Tag: Funds

Financial planning is a process that will help you determine where you are today, where you want to be in the future and how you can get there. Although it may seem daunting, personal financial planning is not rocket science. In fact, with a little time and effort, anyone can develop a plan that will work for them.

Here are five tips to help you get started:

1. Know Where You Are Today

The first step in any financial planning process is to take stock of your current financial situation. This means knowing how much money you have coming in, how much you have going out and what your net worth is. This will give you a starting point to work from and will help you to set realistic goals.

2. Know Where You Want to Be

The next step is to think about where you want to be in the future. What are your financial goals? Do you want to retire early? Buy a new home? Send your children to college? Once you know what you want, you can start to develop a plan to help you get there.

3. Make a Budget

One of the most important aspects of personal financial planning is creating and sticking to a budget. This will help you to keep track of your spending and ensure that you are not spending more than you can afford. A budget will also help you to save money for your future goals.

4. Invest in Your Future

Another important part of financial planning is investing in your future. This can be done in a number of ways, such as contributing to a 401(k) or IRA, investing in stocks or mutual funds, or even just saving money in a high yield savings account.

5. Get Professional Help

If you are having trouble getting started with your financial planning, or if you just want some professional guidance, there is no shame in seeking out the help of a financial planner. These professionals can help you to develop a plan that is tailored to your specific goals and needs.

Personal financial planning is not something that you should put off until later in life. By taking the time to develop a plan now, you can ensure that you are on the right track to a bright financial future.

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Tax time can be stressful for many people, for two reasons – the filing process itself and the knowledge that if you’d made different decisions the year before, you might be facing a smaller tax hit this year. Let’s explore ways to lower the stress level – and the tax burden – at this time of year.

Make the Process Easier

Getting organized and filing your return can be a chore. Even just pulling together your information to get started can be overwhelming. Here are a few tips to ease the process:

Organize Your Paperwork

The first step is to gather your information and receipts. I recommend you keep these in a paper or electronic folder organized by category. Your main categories should include:

– Business income and expenses, which can be exported from financial software such as QuickBooks.
– Personal income, from forms such as W-2s and 1099s.
– Rental and other income.
– Charitable deductions.
– Taxes paid on property, vehicles or purchases.
– 529 plan contributions and distributions.
– Investment income (dividends, interest, sale info).
– Retirement contributions or distributions.

Decide on Your Method

Next, decide whether you want to do your taxes yourself using an online tool or you should seek the help of a tax professional. If you have rental property, real estate investments or a complex investment portfolio, if you own a business, or if you don’t have the desire to take this on, it’s wise to turn to a professional.

Take Your Time

If you’re going to do it yourself, don’t try to rush through the task in one day. I find it’s best to break it up over a few days. Give yourself plenty of time to gather all of the information you need and complete the process.

Some years it takes until mid-February to get the necessary documents for your various investment holdings. For example, Vanguard issues tax documents for mutual funds much earlier than for funds on the brokerage platform. If you rush through your return and file early, you might inadvertently exclude some of your funds, forcing you to amend your return.

You’ll also want to take the time to review your return thoroughly for accuracy before you file.

Finally, save your return and all of the backup documentation in a safe place for at least three years in case you are audited.

Keep an Eye on Your Withholding

If your tax liability is too high or you’ll be receiving a large refund, consider adjusting your withholding. Also, try to determine how your income and deductions will change in the coming year so you can adjust further.

Lessen your tax burden

At tax time, it’s easy to see that decisions you made the year before have a major impact. Here are some things you can do that will pay off next tax season:

Max Out Your Retirement Contributions

Contributing the maximum to your retirement savings accounts is the simplest way to reduce your tax burden, but many people are not doing it. For 2015 and 2016, you can contribute 100% of your salary, up to $18,000, to your 401(k), with a $6,000 ‘catch-up’ for people 50 and over.

You can still contribute to a traditional IRA for 2015 up to the tax filing date, which is April 18. Check the IRS website to see if you’re eligible to deduct your IRA contribution based on your income. You can contribute $5,500 to an IRA with an additional catch-up of $1,000 for those 50 and over.

