Are you prepared for this year's life events?

Our lives are shaped by various events that come with financial consequences. Many people get swept up in such events without being financially prepared. Life events range from the significant milestones of getting married, the birth of a child, buying a home, caring for aging parents, to the loss of a loved one, planning for retirement and your estate. What are the major life events you anticipate this year? Are you prepared for them financially?

Getting married?
Are you planning to get married this year? What a thrill to plan and prepare for a wedding but far too often an important aspect of the marriage, the merging of financial lives, is ignored. Money is an important aspect of marriage and one of the most difficult topics to deal with. Open communication will help you both to align your goals, which ultimately makes for a more successful marriage. As you build financial security together you will need consensus and compromise for some money related issues. It may not sound terribly romantic, but issues such as establishing joint bank accounts are important matters that ought to be discussed. Home ownership, having children, and funding their education naturally should be on the agenda for discussion as well. Remember to review your important documents carefully to ensure that they reflect your new marital status.
Are you the parent who is expected to finance your son or daughter's wedding? Quite often, much of the financial burden of the actual wedding day is likely to fall on the shoulders of parents already in retirement. Where will this money come from? If your child's wedding is imminent, plan ahead and try to work within a budget appropriate for you so that costs do not spiral completely out of control and jeopardise your finances. Do not be in competition with your in-laws who may have far greater resources than you do.

Are you expecting a new baby?
The birth or adoption of a child is one of life's most fulfilling events. New parenthood naturally comes with new financial responsibility and raising a family presents new budgeting challenges. Start to review and estimate current and future expenses, from nappies to university fees! An equity mutual fund would make an ideal savings vehicle for all the early cash gifts that your child might receive as there are strong prospects for long-term capital growth.Child-care is likely to be a major expense, especially as many mothers must return to work. Even if you are able to stay at home with the children, bear in mind that an extended absence from work, skills and training, could limit your future career options, and therefore your lifetime earning potential. If you do wish to pursue a career, consider part-time work or pursuing training and education whilst the children are still young.
The birth of a child is a good time to make a will, if you don't already have one, and review your insurance policies to include the latest beneficiary. The will should make provisions for guardianship if both parents die while the children are still minors.

Owning your own home
Are you planning to buy or build your own home? A home is one of the most significant purchases you will make in your lifetime. If this is on the horizon this year do make sure it is within your budget and lifestyle and will not become a burden. If you know what your budget limitations are you will not be tempted to look at properties or houses outside of your price range. Location is everything, and a wonderful home in an undesirable area may not be worthwhile from the home value perspective.
Be careful with whom you deal as the real estate market can attract some unsavoury characters. Be particularly cautious and deliberate in ensuring that all essential documentation is in place.

Is retirement on the horizon?
Retirement should be a fulfilling and exciting time of life. If you plan to retire this year or fairly soon, I hope you have been preparing long before now. How would you like to live in retirement and how much is it likely to cost? Assess your sources of retirement income, which should ideally include a pension, rental, and dividend income. Then calculate how much you must save to supplement it to be able to afford the lifestyle you envisage. There are numerous online retirement planning calculators that should help you in making these estimates. Your Pension Fund Administrator ("PFA") will also be able to assist in this regard.
Don't forget to build in issues of aging, such as provision for medical health care. Estate planning should be on the front burner, as you age. As life goes naturally through its various stages, so too should your financial planning. Review your financial objectives regularly to keep them in synch with events that shape your life. Even if you have been fairly consistent with your planning since your twenties or thirties, by the time you are in your 50s or 60s you will.

Source : http://234next.com

Advice for the wise January' 11

Indian equity markets continued to experience significant turbulence in December. While January began on a positive note, profit booking has continued to exert downward pressure on the indices. Our ‘Advice for the Wise’ newsletter for the month of January will give you an outlook across sectors along with economic updates both from a global and domestic perspective.

Advice for the wise January' 11

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Common Budgeting Mistakes

Most of us think we are pretty good at estimating our monthly expenses. We account for all the bills that come in every month like cable, water and heat, car insurance and loan payments. We even remember to include such things as groceries, gasoline, and other miscellaneous expenditures.
But our monthly expenses actually add up to a lot more than we typically account for.

The only way to determine with any degree of certainty what your true expenses are, is to keep a running count of every penny you spend for a few consecutive months, and then work out your average from there. Other, more significant expenses that don't typically get mention are things like getting a hair cut every six weeks, or passing through the car wash once a week.

How much is your house really costing you?
Sure, you are factoring in your mortgage, because that is a monthly expense, but what about the insurance and taxes which you only pay once a year? Are you remembering to include the random purchases like a new DVD player? Have you purchased any new home décor items recently, like trendy candles or new tea towels?

