Tag Archives: financial planning

Retirement Planning: 4 Simple Steps

Guest Article By Syed Ali Zain-ul-Abideen 

For many, nearing retirement age can get frustrating and confusing. Many fail to properly get their finances in order to be able to enjoy retired life and thus, frustration takes root and tolls heavily on the person. being forty-five or fifty-five, very few people are satisfied with what they have saved for their retirement days. The list of regrets may not end there. Without getting an early start, many things can go wrong. Those that well into their forties and fifties are bound to lag behind. So, here are some practical and simple steps to getting really into retirement planning if you’re a professional, business owner or just someone who cares about the future!

Firstly, the lessons of life are learned by personal experience or by the experience of others. Smart people learn from the latter in order to never experience bad situations after retirement. The very first lesson to learn about retirement planning is to start saving sooner rather than later. It’s not complicated and it doesn’t require you to be a finance guru either. With some willpower, guidelines, and knowledge, planning your retirement can be easy, convenient and above all, blissful.

Invest

Every paycheck should have about fifteen percent invested into retirement. It can be a savings account or a small side business that, if managed properly, can become something to rely on later on. Retirement saving goals are great but enjoying less of your income today would enable you to afford expenses tomorrow! Forget about your employer’s retirement plan, your own gross income must have this percent stashed away in any form for the golden years ahead.

Recognize Spending Requirements

Being realistic about post-retirement expenditures will drastically help in acquiring a truer picture of what kind of retirement portfolio to adopt. For instance, most people would argue that their expenses after retirement would amount to seventy or eighty percent of what have been spending previously. Assumptions can prove untrue or unrealistic especially if mortgages have not been paid off or if medical emergencies occur. So, to better manage retirement plans, it’s vital to have a firm understanding of what to expect, expense-wise!

Don’t Keep All the Eggs in One Basket

This is the single biggest risk to take that there is for a retiree. Putting all money into one place can be disastrous for obvious reasons and it’s almost never recommended, for instance, in single stock investments. If it hits, it hits. If it doesn’t, it may never be back. However, mutual funds in large and easily recognizable new brands may be worth if potential growth or aggressive growth, growth, and income is seen. Smart investment is key here.

Stick to the Plan

Nothing is risk-free. Mutual funds or stocks, everything has its ups and downs so it will have ups and downs. But when you leave it and add more to it, it’s bound to grow in the long term. After the 2008-09 stock market crash, studies have shown that the retirement plans in the workplace were balanced with an average set of above two-hundred thousand. The grown by average annual rate was fifteen percent between 2004 and 2014.

Kewcorp financial is a premiere Sherwood Park-based financial planning team which has more than thirty years of experience in financial planning, investments, insurance and tax planning to name a few. Our professionals are industry experts and have the necessary knowledge and qualification along with the skill to secure your financial future.

Article Source: https://EzineArticles.com/expert/Syed_Ali_Zain-ul-Abideen/2317169

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What Is An Exchange Traded Fund and How It Works

Guest Article By Shashank Pawar

Investors seeking exposure to an index can consider ETF investing as an option. Exchange traded funds are one of the many types of mutual funds available today and gaining popularity among various kinds of investors. While you may be familiar with equity mutual funds, debt funds or balanced funds, ETFs are yet another class of mutual funds that function a bit differently. ETFs are mutual funds designed to mimic popular market indices like the Nifty 100, BSE 100, Sensex etc. These are passively managed funds that simply hold the stocks of the index they are supposed to mimic exactly in the same proportion as the index. Since the fund managers don’t take active calls in security selection by holding the same stocks as included in the index, these funds are passively managed.

Exchange traded funds are suitable for first-time investors who would like to test the waters and may not be comfortable with the higher risk associated with regular mutual funds.

There are several advantages of investing in an ETF. Firstly, being passively managed they make fewer transactions as compared to actively managed funds where the fund manager must constantly look for securities that can help him outperform the scheme’s benchmark. This leads to higher portfolio turnover resulting in higher tax incidence. Funds pay taxes like STT (Securities Transaction Tax) and capital gains tax while buying or selling securities within their portfolio. Thus, ETFs are more tax efficient and have lower costs arising out of fund management.

Secondly ETFs also usually have lower expense ratio compared to actively managed mutual funds which must employ highly skilled fund managers for generating active returns.

Thirdly ETFs offer more convenience and liquidity to investors since they are listed on exchanges and trade like stocks. Investors can transact in ETF funds any time during market hours at real-time prices unlike actively managed mutual funds where NAV is computed only once a day after the market closes.

ETFs offer better diversification since they carry all the securities listed in the index which are periodically rebalanced. But the reduced risk arising out of greater diversification in exchange-traded funds comes at the cost of possibly lower returns as compared to other mutual funds. Actively run mutual funds are more likely to earn a better return over the long-term than passively managed funds since the fund manager uses his expertise and takes active calls to buy better-performing stocks and sell underperforming stocks. But in the case of an ETF that mimics an index, all kinds of stocks are held including the underperformers.

ETF investors should consider funds with lower tracking error as a key performance indicator. Tracking error shows the deviation in return of a fund from its benchmark. Since these funds mimic their respective indices, tracking error should be close to zero. However, zero tracking error is impossible since it must buy or sell securities to align with the index whenever the index undergoes a rebalancing and hence must bear some transaction costs. However, indices have no such constraints. Investors keen on lower expense ratio and higher liquidity can consider including ETFs in their financial planning.

You can read more about ETF funds on Mutual Funds Sahi Hai, an investor education initiative by AMFI.

Article Source: https://EzineArticles.com/expert/Shashank_Pawar/2571655

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