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March 28, 2016

When is the correct time to begin investing in mutual funds?

mutual fund investmentsPicking mutual funds for investment is easier than picking the right time to invest in them. We give you five hints to help you choose.

Every investor knows that in order to make money, he must put the money he currently has to good use. Simply letting the money sit in the bank or investing it in such instruments as real estate and gold do not always yield the best results. Besides, if the investor has both short term and long term goals, he may need to look at mutual fund investment.

But despite wishing to invest in mutual funds in India, many factors can hold an investor back. In terms of mutual funds, ‘how’ is often not as important as ‘when’. Consider these five pointers to help yourself decide when to invest in mutual funds:

1 When you do your research.

You must be willing to put in hours of study on both the fund you are interested in and the fund house. Choosing the best mutual funds cannot be a snap decision, and it cannot be based on the current favourite in the market. The fund you purchase must offer the potential for growth that you seek to realise your short term and long term financial goals. Apart from the fund, you must select the right fund manager as well. Conducting due diligence is the crucial first step to investing in the best mutual funds in India.

2 Study the fund manager’s record over three years.

Investors are often tempted to see short term results of the fund manager they wish to work with. However, experts will tell you that any amount of time short of three years is too less to analyse the manager’s performance. Analyse his track record over three to five years and discuss the various strategies he has adopted over the years vis-à-vis market fluctuations and asset allocation.

3 Choose a manager with the same investment style as yours.

A fund manager is not a magician who can convert your mutual fund investment into piles of money. Nor is he a mathematician who follows provable theorems with predictable outcomes. A fund manager studies the markets and interprets them every day, and bases his decisions on his understanding and skill. The gains may be slow in coming in some cases, while another of his decisions can fetch a windfall. However, his investment style must align with yours, or there may be conflict in reaching your fiscal goals.

4 Pick the fund of the best available ones.

Studying market forces every day and picking the right mutual fund is important for the proper realisation of your financial goals. Most people tend to go with the popular choice, or expect a long term fund to generate constant growth in the short term. Discussing the fund’s growth with your manager regularly, reading reports by financial companies and looking up the workings of the best mutual funds relays valuable information.

5 Be certain that it is the best way to create wealth.

Investing in mutual funds is a matter of faith and being open to a little risk. Sometimes, all calculations can go awry and mutual funds may show extremely low returns. Hence, it is important to be convinced about the decision to invest in a mutual fund. Only when the investor is certain that they will give the best returns will the investor be confident about putting in his money in them.

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March 15, 2016

Why Women Need To Be Involved In Family Finances

financial planning for single motherIn 2005, I began working with a new client. She just got divorced after over 30 years of marriage. Like many women, she had been content to allow her husband to take care of their finances. However, circumstances changed. In her late 50s, this woman found herself in uncharted waters: managing significant financial matters with zero prior experience.

While insurance, investments and financial planning have traditionally been “a man’s game,” there are many statistics that predict a different story. Women are living significantly longer than men and are more likely to become widows. Like it or not, it’s imperative for women stay on top of all things financial, for themselves and their families.

There are many aspects to financial planning: savings, retirement, day-to-day expenses, student loans, college savings, estate management, building a comprehensive stock market portfolio, life insurance, and more! It can get overwhelming trying to keeping track of every aspect of your broad financial plan. Here are four tips to get started:

1) Make it fun. Financial planning is not something that brings an immediate smile to one’s face. Try to take the stress out of it by making your conversations fun. Plan a “date night” where you cook together and go over one aspect of the finances over dinner. Don’t try to go out: restaurants are wonderful for romance, but not great for private financial conversations. Whatever it is you enjoy, try to mix that in so you can associate something positive with this new learning adventure.

2) Don’t get defensive. Your goal is to become more educated and involved in your family’s finances. This doesn’t have to be a cause for alarm or fighting! Remind whoever is currently in charge that this is not a criticism of what they have been doing. You are not going to change things overnight or perhaps even at all, so do not start out on the defensive.

3) Start with cash flow. In terms of where to start, I recommend beginning with the basics: cash flow. Where are funds currently being spent and allocated? How are new expenses prioritized? This is a good time to analyze expenses both from a high level and then more detailed. We get busy with our daily lives and while a $100/year item may not be significant—how many of them are there? Those can really add up.

