Category Archives for Invest & Retire

Why Is The EUR/USD Currency Pair So Popular?

The following is a guest post. Enjoy! 

­One currency pair enjoys so much trading volume that it is almost synonymous with the whole world of foreign exchange (forex).

The EUR/USD currency pair sometimes nicknamed ‘fiber’ by some traders, tracks the movement in value between the world’s two most liquid currencies, the Euro and the US Dollar.

But what makes the EUR/USD such a popular trading choice?

One reason is the large number of multinational corporations (MNCs) actively trading both in the US and in the Eurozone. These businesses have an ongoing interest in the currency pair, given their need to actively hedge against exchange rate volatility.

That same volatility is also an attraction for newcomers to the world of forex trading. Given the large number of worldwide market participants, liquidity is never in short supply on the EUR/USD. This makes it a great option for those interested in opening short-term positions on the pair, such as day-traders.  The pair’s continuous and incremental changes, driven by ample liquidity, are important to discerning short-term market trends.

The pair can be significantly affected by geopolitical and economic developments in both the US and the 19 Eurozone countries, where the currencies are the official tender.

For those with a keen eye for spotting how global events play into market fluctuations, the pair offers the possibility to take positions based on the expected outcome of major world events, such as elections, monetary crises, and even wars.

Knowledge of the Eurozone’s ‘macro-economy’, including the complex monetary policy administered by the European Central Bank (ECB) in Brussels, will also play dividends for traders looking to explore the pair.  On the US side, policies set by the Federal Reserve (or simply the ‘Fed’) can have a significant impact on the rate.

Given the prominence of the pair, customers also have a vast array of trading websites from which to choose from when looking for an outlet that supports the pair.

For both newbie and veteran traders wishing to find a currency pair that affords plenty of possibilities to leverage both short-term and long-term trading strategies, the EUR/USD is a great place to start.

Forex Basics

The following is a guest post. Enjoy! 

Everyone’s looking to make some easy money, and the older we get the more we learn that such a thing doesn’t exist. But there are ways you can make a little extra money on the side and during your free time such as with forex trading.

Forex trading is seeing a wave of popularity because of the opportunities it gives traders to trade on their own schedules and make some serious cash. The forex markets are decentralized which means that traders can access them via a simple internet connection. This is liberating for many traders that want to trade during their free time, from any place in the world.

Also, forex trading offers a real opportunity to make money. That said, you have to take the time to learn forex basics before you can begin trading and profiting off your trades. Let’s take a look at the forex industry, how it works, and how you can learn about the industry to begin trading as soon as possible.

What is Forex Trading and How Does It Work?

Forex trading is based on a simple concept: currencies have values that fluctuate over time. Throughout the day, week, month, or even year, the currencies go up and down in value as a result of a number of external factors. These factors include the forces of supply and demand, events like war and economic recessions, and even statements and announcements made by governments and political leaders.

Traders take advantage of these value changes to buy and sell currencies. The whole concept is to buy a currency when its value is low, and sell it when its high. Traders that have a well-developed strategy and understand the rules of the forex markets are able to profit off currencies in this way.

The truth is that forex trading takes a lot of time and effort to learn. That’s why it’s important to learn forex basics from the very beginning so you have a sturdy foundation to begin trading and you can build on that foundation as you learn more about the markets and hone your skills.

Learn Forex Basics with Broker Resources

The question that many beginner traders have is where they should begin learning about forex markets. Many novice traders don’t know that brokers often have resources that will help them learn about the industry, get their feet wet, and start trading successfully.

These brokers often have full websites dedicated to educating their customers. Some even offer virtual trading simulations where you can make some sample trades without risking any of your valuable money.

These resources are an invaluable source of information for beginner traders that want to learn and shouldn’t be ignored. If you are able to take advantage of the information that forex brokers provide, you can become a successful trader and make some money.

Overall, the forex industry offers a great opportunity for those that want to make some extra money by trading during their free time. Just keep in mind, you have to invest the time to learn about the markets before you begin trading. Don’t skip this step, otherwise, you may be disappointed with your trading results.

Don’t Lose the Farm at an Investment Seminar

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Attending seminars and training sessions to learn about a topic of interest to you is a worthy endeavor, but you have to be careful about taking action based on those seminars.

Some are entirely legitimate and you might find the perfect financial resource to accomplish your goals.  Financial advisors come in all shapes and flavors – some are just broker house representatives, others are highly trained and certified professionals and some are just shady dealers trying to get your money.

