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Pitfalls Made by Annuity Shoppers

Pitfalls Made by Annuity Shoppers

As with any investment vehicle, annuities can be confusing if they are not researched properly. There are some common mistakes – or annuity pitfalls – that investors often make when purchasing annuities. Each type of annuity – fixed, variable, and index – has its own unique pitfalls which need to be taken into consideration.

Variable Annuity Pitfalls

1. Diversification is important to balance out the downturns in any one investment. Advice varies on diversification levels, but general annuity investments should be divided by between 3-5 subaccounts at a minimum.

2. Many investors do not realize that early withdrawal fees may apply to annuities. Therefore, they do not always consider if they will need the cash they are preparing to invest in a variable annuity if their circumstances or the market conditions change. To avoid this unfortunate situation, do not investment money that you may need during the contract period of the annuity.

3. In addition to the withdrawal fees, management fees should be understood. Often variable annuities charge 1 to 2% account fees which is similar to those levied by mutual funds.

4. Variable annuities offered by different companies have different options. Make sure the option you are interested in is actually available in the annuity’s prospectus before you start the investment paperwork.

5. Some variable annuities charge commission fees, like mutual funds. Look for “No-load” plans to avoid this charge.

Index Annuity Pitfalls

1. Similar to variable annuities, withdrawal fees may apply to index annuities. The same advice applies. Do not invest money that you may need during the contract period of the annuity.

2. Many investors do not realize that an index annuity can have a maximum annual yield cap as well as a minimum floor. Look for annuities with high caps or that are classified as “No-cap.”

3. Only invest in index annuities that zero out every year. This option is called an annual reset provision. By selecting this option, the account balance cannot drop below its previous high.

4. Similar to variable annuities, some index annuities charge 1 to 2% account maintenance fees. Make sure it is understood what the charges are, and make sure that they are fixed.

5. Understand how the annuity calculates growth to avoid surprises at valuations or distribution.

Fixed Annuity Pitfalls

1. Similar to variable and index annuities, withdrawal fees may apply to fixed annuities. This is probably the most important advice an annuity investor can take away which is why it is has been repeated again in each section. Do not invest money that you may need during the contract period of the annuity.

2. Guaranteed rates do not always stay constant for the full term of the contract. Some annuities are advertised with a high rate, but it may only be valid for the first two years of a five year annuity, for example. It is, therefore important to understand the guaranteed rate structure of a fixed annuity before it is purchased.

Overall annuities are solid retirement savings instruments, but they need to be studied properly to avoid common pitfalls and future disappointments.…

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Money Secrets Of The Amish by Lorilee Craker – Personal Finance Book Review – Shopping Secondhand

Money Secrets Of The Amish by Lorilee Craker – Personal Finance Book Review – Shopping Secondhand

Challenging economic times inspire people universally to make wise financial decisions. One culture that has always lived an austere, yet meaningful existence is the Amish. Increasingly, people are inspired by their lifestyle; and seek ways to simplify their own lives.

Lorilee Craker is the author of the new book, “Money Secrets Of The Amish-Finding True Abundance in Simplicity, Sharing and Saving.” She examines their practices, extravagant in peace, family and community closeness. For them, thrift is a muscle that is exercised regularly.

Craker interviewed Amish folk in Indiana, Michigan and Pennsylvania, including an Amish banker whose clientele is 95 percent Amish. During the Great Recession in 2008, his bank had its best year ever. Amish experts and Englishers’ (Amish reference to anyone non-Amish), financial perspectives accentuate the book too. Here, the money-saving habit of shopping secondhand is highlighted.

Shopping secondhand is a key money-saving secret of the Amish. Thrift stores are a great source for many items, including clothing, furniture, bedding and games. Craker quotes an Amish woman who says, “You don’t have to buy something new to buy something good.” Here are some tips to complement your resale shopping experience:

Tips on Buying Used Clothing

Rethink it. Reject the belief that used clothing is gross because other people have worn it. Buy clothing at a high-end store. Odds are good, even there, that others have tried it on at some time.

Mix and Match. Pair something new with something gently used from a second-hand store. Leave your findings to serendipity vs. a specific search.