If you’re in a high tax bracket, say 28% or higher, consider increasing your 401(k) contributions, because these pretax contributions will reduce your taxable income. If you are in the 25% tax bracket or lower, consider increasing your contributions to a Roth 401(k) or contributing to a Roth IRA if you are eligible, as those contributions are made after taxes. The deadline for Roth contributions for 2015 is April 18.

With Roth plans, although you will be taxed on the income now, your investment will grow tax-free and you will be able to withdraw it without paying taxes, if you meet certain conditions. This can be a powerful way to avoid paying taxes on future income, especially if you are young and have time on your side.

Document Your Charitable Contributions

Make sure you have documentation for all cash and noncash donations. Make an itemized list for noncash items and their condition before you make the donation. Remember that you can also deduct mileage for your volunteer work.

If you have substantial charitable donations, say $10,000 a year or more, you might want to consider donating appreciated stocks or mutual funds. This can provide a triple tax benefit – you can deduct the amount of the donated securities, you can eliminate future capital gains on the sale of the securities, and you can buy back the same shares at the higher current market value, resulting in a lower tax bill when you sell the securities in the future.

Track College Expenses

Deduct only qualified expenses and make sure that any distributions from your 529 college-savings plans coincide with expenses incurred in the same calendar year. I use an Excel spreadsheet to keep track of this for my son’s education. It itemizes tuition, books, and room and board fees offset by scholarship amounts.

Don’t forget to deduct your annual contributions to your state 529 if you get a state tax break. I often notice that clients forget to tell their CPA about these contributions or forget to include this info when they prepare their own return. Since South Carolina, where I live, provides a dollar-for-dollar tax deduction for contributions to the Future Scholar 529 plan, this results in a 7% instant return on your money, for example. (I recommend the Future Scholar Direct program, which is no-load and includes index funds with low expense ratios.)

Optimize Your Investments

Capital gains: Review the capital gain distributions for your funds to see if you can improve the tax efficiency of your investments. It may make sense to sell one of your funds if it continually throws off high capital gains. Replacing an active high-expense fund with a more tax-efficient index mutual fund or exchange-traded fund will reduce your taxes and will likely perform better over time due to lower expenses.

U.S. bonds: If you have taxable bond funds in your after-tax (non-retirement) accounts, don’t forget to adjust for U.S. government bond income. You can contact the fund, or it may mail you a sheet that breaks down income by source. The interest from Treasury bills and bonds as well as U.S. government agency securities is taxable at the federal level only.

Municipal bonds: Likewise, adjust your municipal bond dividends and interest for ‘in state’ income as you are not taxed on municipal bond income from your state. This should also be provided by the mutual fund or broker where the bonds are held.

Foreign mutual funds: If you invest in foreign mutual funds, you can take a foreign tax credit or deduction for income, such as dividends, that you received from outside the U.S. The tax credit is generally more beneficial than the deduction. Contact the mutual fund company to find out the percentage of the dividends that are from foreign holdings and adjust accordingly.

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The SEC Commission has approved rules that require institutional money market funds to implement floating share values and other restrictions, such as restricting withdrawals and imposing redemption fees of up to 2% if fund assets drop below prescribed levels.  The shares would float based on changes to NAV (changes to the underlying market value of the fund’s assets).  Currently, these funds have a fixed price of $1 per share.

The rules were crafted in response to the 2008 financial crisis, when corporate lending markets seized up in response to a lack of liquidity.  The new restrictions will hopefully help maintain capital levels and keep markets operating smoothly during times of stress.

Individual Money Market Funds Not Affected

While the new floating share rules apply to institutional funds (both prime and tax exempt), they will not impact government and retail funds that are sold to individual investors. (Note that they will apply to institutional municipal money markets.)  However, provisions for liquidity fees and redemption gates do apply to all funds, both institutional and retail.

