Annuities are probably the most complex “beast” in the financial world. As if it isn’t enough, life insurance companies multiplied product varieties to make sure they are the only ones who can understand (and sell!) annuities.

 

One of the most fundamental concepts to understand is the qualified vs non-qualified annuity. At first glance, I would be tempted to select a qualified annuity without any doubts. The term “qualified” inspires trust. In the financial industry, trust is everything.

 

But if you are like me and selected the qualified annuity right off the bat, you would make a big mistake. In fact, non-qualified annuities show a better tax treatment than qualified annuities!

 

What the Term Qualified is All About

 

The term “qualified” for an annuity denotes if the annuity is purchased with money coming from a pension plan / registered account or from after-tax money or a taxable savings account. Many retirement plans across the world enable you to buy an annuity at retirement. During your working years, a part of your salary is deposited and invested in a tax-sheltered account. Upon retirement, you often have the option of either investing the money as you wish in your own retirement account or purchasing an annuity. The annuity will give you a fixed payment for the rest of your life. This is how defined pension plans work as well.

 

This is what we call a qualified annuity. The money used to buy the annuity is coming from a tax-sheltered account. Therefore, each annuity payment is fully taxable. It is being added onto your income at the end of the year and is taxed as a salary. Therefore, if you live in a country where the marginal tax rate tends to increase fast, your annuity payment may be sponsoring both your retirement and the government at the same time!

 

On the other hand, you don’t need a registered account or a pension plan to buy an annuity. You can buy one using your own funds. The money used to buy the annuity coming from your bank account. This also means you have already paid taxes on this money prior to buying the annuity. But since you already paid taxes on that money, we call it a non-qualified annuity as it doesnt qualify as money coming from a pension plan. The good news about the “non-qualification” is you pay fewer taxes on your annuity payment!

 

A part of the annuity payment is considered to be a “return of capital” meaning the insurance company gives you back a part of the after-tax money you use to purchase the annuity contract. This is why, usually, the non-qualified annuity rate is better than the interest paid by a bond or a certificate of deposit. While interest payments are fully taxed (as income), the non-qualified annuity payment include a part that is tax free.

 

The Best Resources to Understand a Non-Qualified Annuity Tax Treatment

 

I’ve been searching the web for an easy to understand example that would teach you how the tax treatment works for both type of annuity. I found this website; Annuity Rates HQ that wrote a whole article explaining what a non-qualified annuity is.

 

You will find an example with real numbers along with a 20min length video going through the whole process. It’s easy to understand and it is definitely a financial strategy that works!

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Internet marketing is a rapidly growing industry. Most companies can’t afford to neglect their online presence in a market where people look for information online before making so many decisions. Internet marketers help businesses develop their online presence, often working with web designers, web developers, and writers. They help websites get traffic from search engines or ads, track traffic and trends, and create reports illustrating progress. They also help companies develop long-term marketing plans.

Successful internet marketing specialists tend to share a few of the same traits. Enjoying competition is important because internet marketers need to constantly pay attention to their competitors and their client’s competitors. Monitoring the competition helps internet marketers create and alter their own strategies to achieve the best results.

They also tend to be creative, with very strong work ethics. Online marketing is a constantly changing field, and new ideas and strategies are important to remain competetive and be successful. Creating new strategies requires devoting time to keeping up with the latest trends, methods and technologies. The desire to achieve the best results possible requires spending time researching and learning about new skills and techniques.

As a career, online marketing will keep you feeling constantly challenged and offer a variety of opportunities. There are also other benefits, such as flexibility. Because online marketers do so much of their work online, they can work from almost anywhere. Every situation will be different, so some work in traditional office environments, while others might be able to work poolside.

Many online marketers also work for themselves, or for more than one business at a time. The appeal of setting their own hours and choosing which projects to take on holds a lot of appeal for some people. They can choose what kind of businesses and products they want to associate with or specialize in. It also means they can create the kind of work-life balance they want, depending on their family situation and financial goals.