4) Meet and engage with your team. Do you personally know your CPA, attorney, and financial professionals? Start to build a relationship with them. Make sure you understand how they make decisions, how they bill, and how they can help you and your partner reach your goals.

Starting the process is half the battle,and there is no wrong answer when deciding which area to approach first. Remember that this is a team effort between you and your family, spouse, or partner, so don’t try to go it alone. By following these steps,I believe you will become more empowered to make smart financial decisions in good times and in bad.

Meghann McKenna is Owner & Financial Adviser at McKenna Financial in Bozeman MT, a family owned financial firm serving clients since 1949. She also is a Registered Representative offering securities through NYLIFE Securities LLC, Member FINRA/SIPC a Licensed Insurance Agency, and a Financial Adviser offering investment advisory services through Eagle Strategies LLC, a Registered Investment Adviser. McKenna Financial is not owned or operated by Eagle Strategies LLC or its affiliates. This article is offered for general information purposes only. It does not set forth solutions to individual situations. Consult your professional advisor(s) before implementing any planning strategies. SMRU 1683868 (exp. 2.18.2018)

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March 10, 2016

Is Your Financial Plan Incomplete Without Life Insurance?

financial plans for lifeWhen creating an overall financial portfolio, investors typically consider how to allocate assets into categories such as growth, income, and cash or cash equivalents. But, often they will tend to forget about something that, without it, could be detrimental to literally everything else that they’ve worked for. That is life insurance.

Life insurance is, in many ways, one of the most essential elements in a financial portfolio. This is because it can provide protection for all of the other assets – especially in the case of the unexpected.

For example, in its most basic sense, life insurance is made to protect a surviving spouse or loved ones from the financial consequences of unpaid debt and / or ongoing living expenses should a primary income earner pass away.

But life insurance can also be used in other financial planning areas, too.

Using Life Insurance for Diversification

In addition to death benefit protection, there are many life insurance policies that will also provide policy holders with a way to protect their cash value from market volatility, as well as from the high cost of a long-term care need.

In other cases, cash value life insurance can also be used as a primary or a secondary financial vehicle for saving for a child’s or a grandchild’s future college education expenses – and oftentimes this can provide a much more flexible mechanism even than the 529 college savings plan.

Life Insurance as an Income Supplement

If structured in the proper manner, certain cash value life insurance policies today can also be set up to help policy holders in supplementing their retirement income on a tax-free basis. With all permanent life insurance policies, cash value is allowed to grow tax-deferred. This means that there are no taxes due on the gain on those funds until the time they are withdrawn.

In many cases, a life insurance policy owner will either borrow or withdraw their cash value for a variety of different needs. These can include paying off loans, funding the college expenses of a child or a grandchild, or even taking a nice vacation.

The money that is taken out as a loan will not be taxed to the policy holder – and, it can typically be borrowed at very low interest rates (usually quite a bit lower than that of a bank or other lender).

Over the past several years, many pre-retirees have been taking advantage of the many benefits that indexed universal life insurance (IUL) can provide. This is because the cash in these policies has the opportunity to increase based on market indexed linked growth, yet it is protected from downward market movements by being credited with a return of 0% in negative periods.

Cash can be borrowed tax-free in order to supplement retirement income – and, if the policy holder passes away, any unpaid loan balance will simply be charged against the death benefit that is paid out to the policy’s beneficiary.

Making Your Financial Plan Complete

In all, while life insurance should still be considered for its death benefit protection, it also has so much more to offer – and because of that, it should not be thought of as just a “stand alone” product, but rather as an important and essential piece of the overall financial planning puzzle.

When constructing your overall financial plan, it’s important to be sure that you have the right type and amount of life insurance coverage. This is because you don’t want to leave your loved ones short just in case of the unexpected.

When choosing your life insurance plan, know that not all policies are the same, so you want to be sure that you shop for the policy, the benefits, and the insurer that will be the best for you and your specific needs and goals.

An independent insurance advisor can help you to fit the coverage to your plan, as versus the other way around. By working with many different life insurance carriers, going with an independent agency will allow you to shop in an unbiased manner while putting all of the pieces together when you’re ready to move forward.

