Wealth Distribution

Wealth Distribution – What is a private trust?
November 18, 2018, Sunday


Wong Chaw Chern


A complete and holistic financial planning pyramid encompasses three wealth components – accumulation, protection and distribution.

Broken down, it describes the process flow where you start to accumulate your savings and investments, then protect your wealth against any unexpected events with insurance before deciding on how you will distribute your asset when the time comes.

In our opinion, the average Malaysian already has in place, a well thought-out and decently executed investment and insurance plan.

These covers the wealth accumulation and protection components. Briefly, here’s an example of what they generally consist of:

1)Wealth accumulation – Investments in properties, shares, Unit Trust Funds and bank deposits

2)Wealth protection – Medical and life insurance.

3)However, in many cases, the application of the third component and final piece of the financial planning pyramid puzzle – wealth distribution, is still found wanting.

A news report published in 2013, stated that RM45 billion worth of inheritance claims are still frozen by various agencies, lends credence to our belief.

Whether it’s the thinking that death is too taboo a word or procrastinating the idea of planning the distribution of wealth until a ‘later’ age, the truth is – one should plan, and preferably, to do it as early as you can.

Unexpected events do occur and sometimes, at the unlikeliest of times.

For example, if the deceased had not made any wealth distribution plans before passing on, a bickering among his/her beneficiaries or children on who should receive what, can have enormous repercussions. These can potentially tear the family apart, and with it, the family wealth and values.

Proper estate planning can go a long way towards preventing any unwanted occurrences.

So write your Will or remember to update it if there has been any significant changes such as: changes to your marital status, replacement of beneficiaries or if there are notable changes to the size of your estate.

However, if either retaining control of your wealth even after planning to distribute it away or wanting a more tailored approach towards your estate planning, a Private Trust may be more of what you are looking for.

A Trust is a legal instrument which is written on a Trust Deed for the Settlor (the person who creates the Trust) to provide instructions to the Trustee or Trust Administrator for them to hold, manage and distribute the assets to his intended beneficiaries. In this issue, we will talk about a Private Trust, which is a living trust.

Advantages of a private trust from a will

1)Assets are not frozen

Even after writing a Will, when a person passes away, his/her assets will still be frozen while waiting to obtain the grant of probate from the court.

The grant of probate is needed to allow the designated executor, who is appointed by the deceased person to administer and distribute out his/her estate. Generally, this may take between three to six months. Crucially, this may be the time when the deceased’s family members may need the money the most.



For example, if the sole breadwinner has passed away, his spouse may be unable to use the frozen money to pay for the children’s college tuition fees or other important monthly expenses.

In the case of a Private Trust however, for the assets already held by the Trust, they are not frozen and the Trust operates as normal and pays out according to the Settlor’s instruction.

For the assets which the deceased have nominated to the Trust eg: EPF or insurance proceeds, the transfer process can be started immediately without the grant of probate.

If a person dies intestate or without a Will, a long, lengthy and costly process await the family members.

Furthermore, the deceased’s assets would be distributed according to the Distribution Act 1958 instead of what may be his/her wishes.

2)Decisive appointment of beneficiaries and conditions

The Settlor can appoint anyone as the beneficiaries, even himself. For Muslims, assets held under the Private Trust falls outside of the Settlor’s estate, hence is not subject to the Faraid distribution.

Besides that, the Settlor can determine the timing and condition of the particular distribution eg: Instruct the Private Trust to only distribute out the beneficiary or children’s portion upon turning 30 or for the Trust to help with grandchildren’s education expenses.

Instructions can be as specific as spelling out that the Trust will only pay as long as the grandchildren is able to maintain a minimum grade of 3.5 CGPA.

3)Confidentiality

When a Private Trust is created, all the assets are held in the name of the Trust hence the Settlor and Beneficiaries remain confidential.

Moreover, unlike a Will, when the assets are distributed, it is done so to the intended beneficiaries discreetly and privately.

4)Emergency needs

When a Trust is already in place, it can provide a safety net to the Settlor or for the family in case of unexpected occurrences.

If a person falls under mental incapacitation which renders him/her unable to execute any decisions, all his assets remain under his ownership.

In other words, the beneficiaries are unable to utilise the money and the assets for the family’s needs.



With a Private Trust, the Trust is able to take over and perform the necessary procedures as previously instructed by the Settlor.

These may include arranging for medical care, application for EPF withdrawals and providing for the family’s expenses.

In the case of other emergencies, for example, if for whatever reason the Settlor is put in lockup and no next-of-kin to post bail, a Private Trust may come in handy.

5)Professional management

The assets in the Trust will be professionally managed in accordance to the Settlor’s specified mandate; this helps to prevent any mismanagement by beneficiaries who may not be financially astute or to prevent any spendthrift family members from mis-using the assets.

Depending on the size of the Trust, the fund managers can be instructed to invest in local, regional or in various asset classes.

The Trust will be managed to achieve its specified objectives eg: generating returns necessary for successive generations and make available liquidity whenever distributions or payments are necessary.

6)Bankruptcy or creditor protection

A Private Trust is able to provide creditor or bankruptcy protection for all the assets held under the Trust; provided the Trust structure is made Irrevocable and it will take effect after 5 years.

7)Duration

A Private Trust can be set up to last for a maximum period of 80 years.

