, as her partner Harold Evensky puts it, is clear: “Do you want to eat less well, or sleep less well at night?”

For more information, visit our website at http://www.financial-planning.com — the leading resource for the informed independent advisor.

A Roth IRA makes for an indispensable savings tool that not only makes your money grow tax free but also allows you to invest in many options. Investing in a Roth IRA is a smart move that is worth being considered. There are several best Roth IRA investments options that are available to people who are keen to see their money grow. A Roth IRA is also more flexible than most other retirement plans as you are allowed the option to invest in anything that you want to, be it mutual funds, stock, real estate or bonds.

There are several benefits of Roth IRAs. You will be allowed to take out your money from the account any time. It is not mandatory that you have to withdraw it only at the time of retirement. Though the purpose of Roth IRA is accumulating money for your retirement and the money can grow only when you leave it in your account, you are permitted to withdraw the contributions that you have been making any time that you wish to, and that too without any penalty. These withdrawals are absolutely tax free too. You also are under no obligation to pay it back.

Another advantage of best Roth IRA investments is that you can use the funds for your Roth IRA to purchase your first home. The IRS permits you to obtain up to $10,000 from the Roth IRA funds. This is also absolutely free of any penalty. It is however important that the account should have been open for at least five years. Even if you have not had the account open for five years, you can still take out the money but you would then have to pay taxes on the withdrawals.

One of the most popular and best Roth IRA investments is the real estate. If you find that your investment portfolio has not been generating much money and that the investment dollars are decreasing in value instead of appreciating, it is time you wake up to more suitable IRA investments. Many people are not even aware that they can invest in real estate with their IRA money.

Your IRA can purchase almost every type of realty. The piece of real estate would be owned with the IRA and all the incomes that were made from being the owner of the land would be added to the fund. Any costs too that arose from owning the assets would be added to IRA. This is also a trouble free method to purchase a property as banks are not concerned. There are turnkey projects available as well. Investing in realty has made millionaires out of many people and will continue to do so.

It is a proven fact that the best Roth IRA investments are in the real state. It is a buyers market and deals are available in plenty. It is a good way to make your investment grow. It is recommended that you take expert advice before you select from the many best Roth IRA investments options that are available.

Adam King is the president of Mosaic Investments, LLC. Mosaic is a real estate company that partners with private individuals and lending corporations nationwide in order to finance and/or rehab investment properties. This is done by using a “turn-key” real estate system Adam King created called the ILOC program. To learn more on how you can obtain high rates of return on your IRA, CD, or other source of private money, visit http://www.ira-real-estate-investing-site.com/ now.

To answer this question, let’s look at where people typically have money when they retire.

Briefly : Where Shouldn’t I Put My Money

There are lots of bad ways to invest your money. We won’t go into that in detail here, but I will provide you with a short list that has hurt a lot of people. The worst culprits are companies that sale life insurance and annuities; don’t buy these. Life insurance is not medical insurance. The next worst investments are savings accounts with banks, bank brokerages, middle class brokerages (like Primerica), and small cap stocks.

Rule #1

Most people, when they retire, have most of their net worth tied up in their own home. So, the first, and most important way to invest your money is to buy your own home. If you already have a home, buy a rental property. It is realistic that most people can own several houses free and clear through a lifetime of disciplined effort.

Rule #2

When people retire, their next most important source of money is either a 401k, 403b, IRAs, and even annuities (which aren’t that great). The bottom line is to put at least 10% of your gross salary into a 401k, 403b, or IRA. Look at the taxes because it is not always in your best interest to max out the 401k. Sometimes it is better to have a combination of IRA and 401k.

Rule #3

Get some good health insurance. Better yet, stay healthy. Health care costs are ridiculously high. Most people spend an enormous chunk of their savings, in retirement, on health care. An operation can set you back a hundred thousand dollars, or more. Many people who are pretty well off become destitute from medical problems. In some cases, Medicare will force you to sell your home and give them the money or you can’t receive treatment.

My grandma was a first grade teacher her entire life. In retirement, she broke her hip. The medical costs were around 100k. The insurance didn’t cover many of the costs. She was denied treatment because the insurance (Medicaid) said her recovery time was taking too long. The moral of the story is to have some supplementary insurance.

Rule #4

Open an account with a discount brokerage firm (like www.vanguard.com). They have brokers that will help you with financial products. Some of these discount brokerages are available 24 hours a day. They do not give recommendations, but can explain the products quite well. The fees there will be much less than full service brokers. It is here you will get access to retirement calculators, investment research, IRAs, mutual funds, and lot of other things. If you are new to investing, you can learn a lot just by reading the articles on one of these sites.

