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January 10, 2018

The Benefits of Using ETFs to Build Retirement Wealth

mutual fund detailsExchange Traded Funds (ETFs) are a great way to build an effective retirement portfolio through your Roth IRA or IRA contributions due to their low expense ratios. ETFs offer investors exposure to a diverse set of assets. They are currently one of the fastest growing investment products in the world due to the low expense ratio and their high diversification. ETFs can be traded through virtually every big-name brokerage available. Brokerages oftentimes will partner with ETF providers to offer free-commission on ETF trading, which helps you save even more money on expenses!

ETFs are effectively mutual funds, but trade like any other stocks. When you purchase a single ETF share, you gain access to an entire index such as the S&P 500 or the Dow 30. Or, investors can purchase market segments (e.g., financial, industrial or healthcare sectors) within a given country. Thus, making them a highly efficient investment tool. The substantial growth in the ETF market has led to a number of new, distinct ETF products such as the MSCI All Country World Minimum Volatility Index or the Dow Jones EPAC Select Dividend Index. The Dow Jones EPAC Select Dividend Index provides great dividend growth income and that can be reinvested or used as cash flow for other investment products.

Here are main benefits in investing in ETFs:

1. Flexibility: With a number of distinct indexes and options, individuals with retirement accounts can trade commission-free AND can obtain exposure to countries all over the world. If you choose, investors are able to gain exposure to the entire world if you sure please. In addition, ETFs offer the flexibility to be traded as a stock for a market price.

2. Cost Efficiency: ETFs based on indexes are in one transaction that trade all components of the underlying index. Investors are usually not charged any entry or exit fees and management fees are substantially lower than mutual funds. For example, ETFs expense ratio are usually around 0.1 – 0.8% whereas mutual funds are about 1.40%

3. Transparency: ETFs are transparent due to the fact that they list on regulated markets and track transparent indices. The ETFs are traded through the day and there are highly competitive bid/ask prices provided by market makers ensuring ample liquidity.

ETFs are really a simple form of mutual funds and can be used in a variety of ways. If you start investing early in a set of 3-4 mutual funds that offer differentiating diversification, you will be in a great position for retirement. Investors should set aside a predetermined amount of capital each month to purchase ETFs. Given their low expense ratios and flexibility, investors can sleep well at night knowing that their money is being put to good use and is generating income while they are enjoying life.

ETFs are not a guaranteed investment. Be patient with the market and continue to purchase additional ETF shares regardless. The old saying is: “I would prefer my time in the market rather than timing the market.”

Millionaire Mob is a former investment banker that hopes to offer fair value on Wall Street while traveling the world. I enjoy helping others in achieving financial freedom whether that is through dividend growth investing, passive income techniques or travel rewards strategies.

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June 1, 2017

UK pensions map: how much is being saved?

On average, we add £325 to our pension pots every month, but which area of the UK is best at saving? Find out more from the infographic below from personal pension provider, True Potential.

True Potential - UK Pension map

Created by online investment service company, True Potential

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April 16, 2017

Burgeoning Financial Trends for 2017

financial trendsThe new year and the new presidential administration has ushered in a host of fiscal changes that could impact your wallet. Safeguard your money and act in the best interest of your household or business’s bottom line by learning more about the growing financial trends in 2017.

Rising Interest Rates

Interest rates are on the rise in 2017, creating a financial environment that is geared more toward saving than borrowing. In fact, people who put money into personal savings and retirement accounts have the opportunity to create and grow their wealth. Alternatively, people who need to borrow money face paying higher interest rates and making larger payments on their loans each month.

The higher interest rates correlate to the expanding economy and the creation of more openings in the American job market. As unemployment rates go down and American workers may more money, they have the unique opportunity this year to save money and take advantage of rising interest rates that could lead to greater personal wealth. Capital management services offered by professionals like James Dondero are also expected be more in demand this year.

Freelancing in Retirement

This year also has the makings of being the ideal time for retirees to make some extra cash doing side gigs. It is no secret that retirees are living longer and often outliving the money they have set aside for this time in their lives.

Until recently, however, people in this age demographic had few chances to earn extra cash. Many employers did not want to invest time and effort into training employees who would leave the workforce sooner rather than later.

However, thanks to companies like Uber and Lyft that rely on freelancers, senior citizens now have the opportunity to work for themselves as independent contractors and earn money that will not put their Social Security incomes in jeopardy. Along with driving for Uber or Lyft, they also can freelance as writers, artists, tutors, and other independent contractors.