Combined with the Settlor’s ability to set the timing and condition of the distribution, a Private Trust can be made to benefit successive generations of a family – provided the assets are substantial of course.

Conclusion Contrary to popular and long-held belief, Trusts are not reserved exclusively for the rich.

Neither are the fees staggeringly high nor the assets required to be in the mind-boggling tens of millions of ringgit range.

In some cases, RM500,000 could be enough to set up a Private Trust.

However, it is important to consult a financial adviser or investment professional like Areca Capital in order to specifically tailor the Trust to the Settlor’s needs.

Talking about assets for the Trust, aside from cash, there are various other assets that can be used to inject into the Private Trust.

Areca Capital is a niche Malaysian fund management company. We are a firm believer in the advisory-based approach towards investing. For any enquiries, ontact us at 03-79563111 or by email: invest@arecacapital.com.

Disclaimer: The article is produced based on material and information compiled from reliable sources at the time of writing. The article is not an offer, recommendation or advice to transact in any investment products, including the stocks or funds mentioned within. Investors are advised to consult professional investment advisers before making any investment decision.


http://www.theborneopost.com/2018/11/18/wealth-distribution-what-is-a-private-trust/

The whats, whys and hows of personal financial planning

The whats, whys and hows of personal financial planning
February 21, 2018, Wednesday AKPK



KUCHING: What do you do when you want to go somewhere?

You probably ask the following questions: What is the best way to go there? Will there be traffic jams? Is it better to take the LRT or bus? Should someone drive me there instead?

As you evaluate the options available to you, you ask questions about what you need to do and then make your decision — these are the steps involved in the planning process. Planning can be for the short-term, medium-term or long-term.

It is the same in personal financial planning, except that the time frame is over a longer period. Ideally, you should be looking as far ahead as your retirement years.

Personal financial planning involves asking questions about your future, your dreams and goals. It is thinking about what you want to do in your life, such as getting married, buying a car or a house, having children and planning for their education.

To achieve your life dreams and goals, you need to plan from the financial aspect. In personal financial planning, you look at how you will be budgeting, saving and spending your money over time.

Steps in personal financial planning

There are five steps in financial planning:

1. Assessing where you are now in financial terms 
2. Setting goals 
3. Creating a financial plan 
4. Implementing the plan 
5. Monitoring and reassessing


Benefits of financial planning

Many people think that financial planning is a hassle and that it stops them from doing fun things. If you consistently live on a budget, surely you would have to sacrifice some fun activities now, wouldn’t you? Think about it, if you have to save, you can always budget your money in such a way that you have some money to go out with friends and having a good time.

If you set a good financial planning habit, you can always have more fun in the future!

With a personal financial plan, you will:

Have more control of your financial affairs and be able to avoid excessive spending, unmanageable debts, bankruptcy or dependence on others.

Have better personal relationships with people around you, such as your family, friends and colleagues, because you are happy with your life and not borrowing any money to make ends meet or expecting hand-outs from others.

Have a sense of freedom from financial worries because you have planned for the future, anticipated your expenses and achieved your personal goals in life.

Be more effective in obtaining, using and protecting your financial resources throughout your lifetime, not only for yourself but also for the people you love.

With a good personal financial plan, you will be more informed about your future needs and the resources that you have. You will also have peace of mind knowing that your financial situation is in control.



Life stages and financial goals

In your adult life, you will go through various stages, from starting a career to retiring, from being single to getting married, having children and sometimes being single again. At various phases in your life, you have different priorities, responsibilities and financial goals.

Each stage of your life presents different investment opportunities and challenges. Discipline and perseverance play a key role in maintaining a reliable financial strategy. As your life changes, so do your needs and goals. Sound financial planning can prepare you to meet them successfully.

When you are in your 20s, you will be looking at money and spending it differently from when you get into your 50s. For example, when you are single, you probably want to have enough money to make a down payment for a car or go on a holiday with your friends.

After you get married, you may want to buy a house. Later, when you have children, you would want to plan for their education and maybe even start a retirement fund.

You have to adjust your financial priorities to meet the varied needs at different points of your life. Therefore, how you spend your money as you go through your adult life depends on your financial goals.



The Credit Counselling and Debt Management Agency (AKPK) is an agency under Bank Negara Malaysia tasked to help individuals take control of their financial situation. For assistance, please contact AKPK’s Power Infoline at 03-26167766 or visit www.akpk.org.my.

Saved $1 million and living my dream retirement

Roy Nash long dreamed of retiring at the age of 55.

A self-taught investor, he diligently stashed all the savings he could in stocks and mutual funds. So by 2009, when he did turn 55, he says he had more than $800,000 saved -- enough to step away from his nearly three decade long career at a natural gas distributor in St. Louis.  

Now Nash is 61 and his smart investment choices have helped him grow his retirement savings to more than $1 million.

This sizable nest egg allows him to live the lifestyle he wants. He takes four trips a year to places like Chile and Jamaica and, during the rest of the time, he's volunteering around town, driving the elderly to doctor's appointments or helping poor families file their income taxes.  Now Nash is 61 and his smart investment choices have helped him grow his retirement savings to more than $1 million.

How did he do it?

Nash said he learned about the importance of saving from his mother, who raised him in Marianna, Ark.

"My mom told me when I was real small I should learn how to save some money, because my father was a spendthrift," said Nash. "I took it to heart and went beyond saving. I became an investor."