Rule #5 : 90% Rule

If you own your own home and put 10% of your gross income into your retirement account we have found that 90% of people will have enough money to make ends meet. The biggest unknown factor, in this case, are medical bills. Medical problems leave more people destitute than any other.

For further information, on money strategies please visit Money Strategies

Well, actually, while we might believe it is at times, most likely it is not. But with all the rash of problems that Wall Street has realized in the last 12 months, one does definitely wonder. And, since there are plenty of articles devoted to the woes of Wall Street, this one will not do that but, rather, take a higher road of education on what options are available to individuals who wish to protect, nurture and grow their retirement accounts.

It is literally amazing and not so amazing that most individuals (estimated at 98% percent of individuals) do not realize that they are empowered to self-direct their own retirement accounts. Surprising in the sense that this option has been available to them since 1975 and very few know about it. Not surprising in that certain professionals in the financial world feel that it is not in THEIR financial interests to inform people that this option exists.

Now, yes, there are exceptions to individuals not being allowed to do self-direct — chiefly, that individuals cannot, as a general rule, self-direct retirement accounts from employer plans where they are currently employed.

What is a self-directed IRA or 401K? Well, let’s use simple terms. It is merely the opportunity to invest your retirement account assets into practically anything you feel is a good investment. Now, as with all taxes in life, there are certain investments (i.e., life insurance contracts, collectibles defined under IRS Code) that are not tax There are additional restrictions placed so that people do not enter into self-dealing, prohibited transactions and investing with disqualified individuals.

BUT, here is the simple truth: If you could direct your own retirement assets into a plethora of investment opportunities, wouldn’t you at least want to consider this? Also, if your retirement account was established in such a way where you could have the best of both worlds in one account — the ability to invest in both “traditional” (e.g., stocks, bonds, mutuals funds) and “non-traditional” (e.g., real estate, hard money loans) assets — wouldn’t this be the cat’s meow (technical term there folks!). Not only is this possible, but it is totally legal; provided, of course, that all IRS and Department of Labor regulations are met and adhered to.

A great quote from Tama McAleese, CFP in Get Rich Slow, notes The Million(s) Dollar Mistake that most individuals can make. McAleese states, “As a result (of others controlling your money), you’ve been lulled into a sense of security, believing someone else is standing guard over your hard-earned money and, thus, guaranteeing your financial future.”

As a simple real-life example of this, an individual that I am quite familiar with had an IRA that held a value of approximately $150,000 12 months ago. Currently, his account value is a little over $53,000! Now, to be sure, self-directing your retirement account assets does not in any way ensure that you will make money or experience greater results, but it puts the power back with the individual who actually CARES about how their retirement account is performing — the power to research their own investment opportunities and invest in what they believe to be in their short and long-term financial interests.

An amazing statistic from the Investment Company Institute and Internal Revenue Service Statistics of Income Division found that at the end of the 2004 year, there was in excess of $3.475 trillion of retirement plan assets. Of this money, 83%…..that’s right, 83% of those funds were invested in stocks and mutual funds. Less than 1% was invested in real estate….even though much of the self-made wealth in this country was as a result of investing in and owning real estate. Think about it. Also, of that “paltry” $3.475 trillion dollars in retirement plan assets invested into stocks and mutual funds, do you think that commissions were paid to brokers….whether an individual achieved gains or lost money? You know the answer to that.

Oh, you might be thinking that the aforementioned statistic goes back to the end of the 2004 year and things have drastically changed as of September 2008?! Well consider this statistic as noted by a July 1, 2008 article in the USA Today which stated that in 2008, the market has lost 2.1 trillion dollars in value, $1.4 trillion in the month of June, alone.

Finally, if anyone believes that the “average” retiree is retiring with financial dignity, consider an important statistic as first published in the November 27, 2005 edition of the Christian Science Monitor. This article identified that the median income of individuals 65 and over was just $15,199. And, unfortunately, a large portion of this income came from social security.

Let’s face it…..Hope is not a Strategy! If you are an individual who has done well with the traditional offerings of stocks and mutual funds, congratulations! But, for those of you who haven’t and are looking for options and further diversification strategies to the “traditional” world of investing outside of these asset classes, consider self-direction. It may be more lucrative and you won’t be relying on someone else to control YOUR MONEY.

John R. Park is President of PGI SelfDirected (http://www.pgiselfdirected.com) and co-founding Partner of Fulcrum Investment Network (http://www.fulcruminvestmentnetwork.com)