Investment Portfolio Automation

This year also shows signs of increasing the demands for investment portfolio automation. This automation makes investing with financial pros like James Dondero easier and essentially creates an ideal if not passive way for people to put money into the stock market without putting forth any unnecessary effort on their part.

Further, this automation shows promise of being tax efficient and low in cost. Moreover, it costs the same if not less than an exchange-traded fund.

About James Dondero

James Dondero began his career in the financial industry in 1984 and has since become one of the leaders in capital and investment management. As the co-founder and president of Highland Capital Management, L.P. in Dallas, Texas, Dondero also serves as the CEO and chairman of the board at HCM Acquisition Company. Before founding Highland Capital Management, L.P. he worked for top financial companies like American Express and Protective Life.

He graduated with top academic honors from the University of Virginia’s McIntire School of Commerce with dual degrees in finance and accounting. He is certified as a Certified Management Accountant as well as a Chartered Financial Analyst. He also volunteers for Dallas-based charities and organizations like the George W. Bush Presidential Library and Institute, Education is Freedom, Snowball Express, and the Perot Museum of Natural Science.

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August 16, 2014

Do Not Compromise Your Retirement Investing Goals

Retirement investment ideasRetirement planning is a serious business and the sooner you get into it, the better. We often tend to procrastinate, thinking that we have enough time left for the same, but this often makes the task tougher than it would otherwise have been. So the question is what exactly is retirement planning, and how important is it for your future?

The process of retirement planning involves determining what kind of funds should be available to you at the time of retirement, to live comfortably post your retirement. There are a lot of factors that you would need to consider like when will you want to retire, where will you live, and what kind of a lifestyle will you have post retirement. Each additional year you want to retire early raises your goal considerably as you need to account for all the regular monthly expenses, medical and emergency expenses, vacations, celebrations etc.

When you see the costs add up after keeping in mind the inflation, this is likely to be your retirement goal and is clearly dependent on the type of life that you wish to lead. You may come across many typical figures that people throw at you regarding a retirement corpus that one should have, for example 20 times your income and so forth, which can be only used as some vague guideline. You must consider some important points to make sure that you are a smart investor when it comes to your retirement investing.

Evaluate the available instruments for retirement savings

There is a host of saving options available in the market when you want to invest for your post retirement days. There are many tax- efficient ways that can help you build up your retiral kitty, some of which can be availed directly through the employers while other plans are available through investment brokers or banks. However, it is important to closely look at each of these options to determine the benefits and derive the maximum profit by using them judiciously, when your aim happens to be a healthy retirement corpus.

There are some good retirement options that you can explore at your employers, as some may offer unmatched benefits and even give some kind of cushioning against the volatile stock market conditions. It is important to understand and evaluate the risk and benefits associated with each of the options. It is often seen that younger investors are more bent on investment options that have higher returns even if they have higher risks as they have enough time available to recover from the losses that may arise. However, in case you do not have too many years before you retire, then it’s best to avoid such options as you may not be able to recover if you lose your investments and will be better off with some conservative instruments with lower risk factors.

The following are some of the options available for planning your retirement:

  • 401 (K) and other Employer Plans: There are several employer driven plans like the 401(K)s that can be utilized by the individuals to build up their retirement kitty while saving a considerable amount of tax too in many cases. They are also quite hassle-free as you can directly get the amount debited from your paycheck.
  • Fixed Benefit Plans: There are many employer sponsored plans that offer a fixed the sum of money based on certain factors like salary drawn and the years of service one has put in at the establishment .
  • IRAs or the Individual Retirement Accounts: These allow you to move pretax amounts up to certain annual limits towards tax efficient investments. These investments can also be tax deferred.
  • Roth IRA: This can be seen as a retirement option that is similar to a traditional IRA though there are certain differences in the taxation of the contributions as well as the distribution income.
  • SEP IRA: This is targeted at the employer or self-employed individuals, and they can direct 100% of their contributions towards various channels of their choice.
  • SIMPLE IRA: this is a commonly used retirement plan by employers with 100 or less employees in that establishment.
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January 23, 2014

How Are Americans Spending their retirement?

Financial Retirement

The commonly held perception of retirement living is rapidly changing. No longer are older adults settling down after leaving the workforce. Today’s retirees are more focused on active living, whether in the form of exercise, volunteering or picking up a new skill. These new trends will certainly have an impact on the financial strategies of the nearly 10,000 baby boomers turning 65 each day. Here’s a look at how the latest generation of retirees plan on spending their golden years.

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