At the age of 22, he moved to St. Louis and eventually went to work as a controller for the largest natural gas distributor there.

During his free time, he taught himself to invest by reading Money and SmartMoney magazines. That's how he learned to love dividend stocks, high-yield, closed-end funds and mutual funds. He also invests in open-end funds and index funds.

Every year, he socked away between 10% and 15% of his income into his 401(k) plan. Additionally, he also saved another $300 a month in investing accounts with Fidelity.

"I wouldn't consider my savings a sacrifice. I had a good paying job and a budget," Nash said. "I disciplined myself."

And he was mindful about looking after his money and reinvesting gains back into funds and stocks.

"I always reinvested my capital gains," Nash said.

In the beginning, he worked with a brokerage to invest his money. But now he manages his own portfolio.

Nash said he's in an informal retirement club, mostly other retired friends from the office, who he loves teasing about their money managers.

Roy Nash on vacation with his family

"They're paying these guys 1.2% to 2% in fees!" Nash said.

Nash said he collects a healthy sum each year in dividend payouts from his investments in high-yield closed-end mutual funds and preferred stocks.

But still he keeps things simple, living on around $50,000 a year.

Too young for Medicare, Nash gets health insurance through Obamacare, "which has been fantastic," he said.

His retirement income is also enough to satisfy his lust for travel. He takes several trips each year. Often it's just visiting family and friends in Arkansas. But this year, he went to Mardi Gras in New Orleans. He's going to Jamaica in the spring and Santiago, Chile later in the year.

Most days, Nash fills his time by offering his services to the community. During the tax season, he helps the poor prepare their tax forms. And he volunteers for the county, driving housebound elderly residents on much-needed medical errands to doctor's appointments and the pharmacy.

He also plays golf and likes to go fishing, hunting and boating. And he works out at least five days a week, either on a treadmill or a bicycle for between 20 and 30 minutes a day.

"The most important thing I do, is live an active lifestyle," Nash said. "That keeps my doctor bills down."

He has two kids and six grandchildren, ages 3 to 15. Lately, he's become his family's go-to, back-up childcare for sick grandkids.

"If the kids are sick, I go and pick them up, so it doesn't disrupt their parents' work," he said.

And he takes pride in telling his story throughout the community, to help young people learn the importance of saving regularly and early.

"If your income is equal to your expenses, you're not going to save anything," Nash said. "I think anyone making $40,000 a year should be able to save money in St. Louis." 

http://money.cnn.com/2015/03/09/retirement/dream-retirement-million-dollar-saving/index.html?iid=SF_PF_River

A luxury that few people can afford.

If you are lucky to have been rewarded in life , there comes a point at which you have to decide:

- whether to become a slave to your net worth by devoting the rest of your life to increasing it

- or to let what you have accumulated begin to serve you.

The End Of The American Dream - USA

The Middle class is defined as a set of people with these aspirations:

I want to own my own house
I want to live in a safe neighbourhood with good schools
I want to be able to put a bit of money away for taking a modest vacation every year.
I want a health insurance.
I want to be able to save a little for retirement.
I want to be able to send my kids to college.

These make up the "Middle class basket."


Big Question:  Are you doing the things that are most important in your life?

David Bach's #1 Financial Mistake to Avoid

Personal Finance by a leading Financial Planner for the Secondary School Students. Yes, educate them early.

Many intelligent people has no financial education.
This video is an excellent introduction to personal finance.
Well worth spending time to go through the 12 videos in a couple of hours which will benefit you for a lifetime in your financial planning and management.
You will learn the core knowledge of financial planning to accomplish your goals.

Define and set your goals.

Your goals should be SMART
Specific
Measurable
Attainable
Realistic
Time bound



Related:
Compounding
http://myinvestingnotes.blogspot.com/2013/04/compound-interest.html

Do You Invest Like a Grasshopper or an Ant?

When it comes to retirement planning, are you Aesop’s grasshopper or ant?

Like the ant in the fable, should you hoard and invest as much money as you can now, depriving yourself of little luxuries and gambling that you’ll live to a grand old age? Or should you have a bit of fun, like the grasshopper, spend that cash and then end up in your 90s living on Ramen noodles?

Jim Miller’s article posted earlier on this blog— “How Much Should You Save?” — underlines the challenge everyone working without the backup of a pension faces.

A recent Bloomberg.com article (see article posted below) suggests that more of us may be grasshoppers, but caving into immediate gratification may give our finances as much as a six-figure hit. The article notes that a “unique challenge for retirement planning is that the end goal is so far away that it’s hard to see how actions we take or don’t take today will have a huge impact on our older selves.”

Bloomberg further references a contract created by the Allianz Global Investors Center for Behavioral Finance. The contract, written to help financial advisers hold their clients to the investing course, includes this passage: “Should the portfolio value decline by 25 percent, we commit to avoid the urge to panic and sell the portfolio. Similarly, should the portfolio value increase by 25 percent, we commit to avoid the urge to chase the hottest investments.”

If you really want a look at how your savings will pile up if invested in a retirement plan, it’s worthwhile to play around with the 401(k) savings calculator at Bankrate.com. Then tinker with the retirement income calculator at the same website — a fascinating, but also scary, numbers game that may have you joining the ant farm.

http://blog.betterinvesting.org/?p=2836&utm_source=MailingList&utm_medium=email&utm_campaign=BI+Weekly_10-15-12

Retrain Your Brain for Financial Success
By Carla Fried - Oct 9, 2012

Dismal market returns haven’t exactly created a tailwind for 401(k) and IRA portfolios over the last decade or so, but an equally pernicious -- and more entrenched -- problem is that our brains are messing with our retirement plans.

