Real-Estate Investing: Investing in REITs

Real-estate may provide investors with a high-yield and low risk investment combination for greater total return potential to a diversified long-term portfolio. For most people, investing in real estate begins and ends with the purchase of a home and any prospects of investing in office buildings, hotels, and shopping centers seems nearly impossible. However, these investments are more attainable than you may think thanks to real estate investment trusts (REITs).

A REITs sole purpose is to invest in groups of professionally managed properties such as office buildings, apartment complexes, medical complexes, industrial buildings, and so on. REIT performance has varied over the years, but the total annual return for the past 10 years has been 10.5%.

REITs trade like close-end mutual funds. There are a fixed number of shares outstanding and they offer those shares via a price per share model similar to close-end mutual funds. However, unlike close-end mutual funds, REITs gauge performance under different metrics. Rather than measuring performance by net asset value, REITs use a tool called funds from operations. Fund from operations is defined as net income plus depreciations and amortization, excluding gains or losses from debt restructurings and sales of properties. A REITs growth benchmark is a byproduct of funds of operations growth.

Appeal of REITs

REITs offer an array of advantages to investors, including:

Diversification - Investors turn to REITs and their good dividend paying potential for diversification against future market downturns because REITs are uncorrelated with equity markets.

Built-in management - Each REIT and its property investments are overseen with their own management team, saving investors tremendous time from researching each property's management team.

Tax advantages - REITs don't pay federal corporate income taxes and are required by law to distribute at least 90% of their annual taxable income as dividends, eliminating double taxation of income. Investors can also have a portion of REIT dividend income be treated as a return of capital.

Inflation protection - Since landlords are inclined to raise rents more quickly when inflation picks up, equity REITs - which obtain most of their income from rents - can be an inflation hedge.

Weighing out some risks

Just like all investments, REITs carry with them specific risks that you should consider and discuss with your financial advisor before adding them to your portfolio. Above all is the lack of industry diversification because all REIT investments include only property investments. Some REITs may be even less diversified when they choose to specialize in specific property developments such as medical buildings, or golf courses. Because of their focus, a REIT investment should be used as part of a diversified portfolio to provide greater diversification.

You should also be aware that REITs are subject to changes in the value of their underlying portfolios, and their prices may fluctuate with changes in their real estate holdings. REITs are also interest-rate sensitive - particularly mortgage REITs. If rates and borrowing costs rise, construction projects with marginal funding may be shelved, potentially driving down prices across the REIT industry.

There are some unique factors to consider when selecting a REIT

Yield and debt - High-yields are tempting, but REIT yields above certain levels may mean that there's not enough being reinvested for acquisitions, which could affect long-term growth. Too much debt or leverage can also influence prospects for growth. Your Isakov Planning Group Financial Advisor can help you define what a high REIT yield and a high debt load could be in a given market scenario.

Management potential - Management should have a substantial personal stake in the REIT, which should be listed in the latest proxy statement. If the REIT is new, refer to the prospectus for the management's track record (if any) in similar enterprises. For insight into management's effectiveness at cutting costs and increasing rents and occupancy, refer to same-space revenue growth in the annual report's financial analysis.

Demographic trends - In the case of apartment REITs, for example, ask about the area's direction of vacancy rates and rents, the amount of new apartment construction, and the affordability of home ownership. The higher the cost of home ownership, the more attractive an apartment REIT might be.

Perhaps investing in a REIT mutual fund is one way to manage risks or real estate investing, and to spare investors from investing time into researching all the avenues that should be carefully considered when investing in a diversified real estate portfolio on their own. A real estate mutual fund may invest in several different properties across different sectors of the real estate industry in several different geographic regions, giving you diversification and a way to manage your risks.

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Roth IRA Benefits and Withdrawal Rules

Roth IRA was formulated and authored by Senator William Roth of Delaware, as chief legislative sponsor, the retirement plan is named after him. This is a retirement plan that is generally not taxed. It generally provides tax free growth of your money in lieu of getting a tax deduction. This is provided however with some conditions and criteria. Under the tax law of the United States, the Roth Individual Retirement Account (IRA) is allowed to tax reduction on a limited amount of saving for retirement.

These IRAs have tax free growth. Earnings are not subject to tax as long as you have the account for at least five years, and you are at least 59 and one half years of age or more. A Roth allows you to have another retirement plan, so multiple retirement accounts are completely agreeable. Direct contributions can be withdrawn at any time and tax free. This easy withdrawal process may however follow some Roth IRA withdrawal rules. Unlike traditional IRA or 401(k), there are no required minimum distributions and withdrawal requirements. Properties and assets of can be given to beneficiaries and dependents after death.