As an industry, internet marketing is fast growing and global. If working from home, being creative, continuously learning, and developing new ideas appeals to you, you might want to think about Internet Marketing as a career. You could do some online research, look into some college courses, or even reach out to an online marketer to see if they would mind speaking with you.

 

Your business plan is an important document. It is what can secure the funding you need to start or grow your business. While there are some simple things you can do to create a brilliant business plan, there are also some things you can do that may sink your chances of getting the funding you deserve. Not everybody will trust a new entrepreneur, this is why it is so important to have a strong business plan. To make sure you receive the funding that you need for your business, make sure to avoid these common mistakes.

Technical Terminology

Along with technical jargon, you want to make sure you avoid including clichés and New Age lingo in your business plan. Most investors that you will be presenting your plan to won’t know the technical jargon of your industry, so you don’t want to alienate them, or make them feel uneducated. Keep your language simple and in line with what you are trying to accomplish.

It’s a Plan, Not a Brochure

When you are writing your company description, the last thing you want to do is include detailed descriptions of every single product you have in your inventory. Although investors are interested in the products you are selling, they are more interested in how you are going to sell them. They want to know who you are planning to sell them to, how you are going to get customers to buy your products, how much you plan to sell them for, and when you expect to put the plan into effect.

The Word “Conservative”

If you state that the numbers reflected in your business plan are “conservative,” you run the risk that your potential investors will think that means your sales will actually be slower and lower than you project. This also implies that the costs that you are expected to incur will be higher than you’ve projected. A better way to express these numbers would be to say that they are “realistic,” according to Luke Lang, co-creator of Crowdcube.com. By saying this you have acknowledged that there is the potential for huge numbers but also know that as a new company with limited resources there is a chance your numbers may not be as large as you hope.

Individual Curricula Vitae

When it comes to the management section of your business plan, it is important to write unique descriptions of the management team you have in place. Simply attaching each employee’s individual curriculum vitae will only make you look sloppy. Trying to secure funding for your business is important, which means you need to take the time to make your sample of business plan shine. This includes each and every section of the plan. If you aren’t good at writing staff bios, you may want to consider hiring a creative writer to help you complete this important part of your business plan.

Inconsistent Formatting

When it comes to the way your business plan looks, it is extremely important to keep the formatting consistent and clean. Avoid using a variety of different fonts and borders, and keep the formatting simple. You should stick to a 12-point font size and only use a maximum of two fonts, one for your headings and one for the rest of your text. You want to keep your plan tidy and easy to read, avoiding any confusion on the part of your audience.

Your business plan is the document that will get you the funding you need to start your business. Even the smallest of errors can work against you when writing your business plan, according to the writers at Wisteria Business Plans. To make sure you have the best possible chance of seeing your business dreams succeed, it is important to make your business plan the best it can possibly be.

 

 

 

For most people in their 20s, buying their first house will become the most important transaction of their life. When you think about it, this will be the biggest loan ever taken and you will buy your biggest asset with it. What if you borrow too much? Or that you buy a house filled with problems you didn’t see?

 

Buying your first house often means moving into paradise. But if the transaction is not done properly, you may be moving to hell. Here’s a quick guide with crucial points you must take a look before buying your home.

 

MAKE A REAL BUDGET AND START SAVING ON THE SIDE

 

If you think you can afford to buy a house because you can sustain paying a $1,000 rent, think again. A house is a lot more than a mortgage payment. You need to put money aside for utilities, taxes, maintenance and improvement. Most people under estimate the cost of maintaining a house and all those little things you don’t need when you are in an apartment. I remember that after buying my first house, I was at Home Depot every weekend spending $100-$200 each time to buy things I needed and didn’t have before moving. So if you can afford $1,000 in rent, my advice is to go one step further. Make a real budget and start saving an additional $300 per month. This will increase your down payment and prove beyond a doubt that you can afford all the little expenses around the house.

 

MEET WITH YOUR BANKER FIRST

 

Before you start looking for a house and get all excited, have a chat with your banker. He is in the best position to tell you how much you can borrow and at what rate. He can also guide you on how to save for your down payment and the best type of mortgage for your situation. He will realign your budget and make it more realistic.