“We are wired for financial defeat,” says Rapid City, South Dakota, certified financial planner Rick Kahler. “Whatever has the most emotional juice right now is what gets our attention. Invest $5,000 in your IRA for a retirement that is 10, 20, 30 years away? Or spend the $5,000 for a vacation to the Bahamas?” All too often, the Bahamas wins out.

William Meyer, founder of Social Security Solutions, notes that our thirst for immediate gratification can easily take a six-figure toll. More than two-thirds of folks opt to claim a lower Social Security benefit starting as early as age 62. For a married couple, than can mean leaving as much as $100,000 on the table. “If you wait to claim until age 70, you’re locking in a benefit that is 76 percent larger," says Meyer.

More productive planning

Forever tweaking your asset allocation probably won’t get you near the retirement payoff that tweaking your brain will achieve. Consider these strategies for engaging your brain in more productive retirement planning:

Get Thee to a Calculator, Pronto: OK, you know you probably should be saving more for retirement. And when life keeps intervening -- that Bahamas vacation you and yours really really need, or the realization that the kid’s orthodontia isn’t covered by insurance -- you tell yourself that next year, you’ll ramp up your savings rate. You’ve got plenty of time, right?

What you may not realize is how expensive that time is. Research conducted by Craig McKenzie, a psychology professor at the University of California, San Diego, shows that we have a tendency to “massively underestimate the cost of waiting to save. It’s difficult to appreciate the difference between giving yourself 20 years to save and 40 years.”

For example, a 30-year-old who is saving $10,000 a year and earning an annualized 6 percent will have $1.2 million at age 65. Care to guess what someone starting at 45 will have? About $390,000. The younger saver invests $150,000 more than the 45-year-old does, and in return has an ending balance that's $800,000 larger. Even if you’re already past your 20s and 30s, you might find it eye-opening to see how extending your investment timeline by delaying retirement on the back end of the calculation can help matters. Your company retirement plan probably has an online calculator you can play with; or try this one.

Make it Personal: How you frame retirement savings decisions can help boost your ability to delay gratification. When individuals were asked if they'd prefer to have $3,400 in one month or $3,800 in two months, 57 percent chose the latter. When the same scenario was framed in terms of one’s personal age -- “when you are 2 months older” -- 83 percent chose to wait for the bigger payoff.

How does that translate to better retirement planning? Yale School of Management marketing professor Shane Frederick, one of the study’s authors, says a 50-year-old who frames a savings goal as “when I am 65” will likely be more patient to focus on that delayed gratification, than someone who frames it as a more generic “in 15 years.”

Time Travel: Another unique challenge for retirement planning is that the end goal is so far away that it’s hard to see how actions we take or don’t take today will have a huge impact on our older selves. When researchers showed individuals doctored photos of their future selves, the human guinea pigs said they would save more than twice as much for retirement, compared to a control group that wasn’t given a glimpse of their older self.

Work is afoot to bring this visual exercise to a 401(k) plan near you. In the meantime, Hal Hershfield, who led the research, says he wouldn’t recommending using apps that age your face. “They're just not accurate enough, and I think seeing a strange-looking version of your future self may actually have the perverse effect of causing you to identify less.”

Hershfield, an assistant professor of marketing at New York University’s Stern School of Business, says new research that has yet to be published shows that simply writing a letter to your future self can help you become more invested in the welfare of that older person. “In a way, this task is a very low-tech version of the age-progression [photo morphing] techniques: Both have the same goal of creating a more vivid image of the future self.” Hershfield says hanging out with older folks -- parents, grandparents, volunteering with an organization for the elderly -- can also have a beneficial impact on your resolve to save more today.

Channel Ulysses. Most of us suffer from a bad case of recency bias, the tendency to extrapolate that whatever is happening today will keep happening. That’s why it’s so hard to buy low and sell high. If your recent experience is a falling market and bad returns, it’s not exactly easy to belly up to the bar and buy stocks, or simply stay committed to what you already own.

A Ulysses Contract -- a one-page statement that lays out your long-term strategy and the fact that you’re committed to staying the course -- can be a line of defense against over-reacting to current events. Like the Greek warrior, you are pre-planning for how you will circumvent alluring emotional sirens that can thwart your retirement plan.

For example, a sample Ulysses contract -- created by the Allianz Global Investors Center for Behavioral Finance for financial advisers to use with clients -- includes this passage: “Should the portfolio value decline by 25 percent, we commit to avoid the urge to panic and sell the portfolio. Similarly, should the portfolio value increase by 25 percent, we commit to avoid the urge to chase the hottest investments.”

Another useful step is to include a clause in your contract saying that before you ever deviate from your plan, you will write down your rationale. As Nobel Laureate Daniel Kahnemann explained in his book, "Thinking, Fast and Slow," you don’t want to cede all power to the quick-twitch intuitive part of your brain. Slowing down and simply writing down why you want to change course triggers more deliberate rational thinking. That’s the key to getting ahead and staying ahead.