For a definition of government and retail money market funds, the SEC provides this detail via a press release on their website:

Government and Retail Money Market Funds Government and retail money market funds would be allowed to continue using the amortized cost method and/or penny rounding method of pricing to seek to maintain a stable share price.  A government money market fund would be defined as any money market fund that invests 99.5 percent (formerly 80 percent) or more of its total assets in cash, government securities and/or repurchase agreements that are collateralized solely by government securities or cash.  A retail money market fund would be defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the money market fund to natural persons.  A municipal (or tax-exempt) fund would be required to transact at a floating NAV unless the fund meets the definition of a retail money market fund, in which case it would be allowed to use the amortized cost method and/or penny rounding method of pricing to seek to maintain a stable share price.

One way this might affect individuals, is if they invest in institutional money market funds through their 401K.  It is likely that most retirement plans will choose retail money market funds as a plan option for this reason.  This will affect small and large businesses that use these accounts as short term funding for their day to day and week to week operations.  For a related article on this subject read more here.

The new rules will not go into effect immediately.  Fund companies have two years to comply with the new restrictions.

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If you are over 70 1/2 and have retirement accounts or you have an inherited IRA, you will likely need to take RMDs, or Required Minimum Distributions, by the end of the year.  Failure to do so would result in a penalty of 50% of the amount not taken.

Post 70 ½ RMDs

Once you reach age 70½, you must withdraw at least a minimum amount each year from your tax-deferred retirement savings accounts. This includes your IRAs and any qualified retirement accounts such as 403bs, 401ks, etc. Your annual RMD for 2015 is equal to your retirement account balances as of December 31, 2014 divided by your life expectancy factor according to the Uniform Lifetime Table. (If your spouse, however, is more than ten years younger than you, you will need to use the Joint Life and Last Survivor Table.

Note that if you are still working full time at age 70 ½ you can delay your RMDs for your current workplace retirement accounts until April 1 of the calendar year following the year you retire.  Click here for more information and assistance with your calculation.

Inherited IRAs

You must take RMDs by Dec 31st of the year after funds were inherited.  To determine your RMD for this year you will need to take the balance from December 31st, 2014 and divide by the factor (which is age based) on the single life expectancy table.

Here is the table for RMDs for inherited IRAs and here is a calculator to aid with the calculation

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Many of my prospective clients come into my office either not knowing how much they are paying in investment fees or mistakenly thinking that they are receiving their investment counsel for free.  It is no wonder this occurs.  Fees are often embedded in the form of loads (either front-end when the fund is purchased or on the back end when it is sold), commissions, and expense ratios.  These hidden fees make it difficult to ascertain total investment costs for your portfolio. 

Many financial statements appear to have no fees deducted, but just because you can’t see a fee, does not mean it is not present and having an effect on your portfolio.

So how do you determine the fees you are being charged?

How much do you pay for advice? – Fee only versus Fee Based Advisors

First, if you use an advisor, you will somehow be paying for this advice.  There are many ways advisors receive compensation.

A fee “only” advisor charges a fee based on either a percentage of your total assets invested, a retainer, or per project fee based on an hourly rate.   This is the easiest and most transparent way for the client to be charged.  Furthermore, with retainers and hourly fees, large portfolios are not charged egregiously high rates just because they have higher account balances.  Note that true fee-only planners are in the minority in the financial advisory world.   Hourly, fee only advisors are even rarer.

The downside of this approach is that since the client has to write a check for the amount, behaviorally it is less palatable for him, even if the charges are far less. Ironically, this enhanced awareness of the fee, even if it is substantially lower, makes the client more resistant to paying via this method.

Fee “based” advisors are distinctly different from fee only advisors in that they can charge a certain percentage of assets AND may also receive commissions on the products or funds sold to the client.  This could be the case if your advisor who charges you 1% annually on your investment portfolio also gets commissions from the funds or positions in your portfolio or from an insurance product or annuity he or she sells you.

The ABC’s of Investment Fees

Most investors that go to a solely commissioned based brokerage are not charged a fee as a percentage of their assets. So, on the surface, it may appear that the advice they receive is “free.”   Instead, the broker will buy funds that have a built in commission.  These funds are often denoted by a capital letter after the fund.  An “A” fund has a front-end load.  Typically 4-6% of the total amount handed over to the advisor will go straight to him or her as commission.  These fees may decline at certain breakpoints, particularly if you stick within one fund family.  “B” funds have back-end commissions that normally decline over time, so it is best to hold on to these until they have expired.  C funds have level but relatively high annual expenses.  Due to these loads or commissions, load funds tend to have higher expense ratios, as well as potentially 12b-1 fees.