Roth IRA Restrictions:

Compared to Traditional IRA's and 401(k)'s, contributions are not tax deductible. If you have an income higher than the income limits, you may not be able to enroll in a Roth. There is a penalty for early withdrawal fees, a 10% early withdrawal fee is charged if you withdraw money before 59 1/2 without a valid reason and grounds.

Retirement plans are important for your future. Weigh your decisions early and better make them right. Study Roths and make your mind up if it will be the best choice for you.

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How Do You Select the Funds With Regards to Your 401(K) Plan?

401(k) plan investment funds are really a hot button field because they directly impact a lot of individuals who may have decided to get their corporation's retirement savings plan. However, making the leap of faith to purchase a 401(k) is amongst the most straightforward section of the entire process.

The real hard work happens when you are required to study the obtainable strategy of investment, select which funds are the best fitted to your expectations, and decide just how much to set aside a number of areas. The following paragraphs will review the primary actions pertaining to structuring ones own 401k investment strategies, as well as a range of suggestions that should help to help you in the most suitable direction.

Study the existing 401k plan Investment strategies

In many instances, for signing up for an company's retirement account, you can be supplied with a list of 401(k) funds from which to choose. A lot of 401(k) strategies are usually simple anyway and only offer you a few mutual funds, and others are much more complicated, and present a person possibilities including corporation stock and also temporarily personal savings vehicles. Quite often, you need to go with a mix of these types of 401(k) funds to make certain that you will have a well balanced strategy that is definitely structured for your specific needs.

You might need a 401k plan expenditure of money in every single major account group

Once you've checked out the particular funds independently, you will need to undergo some type of Asset Allocation Analysis. Essentially, this kind of document will take things like your age, risk limit, as well as goals and objectives into consideration, and still provide in-depth recommendations on where you need to "set aside" an individual's retirement plan capital. By way of example, an asset allocation document may possibly advice that you put 70% of your respective 401k investment opportunities in stock assets, in addition to 30% within bond funds.

Round out the 401(k) plan Investment funds into your Asset Allocation

After getting recognized the best account for your requirements, you will be able make the decision to make an investment in that mutual fund for one's "large cap growth" piece, and proceed to the other group of 401(k) funds within your proposed asset allocation. You simply must continue doing this for process for every single 401(k) plan investing category, in due course figuring out the ideal fund for the individualized strategy. After the process, you have to have a lineup of resources which symbolize the most effective inside their respective classes, and also a pretty strong 401(k) strategy.

Summary on your 401k Investments

As you can see, there does exist not often a good cookie cutter strategy to configuring your 401(k) plan, unless they offer some kind of target date investment. On top of that, it usually is a good deal to research recommendation coming from a financial counsellor. We have a data source of experienced financial agents to pick from should you be not presently working with an expert.

In the event you go through the technique of identifying the top mutual funds around each and every grouping, and stick with a suggested asset allocation, you need to be picking a really favorable step in the correct course with your 401(k) funds.

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Methods of the 401k Rollover

Chances are that in your working lifetime, you will work at more than one company. You may change jobs, or even become self employed. Your retirement plan will have to follow you wherever you go. A 401k rollover plan will allow you to move your pension from job to job without too much hassle for you.

You do have the option of cashing out your retirement account as you leave one job to go to another. You will be penalized a certain percentage to withdraw the accumulated funds early, and you will have to pay taxes on it. To carry it over makes perfect sense; it stays sheltered and you do not have to start from scratch. Here is some information to guide you through the process.

You will want to find a broker who is well versed in the method initiate this transaction. This will give you the peace of mind you need to know that your pension is safe, and will be handled properly.

If you decide to employ an agent that is associated with a large, well known company you will have added sense of security. That generally means that the organization is established, and not going out of business any time soon. Shop around and check to see which one has the least amount of fees and ones that may even have options for future investing. This will give you the opportunity to be flexible with your funds.

After an agent has been decided on, the process of switching over your retirement account begins. Your new account manager will give you all the necessary paperwork to initiate this course of action; they will know exactly what to do.

Be sure that you are filling the applications out properly, and for the right kind of pension carry over you are looking to initiate. Like most application processes, it can become rather confusing so be careful not to make costly mistakes. The time spent doing this the right way will be worth the money saved for small errors made.