(Carla Fried is a freelance writer based in California.)

http://www.bloomberg.com/news/2012-10-05/retirement-planning-2-0-retrain-your-brain-for-financial-success.html

10 Money Mistakes That Can Ruin a Marriage

By Renee Morad
Fri, Oct 12, 2012

As anyone who’s been there knows, there’s no such thing as a friction-free marriage. But arguing can be ominous when the topic is money.

Couples who reported disagreeing about finances once a week were 30 percent more likely to get divorced than couples who reported disagreeing about them once a month, according to a Utah State University study.

In another survey, published in the Forum for Family and Consumer Issues, finances proved to be the leading cause of conflict in marriage, with 39 percent of respondents listing it as their primary issue and 54 percent as their secondary issue.

Here are 10 of the most common mistakes couples make when dealing with money.

1. Not talking enough about finances

There’s a time and place for everything, but it’s often difficult to find the right time and place to talk money.

Some couples benefit from scheduling a time to talk about money matters, just like they would for a date night or business meeting. Other couples might choose to set a monetary limit that would initiate a conversation: Let’s say, for example, they decide purchases under $500 are discretionary but spending money over that amount warrants a discussion.

Find what works for you and your spouse and commit to it. It might not be the most enjoyable way to spend time together, but you’ll thank yourselves later.

2. Thinking you can buy love

If you think splurging on a new diamond ring or luxury car will help improve your marriage, think again.

A Brigham Young University study found couples with two materialistic spouses were worse off on nearly every measure. Following behind were couples with one materialistic spouse.

Couples who claimed money was not important to them, however, were lucky in love: They scored 10 to 15 percent better on marriage stability and other measures of relationship quality than couples with one or two materialistic spouses.

Interestingly, it didn’t matter how much money they had, but how much value they put on money. In the study, couples who were better off financially but admitted to having “a strong love of money” found that money was a bigger source of conflict.

3. Ignoring conflicting spending habits

Scholars have found that individuals gravitate toward spouses who look, sound, and act as they do – except when it comes to money, according to surveys conducted by the University of Pennsylvania, University of Michigan, and Northwestern University.

Penny pinchers and reckless spenders tend to marry the other, but these couples report unhappier marriages than those in which both spouses had similar spending habits, the studies revealed.

Disparity in spending can be manageable, but if issues aren’t addressed, research says this could increase your likelihood of divorce. The Utah State University study found individuals who feel their spouse spends money foolishly reported lower levels of marital happiness and gauged their likelihood of divorce at 45 percent.

4. Not agreeing on how to divide money

Whether you have joint or separate accounts – or both – doesn’t really matter. What does is whether your financial plan is the right one for your marriage.

This comes down to you and your spouse’s spending habits and money values. If you’re unnecessarily stressing about small, day-to-day purchases, for example, it might be better to put part of your finances in separate accounts – so you’re less likely to question your spouse’s every buy. If you work better as a team knowing where all your money is and where it’s going at all times, then merged accounts could be better.

5. Taking on too much debt

About 76 percent of Americans admit money is a significant source of stress in their lives, according to an American Psychological Association report.

There’s nothing more stressful about money than debt – especially the high-interest, hard-to-pay-off kind. If there’s debt hanging overhead that’s threatening to come between you, read stories like A Simple System to Destroy Debt and focus on paying it off – together.

6. Hiding purchases or debts

Eighty percent of married couples hide some purchases from their spouse, according to a survey by nonprofit CESI Debt Solutions – with men admitting they’re more likely to routinely cover up their spending.

The survey revealed 30 percent of respondents view financial infidelity as being just as harmful as sexual infidelity. What’s more, 79 percent of married respondents were more likely to confess about their financial infidelity to a friend than their spouse.

7. Lending or borrowing money from family

In our recent story The 7 Dumbest Ways to Borrow Money, we explained that borrowing money from family comes with major strings attached. After all, you’re risking your relationship if the deal goes bad.

These waters are even more treacherous for married couples. Rule of thumb: Whether it’s borrowing or lending, the fewer in-laws involved, the better.

Of course, with the right scenarios, borrowing money from or lending it to family can be a success. But proceed with caution: Consider drafting a legal document to ensure everyone’s on the same page, and resist splurging on luxury items while you still owe family members money.

8. Believing you need to split up financial responsibilities traditionally

Traditional roles suggest that women manage the day-to-day finances, like balancing the checkbook and paying the utility bills, and men typically handle investing and financial planning. But traditional isn’t always best.

A better option: Recognize each other’s individual strengths and divvy up the financial tasks accordingly. You want the best candidate for the job, regardless of what other couples do or used to do.

9. Failing to recognize that money matters carry emotional weight

Compared with disagreements over any other topic, research shows financial disagreements last longer, are more salient to couples, and generate more negative conflict tactics, such as yelling.

Money conflicts in marriage particularly affect men. Research suggests that since they are socialized to be providers, men tend to take financial conflict harder than women.

10. Not enjoying your money together

Money doesn’t always have to be a source of stress or conflict. It can also be a source of pleasure. Some of my happiest memories with my husband wouldn’t have been possible without us spending money – on things like exploring Italy, or taking our daughter on her first trip to Florida.

In fact, research indicates that spending money on new experiences, like concert tickets or a wine tasting, produces longer-lasting satisfaction than spending money on material possessions. Experiences bring us happiness not only when we’re experiencing them, but also whenever we reflect back on them as memories.