Clothing is another category that is often completely underestimated. If you keep track of every purchase for a few months, or a year, you will find your clothing costs to be much higher than you might have guessed. Every pair of socks, every belt, every scarf, pair of gloves, accessories…or a new coat, these are not paying for themselves.

We often do not account for emergencies or set aside a fund for unforeseen expenses like a spontaneous weekend getaway, or minor car repairs. Regular dental or optometrist visits often fail to make the budget list, too, but they are a very significant and very real cost.
When you really sit down and think about everything that you spend money on, no matter how small or large the amount, the budget suddenly takes on a whole new shape. If you have a consistent monthly income, you can structure a realistic budget based on all of your actual expenses, and work out a plan for allowing for all the little unforeseen expenditures that can really break the bank if left unaccounted for.

Source : articlesbase.com

Taking a risk? Here are some tips that will help you!

As we face the inevitable challenges 2011 will throw at us, remember that being thrifty can be fun too. 

1. Draw up a sensible monthly budget for your spending. List all monthly payments and expenditures and make sure they are covered by your monthly income. Make sure you stay within your budget guidelines.

2. Use cash instead of credit cards. Have one primary credit card and use it only for emergencies or major necessities. Put your credit card away in a safe place, not available for everyday use.

3. Try and save something every month, especially for planned spending like holidays and Christmas. Set up a standing order to a savings account. You will be surprised how quickly you will forget you are saving!

4. A guideline for an acceptable Credit limit? Do not allow increases in your account’s credit limit to rise above an amount you could easily pay off in three months.

5. Cut down on unnecessary expenses. It may sound obvious, but small things like bringing lunch to work rather than eating out, or using your mobile phone less for social calls can make a definite difference towards cutting outgoings. Before you go grocery shopping, write a list of everything you need… and if it’s not on the list, don’t buy it!

6. Become a savvy shopper. Look for deals and bargains. You’d be surprised at how much you can save if you take the time to shop around! 

7. Evaluate your housing situation. Your housing costs should be no more than 33% of your household income, including mortgage payments, tax and insurance. You can shop around for lower insurance rates, refinance your mortgage, and look for cheaper utility plans.

8. If you need to take out new credit - whether buying a property, a car or getting a loan - think seriously about how you would manage the repayments if interest rates start to rise, or if you suddenly find yourself out of work.

This is really important in the case of mortgages and secured loans where your home is at risk.

9. If you can pay for goods outright, don’t be persuaded to take out credit unless it really does work out cheaper or better meets your budgeting plans. The only circumstance where it may be worth looking into is if you are offered 0% interest. Employ caution and analyse the fine details of any credit agreement, and most importantly…

10. Do your homework before borrowing. Research what’s on offer and get some advice. Never borrow money on a whim. You will be paying the debt off for years to come.

Source : moneymarket

Vacation Homes for High Net Worth Individuals

With the capacity of a handsome proportion of disposable liquidity, investing in vacation homes or the second home is becoming popular with the high net worth individuals. Vacation homes are properties that are solely utilized for the recreation or leisure requirements of families or individuals. The home is usually a home away from home, meant for relaxing and enjoying a vacation. Owning a vacation home is a profitable venture as, this can be rented out when you are not using it. Renting out the vacation home provides you with additional rental income, plus the house will be maintained well.

High net income group people have numerous options while choosing the locales for their vacation home. These include exotic places all over the world, like the Caribbean, Greece, France, Italy, Florida, Hawaii, Spain, Thailand and Portugal etc. The many alternatives available are beach front condos, mountain lodges, country side farmhouses, private castles, chateaus, villas or even ultra luxurious apartments. These luxurious homes provide you with the privacy and comfort of a vacation home.

There are luxury vacation homes designed for the high net income group that have all the world class services to make the vacation a truly memorable experience- theater, swimming pool, Jacuzzi, sauna, state of the art gym, beauty salon, indoor and outdoor games and activities. All of these facilities and more are available at most of the exotic luxury vacation homes.

Keeping the focus on the needs of the high net income group, these vacation homes are furnished with grace and style. Spacious living rooms, luxurious bedrooms, dining areas, and ultra modern kitchens are all done up with opulent interiors, to reflect classic taste. It is even possible to get domestic help staff for housekeeping and cooking services. Touring arrangements are also taken care of along with sightseeing. Skiing sessions are arranged if you are at a skiing station or if you are vacationing at the beach, then cruise in a luxury yacht complete with a cabin crew will give that memorable yachting experience.

Vacation homes are becoming popular with high net income groups. They are perfect getaways for winding down and enjoying with family members. A place where you can relax in epitomized luxury after spending the day in leisurely and adventurous activities. World class dining accompanied with the finest wines make vacation homes most suitable for the rich and famous.

Source : preemierhawaiianvacations.com

New rules for using ATM’s

Next time you go to a bank ATM, be ready to re-enter your PIN afresh for every transaction you wish to conduct, such as money withdrawal, balance enquiry and checking account details.