Your spouse, if you have one, is also required to participate in the application process. Since these annuities are considered joint property, both of you must sign the application and make record of your marital status.

Applications must then be brought to an approval board before they become active. Once you have properly completed the paperwork, namely the initial application, you will be asked to complete another set of forms. These will give your new agent an idea of what he or she is working with in relation to your finances, so it is important to take care in finalizing these as well. This will also give your account direction as far as your desires for fund transfers.

As with most transfers, you will have to provide your new broker with statements that prove ownership of the account to be reassigned. The 401k rollover process can be very easy, especially if the agent you have chosen is experienced in this kind of transaction. The only thing left to do will be to reestablishing your regular deductions to the new account.

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How to Avoid the "Wash Sale Rule"?

You should take care about your capital invested in the Roth IRA

If you already have your Roth IRA, you are no longer interested in choosing a proper retirement plan, but you are rather more bothered about how to make a proper capital gain that would satisfy you and your family, if you have one. If you are willing to gain more for your retirement, you should consider a smart capital gain tax strategy that will help you to achieve your goals. The first step to a successful investment is to look at your strategy and find the mistakes and, if there are any significant ones- correct them and find the strategy that should bring you more benefits.

Invest your money smartly- what does it mean in practice?

If you are already saving for your retirement, your main plan is probably to gain more than you lose on paying your taxes, for example. And it is widely known that the taxes seem to be lower when you decide for a long- term strategy. But on the other hand, the taxes that you are obliged to pay after ending a long- term investment are supposed to reduce the investing results. Sometimes the investors sell their assets at a lower price, allowing them to bring you a capital loss. Now, you should understand the wash sale rule and avoid the blatant, but unfortunately, common mistakes

The definition of a wash sale rule

This rule is not so easy to understand, but in simple words it means that the wash sale rule does not allow the investor to claim a capital loss for tax purposes unless the unfortunate investment is purchased again over thirty days. It will be simpler, if you read the following example: the investors did not have luck and purchased a stock when it cost $50, for example per share. Within a couple of years the investor had some problems, the share price is now $10. The investor should now be allowed to inform about the capital loss and lower his tax. But only if he or she will sell his or her shares. But he hopes that the company will return some value that it has lost and the investor will be able to sell his or her shares and gain more. The investor can call the broker and repurchase the shares and gain.

And what the Roth IRA has in common with it?

The wash sale rule claims that the investor is not allowed to claim the capital loss if he or she will buy the shares again within 30 days. So unless the investor waits, he will not be allowed to claim the capital loss and pay a lower tax. What is the solution? Of course, you can wait 30 days, but if you trade with the Roth IRA you do not need to worry about this rule, because your long term returns will be maximized. You should also sell your shares only when you accept the fact that you may not be able to repurchase it for the same or lower amount of money.

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Go for A Planned Retired Life

Did you just retire? Are you complaining that you have no work to do? Or are you in a situation where you have excess free time and so in a depressed state? You can be free from this if you have a perfect time table that includes all your interests and finds time for everything you wanted to do all your life and couldn't do it because of your tight working schedule.

Planning your day the previous evening itself is a very nice way to avoid excess free times as this can help you plan for something else during this time. Also, you will not be complaining again saying that you have no time. You will have plenty of time to do whatever you want to. You might not want to go for a strict schedule also. This can make you tired very easily. Especially, when you have had enough of your busy schedules, another one will just make you want to forget all of these and lead an unscheduled life. So, let the time table be a bit liberal so that you can make instant changes to it. But, make sure you do not alter it too much.

When you make plans, do not go for plans that are unrealistic. You shouldn't think of any impossible plans. When you make plans for instance, if you are planning to make a 5 hours journey do not make much plans after you get back home. This is just impractical as you know that you will be tired and will not be able to do it. And if you break the schedule, it becomes easier for you to break it more and more times.

While you make your plans, try and be specific. Do not plan your events in a very vague way. Be very specific and know what you have to do. Also think of how much time you can afford to spend on it. Do not 'think' of the time table. Make sure you write everything down and cross off everything once you are done with it. This also helps you think that you should do these things and it also helps build convictions.

Do not aim at the star all the time so that you reach at least the tree top. This is because aiming too high will make you feel that you are not worthy of achieving that much and hence will feel like retreating. This is not good especially for a retired person as they are already going through a difficult situation.