 

USE THE SERVICE OF A REAL ESTATE AGENT

 

I think this is sound advice for anybody who wants to buy their first property. Chances are you have little Real Estate Experience and the use of a realtor can be a very sound idea. For example, if you are looking to buy a house for sale in Montreal, taking an agent will save you time as he knows which neighborhood is great and still affordable. The agent will walk you through each step of the buying process.

 

DON’T LET YOUR FEELINGS GET IN THE WAY

 

Buying a house comes with an important emotional charge. You are about to change a part of your life. Your home is the place where you will spend most of your day besides work, it must be chosen carefully. On top of this, if your feelings get in the way, you may start dreaming of a house that is more than you can afford. Unfortunately, you will always find a bank to lend you too much money and you will buy the house of your dream. Then, you will realize that you are stuck inside and can’t even afford to buy a newspaper.

 

PAY FOR AN INSPECTION

 

I know that when you buy a house, there will be tons of extra expenses. You will have to pay for moving, the lawyer, remodeling, taxes, etc. You may want to try to reduce your expenses as much as possible. But if there is one place you should not skimp in your budget is with the final inspection of the house. The inspector will check important key points around your property to make sure you don’t buy a lemon. These few hundred bucks could save you thousands in the future.

 

Spring is around the corner and this will be the right time to buy a house. Start with your budget and look around on the internet. Good luck with house shopping!

saving in twenties

This article is a guest post from Jessica Wagner, a freelance writer.

If you’re like me, you probably don’t have a lot of money left over at the end of the month. If you’ve just started a new career, you’re probably not bringing home a lot of cash; if you’ve decided to go back to grad school or explore other options, you may not be earning very much money at all.

For a lot of people in their 20s, simply having enough money to pay the bills is a significant achievement. However, there’s also no better time to invest. As difficult as it may seem to set aside money for investments when you’re living in a tiny apartment with roommates and trying to balance all of your other financial obligations, even investing a little bit of money every year has enormous long-term effects for your future.

Types of Investments

The most common investments available to 20-somethings are the 401(k) plans set up by your employers or the Roth IRAs you can set up through your bank. These investments are intended as retirement accounts — once your money goes in, it can’t come out until you retire, unless you want to pay taxes and penalties — but if you start investing now, your tiny investment will eventually earn hundreds of thousands of dollars more than a person who waits until her 30s to start saving for retirement.

There are other options if you don’t want to put everything into a retirement account. One of them is, of course, the stock market. I’m going to recommend against going the stock route, because unless you are lucky enough to have large amounts of disposable cash, you can’t risk the gamble. Right now you need to be thinking about how to make your available dollars go as far as possible.

One of the best types of investments for a young 20-something is a CD, or “certificate of deposit.” When you buy a CD, you loan your money to a bank in exchange for a predetermined interest rate. Unlike other types of investments, CDs aren’t variable; that is, they don’t go up and down like stocks or mutual funds. You can track exactly how much money you earn with a CD, down to the penny.

Why are CDs so great for young people? Well, you’re probably going to have a few major expenses coming up in the next 10 to 15 years, such as a wedding, a home down payment, or that round-the-world trip you’ve always dreamed of. Unlike other investments, such as Roth IRAs, a CD does not force you to put your money away until you’re 65. Instead, you can put it away for a few years, and then get it back, with interest attached.

Learn about CD growth and safety, and then start searching for the best CD rates. When you see exactly how fast your money can grow, you’ll be glad you made the investment.

Investing vs. Student Loan Payments

One of the most common questions I get from other young 20-somethings is “Shouldn’t I spend all of my money on paying down my student loans?” Yes, I’ve got student loans too, and my student loan balance is significantly higher than the national average of $24,301. But that isn’t stopping me from saving for my future.

For most of us in this generation, student loans will be just another monthly payment, like a car payment or an electric bill. It’s part of the cost of being an adult. Yes, you can throw every extra penny you have at your student loans and get them fully paid off by the time you’re 40, but that means you start at age 40 with nothing saved for retirement. It may mean you put off home buying or starting a family. Even though it seems like the responsible thing to pay down your student loans as fast as you can, it’s actually going to prevent you from maximizing your financial potential.