Fond memories, after all, usually turn out to be one of the most valuable assets in a marriage.

http://www.moneytalksnews.com/2012/10/12/10-money-mistakes-that-can-ruin-a-marriage/

Is Your Financial Situation Sustainable And Renewable?

Two words that have attracted a lot of attention are "sustainable" and "renewable." These words are generally used in an environmental sense when discussing energy and natural resources, but they should also be applied to your personal financial situation. Using sustainable and renewable sources of energy, for example, can create a secure supply of energy upon which people can rely. Similarly, ensuring that your lifestyle, savings rate and income can be sustained and/or renewed will help you achieve long-term financial security.

Your Lifestyle

Let's start by examining the spending portion of your financial equation. Do you know how much money you spend each month? If you don't, there's no time like the present to take inventory.

Even if you don't know how much you spend, you should certainly know how much you earn. Starting there, do you know what you would do if your next paycheck did not arrive? How long could you continue to support your current lifestyle? Even if you can't bring yourself to create a budget, at the very least you need to stash away some cash in case you find yourself unemployed.

Your Savings Rate

Now let's look at the savings portion of your financial equation. How much do you save each month? Include all sources, from money set aside in your checking or savings account to your 401(k) plan or other employer-sponsored plan. Don't overlook the cash you stash in the cookie jar.

Now figure out how difficult it would be to save that same amount if you were unemployed or were forced to accept a lower-paying job than the one you have today. When you are saving for long-term goals, such as retirement or the cost of a child's education, the amount you end up with is significantly impacted by the amount you put away early on because of the effects of compound interest. Any interruption of the steady stream of savings could significantly reduce the likelihood of achieving your goal.
When you put your savings plan under the microscope, be sure to view it in the context of your income. Are there places where you could cut your spending if times get tough? Is there a way to cut other expenses before you reduce the amount allocated to savings?

Your Income

Now, let's examine your primary income source. If you are counting on a paycheck from your job to finance your expenses, you should put some thought into where your job ranks in terms of sustainability. Are your skills likely to be in demand five years from now? 10? 15? Is your present employer stable? If not, are your skills easily transferable to another employer? Could you earn an equal or greater paycheck if you changed jobs?

If not, are you taking action? Remember, today is the best time to start preparing for tomorrow.

Hope for the Best, Plan for the Worst

Although the future is unknown, taking inventory of your life will certainly let you know where you stand today and take the stress off your tomorrow. If your current level of income would not be easy to replace, spend some time contemplating the merits of living with less.
Simplifying your lifestyle without reducing your income is a great way to free up some cash to build up your emergency fund or give your investment plan a major boost. With a little forethought, you can be prepared for any eventuality. 


The Bottom Line

Of course, if your cash inflows are steady, your savings plan is on track and your source of income is secure, there's nothing wrong with living the good life. Just do so responsibly. Don't buy more than you can afford, keep your debt-to-income ratio low and have a backup plan in the event that life rains on your parade.

Read more: http://www.investopedia.com/articles/pf/08/personal-finance-sustainable-renewable.asp#ixzz28Je6NVlP

4 Ways To Get A Head Start On Your Financial Career

In the 1970s, financial planners essentially had two career choices: they could become stockbrokers or insurance agents. Their paths were set, and the expectations were simple. Much has changed since then. There are many more choices available, but this also means that students are expected to know more and do more than ever before in fierce competition. Preparing for a career in financial planning requires a great deal more training in areas that were traditionally relegated to other professions, such as accounting and psychology.

In this article we'll explore things that recent and soon-to-be graduates can do to decide where they want their financial planning career to go and to then get a leg-up on the competition.

Prepare Before You Graduate

Perhaps the first and most obvious course of action is to simply choose an appropriate major. These include business, economics, finance or accounting. Personal financial-planning programs are being offered at more universities, both at the graduate and undergraduate levels. These programs can be especially helpful because they also often touch upon a number of topics that other programs fail to cover. These topics include consumer rights, the dynamics of finance within the family and the psychology of retirement.

Traditional financial-planning curricula will only cover material that is directly relevant to the Certified Financial Planner (CFP®) Board exam, such as investments, insurance and taxes. Therefore, choosing financial planning as a major will provide students with a much broader base of knowledge from which to begin their careers. Understanding the psychology of finance and investing will be an invaluable aid when dealing with clients, and is in fact a skill that all financial planners must master to some extent. 

Extracurricular Activities

Of course, choosing the correct major is only one step that students can take to further their careers before graduation. There are a number of other options available to students that will look good on a resume to prospective employers. Here are some examples.

• Preparing Income Tax Returns - This is a good, practical skill that can greatly benefit the student in a number of ways. In addition to providing solid, hands-on experience with customers in the financial industry, it will also teach the student basic tax information that will be tested on the CFP® Board exam.
  
• Working at a Bank - Student planners often find that working at a bank provides multiple career benefits. It's a job that easily fits around an academic schedule. The pay is better than many other after-school jobs. It looks good on a resume, gives practical work experience and shows that you are a responsible person.
  
• Sitting for the Enrolled Agent Exam - This exam is administered by the IRS every September. The test covers virtually all of the tax material found in the CFP® Board exam. Passing this test and earning this designation will be an impressive credential to present to prospective employers in any field of financial practice. You'll also gain a tremendous advantage over CFP® applicants that have had no previous tax training.
  