Most importantly, when you jot down plans for a specific day, make sure you keep some time apart for yourself. You need to take care of your health better during this time as the body is suddenly going through a resting phase.

You may take some time to adjust to this new life style. But this time is going to pass off soon and you will start enjoying your retired life. This just another phase!

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Roth 401k Versus 401k: What Is Right for Me?

I was asked recently about the differences between traditional 401k plans and Roth 401k plans. I then realized I didn't have a solid answer. Truth be told, I had to do a little research on the subject. I'm not going to bore you with this article. This one is going to be straight the point. Want an easy answer? Well, the Roth 401k is a great choice for almost everyone. Let's get into the details before you make any hasty decisions!

What is a Roth 401k anyways?

This is easy. It's just like a typical 401k, but with some minor differences. A Roth 401k acts in the same way in terms of your boss managing your plan. Also, just like a typical 401k, money is taken out of your paycheck and placed within the Roth 401k plan. Once in the Roth 401k, you control the investment choices.

But what about the differences?

This is where it gets a little tricky. The money that goes into a Roth 401k is post-tax $'s. It's both a negative and a positive. It's bad because your taxes are higher now. The good is that you will never have to pay taxes on your distributions during retirement.

Another key difference is that you won't have to pay taxes when you withdraw money after you're 59 1/2. Yes, you read that right. You pay zero taxes when you withdraw during retirement! Sounds good to me. There's one big BUT though. Unfortunately, you cannot withdraw your Roth 401k contributions. I mean you can, but you'd be facing stiff tax penalties.

Now, for the DEBATE! Taxes, taxes, taxes. This debate comes down to the pre-payment of taxes. With a Roth 401k, you pre-pay taxes now so you avoid paying taxes later. With a 401k, you avoid taxes now and pay taxes later. The goal is to lessen your tax burden of your retirement accounts. We could go on and on about the tax benefits and downfalls of a Roth 401k. I'll let the Finance Buff explain the tax side of the debate, as he is much more knowledgeable on this subject. He presents a great case to NOT contribute to a Roth 401k, but I disagree with his view of future taxes. With the way taxes are going up now, crippled economy, and the fall of the dollar, I foresee extremely high taxes 30+ years from now.

So, how much can you contribute to you sweet Roth 401k? This is the best part. Unlike a traditional Roth-Ira, you can contribute a maximum of $16,500. But what if I make over $100k you ask. Man, I wish I made that much haha. Well the good news for you rich folks is that there are no income limitations for a Roth 401k. You could be a multi-millionaire and still contribute. But then again, you probably don't need to worry about retirement accounts anyways...

Another key benefit is the rollover option. Let me give you an example. Say, a dude named Joe is working away at corporation ABC and he is actively contributing to his employer's Roth 401k plan. On Monday, he finds a pink slip at his desk and now he's fired. What happens to his Roth 401k contributions?! The good news is that Joe can rollover his contributions to an individual Roth-Ira and maintain tax-free growth. This is king in an economy where you never know if your job is secure.

Hmm, as for taxes, do you remember President Obama spending trillions of dollars out of thin air? There WILL be repercussions for the out of control spending. Guess who will be paying for it? You and me, that's who. So protect your assets and retirement future by contributing to a Roth 401k today. Remember to keep a well diversified portfolio and invest for the long-haul. Get to it!

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A Simple Strategy to Turn $5,000 a Year Into $3.3 Million Tax Deferred

Here's the deal. An IRA allows for investors under the age of 50 to contribute $5,000 a year to the account and trade tax free. Investing $5,000 a year for 25 years at 20% annualized will turn a 35 year old investor's annual contribution into over $3.3 million by the time they are 60 in 2035. The problem is that no one thinks ahead because many are scared of what is to come instead of being confident that the future holds the best for them.

Now let's dream a little bit...

Let's say you bought a subscription to The Poland Report and over the next 25 years the ideas published could produce the same annualized return we have for the last 9 - 47% a year. What do you think your $5,000 annual contribution would be worth by 2035? The answer is over $314,474,000!

With that in mind, there are two ways to go with this.

1. Put a small portion of your holdings into ideas The Poland Report issues each year. Follow our strategy of buy, sell, repeat and profit from our experience and ideas. Or if you are earning better than 25% a year, it might be better not to buy anyone's newsletter, but you still owe it to yourself to build your retirement fund.

