Avoid Unnecessary Probate Expenses and Time Delays With This Simple Planning Tip

Your IRA, 401 (k), pension plan and other qualified plans can transfer at death without the need for probate by designating a named beneficiary.

When you open a retirement savings account (such as an IRA), you have the option of naming a beneficiary. This beneficiary designee stipulates where these assets will go when you pass away. A beneficiary form commonly takes precedence over a will, because retirement accounts do not fall under probate.

 

If it has been a while since you named the beneficiary on your accounts, it makes good sense to review them.  If you be a mistake for your IRA and other pension assets being inherited by someone you no longer trust or love.

 

One situation to avoid is leaving the designation blank on the beneficiary form because then the IRA assets may be distributed according to the default provision set by the IRA custodian (the brokerage firm or insurance company custodial hosting the IRA account).

 

Keep your planning simple, name a beneficiary. If in the future you want to name someone else, easy, you are in control.

 

This might also be a good time to review all your beneficiary designations on your life insurance policies, annuity contracts and bank accounts.  Bank accounts allow for TOD (transfer on death) forms which can also help you avoid probate.

 

Simple planning with a named beneficiary can save money, time and possibly undo tax liability.$

Mother, Banks and Options to Avoid Poverty

I found a very interesting letter to the editor in the financial section of my local paper.  It started like this:

“My mother is sixty-seven-years old and has saved up a half-million dollars in a bank account earning about 1% interest. Obviously, not a very good interest rate. She wasn’t sure what to do to earn more money on her money. Her house was paid off as well as her car. She had been thrifty her entire life, but still felt like she was making a mistake keeping her money in a normal bank account. I want to find a way to help her.”

I was quite taken by how accurate and common this is. Just think how many people are in this exact situation.  Here’s a guy wanting to help his mother and yet her options are so limited. The government’s intentional intervention into the stock and bond market through QE3 has lots of side effects. His mother is an example.

She worked hard and she saved, now she is near the poverty line because of things she has no control over, bank interest rate yields.  Many people think the bank sets the interest rates, but they don’t.  Interest rates in banks are set by one superior force, the same force that is funding QE3, The Federal Reserve.  Banks charge what they are told to charge and as long as the Fed says interest rates are low, they are low.

So what are this mother’s options in this situation?  She can’t afford risk and doesn’t have time to earn the funds again if she were exposed to risk.  She has to stay in safety and that in of itself can be a death sentence. I would suggest she look at an annuity or a market-linked bank cd.
Good luck, Mom.$

Is The Stock Market Really a Free Market?

The stock market is based on free enterprise, right?  It is a place where one party can sell and one party can buy based on free will and personal knowledge. It is the exchange of value for money and a place to raise and disburse money.  It is the core of our economy; it is how our free market works as a free market.

I am sorry to inform you, it is not anything like that, and it is a manipulated market and a market that is opposite of how a free market operates.  Who manipulates it? Actually there are two sources: Wall Street itself and the biggest manipulator of all, The Federal Reserve.

Beginning with the Bush Administration and carried on with the Obama administration, the Federal Reserve is bulling the stock market.  Each month they buy $85 billion of US Treasuries which keeps the interest rates at an all-time low.  Because of the very low yield on interest bearing options, money has flooded back into the stock market.  Once the Federal Reserve slows or stops their Treasury buying spree, money will flow from the stock market and back into interest bearing vehicles.  Money flows based the risk/yield principle and if investors can receive a reasonable yield without accepting risk, the funds will flow.

The stock market is rising to record highs after Federal Reserve Chairman Ben Bernanke said the central bank would continue to support the U.S. economy. Investors also bought bonds after being reassured that the Fed was not in a hurry to pull back on its huge bond-buying program.

The program the Federal reserve is using is called Quantitative easing, there have been 3 levels, QE1, QE2 and the current QE3.  Many high ranking people feel the QE3 should stop such as Bill Isaac, former chairman of the FDIC, says it’s high time for the Fed to start tapering its quantitative easing: “I’ve never liked QE. It’s been very harmful to the economy and normalizing things.”

What should you do as an investor or a depositor?  How about moving to a no risk approach and living with the yields.  Banks, US Treasuries and insurance company annuities all offer risk free vehicles.  Maybe you should invest in all three and average your overall yield, that would be diversification.$

The Chicken, The Egg and Goldilocks

Over the past few years, we’ve seen the” chicken and egg” cycle continue in the national economy.  The Federal Reserve pumps more money into the system and buys vast quantities of U.S. bonds and mortgage backed securities.  This is one reason the stock market took off as the Fed’s monetary policy pushed buyers into riskier assets like stocks and bonds. So why are you wary of the stock market wave?

Because deep down you know the Fed’s money infusion causes economic distractions.  What happens when stock market returns are eroded because of inflation (higher prices)?  If people open their wallets and pocketbooks, prices will rise because of higher consumer demand for everything from peanuts to petrol.  But real growth stops when prices go up at the same time stocks go up.  Higher prices eat into your profit.  Suddenly, the wallets and pocketbooks close up and consumers hunker down.  A negative spending consciousness means a negative economy.  At this point, borrowing costs skyrocket, real estate struggles, and finance as a fuel for capitalism is tapped out.