• Internships - Working as an intern at a financial planning firm will provide obvious benefits for any student. However, while any internship can be beneficial, working at a smaller company will likely provide more hands-on experience with clients and the financial planning process than a larger firm, where interns are often relegated to administrative support or marketing roles.

Finding a Job

Graduates have a number of tools at their disposal that can greatly increase their exposure to the financial community. Obviously, a graduate who completed an internship at a local company has a substantial advantage over an unknown competitor in the job-selection process.

For those who do not have this luxury, the Internet can be an indispensable resource. Websites such as brokerhunter.com continually list all available postings from many companies. Those who prefer to take a face-to-face approach and network themselves (and even those who don't) would be wise to join the local chapter of a financial planning organization, such as the Financial Planning Association or the National Association of Insurance and Financial Advisors. These groups offer many resources to both rookie and veteran planners and are well worth the cost of membership. Their websites often contain job postings, too.

After Graduation

Knowing what job is the best fit for you can be a challenge. Here are some more items to consider when choosing your career path:

• There are a number of different business models being used in the financial planning industry today. Stockbrokers and insurance agents generally work on commission, while Registered Investment Advisors tend to charge either an hourly fee or a percentage of assets under management as compensation.
  
• The size of the company matters. Large companies will provide such amenities as office space, business cards and letterhead. However, larger companies may also have stiff production quotas, lower payouts on commissions and a highly regulated environment.
  
  In turn, small financial companies offer a more relaxed atmosphere and a more comprehensive array of products and services. Working at a smaller firm can also provide a much broader range of experience for new representatives, who may have the freedom to implement a well-rounded financial plan for a client. This plan could include such things as mortgage planning and income tax preparation. It's doubtful you would have this kind of responsibility at a large company.
  
• Training and support differ from company to company. Financial firms such as Smith Barney or Northwestern Mutual will provide their employees with all the necessary education and training that they need in order to pass the requisite tests, as well as thorough sales and product training. Many new advisors will benefit from the training programs offered by the large companies. Even if you ultimately lose out to the competition at a large firm, you will still have marketable skills that are attractive to small firms that can't provide the kind of training and licensing you've received.
  
• Finally, regulations from the Financial Industry Regulatory Authority require sponsorship by a broker/dealer in order to sit for any securities licensing exam.

The Bottom Line

College students have many things that they can do to improve their marketability before graduation. Once you're out in the real world, remember that the initial key to success in the financial planning business is persistence. Some graduates will find their place in the field immediately, while others may have to try a few different working environments to find the one that best suits them. Hard work and perseverance will always pay off for those who are willing to risk failure to achieve their dreams.

Read more: http://www.investopedia.com/articles/financialcareers/07/student-advice.asp#ixzz28JX7DuSu

10 rules for multiplying personal wealth

http://business.rediff.com/report/2009/jul/09/perfin-10-rules-for-multiplying-personal-wealth.htm

I have the privilege of teaching financial planning courses at local colleges and adult learning centers.

One of the things we do in class is recite and write down a set of rules I hope each student can learn to live by.

Here are a few key rules to remember:

Rule 1: Be systematic, unemotional and diversified

This is the very first rule we touch on right from the beginning. There's a popular bumper sticker that says, "I'm spending my grandkids' inheritance."

That whole idea just frustrates me. In some ways, our society's personality is such that if we can spend our money before we die, we've lived a great life. But you can't do that.

Rule 2: Never spend principal

That's the second rule. Inflation has gone above 10 per cent in the US economy five times, and I'd bet you it will happen again.

Rule 3: Never borrow money to buy a depreciating asset

Almost everybody does this at some point. But as soon as possible, and definitely by retirement, you have to get back to a cash basis.

How many people know what a $30,000 car bought on credit costs them at age 25? In retirement dollars, at age 65 and assuming a hypothetical 10 per cent return, that financed car could cost as much as $11,314 a month in potential income. Forever!

So, do you or your children understand what an "investment" in a car really costs you? Yes, I know we all buy cars. But try to imagine what would happen if I got every 25-year-old to forgo just one car purchase and invest that same amount of money in their long-term retirement goals. What a huge difference that could make to their choices at retirement!

Rule 4: Never save money in a spending account

Keep separate bank accounts for saving and spending. You have to save in savings accounts. If you truly want those savings to grow, use an account that helps you leave the money at work, rather than a "slush fund" that's easy to dip into.

People tell me they are saving $545 a month in an account. Yet when I ask them how much they have accumulated after seven years of doing this, their answer is often $1,123 because they spend out of that same account.

It is not a save-to-save account -- it's a save-to-spend account! If you know you're not naturally a disciplined saver, make it harder to get at the money. You'll be doing yourself a favor in the long run.

Rule 5: Use half, save half

Every time you pay off a debt, get a pay raise, get a bonus, or have any excess cash, have fun with half the money, and put the other half toward your long-term goals.

This is one of the best rules, especially for younger people. By following this rule consistently, in ten years, most people are amazed at how much they can save.

Whether you save or not has nothing to do with how much money you make. Either you save or you don't. It's a habit. Make a habit of investing half of any windfall, big or small, right off the top.

Rule 6: Always use matching money

For example, your employer's 401(k) matching program (in India [ Images ], the employer's matching Providend Fund Contribution, for example).