2. Put a larger amount of cash behind our ideas and make massive gains over the life of your investments. If you are earning 40% or more annually, then you should only be investing in whatever that is that is producing those kinds of results. We live in a society that even the average citizen can earn interest off their money. That's the good news. However, too many people never take advantage of this. That's the bad news.

Either way you go, I definitely think opening an IRA account is the way to go. You should only have or need one since the maximum contribution will be $5,000 for those under 50 and $6,000 for those over 50. If you are already in your 50s the chances you will live to be 80 are increasing daily. So do not think it's too late because it's not!! If you're married you can add $10,000 a year pre-tax and really max out your gains.

To recap: 25 Years @ 20% = $3.3 million 25 Years @ 47% = $314 million

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Things To Know While Planning For A Roth IRA

Planning for your retirement? A great decision. For all those people who think that retirement is half a life away and you have all the time in the world to save up enough for a secure old age, you are so wrong. Retirement planning is not exactly like planning for a holiday at the beach. There is a lot more to decide and plan. But it is not very tough either as you have so many options or plans to choose from.

Roth IRA or Roth Individual Retirement Account is one such plan. Retirement plans are provided to you by your employers. The government and trade unions also provide many plans. Roth is very simple to understand. You open an account at a bank or a brokerage firm or any other financial institution that acts as the custodian of your account. Over the next years, you have to regularly contribute towards this account. This amount will be used by the custodian to invest in real estate or deposit certificates or some other kind of investment.

To open a Roth IRA you must first meet a couple of conditions. When you have met these conditions, you have to decide what kind of investments you are interested in taking up. According to this, you have to choose an ideal bank or brokerage to set up your Roth account. Each firm differs in the retirement plan they offer so you need to choose what you suits you. When you have chosen you company, the next thing is to go ahead and open the account.

How do you open a Roth IRA? Here are the steps that give you an idea of how to do it. First of all, you will need some information about yourself to fill in the forms to open the account. Information such as your social security numbers and that of your beneficiaries, information about your job, bank account information, income certificate and so on. You cannot open a Roth IRA with just passive income such as rent or interest. You need to have earned income.

When you choose the plan and the brokerage firm, choose one that offers the plan at low fees. You wouldn't want to open an account and then loose more money from it that you put in it in account of commission costs and account fees.

You have to determine what kind of an investor you are. You will be asked questions to determine whether you are an aggressive investor or a moderate one. So you need to know before hand what type you fall under. Risky investing can bring you huge rewards but it can also make you lose you money overnight. But safe investing, even if it does not bring as big rewards, it will keep you secure for the future.

The firm that you are going to set up an account will probably give you a list of prospective investments. Choose carefully and cleverly. If you are not at all experienced in the field of investing, go for mutual funds or CDs. They are easy to understand and also safe.

You fill in all the forms and your Roth account is established. Now, all you have to do is keep contributing regularly to this account. You can also go for automatic contribution i.e. automatically forwarding money in a regular basis to your Roth account from a linked bank account.

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An Often-Overlooked Investment Opportunity: Non-Traded REITs

Residential properties are one great way of owning a piece of real estate for investors, but it is certainly not the only way. Investing in commercial real estate such as malls, medical office buildings, large properties, and hospitals - may provide investors with an income stream, potential tax benefits, protection against inflation, and substantial growth opportunities. In addition, real estate is a great way to add diversification benefits when combining it with other types of non-correlated investments such as equities and fixed income securities. Therefore, commercial real estate can provide investors with a way to shield against volatile market conditions.

An investment opportunity Years ago, commercial real estate investments were only attainable by institutional investors, wealthy individuals, and trusts with significant financial resources. Today, with the advent of products such as real estate investment trusts (REITs), many investors now have access to commercial real estate investments and opportunities that were once available to only the cream of the crop.

How it works The most often used vehicle for investing in commercial real estate is the REIT. Although investing in commercial real estate was restricted to wealthy individual and corporations 50 years ago, since the REIT was created, the real estate market has attracted a much broader and much larger group of investors because it allowed regular investors to participate. REITs are like most other funds in the way they get capital for their operations. They raise money from investors and pool all the funds to acquire properties such as hospitals and office buildings. As long as REITs closely adhere to the laws applicable to them, most notably distributing at least 90% of all their taxable income to investors, they avoid double taxation of its income at the REIT level. This distribution is the major source of the income that REIT investors receive.

When investors place their money in any REIT, they are putting their money in the hands of real estate professionals that monitor changes and trends in the real estate market, mortgage rate movements, regional trends, and other factors. In addition to all the external factors, the REIT's success will also be affected by the fund manager's skills, experience, and talent.