Often my spouse and I get invitations to attend investment related seminars – including a free dinner.  We get them more often now that we are over 65.  Typically they are for dinner at a popular local restaurant with pretty good food.  Headliners have included things like:  “Come learn how to make your money last in retirement”.  “How to invest in a down market”.  “Plan your retirement income” and etc.

It’s not surprising that we receive these invitations. Forbes article Beware The Free Lunch (Or Dinner) Investment Seminar reported:

“According to FINRA research, 64 percent of those responding to a survey of people age 40 and over had been invited to an “educational” seminar with a free meal offered.”

The North American Securities Administrators Association says:

“State securities regulators warn senior investors to be aware that a combination of “free lunch” seminars, misleading professional “senior specialist” designations, and abusive sales practices can create a perfect storm for investment fraud. Remember: there’s no such thing as a free lunch.”

The Alberta Securities Commission has a list of various types of scams including these.  They note some red flags – such as:

• “Above average returns with little or no risk. No investment is risk free.
• Offer of loans to cover both the investment and further investment seminars.
• Claims of a secret or exclusive technique for building wealth. The salespeople at seminars can make misleading claims that entice you to sign up right away.
• Limited time offer that discourages investors from getting independent advice.
• Promises to ‘be a millionaire in three years’ and ‘get-rich-quick’.
• Sales pitches of no cost involved or free attendance at seminars. The first session you are invited to attend may be free, but you may have to pay fees and commissions that the promoters did not tell you about beforehand”

A few years ago, we (my spouse and I) actually attended one of these free dinner investment seminars.  The dinner was hosted by a broker (supposedly associated with one of the big wire houses – I don’t remember which).  The event took all evening, from about 5 pm until about 9 pm.  It was at a nice steakhouse in my home town – one that is on the upscale side of the price range.  We did get a nice dinner.  After dinner, there was a presentation and a long sales pitch.  We listened and squirmed, wanting to leave and get home so we could get some rest for the next day.  We bought nothing and we gave no information.  We were not contacted much afterward.  Overall, it wasn’t an unpleasant experience.  We felt we paid for our dinner by listening to the pitch, but didn’t feel obligated to buy because we had a ‘free’ dinner.  We’ve never been back, preferring to rely on our own research and studies to figure out our investments.

Junk mail isn’t the only avenue used by brokers and other’s dealing in securities investments for a living to offer free seminars.

You can find one in most local ‘communiversity’ classes (classes taught by community volunteers, usually held at a local school and charging only a small fee for participants).  Heck, your company may even host one.  Mine did.

My company brought in local financial advisers to teach a course that covered retirement saving and investing.  The company offered it only to people 55 and over.  As part of the course, the advisers offered to do a free financial plan – a value (they claimed) worth hundreds of dollars.  At the seminar the advisers really played up the benefits of variable annuities.  They did such a good job that one of my co-workers fell, hook, line and sinker for the pitch.  She turned over her entire retirement savings to them to invest.  I’m pretty sure she is back at work now!

Even Vanguard offers a ‘financial planning’ service.  They, however, are very up front on their web site with the fact that their recommendations will put you into Vanguard mutual funds only – so if that’s not what you are looking for, don’t ask them to do a financial plan for you, even if it is free!

So, if you read your junk mail, and want that free dinner, be prepared to invest your time to pay for it and don’t feel obligated to buy something just because you got dinner!

• You don’t owe the broker a sale for the dinner.
• You don’t owe the charity a donation for the return address stickers.
• You don’t owe the company a response because they sent you a dollar in the mail – unsolicited.
• Heck, you don’t even have to get the junk mail (but it does help the USPS stay afloat).

How about you all? Have you ever attended a financial seminar? Did you feel pressured to buy any of the products?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/ctbto/7995586057/in/

How to Painlessly Switch Mortgages When You Need a New Home

The following is a guest post by George. George writes at Sobredinero.com, a personal finance site for Latinos in the US. Enjoy!

Let me tell you about a man named David. The first thing that attracted David to his condo when he first bought it was how close he was to his job. On top of that, it was near a trendy area packed with nightclubs, bars, and fancy restaurants. It was perfect for David when he was single with no kids. However, David started a family and his housing needs changed.

With a wife, one child, and another child on the way, waiting 10 years to build equity and then liquidate that equity in his condo was not an option for David. He was ready to trade in his two-bedroom downtown condo for a three-bedroom home in the suburbs.

