How To Recession Proof Your Personal Finances

Looking back over the last 50 years, housing downturns have usually signaled pending recessions. Now with the first employment drop in 4 years, stock market fluctuations and the credit crunch many wonder if we may be headed that direction again. Wall Street bulls, or those who have a positive outlook, hope that strong global economies will keep things on an upward track.

To a great extent, the health of our economy rests on the shoulders of the American consumer's buying power. If we are able to continue spending, many corporations may report positive results, which will buffer negative downturns. However, the consumer may be running out of steam when you consider the low savings rates, high level of debt, home foreclosures and consumption of home-equity coupled with stagnant home prices.

Tips for Financially Challenged Individuals

Those in financial difficulty are more susceptible to the affects of a recession, because they probably don't have adequate savings or the ability to borrow more without risking financial disaster.

Negative financial circumstances can come at any time such as a major car repair or large health bill that isn't completely covered by insurance. But, if a recession were to occur there is a greater likelihood of other consequences such as:

? Corporate cut-back

? Difficulty obtaining credit

? Smaller wage increase

? Bonus reductions

? Inability to sell real estate

? Less overtime pay

? Slow sales and lower commissions

Prepare don't panic. Prepare instead in case you are thrown a financial curve ball. If you prepare, you will be better able to face financial challenges when (not if) they come.

"What can you do?"

? Delay large purchases: you may want to put off purchasing the new car or going on a big vacation. You can always buy the item later, but you usually can't take it back. This particular tip could potentially save tens of thousands of dollars.

? Accumulate money in savings or rainy day funds so that you don't have to pull money out of retirement funds, borrow, or fall behind on payments during a hardship. Savings can be invested in a money market account earning around 5%, which isn't great, but much better than paying 18% on a credit card for emergencies.

? Develop and follow a household budget and limit spending on discretionary items. Utilize good budgeting software to track all of your expenses. This way you can see if you are overspending in any particular category.

? Avoid unnecessary smaller ?want' versus ?need' purchases. For example, your cell phone contract may be due to renew, opt for the free or low cost phone and avoid the multi-media entertainment devices unless internet and email is a must for your business.

? Since transportation costs are a significant household expense, you may spend less on gasoline by combining trips, car pooling and public transportation.

? Spend wisely by becoming a student of money saving techniques: There are many excellent authors to help you save money such as Mary Hunt and money saving blogs that provide a whole host of money savings tips. Budgeting, limiting unnecessary purchases, and spending wisely can save you a few hundred dollars per month to help you build up your rainy day fund - all with little sacrifice to your standard of living.

? Develop your long-term goals. Having written goals and a mapped out plan of action puts your spending into the proper perspective. To get started list 10 things you want to accomplish, these goals can be things you want to achieve now or in the future. Secondly, get a financial plan. If you can afford to, consider hiring a financial planner. Not everyone can afford a financial planner, and some people prefer to do it themselves. Today there are more resources available than ever to help you do a lot of it yourself.

Tips for Financially Healthy People

Some people are naturally good financial managers or perhaps have not faced financial setbacks. If you are in this category, have a firmly established financial plan, excess income and savings - recessionary times provide opportunities that you may want to take advantage of.

? Become self-employed and or buy a company. Are you an experienced business person, with great ideas, work ethic and contacts but burned out in your corporate position? Owners facing recessionary times may want to retire or avoid enduring an economic downturn. Your ideas may breathe new enthusiasm and life into a business. Seek qualified legal and tax counsel to steer you through the transaction process.

? Purchase discounted large items: auto manufacturers are already beginning to offer buyer incentives.

? Invest: don't try to time the market by moving out of stock mutual funds, but stay with the proper asset allocation (that fits your risk tolerance and return expectations) between stocks and bonds funds regardless of short term economic forecasts. When stock values decrease you get more mutual fund shares for your money. You will likely enjoy great appreciation in your investment portfolio when the stock market goes up.

? Purchase real estate. Real estate purchased for investment purposes should always be for the long term since it can be costly to own and difficult to sell, however recessionary times may provide opportunities to purchase property which has gone down in value.