What are expense ratios and 12b-1 fees?

An expense ratio is the most common fee an investor will encounter.    It represents the annual operating costs of the fund.  Every mutual fund or exchange traded fund has this ratio, and, of course, you would ideally like to see these as low as possible.  For example, active funds may have expenses ratios well over 1%, whereas passive index funds may have expense ratios less than .20%.

The 12b-1 fee is also considered an operational expense and, as such, is included in a fund’s expense ratio. It ranges between 0.25-1%, but is more often closer to 0.25%.  It is primarily used as an incentive for the broker or rep to sell the fund and is paid to that broker annually.

Note that although active funds purport to “beat the market,” over two-thirds of these funds fail to beat their benchmark in any one year.   See this related article. As you can imagine, the more of these active funds you add to your portfolio, the chance of you beating the market (as represented by index funds) over many years substantially diminishes.   Thus, the increased expenses many investors pay a fund manager to “market time” or pick “winning funds” are often a waste of money.

Let’s look at an example to bring it all together:

Say I invest $100,000 in a fund with front end loads of 4.75%.  The fund also has an expense ratio of 1.13% inclusive of a 0.25% 12-b1 fee, which goes back to the broker.  At the same time, I decide to invest in a no load passive indexed fund in the same investment category.

After 5 years, assuming that the annualized rate of return for the category index is 10%, the total costs and return of the portfolio would be as follows:

 Even though the expenses for the higher cost fund were perhaps not as transparent, the ending value of the investment shows the dramatic difference.  This is why many investors scratch their head and wonder why their portfolio seems to underperform the market.

The moral of the story is costs matter, especially over long periods of time.  Over just five years, in this example, the low cost investment balance is over 10% higher.

Make sure you fully understand all of your investment costs and how you are being charged.  If future investment returns are expected to be lower than what we have historically experienced, keeping costs low is even more imperative.

If you invest in low cost funds and use a low cost fee only advisor consider yourself well-armed to defend against lower returns in the future.

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Retirement planning can be more complex for women for various reasons.  Women live longer, take time away from work to care for their parents or children, and are often paid less than their male counterparts. 

To compound matters further,  many married men are deciding to retire much earlier than originally anticipated.  A husband’s early retirement can have profound effects on a woman’s ability to fund her retirement throughout her lifetime.  With careful planning, however, these issues can be successfully navigated to provide peace of mind that the couple will have adequate funds.

Many baby boomers are burnt out from working 20+ years in their careers and feel a burning desire to quit and travel the world.  Many men and women are leaving their corporate jobs whether by choice or by design.  Retiring in your 50s, may mean that your spouse will need funds to last 40 or more years.   Unfortunately, women, due to their higher risk of longevity, bear the brunt of a husband’s desire to retire early.   The wife may continue to work after their husband retires to provide additional income, and thus feels increased stress due to suddenly being the sole breadwinner.  Ironically, she may feel as though she needs to retire later to offset the impact of her husband’s early retirement.  Financially, a wife, especially if she has been the lower earner or worked fewer overall years than her husband, will also have lower Social Security spousal and survivor payments, if her husband chooses to take benefits early.

How can women improve planning around her husband’s desire to retire early?