Analyze the Options

David knew which house he wanted, but like most people, he could not afford to pay for two mortgages at the same time and even though he was fairly certain that his condo would sell quickly for the asking price, he did not want to risk his family’s financial security.  He thought about moving to the new house and renting out his condo to cover the mortgage while he had the condo on the market. However, after speaking with the condo board president and reading the homeowner’s association paperwork, David discovered that renting out his home would require a lengthy and rigorous vetting process with the board.  He did not have the time or money to do that.

David also considered borrowing against his 401k for the second mortgage, but if he were to leave his job before paying back the loan, he would be obligated to pay the outstanding balance of the loan within 60 days or be hammered with taxes and penalties. He learned fact by reading through the 401k materials he’d received at orientation three years earlier and he also learned that those terms were common for 401k plans. That was a dicey and expensive option.

After thoroughly weighing all of the possibilities, David decided to put his condo up for sale and simultaneously file for a second mortgage. This sounds risky on the surface, but David knew that the bank would only grant the second mortgage after the condo sold. This practice protects the interests of both the lender and the borrower.

Factor in the Real Cost

Once David decided on the list and file simultaneously route, he put in some research on mortgage terms. Taking on a mortgage is not just about paying back the amount of the loan itself. Smart borrowers also consider the interest rate, total annual cost, monthly payment terms, and the total payment. Additionally, ancillary costs such as bank fees, housing association requirements, taxes, and transportation need to be factored into the real cost of a new home purchase. David used a mortgage calculator to help him understand the true costs of his mortgage options.

Time It

David had everything in place and the only thing left to do was to sign the paperwork. To cancel a mortgage and acquire a new one requires the bank as well as a notary public, so David made sure to schedule the two transactions in one meeting and ensure a smooth process.

This didn’t always used to be the case. Historically, purchasing and selling a home at the same time was a long process. Say for example if David had purchased that condo recently to “flip” (buy for a low price and quickly re-sell at a higher price with inexpensive upgrades), he might not have been able to sell the condo because of restrictions that prevented a home sale if the home been had purchased within 90 days. However, the Federal Housing Administration has eliminated this restriction.

Get the Happy Ending

At the end of everything, David and his family turned out just fine. The condo sold, the mortgage terms for the new home were agreeable, and everyone settled into a more comfortable arrangement. Gone are the days of being tied to a house simply because you signed a mortgage. Granted, it’s not as easy to move when owning a piece of property as it is for renters, but it is certainly possible in today’s modern housing market, and the last thing you want to do is be unhappy with your home. Happy house hunting! Be sure to check out more advice about mortgages here, or here.

Don’t Get Trapped into Buying Credit Life Insurance

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Have you ever made a major purchase, and been told that you must pay for a credit life insurance policy in order to get a loan to make that purchase? It’s a common practice, and even though it’s usually not a true requirement, it is almost always presented as though it is. But in most situations, credit life insurance is not a requirement, and represents little more than an extra expense for you.

What is Credit Life Insurance?

Credit life insurance is a form of life insurance that has a single specific purpose. Regular life insurance is usually taken out for a general purpose. The insured purchases a policy for a certain amount of money, which is then paid to his or her beneficiaries at the time of death, and can be used for any purpose.

Credit life insurance, on the other hand, is taken out for the purpose of paying off a single loan upon the death of the insured. The proceeds cannot be used for any other purpose. And in fact, the proceeds don’t even go to the insured’s beneficiaries. Instead, even though the policy is paid for by the insured, the beneficiary is the lender. The proceeds will go to the lender to pay off the remaining balance of the loan at the time of death.

Now even though credit life insurance is for the direct benefit of the lender, there is a secondary benefit to the insured’s family. Because the policy will pay off the loan on the asset, the insured’s heirs will be able to retain ownership of the asset, free of the loan that was used to purchase it.

Credit life insurance is most commonly used in connection with the purchase of a major asset. This can include a house, a car, a boat, furniture or appliances, and computer equipment. Any time an asset is purchased using credit, credit life insurance can enter the picture.

Why Credit Life Insurance is Such a Bad Deal – For You

There are several reasons why credit life insurance is best avoided:

Credit life insurance is expensive. It costs significantly more than an equivalent amount of ordinary life insurance. This is partially true because the amount of the policy is generally small, and life insurance costs proportionally more for smaller amounts.

It is also because credit life insurance comes under the category of guaranteed issue. That’s a term used to describe a policy that does not require you to disclose the condition of your health, nor does it require a medical exam. The insurance company is issuing the policy with no knowledge as to any factors that might affect your mortality.

Declining balance of death benefit. Since credit life insurance is tied to a loan, the death benefit declines in value as the loan amount is paid down. This means that as the loan is amortized, you’re paying proportionately more for less coverage.