Brad Cummins, founder of LocalLifeAgents, a Columbus, Ohio-based firm of independent insurance agents. Follow Brad on Twitter, or connect with Local Life Agents on LinkedIn.

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March 6, 2016

4 Marketing Channels you should be Investing In

investment channelsA well thought out marketing strategy is an important component for every business. One of the things to consider when developing a marketing strategy is figuring out which marketing channels to invest in.

 There are many different options, but not all of them make sense for every business. It is; therefore, best to invest in the marketing channels that are most appropriate for your target market. The rise of social media and internet usage has made digital marketing platforms extremely relevant. Here are four marketing channels you should be investing in.

Social media

According to EMarketer, there were over 1.43 billion social media users in 2012. This is a 19% increase from the 2011 figures. It’s obvious that social media usage is rapidly expanding, making it the perfect platform for a well-developed marketing strategy.

It is easy to target the right audience through networks like Facebook, which allow for targeted advertising. Twitter is a great way to share small amounts of information about products with a large number of people. There are also other social media networks; like LinkedIn, Tumblr, FourSquare, that can help market products at a fraction of the traditional cost.

Search engine marketing

Ranking high in search engine results is important as only the highest ranked websites get the most traffic. Search engine marketing includes paid advertisements, search engine optimization, and pay-per-click services. Investing in a new website and search engine marketing (SEM) services is not expensive. Most companies that provide SEM services will help develop the website, and website content for an all-inclusive price as well. SEM is a great way to increase the visibility for your product online, and works well with social media marketing methods as well.

Event marketing

Event marketing allows companies to target more specific groups of people as compared to traditional marketing methods like TV advertisements or billboards. It consists of sample distribution, interactive displays, and visual promotions at events. It is very common for companies to sponsor entire events – Mercedes Benz Fashion Week – which are branded to market a specific product.

You can also see event marketing in action at malls, where free samples are being provided. This means that companies – regardless of their marketing budget – can participate in this marketing channel as it is customizable. It is worth the money since it targets a specific type of customer in a more personal way as compared to other marketing channels.

Trade shows

Trade fairs (trade shows) allows companies to promote their products to a large number of potential consumers in the very short space of time. By having trained staff at the booth, collecting leads and quickly following up on them, it can be very easy to turn these potential consumers into actual buyers. This is one of the best methods for creating a lasting impression on consumers.

There are plenty of marketing channels available, but you should focus on using the ones that deliver the most bang for the buck.

Eva has been helping small businesses to improve their promotions for the last 3 years. Her expertise is in custom promotional merchandise, through her work at Custom Gear, one of Australia’s fastest growing branding companies.

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March 5, 2016

Prepaid vs Postpaid in India – Business details

prepaid vs postpaid businessIndia’s popularity among low cost mobile manufacturers like Xiaomi, OnePlus and others is big enough to make the country their highest priority. The main reason for this surge is, among many other things, the fact that Indians prefer prepaid connections more than post paid. While the lucrative recharge offers make prepaid a better option for cost sensitive con-sumers, what this translates to the low cost mobile manufacturers is a market free from telco-subsidised iPhones and other high-end phones.

Indians have too much love for prepaid and it is only going to grow stronger. This is in con-trast to developed markets where unlocked gsm phones barely have a market. In developed countries like UK and US, telcos heavily subsidise high end mobiles to acquire long term subscribers in a bid to recover the amount through the course of the term. These connections typically come with a two year contract, with a monthly rental that help make the business profitable. Most customers in these countries do not seem to mind as long as they get their brand new high end smartphones. This is a long shot in India where even postpaid consumers pay a premium price for flagship devices.

It does raise the question though – are you better off using a prepaid connection or would a postpaid arrangement serve you better? Like any other question like this one, the answer does, to some extent, depend on who you are and what are your needs. Surely, you can not work with a prepaid connection if you work in Sales. However, there is a large group of mobile users who are happy with mobile internet and barely even make calls.

For anyone looking to have more control over their bills and a more clearer understanding of their usage, Prepaid is still the way to go. Convenience wise, however, postpaid remains the choice to make especially now that most telcos offer auto debit of monthly bills. It sure will be interesting to see if Indian telcos will start offering US style contracts here and how that’ll change preference.

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