Instead, think holistically. Every month, you’re going to pay your rent, and you’re going to pay your bills. You’re going to pay down a little bit of your student loans. And, most importantly, you’re going to save for your future. You’re going to invest in that CD so you have money for your upcoming expenses. You’re going to maximize your 401(k) to get that employer match. You’re going to live life like you’re planning for the whole thing, not simply paying off something that happened when you were in college.

Now it’s your turn. Are you taking advantage of the benefits that come from saving in your 20s? How are you making it work with your budget? Do you find it difficult to decide between investing in your future and paying off your student loans? Do you have questions about CDs or other investments?

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If you have ever saved to buy a new car or house, or figured out how to put yourself through college, than financial planning might be a great career choice for you. Financial planning is the perfect job for a recent college graduate or someone looking for a career change later in life. If you enjoy managing and budgeting money, as well as working directly with people, then it might be something you want to look into. It’s a very rewarding career that is very obtainable if you have the skills and drive. If you’re interested in becoming a financial planner follow these steps to make sure you’re doing it right.

Make Sure Financial Planning is Right for You

Financial planning is not for everyone. It demands certain skills and can have grueling hours. Make sure that you have an interest in investment and finance, as well as a strong understanding for math and learning new technology before jumping into this career. If you do not enjoy working with numbers or aren’t keen on details, this career may not be for you. Additionally, some financial planners start out as unpaid interns, so make sure you’re okay with starting from the bottom and working your way up.

Get a Bachelor’s Degree

Most financial advisors have a bachelor’s degree, so having one will give you an edge among your competitors. If you want a professional certification such as CFP or CFA, having a bachelor’s degree is required. Although your major doesn’t matter, it helps if it’s in Accounting, Economics, Finance, Marketing, Business or Commerce. Studying Mathematics or Computer Science will also give you an advantage and a better understanding of finance and computer technology.

Obtaining a degree in the career you want to pursue is important even if you decide against financial planning. Gaining at least a bachelor’s degree is highly recommended, even if you don’t plan on getting any certifications.

Gain Experience

What would a career at Fisher Investments be like? Well, how about looking for an internship that can give you a good idea of what the finance business is all about, or look for a entry-level job at a reputable company like Fisher Investments. Learn everything you can about the business during this time and decide which route you would like to take as a financial planner.

Once you figure out what path to take, start looking for jobs at companies that fit you and your needs. Try starting out at a smaller company so you can get opportunities for one-on-one mentoring and will be able to broaden your knowledge by performing several different tasks for different clients.

Look Into Training Programs

Some large investment companies offer training programs for financial planners, during which they will help you gain the necessary work experience and help prepare you for your licensing exam. The companies will teach you the rules and regulations, but cannot force you to be passionate about it. So make sure you’re making the right decision before getting this far. This is also a chance for you to get your foot in the door by showing your dedication and willingness to learn. These programs are very competitive and time-consuming, but highly recommended if you have the time.

Get Licensed

Having a professional license shows your clients and employer that you care enough about your job to pursue extra education and certifications. The licence(s) you’ll need depend on which path you want to take in your financial career. Look over a list of certifications and their purpose before choosing which one is right for you. Also, make sure you follow-up with continuing education. Some licenses require you to take continuing education examinations every few years or pay re-licensing fees.

Financial planning is a great career and is very accessible if you’re willing to put in the work. The hours may be long and the work may be grueling, but it’s definitely doable if you have the drive and determination. If you think that a career in financial planning is for you then follow these steps to get on the right path.

Author Bio: Samantha Ducati is a loving wife and a mother of 2. She loves reading and writing so much that during her free time she writes about anything and believes that a pen is mightier than a sword.

A home is a place where precious moments and priceless memories reside. It is also where most of your belongings are. These belongings sometimes mean a lot more than common material. They are what you worked for for years and many of us feel proud about them.