  • Discuss any early retirement decision as a couple and ensure that you are both ready for other emotional, financial, and psychological change.  Be supportive and see how you can make each other’s lives more enjoyable in the interim, to see if retirement can be delayed.  It may mean that you take more time off or even phase into retirement over time.  Most importantly, balance the short term benefits of leaving work with the long term tradeoffs.
  • Try to delay taking Social Security.  If you are both healthy, you should try to delay claiming until at least your full retirement age.  Work with a fee-only financial planner to determine the optimum strategy to maximize your lifetime income based on your age and life expectancy. You can go to livingtoo100.com to get an estimate of your life expectancy.
  • Create a life plan along with your financial plan.  Determine how your lifestyle will change after retirement and make sure to share household responsibilities.  Create an ideal day, week, month, year in retirement.  Write it on paper.  Create a Pinterest board or scrapbook of things you want to do or see in retirement.
  • Realize there are significant tradeoffs.  Early retirement may mean that you can’t gift to the kids as much as you wanted or fund lavish travel plans.  Discuss how that might affect your retirement satisfaction in the long run.
  • Maximize your pension payments through a “pension max” strategy.  If you want to choose a pension benefit that provides maximum yearly income and a small survivor benefit, you need to ensure that your spouse is able to support his or her lifestyle should something happen to you.  A “pension max” strategy using laddered insurance will be necessary to offset the impact of an early death of the person who receives the large pension.
  • Consider long term care insurance—this can ease the burden of taking care of a spouse and help protect assets so that the caregiver spouse can have sufficient funds for the balance of his or her life.

Retirement planning is far more complex than just your investment allocation and selection of funds.

The many moving parts of Social Security claiming strategies, pension strategies, budgeting, withdrawals, and planning for large expenditures all come into play.  Work with a fee only financial planner to ensure that you are making appropriate decisions.  A decision to take early benefits may reduce cash flow stress in the short term, but have longer term negative repercussions.

Sorting it all out with a map of your retirement landscape and how to navigate that map, can help you sleep better at night knowing that important decisions you make about retirement are sound.

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Most people think they’ll be ready to retire when they hit a certain age or accumulate a set amount of assets. Unfortunately, they rarely do the math to determine whether their savings will sustain them after they retire. According to the 2015 Retirement Confidence Survey by the Employee Benefit Research Institute, only 48% of workers reported that they or their spouses have tried to calculate how much money they’ll need to live comfortably in retirement, and people who did attempt this calculation generally ‘guesstimated’ the numbers.

The EBRI found that most Americans spend more time preparing for the holidays than for retirement.

To stay out of financial trouble after you retire, it’s important to start planning well ahead of time. And that involves taking a hard look at the numbers.

Work the problem

Retirement projection is a big math problem, and to get the right answer, you must plug in the right figures. To start, you must have a good grasp of how much income you can expect from retirement income streams such as Social Security and pensions.

The next step is crucial: understanding how much you’re going to spend in retirement. This can be much tougher to predict, but accurate projections can mean the difference between having adequate funds for the rest of your life and outliving your savings. Neglecting this important step before making the decision to retire is unwise; deciding when to retire should be based on your financial capacity.

That’s because once you’re retired, your main source of income ends, and expenses will be covered out of savings, investments and retirement income streams. Spending is perhaps the biggest variable in retirement planning calculations. It’s easy to be complacent during working years, when a steady paycheck is coming in. So it makes sense that a huge paradigm shift occurs when the paychecks stop and cash flow shortages have to be covered from savings. Creating your own paycheck from your savings can be overwhelming.

Set a retirement spending plan

For all of these reasons, establishing a realistic retirement budget is critical. To do this effectively, consider these steps:

1. Envision your life during retirement. Make a list of what you’ll be doing and how you’ll be living. What will a typical day look like? What kinds of hobbies or volunteer work will you participate in? Will you embark on a second career? How much will you travel? Will you move to another location or maintain two residences? How much support will you provide for your kids and grandkids? What is on your bucket list and how much will realizing it cost?

2. Keep track of your current spending for at least three months. Be sure to include expenses that occur less frequently, such as insurance and dues.

3. Review this spending record. My clients are often surprised to see where they’re spending their money. This exercise enables them to align their spending with their goals, values and desires. They’re more committed to a spending plan once they have determined where their money is going because this prompts them to set priorities to ensure that they don’t spend frivolously or on items that aren’t priorities.

4. Make changes in your spending now to reflect the retirement lifestyle you envision. How will your expenses change upon retiring? Does your spending jibe with the goals you identified in the first step? Be sure to revise entries for certain expense categories, such as travel, entertainment and housing, to reflect these goals. Don’t forget to account for uncovered medical expenses and supplemental health insurance premiums, including Medicare Part B.