In order to check misuse of ATM cards by unauthorized people, RBI has asked banks to allow only one transaction at ATM machines for one entry of PIN (Personal Identification Number which acts like a password for ATM transactions).

The transactions that a bank customer can conduct through the ATMs (automated teller machines), by inserting or swiping the card and entering the PIN, include withdrawal of money, deposits, fund transfer, bill payments, checking account details, etc.

Previously, customers were allowed to conduct multiple transactions through the ATM by punching in their PIN only once in a single session. However, the practice was vulnerable to misuse by unauthorized people, especially in case authorized customers forgot to collect their ATM card after the transactions. There have also been cases when some people tamper with the ATM machines in a way that a customer cannot collect the ATM card after conducting the transaction.

Once the customer moves out of the ATM machine thinking that the withheld card needed to be collected from the bank, the fraudster goes into the ATM and withdraws money as previous session remains active with the PIN already punched in.

Having received several complaints about the vulnerabilities of the existing practice, RBI has asked the banks to make changes in their systems to allow only one transaction for every entry of the PIN.

Although, RBI had asked all banks to follow these guidelines with effect from January 1, 2011, some of the banks are still in the process of updating their systems with the required changes. In the meantime, the banks have started communicating to their customers about the changes in the way ATM transactions are conducted.

As per RBI guidelines, you will need to re-enter your ATM PIN for every additional ATM transaction in a single session, with effect from January 1, 2011. ATMs have become a preferred mode of banking transactions for both customers and banks, due to the convenience and cost-saving factors.

Source : Rediff Business

5 Easy Ways to Save Money on Credit Cards

Plastic Money is the latest buzz word in town; everyone was their share of Plastic Currency. Credit Cards, Debit cards are a cool factor with the growing urban population and before they start earning and saving a few for the rainy days they are already under Credit Card Debts!

Too many consumers sign up select a credit card offer by looking only at the credit limit and don’t give a second thought to whether they are getting the most out of their cards.

Here are the top five things we suggest you look for when selecting a credit card:

1. Look Out for Two-Cycle Billing

A little known trick many credit card companies practice is something referred to as two-cycle billing. With the standard one cycle billing, the interest you pay is based on your average balance for the month. Not so with two-cycle billing, where the interest you pay is based on your average balance for this month and the previous month. This makes it more difficult to get out of credit card debt because you’re working towards paying off your card.

The interest you pay makes up a higher percentage of your balance because the calculation includes the higher balance you had the month before. Whether the issuer practices two-cycle billing is not something you will find in any of the promotions so it’s important to look for this in the terms and conditions before signing up.

2. Use That Price Protection Plan

Many credit cards offer added perks like road side assistance and extended warranties that rarely get used. One of these common perks is something referred to as price protection. With this the credit card issuers effectively offer you a 30, 60 or 90 day price match guarantee on anything you purchase with your credit card. This comes in handy with purchases like electronics that are known to have significant price drops within a short period of time. Find a card with this perk and use it!

3. Are Rewards Cards Really Rewarding?

Earning airline miles or cash back may sound like a great deal, but the reality can be quite different. Although many cards offer great deals like 5% cash back, this is often an intro offer and ultimately you’ll only get the same 1% cash back or equivalent rewards that most cards offer. If it causes you to spend more on you’re credit card it’s immediately not worth it.

However there is another factor many don’t consider. The interest rate on these credit cards in generally about 5-7% higher than their non-rewards equivalent. Unless you are certain that you will never carry a balance on the card, a rewards card is probably not worthwhile.

4. Transfer Your Balance

You may have heard when taking out a 30 year mortgage that the first 15 years of payments will only knock about 15% off the principal borrowed. The other 85% is paid in the final 15 years. This is because in the beginning nearly all of your payment is going towards interest and only a small sliver goes to paying down the principal. As you get it paid off it creates a snowball effect, which results in larger portions of the payment being applied towards the principal each month. The same is true for paying off credit card debt.

If you are serious about paying off your credit card debt a balance transfer credit card is one of the best options available. In general you should go with the balance transfer card that offers the longest 0% intro   period. The long term rate is less important in this case.

The reason is the 12-15 months you have of paying 0% interest allows you to get a major jump on paying off the principal, creating the snowball effect. If you still have a balance at the end of the intro period you can look at refinancing again. Either way you’re going to come out ahead.

5. Shop Around

Would you sign up for any mortgage or car loan offer you receive in the mail because it said you were pre-approved? Then why would you sign up for a credit card this way? Choosing a credit card is a major financial decision. Rates and terms of credit cards vary greatly and you should always shop around before choosing a card. It doesn’t take long and there are dozens of websites that offer easy side by side comparisons.

Source : Rediff Money and Multiple