Hope Fund

5October2009

Early Investment Planning Makes Your Life Happy and Easy

One of the most essential financial planning advices that are given to people is to start investing early when people are still in their twenties. Many people could avoid getting into debt later of life if they exercise to budget their earnings, save and invest as early as possible. Start investing young will get you the benefit of overcoming the learning curve of investing, the road won’t look bumpy once you master the game.

To illustrate the point, let’s draw out a financial plan for a 25 years old fellow who kick start the saving of $2,000 annually and keep doing this for 8 years. After age 33, he never invests a single additional dollar. More money will be available to this person when he reaches 65, in a better financial situation than a 35 years old keep investing for 32 years. That fact of matter is 25 years old will have more saving than the 35-year old will invest 4 times every year.
Whenever you sit down to take any financial planning advice, you must have identified your short, medium and long-term goals. Start with wedding plan, a house on the top of a new car. Next, is to consider your medium-term goals. Long-term goals should focus on having adequate money to retire on.
Financing a house mortgage, and having a big family might be your dream. Then you should mind your own comfort retirement. When you sit down to calculate all of these expenses, consider what you are going to save to reach each and every one of your goals within the set time frame. When making a budget, set aside some time for each of these and do not try to sacrifice one for the other.
One you’re more sophisticated with more education from , CD and money market funds and investing in stock market won’t be solid financial goals. Throughout, it has been shown that the stock market has out-performed just about any other type of investment. However, this form of investment is not for the faint of heart.
You must have a strong heart to stand on this type of investment. If you have the gut to take on more risks for exchanging better return, or you have a average-out investment plan then the stock market works for your long term goal, otherwise, it is better suited for short-term.
One will be naturally think 401(k) plan is a investment plan, actually I mentioned in , it is rather a saving plan. So many financial advisor still suggest tax-deferred retirement plan like 401(k) plan worth considering. It is no-brainer for people to join the plan. It is tax-free if you invest inside of 401(k) plan, all tax will be deferred until you start taking the money out of plan then it will be treated as your income. The good thing about the plan is employer usually match a portion of full amount of your contribution, that could be a big bonus. You should go out and seek more information on the subject for free on the internet. It takes time to filter out many many pages of information on the subject to find solid one to digest.

5October2009

Your Capital Gains Tax Rate

It’s a great time to invest in the stock market – with the recession crash peaking, stocks are severely undervalued across many markets, and pretty much every economist on Earth is predicting an eventual return for prosperity in the long run. If you have available liquidity, you may have considered delving into investment, but like many people you should be concerned about the ancillary costs and worries involved. One thing that deters many first-time investors is not understanding their capital gains tax rate. Capital gains tax is levied by the Federal Government at a lower rate than income, but it’s there nonetheless, and you should protect yourself from it. This guide will help you understand where you fit into the capital gains tax rate brackets and hopefully help you keep a few bucks out of the hands of Uncle Sam.

One of the best things to happen to the capital gains tax rate came courtesy of President George W. Bush in 2006, when he signed the Tax Reconciliation Act into law. Recently extended until 2010, this act reduced the capital gains tax for taxpayers in the 10% and 15% brackets to nothing. That’s right, if you’re in the lowest income tax brackets, you will pay absolutely nothing on dividends from your investments. This is obviously good news for lower-income families looking to set aside some money for their future. This will also help retirees use their investments in their senior years to pay for their care and medical expenses.

In addition, the Tax Reconciliation Act gave an even bigger cut to the capital gains tax rate from the highest earners. Formerly in the 25 to 35 percent range, tax on their earnings have now been dropped to a baseline 15 percent. This represents an enormous amount of money, as these high-income individuals and families are more likely to invest a portion of their earnings. These rates are for long-term capital gains, however, so to take advantage of the reduced tax rate, you must in most cases hold on to the assets in question for over one year.

Interestingly enough, there are a few types of asset that have slightly different capital gains tax rates. For instance, cash made from the purchase of collectables is levied at the higher 28 percent rate. This includes stamps, works of art, antiques, and even wine. That rate also applies to the sale of stock from Federally qualified small businesses.
Understanding your federal capital gains tax rate can be a tricky proposition, but with it in hand you can move forward as a confident – and cheap – investor. Good luck on the market and on tax day.