Watch your withdrawal rates

Once you have put together a spending plan, you can determine how much of your expenses would be covered from your investments. Most financial planners recommend that people who retire at 65 withdraw no more than 4% of savings annually. If you withdraw much more than that, you’re likely to outlive your funds, so you might need to work longer. If you retire earlier than 65, you will likely need to adjust that withdrawal rate downward, as you’ll be making withdrawals longer.

Consider working with a financial planner who specializes in retirement planning. He or she can walk you through the planning process and potentially give you confidence about the capacity of your investment portfolio to provide adequate income after you retire. The planner can also help you realize that you’re not on track and need to make changes.

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The current pandemic situation should have been thought of from the start when we managed our finances. At what age were you taught to save? Most parents since ancient times have taught their children to save since school age or 5 years and over when they have entered kindergarten as a saving for the future. But it turns out that in this era known as millennials, there is a very different tendency for the current generation in managing their finances.

A survey agency in the United States (US) named Gobankingrates.com conducted a survey in May 2019 about millennials in the US to find out their habits in managing finances.

One of the topics being surveyed is how much savings they have in their accounts. Gobankingrates.com found the fact that 54% of millennials aged 20-35 do not have savings of more than $ 1,000.

Many people are busy surfing for information on the internet about how to save the most effective, most quickly collect large amounts of money, and in the shortest possible time. This is clearly mistaken. Though it is not the wrong saving method, but rather the reason why we always fail. Maybe everything should go back to form a way of thinking first about the cause of our failure to save. So let’s look at three reasons we always fail to raise money to save, even when the intention has been collected.

1. Don’t Have Money to Save!

In this first point, there will appear all kinds of reasons that will always be able to be issued at this point. From things that are to blame, it is reasonable to be filial to the inability of oneself to manage their own finances. Okay try to note the first thing that is often used as an excuse is a salary that is too small, then the money that is used up to help parents, until they realize that themselves are wasteful. These things are always or often become common reasons for millennials.

Why do these things happen? Because they don’t save their income when they get their salary/income. Because they should be able to save 20-10% of the money earned to meet their savings. For those who already have dependents/debts or cannot be a reason, the amount can be reduced by saving 10% -5% to save.

After clearly saving at the beginning is not set aside at the end, savings should be millennial in Indonesia have enough savings to raise their emergency funds, or meet their needs as explained above such as buying a vehicle, buying a first home, and getting married.

Now let’s try to change the way it acts, that is by not being put aside at the end, but saving first at the beginning and then set aside for all kinds of living needs. First saving, why is that? Because of the necessities of life in the future that is uncertain makes us have to have savings, money that is ready to be used as an emergency fund. Already fulfilling our emergency funds we still have other long-term needs that have been put on the waiting list to be fulfilled.

2. The nature of Hedonism which has become a necessity of life

Who here often does not feel guilty if monthly income is always used up to visit unique/viral eating places, shopping for unique items in the marketplace to sneakers at a price of $ 300, and how to pay in installments 12 months using a credit card?

Well! because of the hedonic owned by millennials so that the habit of not recording every money spent because of the lazy habit of recording it up to too many daily small expenses like that and the nature that is like daily needs, then they do not know how much a lot of money they have spent.

Likewise with the cause of our failure to save. If we don’t know why we will always fail to save. Start recording each expense in detail. Many ways to take notes, through a blank book, through a laptop, or can with applications on our respective smartphones. The point is that there are many ways that make it easier for us to take notes, we only have the intention to improve our finances or not.

3. There Are Still Opportunities for Tomorrow!

Yes !, the motto of Y.O.L.O (You Only Live Once) becomes a favorite quote of millennials as if everything can be postponed until tomorrow because of life only once. This disparaging trait often backfires on their lives, why? Because time continues to move forward and cannot reverse. Suddenly age continues to grow and without realizing it or already aware, when their eyes are open they still do not have a home, have not prepared for future. So stop spending money without any purpose.