Single premium payment. The lender will often require you to pay the full cost of the policy at the time you purchase the asset. In doing so, the premium will be financed into the loan amount. That means that you will be paying interest on the amount of the premium.

Worse, should you pay off the loan early, it is unlikely that you will get a refund of the unapplied premium. More likely, you will forget all about the life insurance policy, and assume that the remaining portion of the premium is simply part of the loan balance that needed to be paid off.

Why Are Companies So Aggressive in Promoting Credit Life Insurance?

Though few lenders or product dealers will admit it openly, it’s extremely likely that they are receiving some sort of incentive in order to promote the use of credit life insurance in conjunction with the purchase of their products. In the simplest terms, credit life insurance represents an additional revenue stream for both the company and its sales staff. They will be strongly encouraged to add credit life insurance to the purchase.

It may also be that in some cases the existence of credit life insurance might help to enable a marginal borrower to get a loan. This is a common requirement with various types of subprime loans. The existence of credit life insurance will eliminate at least one potential risk for the lender, which is the death of the borrower before the loan is repaid.

There may also be certain situations in which a product vendor and the insurance provider are related organizations. It could be that one owns the other, or that they have a common corporate parent. Any of those connections could result in an attempt by each subsidiary to promote the products of another.

Credit Life Insurance is Usually Not a Requirement

Credit life insurance is not supposed to be a requirement for obtaining a mortgage. And depending upon what state you live in, it may not be required for any other type of loan, including auto loans.

But that won’t stop a vendor from selling you a credit life insurance policy. They may even press the notion that it is a requirement. Even though state law may require some sort of disclosure or waiver, the sales staff may bury the document in a thick bundle of paperwork, in the hope that it will be ignored.

They tend to be most successful in promoting credit life insurance in connection with subprime loans. For example, if a person has less-than-perfect credit, they may just be happy to get a loan – any kind of loan – even if it has some expensive requirements. That can include credit life insurance.

How to Avoid Being Trapped into Buying Credit Life Insurance

One of the best ways to avoid being trapped into buying credit life insurance is to maintain good credit. Since the competition to make loans to people with strong credit profiles is so heavy, neither lenders nor vendors will risk including credit life insurance for prime borrowers, who always have the option to go to another source. Maintaining a high credit score will likely prevent the topic from ever even coming up.

You can also check with laws in regard to credit life insurance in your state. The laws vary in each state, and you can never expect a vendor or a lender to tell you what the law is if it doesn’t work in their favor. You need to do your homework and know what the laws are. Get a copy of them, and be prepared to present them when you make your purchase, in the event that anyone tries to push credit life insurance as a requirement.

Another option is to shop. Even if you fall into the subprime credit category, the knowledge that you are working with two or three different vendors could force one of them to drop the credit life insurance requirement in order to win your business.

Credit life insurance is expensive, and works primarily for the benefit of the lender or vendor and not you. For those reasons, you should do everything you can to avoid having to take a policy.

How about you all? What are your thoughts on credit life insurance?

Share your experiences by commenting below! 

Top 5 Roles of Frictionless Banking in Financial Services

The following is a guest post by Ryan. Enjoy! 

The evolution of online banking solutions in the last couple of decades has been phenomenal. It has changed everything right from the way we shop to the way we bank. For the banking and finance industry – the evolution of online banking has brought its own share of benefits and challenges; however, there is one thing which is clearly noticeable now – the players in the industry can no more survive without keeping pace with the ever-evolving digital world.

The digital revolution has influenced all aspects of the banking and finance industry – from how customers avail banking services to how the financial market operates. The tech-savvy millennial generation doesn’t simply choose a bank because of its fiscal and social status but also looks for a seamless financial service experience. Banks are, therefore, in need of keeping pace with the digital world and competing to innovate, collaborate and increase their focus on providing superior digital services to their customers.

The need for frictionless banking experience  

The customer footfalls in the bank branches have drastically reduced and most of the customers are now fully accustomed and comfortable with a contactless world. The new banking experience is all about clicking few buttons or tapping the cards.

Despite these improvements in card transactions and mobile banking experiences, customers are left asking for more. For example, to access a bank account, a customer still needs to remember a PIN, a password or details to authenticate the transaction. Now with growing number of platforms requesting for similar access details, the customer starts feeling the pressure of remembering too much and verifying too many details. The situation in the mobile banking domain, therefore, is less than ideal.