If you are wise and plan accordingly, recessionary times should not affect you deeply. Plan now and make good decisions. Regardless of whether we enter a recession or not, proper planning can help prevent a financial disaster and hopefully increase wealth. Remember, the best years can be ahead for those who correctly gauge the signs of a recession, take control of their finances, and seek ways to grow wealth regardless of the financial climate.

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How Broker Scams Work

Not all financial con artists are found online or at sleazy investment seminars. There are many fraudsters that operate out of broker's offices and hide behind SEC licenses and the logos of major investment companies. These predators masquerade as legitimate brokers but they are really scam artists trying to take your money.
A classic example of a financial fraudster masquerading as a legitimate broker was Bernie Madoff. At the height of his career the notorious Ponzi scheme operator was actually sitting on panels that advised the SEC. If that wasn't bad enough he was often quoted by the financial media as an authority.
Unfortunately Madoff was only one example of such a predator. Brokers at many large firms including Securities America (formerly part of Ameriprise), Banc of America Securities (now part of Merill Lynch), Wells Fargo and other major brokerages have been caught running scams. Securities America and its former parent Ameriprise settled a lawsuit for $80 million filed over allegations that Securities America brokers had invested retirees' money in Ponzi schemes.
How to Spot a Broker Scam
Fortunately it's actually fairly easy to spot a broker scam because brokerage fraudsters use the same shoddy tactics as other financial predators. In many cases there is little difference between their cons and those run by other hustlers.
The first and biggest sign of a scam is that a broker or financial advisor tries to steer you away from regular or traditional investments. He or she tries to claim that you will not make enough money out of stocks, mutual funds etc. Then he or she introduces some unusual or exotic investment that will make piles of money. They will try to push something unusual like promissory notes, derivatives or private placements on you. In the scam at Securities America investors were encouraged to buy accounts payable investors issued by something called Medical Capital. Medical Capital was a blatant Ponzi scheme that was later shut down by the Securities and Exchange Commission (SEC).
The next sign is that the broker or advisor makes extraordinary or unusual claims about the "investment." He or she will promise an unrealistically high return or claim that the offering is totally risk free. One sure sign of a scam is a return that exceeds 13% or something that will give you a high return on a permanent basis. There is no way to guarantee such a return and no such thing as a risk free investment.
Variations of the Broker Scam
There are some other tricks that brokerage fraudsters will use to try and convince their scams are real. One common tactic is to steer the investor to something outside the brokerage. In some cases brokers will act as front men for con artists they will try to spot suckers and steer them to financial seminars and other hunting grounds for financial predators.
Another tactic such criminals will use is to always pay a high return. They get the money they are paying you from their other victims. This is called the Ponzi scheme and it was Bernie Madoff's favorite tactic. Always be leery of anything that should not be paying out and will.
Protecting Yourself from Broker Scams
Questions are the best protections that you have from broker scams. Always question everything that financial advisors and brokers say. Ask for the prospectus which describes everything about the investment. Financial professionals are required to give you this by law. Ask how the investment works and how it makes money, generally predatory brokers like other hucksters are unable to answer such a question.
The final piece of advice is to always keep the old adage if it sounds too good to be true it usually is in mind. In the world of investments this is always true no matter who is trying to sell you something.

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How To Plan And Succeed At Your Retirement Plan

If you are looking for a way to keep your life busy after you retire, consider teaching in your local community. You could do these in churches, student societies and youth clubs. Sharing your work experience will certainly benefit a lot of people and at the same time keep you occupied.

Are you thinking of retiring and living in retirement communities? Despite how lots of people hate such communities, living in retirement communities has a lot of benefits. For one, you are guaranteed instant and efficient health care. Before you join the community, your medical history is studied; thus if you take ill in the course of your stay, it becomes easier treating you.

Although retirement is exciting, it can also be frightening. It's frightening when you fail to plan; taking into consideration the financial and emotional aspects. If you have these two well mapped out, there will never be cause for alarm when you hear of retirement.

If you are about to retire and are thinking of the stock market for your investment, know that it is not a short-term enterprise. Patience and awareness are two key virtues in dabbling in the stock market. Always seek the counseling of trusted professionals in the market before you step in.