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Not everyone is born from a royal family that has a legacy from generation to generation. Having inheritance is not necessarily able to be managed well so that it is not in vain or just used up. After becoming parents, many young couples who already have insight about how important education funding for their children later. When a baby is born, most parents already think about the cost of their education later. And indeed there are a variety of investments made by their parents in order to prepare their children’s education funding needs later which of course will be different 5 years or 10 years to come.

There are many investment offers for your child’s education fund. But before considering that it’s a good idea to read the following tips.

1. Set aside Revenue

The first step that must be done is to save as early as possible from the money set aside from income. The earlier you start, the more money you will collect. Of course, the challenge you have to face is the temptation to use this money. But it’s good you choose to save it in investment savings where you can not withdraw it within a certain period.

2. Research before investing

Many insurance companies have savings solutions for your child’s higher education costs. Before you invest your hard-earned income into these products, you need to identify your financial targets first. You should also know the average rate of return on your policy, how much money you can comfortably set aside, and how much financial risk you can face when buying investment products. Examples of investment options available are mutual funds, trust funds, bonds and stock investments.

3. Adjusting the Budget to the Number of Children

Indeed, having only one child with more than one child has a different amount of budget. Talk well with your partner, how many children do you plan because it will affect the amount of their education savings.

4. Don’t put all the eggs in one basket

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If you are an investor who is reluctant to take risks and tends to choose the type of low-risk investment, the disadvantage you will face is the low return on investment. This is not good if you still have to cover a lot of shortcomings to achieve your financial goals. Start thinking about diversifying your portfolio by putting some of your assets in instruments that provide higher returns, for example buying shares that will provide dividends. With the principle of spreading eggs in different baskets, you increase your overall investment return and at the same time maintain a moderate/moderate level of risk.

5. Avoid Borrowing Money to Fund Your Child’s Education

The best way is money that comes from your savings or investment returns. That is why it is very good if you start early to prepare your child’s savings. If they do not have sufficient funds, parents may be tempted to borrow money to pay for their children’s tuition. If indeed the amount of money borrowed is relatively small, then this might not have a bad impact, but if the amount of money borrowed is large, then parents need to be careful about the payment system in the future.

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To deal with the spread of Covid 19, most countries in the world establish independent quarantine at home. As long as you have to work, study and do all the activities at home, of course household expenses continue to run. At a time like this, it’s a good idea to save money on household expenses during the quarantine period in your home. The good side of you having to stay home during the stipulation period of the Government is that you can save on transportation expenses.

Here are some ways that you can use to save your expenses as long as you have to live and work from home.

1. Turn off the lights when not in use

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This simple thing is often forgotten. Did you know that by turning off one light in your home, you can save electricity. Two 100 watt incandescent lamps which are turned off for two extra hours per day can save 15 US dollars per year or around Rp245 thousand (exchange rate Rp16,354). If you want to save even more, you can switch to the type of LED lights to reduce your electricity costs. Without you realizing you also contribute to the maintenance of our earth by saving electricity. .

You can also use natural lighting during the day. Open your window, turn off the lights other than at night. If you fall asleep, don’t forget to turn off the sleep lights in your room too.

2. Turn off the water

Cover the water tap after use and before use. If you wash your hands, don’t let water run while you rub with soap. Reduce the flow of water so that the flow of water that comes out is not too much. Try to take a shower not too long. Clean your whole body parts without having to discharge water through your tap as long as you shower.

3. Pay your installments

Try to pay your installments before maturity. Fines will result in you having to pay unnecessary fees and in the midst of this crisis, you should keep your name in the relevant Financial Services Authority if in the future you need your funds not constrained in your credit score.

4. Save Food Stock

Avoid going out every day just shopping for food daily. Shop for food stock for about a week or two. You can store it in the refrigerator and freezer for food ingredients that can be frozen. Suppose you buy a potato, you can fry it dry, and store it in the freezer. Likewise, meat, fish and seafood. Make sure all your food items have been washed with soap first.

5. Stop smoking

Besides you save money on your monthly expenses, this also helps maintain your health. As much as possible you reduce smoking even quitting will be even better. You love yourself and those around you.

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