REITs come in two forms: traded and non-traded fashions. Each has its own advantages and risks. However, this article concentrated on non-traded REITs.

Potential benefits

Non-traded REITs may offer:

Steady income streams. Non-traded REITs may provide a revenue stream in the form of monthly or quarterly distributions. This gives fixed-income investors with a steady cash flow.

Protection of principal. Although the economy's ups and downs can affect real estate values, REITs that invest in high-quality real estate assets can maintain their values.

Capital appreciation. With a sufficiently long time horizon, real estate can provide investors with back-end appreciation which can translate into significant rates of returns.

Inflation protection. Real estate typically withstands the erosive nature of inflation.

Tax advantages. Many investors benefit from holding real estate investments because the investor's taxable income is reduced by taking advantage of depreciation deductions. When the asset is sold, the income that was protected by the deductions is taxed at potentially lower capital gains taxes.

Potential risks

The following risks are possible with non-traded REITs:

Some of the property holdings in the REIT may have been purchased at a highly appreciated price which can restrict the overall growth of a REIT portfolio because the REIT may run the risk of not being able to sell the property at a more appreciated price. These types of properties may or may not be providing cash flows to the REIT.

Non-traded REITs are typically appropriate for long-term investment horizons of 5-10 years making them more illiquid investments.

Investment objectives stated in the REIT's prospectus are target not guarantees. Clients may see a difference in the distributions they receive and the expected level of distribution rate.

Commercial real estate investment strategies

Carefully consider what risks you are looking to take on in order to justify the expected return. Higher returns generally go hand in hand with higher risks. Individual investors need to feel comfortable with the degree of risk they are willing to tolerate and then maximize their returns to their unique risk level without leaving your comfort zone.

REITs typically fall into three principal categories each with its own advantages and risks:

1. Core investment programs concentrate on long-term property holdings in order to generate steady income streams for their investors and potentially some back-end appreciation. Investors that find these programs appealing are typically focused on receiving an income stream to supplement their current income.

REITs that fall under this category of core real estate investments invest their funds in well-established real estate markets focusing on high-quality, stable, well-maintained properties that are not too leveraged. They buildings generally have minimal upkeep necessary such as repairs.

Managers select properties in diverse markets and look at the financial stability of tenants in their chose properties.

2. The value-added group invests in properties that potentially may provide investors with significant back-end capital appreciation. Therefore, these properties carry with them a higher level of risk and are generally financed with some amount of leverage. Investors seeking greater asset appreciation rather than current income in their investment plans may find this group of REITs more appropriate for their investment goals.

When buying these types of real estate properties, managers are willing to purchase properties that may have had some operational or management problems such as average or below average occupancy rates. In hope of turning these investments around, the REIT may look to improve or reposition troubled areas in the property in some way often by finding higher-quality tenants. Once their attempts have increased the value of the asset, the manager may consider selling the property to capture gains.

3. The opportunistic REIT strategy seeks to invest in properties that will capture the highest possible returns and therefore may accept a significant amount of risk to get to their goals. Investors in these types of REITs have a minimal need for current income and are looking for substantial short-term capital appreciation.

Such investments are generally not appropriate for individuals seeking a steady income stream, but rather those seeking to increase total returns in their portfolios via capital appreciation. REIT managers create value by finding properties in geographically diverse markets where growth potential is high. Fund managers invest in properties for a short period of time are generally ready to recapitalize certain holdings to increase returns.

You don't have to do it alone

REITs can be complicated investments to evaluate and even more complicated to integrate into your current portfolio and investment goals. Your Isakov Planning Group Financial Advisor can help you determine if REITs makes sense for you.

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What Are Your 401K Contribution Limits and How Do They Work to Build Wealth?

Do you know your 2011 401K contribution limits? The 401k plan is a retirement plan that companies have for their employees to save for their retirement. Congress makes the rules for the 401k contribution limits, not the IRS like most people think. For some years the limit has been the same, because the costs of living adjustment (COLA) did not change.

For instance in 2007 it was $15,500 and 2008 the limit was the same. The next year in 2009 was $16,500 and 2010, it is the same and that the limit for those years. The following year of 2011 is also the same ($16,500) but with an additional $5,500 for people who are age 50 or older. This is called the catch-up provision.