Should a fire or a burglary happen, proper insurance is essential so you don’t loose all value. But you’ll have to replace your belongings and it also takes a lot of time to get back what you have. However, a home security system can prevent many bad events before they happen. This is why it is clearly a tool to consider including as a home owner.

Now what? How to choose it? There are so many different systems out there that it can become overwhelming.

Knowing Your Needs

The choice made is mainly related to your needs. How many windows do you have? How many doors? Would you like them all to be protected by the home security system? Where would like the control panel to be? Would a keypad be useful for you (that’s basically something similar to a remote control)?

Wired Vs. Wireless

For many years, home security systems all required wires. It sometimes results in higher installation costs due to the wires going throughout the home walls. In case you need to change your system, they are chances you’ll have to change the wires as well and pay higher costs for installation once again. Nowadays, wireless home security systems exist. Some, like the SimpliSafe Wireless Security, can even be installed by yourself so you save more money. Therefore, it can be worth comparing the upfront cost of both systems but also monthly or repairing fees that may occur before taking the decision.

Monitored or Not?

Depending of your home area, having your system monitored can be justified… or not! For example, if you live in a place where many burglaries took place in the last years, it may be a good idea to have it monitored. It might also be the right choice is you live in the country where you don’t have close neighbors that can alert the autorithy if needed. Monthly fees apply for monitoring.

On the other side, if you live in a quiet neighborhood where your neighbors know you, it might not be worth to monitor your system. Then, you need to be confident that the loud alarm will be noticed by them and proper action will be taken.

Motion Sensors

These sensors seem to be worthwhile at first thoughts. You may want to consider your lifestyle before installing them though. If you have young children getting up in the middle of the night or a teenager with big night appetite, you might want to skip them. Another reason why motion sensors can be a bad idea is a pet that roams the house at night. This type of lifestyles might result in unwanted alarms in the middle of the night!

Consulting Reviews

My last tip would be to consult some reviews about the systems that attract you the most. Having an input from users can never be denied. You can search and easily find them over the web.

What about you? Would you consider having a home security system?

rewards

When I was a student, I can still remember how often I heard that credit cards were bad. Most of the times, they are, especially when you’re young and have about no personal finance experience or knowledge. Many are tempted to see their credit card as “free” money… paid the hard way afterwards. Let me tell you a little secret: Using a credit card to save is possible! It’s actually for me one of the best ways to pay for about all my expenses. Let’s have a look at the advantages of this method.

Look for Rewards

There are plenty of rewards credit cards. Some offer rewards like flights, gifts, etc. Others will give you cask back rewards. These are my favorite. Usually, you can get around 1% cash back on all purchases made with your credit card and up to 5% on specific items such as gas, drugstores, etc. I usually use this cash back once a year for our family vacations. If you have a mortgage, you might want to consider using your cash back as extra payments on your loan. Taking this habit can save you a lot in interests on the long run.

Stores’ Credit Cards

If you have a good rewards credit card, there’s no real advantage into subscribing for a store’s credit card. However, it can be advantageous to look in through. For example, if you do your groceries at Walmart along with many other products on a regular basis, it could be a good idea to register to its credit card and earn 5% on in-store purchases while your regular rewards credit card only gives you 1% cash back in the same store. Make sure to not hold too many credit cards at the same time though or you could easily loose track of your expenses and monthly bills.

Building a Relationship with your Bank

Using your credit card will also indirectly save you money by creating a relationship with your bank. If you pay your entire bill each month, chances are that your bank will most likely give you lower rates on future loans, line of credit, mortgage, etc. Simply put, the bank will be more likely to lend over to you if you have a good credit score, which you can build at young age by smartly using your credit card.

Money Protection

Credit Cards almost always come with money protection that can’t be denied. Should you get your wallet stolen or in case your a victim of online fraud, many credit cards company will give you a free protection plan. Headaches and money saved again! ;-)

As you can see, there are numerous ways to save money while using a credit card. It’s only up to you to manage it according to your needs. Taking a low limit rewards credit cards can surely help you keeping things balanced while still saving money.

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