Try things on. Many thrift stores have nice, clean dressing rooms, so there’s no reason to observe fit.

Don’t buy clothes you won’t wear. It’s no bargain if you won’t get use out of your purchase.

Don’t limit yourself to favorite brands. It’s cool to find old favorites, but once you develop your thrift eye, you’ll appreciate pieces from unknown labels.

Think accessories. Many accessories are available at thrift stores, including jewelry, belts and handbags.

Brief yourself on what’s vogue. Google trends before visiting resale shops.

Institute a one in, one out policy. Every time you purchase something new, discard something old. Give it away or make a donation to an organization.

Define your upper limit. What is your flinch point? It’s the amount that forces the questions, “Is it worth it?” “Can I really use it?” and “Can I live without it?”

Tips on Buying Furniture and Home Decor

Debrief yourself with a great flea market magazine. Studying such magazines will give you new perspective on home decorating possibilities via thrift stores.

Think junque. Mix serious antiques with “junque.” Rethink how and where you’re going to decorate and furnish your home. Vintage style adds instant heritage to any home. Vintage objects promote expressing individuality and creativity on a limited budget.

Buy only what you love. Home d?�cor and furniture resells at an average one-tenth of original cost. Ask yourself, “Do I love this or just like it?” “True love stands the test of time,” says Craker.

Buy only what you need. Sure, buy smaller items for future anniversary, birthday and baby/bridal shower gifts. It’s senseless however to buy something you don’t need but simply like when it’s a larger item.

Buyer beware. Here are five guidelines when purchasing used furniture:

Buy solid hardwoods such as maple or oak, which endure. Some furniture only lasts for one owner.

Look for quality construction. Check underneath seats for bolts vs. glue, etc.

Assess furniture smells. Fouls scents in upholstery will never end; pass on the purchase. Wooden armoires, chests and drawers placed in the afternoon sun will open their wood’s pores and release odors.

Open drawers, sit on chairs, lean on tables. Watch for creaking, moaning or wobbling.

Consider original use sometimes. It’s ok to fill an antique china hutch with towels, linens, books, etc., but not electronics. Inadequate ventilation can generate heat and become a fire hazard.

Garage Sales. “Garage sales are a complete hit or miss,” says Craker. Here are some tips to enhance your shopping experience:

Arrive early. The early bird gets the worm and the best selection.

Arrive late. Attend later in the day and be prepared to haggle with the seller. Try bundling two or three items and quote the seller a discounted price. They may seize the opportunity for a sale in exchange for unloading the items.

Peer deeply. Scan all the offerings and you may find some hidden gems.

You may have been loathe to use resale shops in the past. Here’s hoping the above cash-saving tips have inspired you to at least visit a local store. You might be pleasantly surprised.…

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Business and Finance – Thinking of Buying an Online Store?

Business and Finance – Thinking of Buying an Online Store?

Are you thinking of starting your own business, say purchasing your own website store? I did just that six months ago and thought it would be helpful to write about and share my experiences with you all.

My reasons for buying a website are irrelevant in that they matter only to myself. It’s what happens after you’ve bought your website that’s the issue and more importantly whether or not you make your website work for you. Make no mistake, as with any business you must put in the time and effort to drive your business forward.

Having said that, it is not easy and if things don’t work out as quickly as you’d hoped or were led to believe, it’s very simple to become more than a little disheartened. Which is the stage I am at now. I can honestly say that I have never worked so hard for no pay in my entire life. To say that I am frustrated and angry and in desperate need of motivation (but preferably an income) at this point is an understatement.

The initial information I was given, or sales pitch if you prefer, seemed to me to be quite hopeful perhaps even optimistic. Who would, especially in this time of recession (or maybe depression?) turn down the opportunity to work from home for only 2-3 hours per day in order to be financially rewarded within 2-3 months and to make more money doing this than you ever did or could in a mainstream 40 hour per week job! Well not me, obviously!