The next thing is that all employers have the opportunity to match what the employee has put into the plan. For many,the amount is $0.50 of every dollar the employee puts in. If they put in $1,000, the total at the end of the year would be $1,500, not including any investment gains. Many employers will match up to 3 to 6 percent of your gross salary. It would be foolish not to put in that much since that is free money.

If anyone tries withdraw money out before they are age 59 and a half,, there are severe penalties. They include ordinary income tax on the amount withdrawn in addition to a 10% penalty tax on the amount withdrawn. Many people are happy that they have a 401K plan that they can contribute to and put in the maximum 401K contribution limits. The results will be that you have enough money to live on when you can no longer work to provide for your family. This will be in addition to Social security income and pension include.

Don't delay in contribution to this account to build wealth fast. Make your 401K contribution limits count toward giving you the retirement income that you deserve for a comfortable future.

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How Is That 'Free' 401k Investment Advice From Your Broker Been Working?

"Oh, my stock broker already took care of that." said the plan participant, calmly almost with a tone of pride. The story is always a little different but almost always the same. Quite some time ago, the stock broker's client expressed frustration over the investment options in her 401k plan. The stock broker offered or her client asked for some help picking the best funds off the main menu ~ and that was it. The subject never came up again ~ ever! The client considered the problem settled and the broker forgot about it the very next day.

Investment advice is a process not an event. Yet, the plan participant who has graciously accepted some "free" advice on her 401k investments has fallen into a common trap. While her broker may have suggested some funds, the suggestion was merely guidance. Investment advice is an ongoing relationship. Investment markets are dynamic and someone must be alert at the wheel. Would any of you consider setting your cruse control at 65 mph for a long distance highway trip ~ and then sleeping behind the wheel? Conditions change and adjustment are sometimes necessary. We don't know when; but, experience suggests that at some point we will need to slow down or stop to avoid a collision.

Were you aware that the brokerage firm where your stock broker works has made it clear that their representatives are NOT to give advice on their clients 401k plan assets? Your broker's firm knows that to do so would put the firm at risk of being a Fiduciary. Fiduciary Liability means that a plan participant may be able to sue the firm if the "advice" was inappropriate for a particular client's ever-changing situation which resulted in an unnecessary financial loss.

As innocent as the request or offer of a "favor" to just look at the investment options on the 401k plan may have been, the truth is that plan participant is not being well served. What is the cost of the "free" advice if it is never monitored or even mentioned ever again? For the plan participant engaged in volunteer work, consider the attention you give to charitable services you have provided ~ after the fact. I would not be surprised to hear you say: "well... why should I?" Yet, how is it you believe your broker will give your 401k plan a second thought?

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Retirement Planning - Read More About It

Retirement planning appears in front of many people when they reach almost at the fag end of their service. They chose to enjoy the fruits of life in the golden days and just forget that a tomorrow is waiting for them where one has to say good bye from service and forget about the regular monthly pay packets. The ever increasing financial needs and the multiplying cost of living will appear before him as a ghost on retirement day.

It may be too late for him to take any corrective step or to make a decision at the fag end of service to take care of the financial needs of a retired life. He will find it difficult to meet the daily expenses. His health conditions might haunt him. Financial conditions might prevent from going for medical help medicines. The retirement benefits and pension or social security might not meet all needs of the day especially when the life style is changing and cost of living is climbing the mountain peaks day after day.

How to plan for a better retired life?

Planning for the retired life should start from the very early stage, may be immediately after joining the service. He or she should spare a part of the earning and start saving systematically. The amount thus saved should go to an investment instrument regularly. The benefits to select an investment instrument for the savings are many. The investments thus made, attracts tax holiday.

Obviously the tax holiday for the savings is real benefit to the investor in certain other counts too. One gets tax relaxation while earning. He has nothing to show as earning other than the returns from investment and social security or retirement pensions. Naturally his tax liability is too low or he falls into no tax category on retirement.

For some reasons, if you could not make your retirement strategy right at the early stages of employment, still you are not missing the wagon if you are committed to comfortable retired life.

In this case, you should be taking firm decisions on your saving strategy for retirement. When you are away from your retirement say by 10 or 15 years, you can accept a different type of saving plan or strategy. That is the time when you are comparatively comfortable with reference to your earnings. Your liabilities are the least in most cases since your commitments or obligations towards the education of children or mortgages towards housing loan or automobile are no more there. You find sizable surplus with you at this stage.