Do whatever you must to take advantage of matched contributions in a retirement plan. You can't afford not to take the free money.

Hypothetically speaking, if you invest $100 take-home pay in a taxable investment (25 per cent tax on growth) at an assumed 10 per cent return, you would potentially have $135,586 in 30 years (sales charges and fees not included).

If you put the same $100 into your 401(k) that is 100 per cent matched, now you have $150 a month saved because of the tax savings.

Meanwhile your boss adds $150 because of the match -- and it grows tax-deferred, too! Using the same hypothetical return scenario, we have $683,797 to live on -- five times as much wealth with the same work.

Sometimes being smart with our money is a phenomenal advantage. This is a classic example of where investor behavior, not investment performance, makes a huge difference in your long-term wealth potential. You can hate your boss, or plan to quit, but you must take advantage of the matched money.

Rule 7: Do not spend more than you make

This should seem painfully obvious, but people often have no idea how much they're really spending and what relationship that has to how much they make.

In making a budget people often cannot account for 30 per cent of the money they earn and where it goes.

If you are just a little more vigilant, you can significantly enhance your long-term ability to reach your goals.

A budget doesn't happen by accident; it takes practice and is an ever-changing tool in our financial planning. Practice makes perfect. Although "perfect" is never the ideal word for a budget, it does have more meaning and usefulness the longer we practice its use.

Rule 8: Never leave undivided real property to joint beneficiaries

Lots of things are more important than money. Family is probably at the top of the list. If you want a vicious family feud on your hands, breaking this rule would be a great place to start.

Imagine a farm that gets left to four sons: One has farmed it for 20 years; one is an environmentalist and wants it to be a park; one is broke and needs money; and one could not care less about it. Who will get wealthy from this plan? The attorneys. And the kids and grandkids will probably hate each other forever.

Remember that 'equal', 'equitable', and 'fair' are three different words with three totally different meanings.

Rule 9: Never name co-trustees or co-executors of your estate

This one goes right along with the undivided property rule above. Next to poor planning, litigation can be the biggest financial drain on an estate.

Minimize the number of trusted decision-makers, and you'll reduce your chances for litigation. What's more, the entire process will be easier and more efficient with one decision-maker.

Rule 10: Above all --

--Be happy with what you have, and it will lead to both unbelievable financial success and personal (not mere financial) wealth!

[Excerpt from The Invincible Investor: 10 Top Financial Planners Reveal the Secrets of Loss-Proof Investing(www.visionbooksindia.com/details.asp?isbn=8170947456) Published by Vision Books.]

Introduction to Financial Planning

Should You Support Your Adult Child?

Should You Support Your Adult Child? March 21, 2010 Your child is an adult now. You have supported him until he has graduated from university. How far should you continue to support him? Parents are not doing their adult child a favor by supporting him continuously with no limits in sight. Your adult child may end up being dependent on you and may put off taking full responsibility for his own life or future. Personally, I think that it is fine to support my adult child and he is welcome to stay at home within certain conditions or parameters. One of the ground rules I would insist upon is that my adult child helps with the household chores and if he is working, he should contribute towards the household expenses as well. One day, I would expect him to move out and build a family of his own. However, I would not kick him out of the house when family support is still needed. Money concerns One of the main concerns when an adult child lives with the parents is on money matters. I would not want to jeopardize my own financial future to support my adult child continuously. Your adult child has to understand that you are not going to sponsor his leisure pursuits or other hobbies while staying with you. You are not his banker unless he is committed to repaying the money. I would love to help my adult child once in awhile (if I can afford it) but it will be my decision whether to do so or not. Educate him quickly! Your adult child needs to be taught to live within his means, start to build a nest egg as soon as possible and not to fall victim to money traps like credit cards. An important priority is finding a source of income (not the parents) like getting a good paying job or jobs (it does not hurt to work hard especially when you are still young). It is imperative that your child loves his work and finds it fulfilling. Teach him how to budget and to pay his bills on time. If he has trouble paying his bills, do not rush in immediately to bail him out. He has to figure out how to solve his money problems with your advice and guidance. In short, the goal is getting your adult child to be independent and take control of his own life. You would not want him still dependent on you especially during your retirement period, right?

http://www.investlah.com/forum/index.php/topic,7271.0.html


Warren Buffett's approach is reasonable, give them enough to be 
comfortable but not so much as to end up as useless human trash.


Related:

Let The Man Be The Man He Is

http://malaysiafinance.blogspot.com/2012/08/let-man-be-man-he-is.html

Financial Planning The Right Way. Write down your goals, don't get emotional, and stay on course.

http://www.youtube.com/watch?feature=fvwp&v=e0G_ZKxbECM&NR=1

Financial Planning and Reinvesting Your Passive Income

Reinvest money from passive income

My Cash Flow Framework

Cash Flow Diagram

HAVE YOU STARTED YOUR JOURNEY TOWARDS FINANCIAL FREEDOM?

No, what is financial freedom?	7 (6%)
No, I don't intend to start my journey.	1 (0%)
No, but I am preparing to start my journey.	26 (25%)
Yes, I have just started my journey.	40 (39%)
Yes, I am half-way in my journey.	17 (16%)
Yes, I have achieved financial freedom already.	10 (9%)

Source:  

My Investment Portfolio in Singapore

Saving Money In Singapore