Initially I was very excited about starting my online business and couldn’t wait to get cracking with it. The online training provided helped me to get my website set up and linked with certain organisations and companies which sold my particular niche products so that I could download them to my site. What I wasn’t told at the outset was that there was a limit to the number of products you could download so unfortunately I fell into this particular trap quite early on so I would urge you not to repeat my mistake (although as far as I’m concerned it wasn’t my mistake).

As I had never done this type of thing before I was totally unaware and unprepared for just how much writing of things such as articles, web content and press releases it required in order for my website to attract online traffic and eventually rankings through the use of good key phrases, which are in themselves rather problematic in the beginning. It is possible to pay someone to write all these articles for you, in fact you can even pay someone to get your website ranked and save you all the bother. However, if finances are somewhat tight I would recommend that you persevere with this yourself. Plenty of time to do this once finances are stable enough to allow you to outsource these things.

The worst part of writing an article is choosing a title which will stand out and make people want to read it. I haven’t so far managed that yet. The next thing is the beginning of the article. How do I start? I’m still having problems with these issues even after six months. I am of course hoping that it will get a lot easier.

It’s a surprise to me but I have had other people like my articles and a few have even subscribed to them so I guess I must be doing something right.

Social networking is another obstacle you have to overcome. Until I bought my website I had never been involved with this in my life so far and could have gladly proceeded through the rest of it without this association too. I use it quite often now for business purposes but still don’t understand the point of it at all.

What has the last six months taught me? That there’s so much information to take in and digest and lots of new skills to master. That I have to try and be patient (not an easy task at the best of times) and trust in all that I hold dear that the paltry fifty pence I have accrued thus far will increase a hundred-fold, preferably in the next five minutes (told you I wasn’t the most patient person in the world didn’t I).

From the outset I had many hopes and dreams for a successful venture and maybe if I’d known sooner that it would take much more of an effort and time than I was led to believe I’m almost certain I wouldn’t have purchased this business in the first place. But there’s no point dwelling on that now. I took the risk and I …

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Handling Family Finance

Handling Family Finance

Family Finance – What has this got to do with LOVE?

Yesterday, at a couples’ dinner that was put together by our organisation, We had different sessions that dealt with relationships, sex, communication in marriage, what to do when communication breaks down, handling family finance e.t.c.

The session on Family Finance attracted the most comments, questions and heated arguments. And I felt I should share some of my views with you today.

The following are some of the symptoms of wrong financial system in the family:

Regular quarreling: between you and your spouse shows that you are operating a wrong financial system in your family. More importantly, it reveals that there is a disparity in financial views and probably a lack of trust. Continuous misunderstanding in the area of finance at home is a sign that both of you and your spouse are not mature in the area of family finance; you need to improve on that.

Family Replacement: If you hustle for money at the expense of your family, if all you do is to look for money all day long with no family time, no time for your spouse or your children; then money is working against you and you are working on a wrong financial system. The best gift you can give to your family is your time. How can you prove to them that you love them without spending time with them? You have to create time for your family.

Wrong Money Usage: There are good and bad ways to use money. That is why you need to sit down and take stocks of your life. Check where your money is going; if it has been going into negative ventures then you should know that the future is bleak as your spending will definitely affect your family negatively.

How do you ensure that money works for your family?

Making money work for your family is not a one-day event, it is a life-long experience.

Yet, the importance can never be over-emphasized.

It will not only ensure that you have enough to meet your family needs and obligations, you will also be able to even build wealth for your family. When you do it right, you will also build trust in each other.


Both of you will now have to sit down and develop a marathon mentality for investment.

It is a decision that both parties must take. if only one person is committed to a better financial system and the other is indifferent, the one person who is desirous of change will eventually feel frustrated.

You need gut and graft: You need gut, you need determination, you need to close your eyes to present accolade and look up to the future ovation, move forward at a time and win the race for your family TOGETHER.

Discipline Yourself: One thing you need more than anything else is discipline, when you are setting a new course for your family finance. Discipline is the mother of distinction.

Don’t buy what others are buying because they are buying it and never buy to impress anybody because the people you want to impress are not really impressed.


Can you imagine running any company, business organisation or your home-based business without any form of financial system in place? Yet, that is how we, often times, treat our finances. That is definitely not good enough.