You can spare and invest a considerable amount at this stage in various saving instruments which will pay you back at your retirement. You have ample options like fixed annuity, deferred annuity, and variable annuity or an IRA to choose from. In this case too you can earn the benefit of minimum tax liability since your taxable income falls to a very lower level. You can select the convenient plan of your choice taking the duration for which you are opting for returns (normally life term) and your physical and health conditions and expected requirements.

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Raising Private Money

Other than borrowing from banks, large businesses raise funds by offering public shares in Initial Public Offerings, (IPOs). In this case, companies files with the securities commission for permission to sell shares to the public. In this regard, banks are given permission to sell shares across the country. Although smaller companies are do not generally raise funds across state lines, the can raise funds within their sates of operation with permission of their state securities commissions. The reason smaller companies do not participate in public offerings in that costs are prohibitively high and the legal requirements are so intricate for their comfort.

There however are laws that allow smaller business people to form syndications that legally allow them to raise funds from the public. The cost of forming a syndication can range from $25,000 and up. The beauty however is if a businessperson is creative enough, they do not have to come up with the funds upfront.

The target market here will be people who have cash in the bank and are getting low returns on Certificates of Deposit on any other low earning investments. It is important to find such people in your neighborhood, where they can trust you and believe that their money is secured.

The trick here though is that a business person will have to have a strong product that can be secured. In some cases, such a business person may give up part of their equity generated by the new funds in the business. As the argument always goes, it is better to have a small percentage of something than a whole percentage of nothing.

The second method of raising funds, especially for technology companies is through venture capitalists. In this regard, a business person will need to approach a venture group in the area and present their idea, and hope to get funding. This is another expensive way of raising capital but a well worth option. Most of the large technology companies in existence today were funded by venture capitalists.

The third and probably cheapest and least known way of raising capital is through people's retirement funds. As it, people's retirement funds have earned an average of 2.07% interest for close to 10 years now. During that same time, inflation has hovered around 5%, meaning that the retirement funds are on a losing end.

The other fact on IRAs is that most of the monies rolled over into annuities and other securities are tied for years and attract huge penalties if drawn before maturity. These funds often have no insurance. As a matter of fact, retirement funds lost about 47% of their value in 2008. Armed with these facts, it is not hard to help people increase their Returns On Investment (ROI) in their Individual Retirement Accounts.

I know the question in most people's minds is the penalties involved in drawing the funds. Well, your fear is based on long portended notion that the IRS does not allow people to invest their retirement funds.

As a matter of fact, in 1974, IRS allowed the formation of third-party IRA custodians whose mandate was, among other things to act as a conduit of IRA funds into various investments. This therefore gave individuals power to invest their retirement funds tax-free or tax deferred for the highest returns in the market.

This is where small business owners come in. Create a plan on how you can give high returns and how the people's money will be secured. In this era where many Ponzi schemes pop up and scammers are all over the internet, it is important that the investors feel that their funds are secured and that they are dealing with an honest person.

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Does HR Really Expect Me To Look At My 401k Plan - Again?

Perhaps it is fear that keeps us from taking the steps to begin the process: the fear that we simply cannot handle it. This really is the key! First know that you can handle it and second know that it is a process and not an event. Regardless of what decisions you make at the beginning, they can all be changed. There is no drastic, permanent blunder you can make at the beginning ~ except failing to start at all.

Would it surprise you to know the one variable for a successfully planned retirement is not investment returns? That is correct. The one variable essential for a successful retirement is regular savings. And, yes, that IS entirely within your control. Based on that one variable I recently saw a study that suggested that only one in five employees are saving enough to retire at age 65. "Low" investment returns will not keep you from retirement. Insufficient savings will. Consider the tenfold power of a 5% return on $200,000 vs. a 100% return on $1,000!

One of the habits of the wealthy is the simple idea that they deserve to pay themselves first. You too can easily adopt this attitude. Your company has provided the perfect platform for you ~ the 401k Plan. You can reduce your current tax liability by contributing to your plan; and, quite possibly, your company will add to your contribution! Who would not like that?

The next step is to accept personal responsibility not only for saving but for investing your retirement assets as well. The shift from employers being responsible for saving and investing for your retirement directly to you, yourself, being responsible is the reality of the 401k Plan. To deny that fact simply pushes your expected retirement at age 65 further out. How would you feel about retiring at age 75... or older?

Fix The Cracks In That Nest Egg   SEP IRA OR 401K - Which One Is Right For You?   How to Add Colors to Your Retired Life?   Retirement, Roth IRA, And You