So where does one go for safety and security? 

Safe money fixed/indexed annuities can be the logical choice.  Wall Street will come running to the safe annuity industry if they see any chance of recapturing the funds that have evaporated from them.  As a matter of fact, new products will be developed which will only have allusion of what we know as an annuity.

There is no public outcry of dissatisfaction with fixed/indexed annuities.  In 2012 there were a total of 50 complaints initiated against safe money fixed/indexed annuities.  There were approximately 30 billion dollars submitted in new sales for fixed/indexed annuities.  Think about it – there are 52 individual states in the United States, and a total of 50 complaints.  This breaks down to only 1 complaint per state?  $30 billion dollars in new business divided by 50 complaints?  Your calculator can’t even do the math.  Folks, there is no other industry that boasts the same degree of customer satisfaction as safe money fixed/indexed annuities.  It is a squeaky clean industry.  All these facts run contrary to any misinformation campaigns via Google search engines.

Have a look at Fixed Indexed Annuities, just might be a good option for your important money.$

The US Treasury, Your 401(k) and Longevity Income

The Treasury Department announced in February a plan to help 401 (k) and IRA owners to add annuities to their investment options.  The fact that “longevity” options can increase income for a lifetime makes great sense.  Knowing an income can pay for anytime period allows for a lifetime of security for the plan participants. The announcement by the Treasury received a lot of attention and helped push annuities to the forefront of available options.

The proposal would give these annuities “special relief” from Internal Revenue Service rules that require  retirement plans to start taking taxable withdrawals at age 70½. Treasury officials have not yet provided final rules and regulations, but the obvious need for annuities in planned as an alternative to guaranteed income needs.

A recent discussion with Treasury officials did reveal an outline of their plans, income withdrawals would need to start by age 85 and there would be a limit percentage of the 401(k) that can be placed in the annuity.

Many details still need to be considered such as how the annuity would be managed within the 401(k) plan administrator. How best to select the correct insurance company and keeping compliant with existing Employee Retirement Income Security Act  (ERISA) rules are key concerns..

The Treasury has reiterated the need for “longevity income” for plan participants and outsourcing the responsibility to insurance companies seems like a good fit. Many companies build their portfolio around the need of their customers income needs lasting a long period of time. Insurance companies can reduce the risk of an individual making eh incorrect decision with their important assets.

Outsourcing the responsibility for providing income for plan participants is solid thinking a recent official stated.  Place the responsibility in the hands of those who are expert in the field.$

Volatility, Information, The Stock Market and Annuities

Volatility definition: the property of changing rapidly

Volatility is what drives the stock market, it changes.  As it changes, opportunities exist to make money whether betting on a movement up or a movement down of the market. All that is needed to make the stock market work is volatility and what drives volatility?

Information.

Information is almost any form can have an effect on the volatility of the stock market.  Information from a confidential source can be extremely valuable to the right investor, which is known as insider trading.  Insider trading is illegal. (except in the US Congress where it is allowed.)

Information through legal channels drives the stock market, as an example something an minor as a remark from the President that he says he doesn’t like broccoli, farm stocks could decline.  If an earnings report is greater than expected, stocks could increase, or the estimate of a bad earnings report could have a negative effect.  It is all about information.

But, it is a very private and exclusive club, the stock exchange.  The stock exchange appears to be open and available to everyone but sadly it is not.  It is the vast playground for money making for only a few, the few who own board seats on the exchange and are the quickest to act on any new information.

Why?  Simple, they are in first place to make the market move. By the time we as small investors hear the news it is well after the fact, after all we are busy working at our jobs and are not close to the actual action.  By the time we hear anything of value, positions have already been taken. Taken by the big boys, those closest to the action.

How do we as small investors even invest in the stock market?  There are many ways I suppose, but taking a long term look at the investment is the only way it makes sense.  Buying individual stocks is also a waste of time generally.  Buying groups of stocks can make sense but then why not just buy the market?  You can do that (almost).

You can buy the S/P 500 Stock Index (Standard and Poor’s 500 Stock Index) which is 500 America stocks spread over all segments of the American economy.  Just buy the American economy and then as America grows or falls so do you. Many mutual funds mimic exactly how the S/P performs, holding the exact same stocks in the exact same percentages.  Merely look for one with the lowers fees charged to maximize your returns.

Volatility!

What happens when the market is in a downward movement due to volatility just when you would like your money to be available for retirement?

How do you protect yourself against that possibility?

Base your retirement decisions on your time period to retirement, if you are 30, invest in the S/P 500 and bet on America.  As you age, you merely reallocate from the stock market to more guarantees by using a Fixed Indexed Annuity. Shield yourself from the downside and yet continue with some upside. You eliminate any chance of losing your long term funds.

Sound too good to be true?  Well they say the devils in the details, so do your own research, start by watching this video and understanding how a Fixed Indexed Annuity really works.$ http://youtu.be/ChHaRxguEkM