One principle that has worked for my family and that I recommend to people is that you should handle family financial issues OFFICIALLY. I know that may sound kind of boring to many of us, but it works. It is the first lesson in financial eduaction and intelligence that you and your spouse must learn.

I have realised that those who handle even personal financial issues officially fare better than those who don’t have any structured plan on how to make, spend or invest. The same principle apply to your family’s finance.…

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Personal Finance – What is Good and Bad Debt?

Personal Finance – What is Good and Bad Debt?

What is the difference between good and bad debt? Can they even exist this way? I thought debts were just debts, and nothing more. Debt is borrowed money. Everyone knows that. However, debts are essential in our lives. We all use them to our advantages. On the other side of the coin, use it too much, and it becomes a curse instead.

When we go to college, we might not have the large sum of money to dispose of. Therefore, the need for a loan is apparent. Loan, too, is a type of debt. In this case, debt is a good thing and it helps serve as the stepping stone in life. But what take a car for another example. Is it a good thing to get involved with a debt to obtain a car? As opposed to investing in yourself; an education, borrowing huge amount of money for buying a car can be a good or bad thing. It is a good thing if you are a salesman, needing mobility all the time. But it is a bad thing indeed, when you are buying that car just for satisfying your ego.

In a vacation, you would spend also, large sum of money. In financial terms, this is a huge waste. Yes, you will get nice and great memories, as well as unforgettable life experiences. But it is no asset in terms of business and money matters. This example can be an extreme case. Some will argue that having a holiday releases much stress and heals the mind.

In the end, the point is to do it when you can afford it. There is no use trying to splurge more than what you already spend or can afford. How is this relevant to debts? It is when you try to take a loan, or large portion of cash to go for a vacation or splurging moments. Enjoying on credit is definitely a bad debt, rather than a good debt. A good debt is like a college education. It serves you in the future.…

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How to Get the Auto Loan Rate You Want

How to Get the Auto Loan Rate You Want

Getting tired of your old car? Are the maintenance costs unreasonable anymore? Do you wish for a brand new one to replace it? Well, why don’t you avail of auto loans? If you are reluctant to purchase one because of financial constraints, then you can go for financing. There are lots of financial institutions in the market who are offering loans to those who need it. Just like your case, you can go to a trusted lender and apply. The problem though with availing loans is the interest rate. Let’ face it, lenders make a profit out of the interest included in the payments.

So, the most important thing you will do first is to look for a lender offering the auto loan rate to your advantage. Everybody doesn’t want to pay for higher monthly payment. And you should also posses that kind of attitude. Make sure to get a lower rate as much as possible. Sometimes, borrowers don’t care at all about natters like interest rates, penalties and other charges. They readily sign the contract without knowing the unreasonableness of the terms and conditions. It should not be the case for you. In order to avoid paying excessive monthly payment, negotiate for a lower auto loan rate.

Actually there are many ways on how you can avail of lower rates. Bear in mind the number of financial companies in the market. To attract more clients, they are willing to bend some terms for you. One client means income and they can give you the interest you want. Just prove to them your eagerness and determination in getting the auto loan. Lowering the rate won’t be a total loss for them. Remember, it all boils down to business and they’re no fools to easily succumb to your terms. It means that with lowering the rate, they can still earn profit.

Lenders are also open for auto loan rate negotiability for it makes a good impression to would-be borrowers. It will create goodwill and is very good for the business. Basically, you can choose between secured and unsecured car loans. Unsecured auto loans are the easiest to process for it requires only few documents to submit. Usually, you will provide a down payment for the lenders will not finance the whole amount of the purchase price of the car. On the other hand, secured auto loans involve collateral. It’s all in your hands on choosing what kind of car loan you will avail.