This is precisely the reason why the concept of frictionless banking has come in to picture. Frictionless banking is the next big thing in the mobile banking domain.  Frictionless banking, as the name suggests, is about providing seamless access and hassle-free authentication by using verification features other than PIN, passcodes, and passwords. With customers getting more and more demanding about superior customer experience – the new rule of customer engagement for all types of financial institutions is to keep transactions simple and straightforward, without any friction at the customer’s end.

With the advent of new digital technologies, banks and other financial institutions are constantly looking for new ways to interact with customers and provide them with a more frictionless experience.  Biometric data such as iris, fingerprint scanning or facial and voice recognition are now being used as a part of verification processes for a transaction. Location data, digital fingerprints, online behavior of the customer are other ways in which verification processes for a transaction are being conducted to provide frictionless banking experience to customers.

Frictionless banking is the future

Frictionless banking will play a great role in the future because,

1. Retaining and attracting customers: Frictionless banking will redefine banking experience for customers; and therefore, it will play a great role in retaining old customers and attracting new ones. With customers finding simpler and hassle-free platforms to conduct transactions, they will come back to the bank again and again. This will translate into growing customer base, increasing number of patrons and, of course, more business for the banks.

2. Reducing frauds and forgery: With lesser dependency on the manually fed information, the chances of forgery and manipulation of the system will go down. As frictionless banking platforms are mostly biometrics-based, mistakes such as the customer divulging the password to someone, entering the wrong passwords and any similar manual error will have lesser or no impact on the banking experience. Frictionless banking will, in fact, make banking safer, secure and error-free.

3. Making banking faster: With password-free logins, banking would become much faster – it will just be a matter of swiping the fingerprints through a device or tapping the smartwatch. Peer-to-peer transfer, bill payment, and other such transactions will be possible without remembering a single password. Such password-free transactions will be possible 24 hours a day, 7 days in a week.
4. Streamlining customer records: With biometrics verification in place, the need for collecting too many identification documents for customers will be redundant. The customer records with banks would be limited to necessary biometric details. This will reduce the piles and piles of unnecessary customer data that a bank has and streamline their records.

5. Reducing operational cost: With remote banking experience becoming so seamless, there will be no need of walking into a bank for any transaction. This will bring down the needs of the banks to create more infrastructure, have more staff on the ground to manage the customers and hire additional help to assist the existing staff. Frictionless banking will also allow the customers to be onboarded remotely.

Creating a frictionless banking experience 

Banking, now, with the advent of highly evolved technological platforms has become much faster than one could have imagined about a decade back. Several IT and software companies now specialize in assisting banks and financial institutions in innovating newer platforms and making banking more and more customer friendly every day.

From designing customized core-banking platforms to different mobile banking platforms for different operating systems – these companies have evolved with the needs of the customers. With ‘frictionless banking experience’ becoming the buzz word of the future, there are several companies that have come up with innovative solutions for that as well.

Apps For Investing in Precious Metals

The following is a guest post. Enjoy! 

Precious metals like gold and silver have been a popular choice for investors for thousands of years: the intrinsic value that metals have provides investors with a sense of comfort and security.

Precious metals can be very volatile, however. Even with the historic stability, they have provided investors over the years, there are times when the prices can rise or fall just as quickly as any other stock on the market. Therefore, it’s important that investors have the ability to stay current on their stock of precious metals from anywhere they are. Fortunately, there are apps for both Android and iOS users that can help them follow the gold and silver prices right from their phone. Here are a few of them:

Gold Research

This application is a great beginners tool to help determine whether gold is right for your portfolio. Not only does it measure the price of gold in real time, it provides plenty of tools that can help make a savvy investor out of anyone.

Gold Research will provide insight into such important factors as supply and demand as well as offer strategic investment advice from experts, including the World Gold Council. The research focuses on the drivers of the gold market, like central bank policies, risk diversification, and many others that professional investors use every day to make decisions. The app even includes jewelry technology in its analysis.

There are also helpful charts that can help you track your investments as well as current and historical trends. This is a great way to continue your research and to determine times to buy or sell. You can also visit a “frequently asked question” page that can answer some basic questions if you ever find yourself stuck.

Bullion Vault: Gold & Silver

This app takes everything you need to know about investing in precious metals and makes it easy to understand. It is the largest online investment service for silver and gold, which give millions of private investors the information they need to make wise decisions and stay on top of the current markets.

This app isn’t just a tracking and investment advice app: it also lets you buy and sell gold and silver directly. If you are a customer of BullionVault, you can not only track the prices but can instantaneously purchase bullion that is housed in vaults all over the world, from London to Singapore to New York City. If you are confident that you know what you are doing, this can help save the cost of going through a broker, putting more money in your pocket. All from your mobile device.