When selecting a consultant service to assist with your retirement plans, do your homework well. There are many reputable firms out there that can actually assist you. However, most of them can only cause more harm, so be careful in your selection.

Have you taken the time to plan out your retirement. You should be able to plan out lots of things including your choice of lifestyle after you retire. Without proper planning, you will be unable to live the kind of lifestyle that you want after you retire.

When you retire, engage in any kind of work you are passionate about. It could be something you were doing while still working; for example-- art, painting, craft, computer, home repairs and so. Just do something. Don't idle away or you will grow older than you really are.

If you are a female and are able to plan well before retiring, there will never be a dull moment in your life. Women especially love their social cycles. This shouldn't change after you retire. Continue to have fun and your retirement will be fun too.

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Seven Key Items To Consider Before You Hire A Financial Advisor

Often times, choosing an advisor can be a difficult and overwhelming process. Financial Advisors come in every shape and size and with a variety of qualifications. They work for big companies on Wall Street down to small firms on Main Street.
The good news is that a careful examination can be done to help make your advisor search easier. There are several essential items to consider when selecting a financial advisor that can be used as a guideline to help you through the process.
Things you should be aware of when choosing an advisor:
1. How do they get paid?
In the previous twenty years, the financial profession has created a lot of debate and negative media because of its compensation arrangement. Often times the type of compensation that is most vulnerable to producing problems within the client-advisor relationship is in the form of commission.
A commission is a fee that is paid when an investment product is sold, which is often not disclosed to the client. The product can be an investment or insurance, such as life insurance, long term care, or an annuity. This commission rewards the advisor for placing the client into a product, not for providing advice or guidance.
Frequently, the advisor is then motivated to suggest products so they can get paid, which destroys the real premise of remaining unbiased and impartial for the client. The best course of action for someone looking for the help of a financial advisor is to search for one that is compensated by a "fee for service."
In addition, it is worthwhile to seek out an advisor that does not get paid by any commission-based product which could include limited partnerships, annuities, mutual funds, and all forms of insurance.
2. What is their knowledge and experience?
As with all professions, knowledge is critical, even if their business has been in existence for quite some time, because their organization can't oversee each piece of guidance and direction they would be providing you. Make certain that the potential advisor has a sufficient amount of experience.
3. Is their regulatory record clean?
It is essential to know the prospective advisor's ethical record. The easiest way to find this information is by exploring their records through the regulatory agencies. The most trusted resource is the FINRA website - You can also make inquiries through the SEC if they are a Registered Investment Advisor. If they are a CERTIFIED FINANCIAL PLANNER Professional, you can make inquiries about them through the CFP board.
4. Do they have any credentials?
This is imperative for several reasons. First, it is a sign of their knowledge, expertise and proficiency within their profession. Some legitimate qualifications to look for would be CFP??, CERTIFIED FINANCIAL PLANNER, CFA, Chartered Financial Analyst, and ChFC. The most admired for financial planners is the CFP??.
Second, it helps you decide whether or not their heart is in their profession. The majority of these credentials involve quite a lot of effort and devotion to acquire.
5. Do they use a proven Investment Process?
One of the major reasons why people get themselves into trouble when investing is because they never hold fast to a stringent discipline. This goes for an advisor as well. It is astounding how many advisors position their clients into the market without an established investment process in place.
When a severe market decline occurs, their clients frequently suffer more than they bargained for. Make sure the potential advisor has been using a demonstrated investment process that has a track record of withstanding severe market environments.
6. What planning services do they offer?
There are several important areas within the sphere of financial planning that the advisor needs to be skilled in and can display that they have provided. You should acquire a careful understanding of all the areas of planning that they provide, and possibly see some examples of their work. This will assist you in getting a better idea of the level of their proficiency and the quality of their advisement.
7. What is their longest client relationship?
Finding out how long their clients have been with them will tell you how satisfied their clients are, and how long they have been providing a superior of service.
While there are several items that you ought to consider, the key is to prepare yourself in advance with the right questions so that you can make an educated decision.

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