However, auto loan rate will mostly depend on the type of loan you are planning to take. If you will go for the unsecured type, expect for higher rates. Meanwhile, providing a security in the form of like real property can be a good means of negotiating for a lower rate. Another thing you can do is to ask from people you know on which lenders offer the best car loan deals. After all, auto loan is not just about purchasing a car but taking into consideration its affordability as well. Before you go signing in the loan contract, assess first the reasonableness of the auto loan rate.…

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Integrating Financial Education Into The Education System – Part 3

Integrating Financial Education Into The Education System – Part 3

With the world changing so quickly today, schools have failed to keep up and as a result, their students get trained to become obsolete. This is especially true financially because many people are misguided daily, causing them to lose money unknowingly. Because of this, 2 more lessons ought to be added to the curriculum apart from the 4 already mentioned in Part 1 and 2.

Today, in the realm of investing, there are 2 aspects and students ought to know the difference between them well to avoid making mistakes in investments. These 2 are fundamental investing and technical investing.

Fundamental investing involves analyzing a company’s financial performance via its financial statement. In contrast, technical investing involves the measure of the market’s emotions and moods via technical indicators like charts without caring for fundamentals like earnings, book value, etc. In technical investing, investors look for historical patterns in markets based on cash flow to know where money is flowing to.

In my opinion, technical investing can be good in markets without much changes as they tend to follow patterns like seasons. However, in fast-changing markets, fundamentals would be more important because being the core of investments, they are easier to track. Should students already have known this in school, many would not now have fallen prey to using wrong investment methods and as a result lost money.

Another key lesson to drill into the education system would be knowing how to choose good people. This is important because in business, having good people will drive you to success while knowing bad ones will kill you. However, as the saying goes, the only way to find a good partner is to know a bad one. Given this, schools should place more emphasis on team activities and structure them in a way that knowing how to judge is the critical moral to learn.

Among the many other lessons proposed, I believe this to be the easiest for implementation because schools have more experience in doing so. In addition, after this lesson carries out its primary role, the advanced version can subsequently be developed where schools will ingrain into students the importance of having good partners, favorable financing and good management in investments.

If done successfully, students will become wiser financially and this can really help reduce financial problems by busting the myths they once knew for money and finance.

In conclusion, given the relative importance of these lessons, I hope schools really would consider them to upgrade the quality of its curriculum to provide a truly holistic education. This will certainly help people prevent many financial mistakes and nurture them into better individuals equipped with better skills to benefit society.…

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Personal Finance – A Review

Personal Finance – A Review

Minding your finances doesn’t have to stressful and overwhelming. There are many people right now that are worrying themselves right into the area of heart attacks because of money, or rather the lack of it. No one needs to let themselves get to this point when there are personal finance tips to follow that are simple and will leave you able to sleep at night.

The biggest tip to follow for your personal finances is to learn how to be frugal. This is especially true for those young people out there that are just stepping into the wig world of money. Don’t spend on unnecessary items. If you see something that you want, don’t spend to get it right then. Make yourself go home and think about it. Chances are you will end up making the decision not to buy it.

In addition to frugality, you should make a budget and live by it to the letter. Sit down and write out what you must pay each month to live, as far as rent and living expenses. Don’t add in things like a shopping trip with your friends at the mall each week or that little gift for yourself because you worked hard all week. These kinds of things are wasting precious money that you could be saving up to have on a rainy day.

Avoid unnecessary debt like the plague. Going into debt means that you are going to lose more money every month to interest and other fees related to that debt. This is money that you will never have the chance to even squander. You will never see those dollars except as they go out the door and into the hands of someone else.

When you make the guidelines for your budget, make it a point to turn it out where you are going to be spending a lot less than you are earning. This is going to leave money left over to save. Make sure that you also pay your bills on time so you can save yourself from late fees as well. These may seem like little things, but they add to being a whole lot later on. Personal finance tips can be sticky and hard to follow sometimes, but to become financially stable, you must learn early on to make sacrifices.

Find ways to make more money. This may come in the form of getting a degree or it may be that you can go higher in the job you have. Education is one of the essential keys to success, especially when it comes to earning a high salary.

When you get paid, you should take at least 10% right off the top for a savings account. This way, in the event that you lose your job or you have something happen to you that causes you not to be able to work, you are going to have some money to go on until you change course and get resettled. A lot of people have hit rock bottom and never made it back up because of situations like this happening and they didn’t have a savings to depend on. These personal finance tips will help to become a better money manager.…