Gold Live!

This application from Kitco is one of the highest precious-metal tracking apps out there. It includes pricing and research on gold, silver and other precious metals that can help you stay current on pricing and trends.

You can set alerts in the app that will notify you when your precious metal of choice hits a certain price point so you know instantly whenever you need to buy or sell. This is fully customizable to your standards, so you can have control over your portfolio. While gold prices are live and up-to-the-minute, other metal prices are available in reports that are made every hour, which you can have emailed

Gold Live! Also, features currency exchange rates with 13 currencies around the world, so you know what to expect when you buy or sell. There are also full-screen technical and historical charts that so you can keep up with your research wherever you go.

Gold Silver Price and News

For a one-stop app for all the information you need, it’s hard to beat this app. While you cannot buy any precious metals through this app, it does provide in-depth news and analysis that every savvy investor needs to be successful.

This app allows you to quickly check the spot prices of many precious metals so you always know what the metals are currently trading for. You can also call up 24-hour to 10-year charts to help spot trends and review historical data. The app also has breaking news stories and general financial news to keep you updated on the daily markets.

In a constantly-connected mobile world, it’s important that you stay on top of your finances. Try some of these apps and see which one is right for your portfolio.

Reflections and Lessons Learned From Obtaining Term Life Insurance

Ten months ago, my wife and I went through the process of obtaining term life insurance policies. The major life event that gave us the final nudge to obtain policies was the soon-to-occur birth of our son, Alex.

In the end of the life insurance-obtaining journey, we had taken out two term life policies (one for each of us) with face values of 10x our current respective annual incomes from Protective Life Insurance Company from a local Colorado independent insurance agent. You can read the full details of the process we went through in a previous post I wrote. The monthly premium payments are $49 and $15.

Reflections

Reflecting on now having our life insurance policies for 10 months (including those lovely dependable premium payments waiting for us to pay each month), I definitely feel like we made the decision to get term life insurance at the correct time in our lives and were also in the correct financial position to make the commitment.

It was the correct time in our lives because we were just about to give birth to our first child. In addition, being in our early 30’s, we were not too aged for life insurance to be affordable and not too young for life insurance to be relevant. The insurance premiums are taken out of our checking accounts each month, and I often don’t even notice that the premiums have been debited from our accounts.

Does having life insurance actually provide added peace of mind in real life? Truthfully, I hadn’t given this question a great deal of thought. It seems that since our son was born, we’ve been so busy that I don’t have as much time for reflections on financial planning decisions. However, two weeks ago while out on a group bike ride, several members of the group had a crash. All of the crash victims will make a full recovery, but one of them did have to head to the hospital. After examination, it was discovered that he had multiple broken ribs and a partially punctured lung. It was definitely a reminder that anything can happen at any time. Later that day while reviewing the incident in my mind, I did feel better knowing that if anything was to happen to me, that my son and wife would be taken care of financially, at least for a few years.

Lessons Learned

Going through the process obtaining life insurance was more involved than I was expecting based on previous experiences of obtaining renter’s/home, health, and auto insurance. Described below are several of the key lessons learned I picked up along the way.

1) Shop around online FIRST

Even if you think you will obtain life insurance through a local insurance agent, it is a valuable first step to obtain price quotes from the Internet first. This ensures that any premium quote you receive is competitive in the overall market.

2) Don’t fear insurance companies you’ve never heard of

On a daily basis, we as consumers are bombarded with advertisements from insurance carriers, most of which also offer term life insurance policies for sale. As a result of these ads, we have an inherent familiarity with them. You know – the Geico lizard, “We are Farmers, da, da-da, da-da, da da,” the Aflac duck, “Nationwide is on your side,” “Allstate – are you in good hands,” State Farm, Liberty, Northwestern Mutual, etc. And, most of these are great companies that have stellar track records.

However, there is a little known “secret” (actually not a secret at all) in this country. There are a number of life insurance companies that have been humming along for 80-100+ years in the USA, churning out consistent performance, never missing an insurance payout, never being over-leveraged/over-risk-exposed, and consistently being rated highly by credit agencies. But, guess what? You’ve probably never heard a single national commercial from them, and perhaps they’re not even listed on the national stock exchanges. For example, have you ever heard of companies like Ohio National Life, Lincoln National Life, American General Life, Banner Life, Savings Bank Life, TransAmerica, Protective Life, Massachusetts Mutual?

Anyhow, my point here is that you shouldn’t shy away from opening up a life insurance quote from a company you are unfamiliar with. Instead, investigate the company yourself. The key things I look for is a long historical record (i.e. company has been around for over 50 years, which is short in the life insurance industry) and a high credit rating by the rating agencies/bureaus (AM Best is the most common choice)

3) Automatic payments

After you have signed a life insurance policy, my next recommendation would be to set up an automatic payment plan to cover your premium each month. The purpose of this is two-fold. First, an automatic premium payment plan reduces the chance that you’ll miss a payment and your policy will be nullified/lapse. This is important with term life insurance because as you age, the pricing of a plan goes up dramatically. You don’t want to be put in a situation where you have to open up a new policy at a higher price, just because you weren’t paying attention during a job/family move or other life-changing event. Second, I find that when I have automatic payments in place, I “miss” the money much less than if I have to physically open my account and transfer the money manually. If it is automatic, I often forget that the money has already been transferred.

4) Obtain a policy with a mutual insurance company

Although there are many great insurance companies around today and ultimately, you should go with the company that provides the best deal/most value, my favorite type of insurance companies are mutual-type. With a mutual insurance company structure, the company is owned by the policy-holders, instead of by a private individual/group or stock shareholders.

5) Read all the fine print prior to signing and be careful with DocuSign

The last lesson I learned from obtaining life insurance policies was to be careful to read all of the fine print in an insurance policy prior to placing your final signature on the document. This is especially true in today’s online world with the use of electronic signature programs, such as DocuSign. With these programs, it is very easy to simply click “go to next signature” which can auto-scroll down multiple pages, causing you to miss important details in a document you could be bound by for tens of years.

How about you all? Do you have life insurance? Do you find it gives you added peace of mind on a daily basis? What do you find most important for life insurance?

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/chrigu/2635274509/in/

4 Money Milestones You Should Have in Place Before You Have Kids

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

With the latest reports stating that it costs nearly $250,000 to raise a kid, it might be a good idea to have your money situation in order before you think about having kids. It also might be a good idea to get your money situation in order if you already have kids.

I should start off by saying that we didn’t start getting our money in order until the oldest of our four kids turned thirteen years old. I share this to encourage those starting late: it’s never too late to start getting your money together.

I remember having a talk with our oldest one time, expressing remorse and regret that all of her years as a child had been watching us struggle for money. I didn’t want to give her that same experience that I had as a child; one where money had been a constant source of fear because we never had enough growing up. Yet my husband and I fell into the same path with our kids that our parents fell into with us. A lack of education about personal finance had been passed down throughout the generations.

Oldest daughter answered my regrets with the heart of a champion. “Mom, what matters is that you are getting it together now. Even if it takes ten years to get out of debt, at least you’re getting out. You can spoil us then.”

Kids are resilient. They often have a wisdom that adults lose in the face of trying circumstances. It’s for them that we’re working on achieving the money milestones that are best in place before kids arrive on the scene. Here are four of my favorite money milestones that you might want to think about achieving before you have kids.

Get Your Debt Situation in Order

A best case scenario would be zero consumer debt (and a commitment to stay that way) and a very manageable mortgage (say, 25-30% of the primary income earner’s take home pay). When we had our first baby, both Rick and I were working. I had a great job: part-time, they allowed me to work from home and I made really good money.

I thought I’d work forever, but after kid number two came along I really had a heart to stay home and manage the kids and the house full-time.  Kid number two had a minor but time-intensive medical condition for the first year of her life that left me wanting time to care for her more than I wanted money.

I got laid off in a group layoff at my company when kid number two was 9 months old, and we chose for me to stay home, but money was tight due to our debt situation. We had borrowed based on two incomes. If we had to do it over again we would’ve bought a house based on hubby’s income alone and avoided consumer debt altogether.

Be Contributing to Retirement Accounts Consistently

“I haven’t arrived, but I’ve left” is a good motto when it comes to combining retirement planning and kid-raising.  It’s not necessary to be fully prepared for retirement, but it’s a good idea to be consistently contributing to either a 401(k) or an IRA of some sort. It’s tempting to stop saving for retirement during the kid-raising years so you can be sure to have money to cover kid expenses, but you’ll thank yourself if you keep saving for retirement because then your kids won’t have to help support you financially during retirement years.

Make Saving a Habit

A plush emergency savings fund is always a good idea, but even more so when you’ve got kids. All expenses double and triple when you add additional family members, so it’s a good idea to set aside a specific percentage of your paycheck into a savings account that can cover a new car need, an expensive bill or repair, or that can carry your family through during an unexpected reduction in income such as a job layoff.  It’s also a good idea to carry a sizeable life insurance policy if you don’t have enough money saved to be considered self-insured in your own eyes.

Have a College Savings Plan

College costs and student loan debt numbers are rising every single year. If you’re having a baby, it’s a smart idea to research the different college savings plans available in your state and to have a plan in place for how much you’re going to contribute to your child’s college education and to work that number into a monthly amount that you can include in your budget as early as possible. Time flies even faster when kids come along. It’s a wonderfully, beautifully hectic life where one day you’ll be bringing your kid home from the hospital and then next you’ll be teaching him or her to drive.

If you get a college savings plan in place sooner rather than later, you’ll lessen the financial burden of college on yourself and on your kids.

How about you all? What money milestones do you think are important to have in place before kids come along?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/digitalsextant/29908738/

Is CFD Trading Risk Free?

The following is a guest post. Enjoy! 

A lot of traders these days, from different markets, are stepping into the arena of CFD Trading, or Contract for Difference trading. In simple words, CFDs types of trading allow investors to gain an upper hand in certain markets. And, in such markets, they can make precise calculations of prices in either long or short positions. It was during the 1990s when the contract for different trading was started in England, and it was basically backed by the concept of equity swaps. One of the prime benefits of CFDs was that they didn’t come under the tax slab. This is the reason why CFDs turned out to be so popular among the traders.

How do CFDs work?

Well, contract for different trading work simply by starting a contract between a CFD provider and an investor. In the beginning, a trade begins through a particular instrument that passes through the provider of CFD, which in turn creates a position. Interestingly, these trades do not come with an expiry date; however, they get closed automatically with the completion of the other trade. Eventually, the trade difference is released either as a loss or a profit. Besides, the provider can change the trade as per one of the provisions of the standard deal. And, it can be done using a commission or certain fees relevant to the trade. So, CFD trading is quite similar to gambling on the trade market. In case an investor takes a good decision then he or she will eventually earn a lot if he or she has precisely forecasted the events in the trade. After all, CFDs help them increase income as well as value brackets of each investor.

Choose your Broker Wisely

Quite certainly, there are certain CFD brokers out there in the market who are available to help you with CFDs. Such brokers certainly have expertise in this process and they know completely how to handle these types of trading work. And, you can definitely trust them. But, before you head towards any CFD broker, it is better to gain some idea by understanding the different aspects of CFDs. You can refer to different CFD training books, DVDs, programs, audio files, and manuals that teach the methodology of CFD training to novices and beginners.

One of the key aspects of CFD Trading is that the risk involved is too low. This is the reason why it is so lucrative for beginners. If you want to step into the world of trading then CFD can be an excellent option to start with. The aptest way to begin with CFDs is to figure out a reputable company and start trading with small amounts. Once the company starts yielding a profit for you, it would be easy for you to make some more investments.

The reason that CFD trading is so popular is that it features several benefits over other types of trading programs. The most valuable of these advantages is leverage, which is 10:1 or possibly 20:1 in a few situations. With this kind of leverage, it is possible to make use of a small deposit to generate greater profits. As an example, if the seller wants 10% or 10:1 leverage, it will mean that through investing $10,000, you may buy CFDs really worth $100,000. Another advantage is that making use of CFDs, you can easily go short as well as go long. 

Most CFD providers allow you to buy and sell 24 hours per day. Thus, you can trade in the evenings, essentially after the market closes. It is possible to trade within seconds and you don’t need to wait for a dealer to process your order.

In CFD trading, you’ll be able to earn considerable profits in shorter durations, as well. Furthermore, you will have many investing alternatives to select from. You are able to invest in futures, currencies, assets, etc. A lot of CFD providers also offer you the possibility to utilize guaranteed stop loss orders.

However, CFD trading has certain drawbacks, too. Leverage may possibly wind up becoming disadvantageous for you at certain times. If you invest a modest sum of money and the stock prices go down by a pretty large percent, say 80%, then in that single trade, your loss is going to be a lot more than your original investment. Slippage may possibly at times also move a successful trade into a substantial loss. CFDs aren’t appropriate if there’s a large amount of money to be invested or for those who want to invest cash for a very long duration of time.

There is no investment choice that is best. There are advantages and disadvantages of all of them. There can never be an obvious winner. You must choose the very best investment strategy for yourself, depending on what precisely you need from your investments. But you can easily lessen your losing trades by completely comprehending CFD trading, its benefits plus the risks.