Structured settlements are becoming highly popular these days, partly due to the benefits they provide and partly due to the flexibility they offer to the holder. According to Einstein Structured Settlement, Structured settlements are regarded much well as compared to other types of investment in the sense that they are oriented towards the needs of the owner. Despite all the advantages many people have doubts about this financial instrument when it comes to make an investment. They have many questions regarding the investment and handling of structured settlement that they want to answer before making any decision.
The questions are countless but a few, that are continuously haunting the minds of those who want to invest in structured settlement, are answered below:
The biggest worry for the investors these days is inflation, which is chomping off their plans to save for their future. The investors need to mark up their investment for their future with the expected rise in inflation. Without a proper calculation their investment will not pay them as per their expectations. Annuity is no exception for this truth. Annuity sure pays a comfortable annual income but it does not promise to do so after a time of 10 years, as the purchasing power is expected to change with the rise in inflation. The value of the annual payment of structured settlement can drastically reduce due to the effect of inflation. In this case most of the people decide to sell this financial instrument to a structured settlement company in exchange of cash that they can invest in some other instruments to fight off inflation.
Legally a person does not have to pay tax on the any amount of money received as the compensation of physical damage caused to him/her. This money is not treated as the source of actual income and thus is exempt from tax. In legal terms this money is for the compensation for recovery from that particular damage. In fact, the tax free nature of the structured settlement amounts is among the most highly regarded benefits of this financial scheme. But this income from the structured settlement is tax free only as long as the payee is alive. In case of the death of the payee, the income becomes taxable as per the law of Inheritance. This is because the source of income is now transferred to the descendent of the actual payee who did not suffer any damage. Thus this money coming as a source of income becomes taxable.
In some cases this financial instrument is tax deferred, which means the taxes on the income through structured settlement are delayed for a specific period of time only. After that period of time the income becomes taxable. If the payee decides to make a withdrawal, in this case the amount withdrawn is taxable.
It can be seen very often that the holders of the structured settlement sell only a portion of the structured settlement to fulfill their immediate financial needs. It is also possible for the holder of the structured settlement to sell this instrument in portions on different occasions throughout their lifetime as per their need and convenience. There are many individuals and companies that are ready to purchase these portions of structured settlement in exchange of a good amount of cash. This option gives the holder a flexibility of handling it and gets the holders higher amount of liquidity on their holdings.
While making the decision to sell the structured settlement, it is necessary for the holder to consider some important factors which are sure to affect their deal.
It is very wise to take help from a lawyer before making any deal related to structured settlement. He will ensure that the rights of the holder are protected against any type of fraud or he/she is not held responsible for anything outside his/her control. The lawyer will help the plaintiff with the purchase or selling agreement.
Today on the show….you’ve read the tale: parents die and kid ends up with the evil stepmother who locks the kid away and just wants her money?
Good news: you don’t have to wait around for a glass slipper. You can set up your estate correctly the first time to avoid this mess. We’ll discuss on this week’s podcast!
Today in New Jersey an 18 year old is suing her parents for college money. According to USA Today, she says that they issued her an ultimatum (ditch the boyfriend or get out). Dad says they asked her to follow a few house rules.
Whatever. I think this is an awesome exercise.
Partially, I like this lawsuit because I think entertaining me (no matter what it means to the court system) is a great idea. But there are many BETTER reasons:
1) Blaming Someone Else For Your Problems Is Often the Best Solution. This idea of “trying to solve your problems through listening and compromise” is complete baloney. Take a page out of Washington’s book and adopt this slogan: My Way or the Highway.
This plays into any financial decision, doesn’t it? I met with a client during the 2000 market collapse with a young advisor. The client was agitated because the market was collapsing and she wanted someone to blame. The advisor continually tried to reconfirm the strategy that they were using, but the client would hear none of it. “I don’t care what the strategy is. I just want my money back.”
I felt for the woman. Clearly, understanding your strategy is overrated. It isn’t about the world….it’s all about you.
2) Rules Are For Suckers. If you lose money in the stock market you should sue your broker. If McDonalds only gives you one napkin, sue them. I should have sued J Crew for my horrible shopping experience. If your parents won’t pay for college, then tell it to a judge.
I have no sympathy for this guy. Sure, it’s his home, but what about her rights? If she has a boyfriend that dad doesn’t like, why shouldn’t he let her bring him home? In fact, why doesn’t he just pony up for them to live in a hotel? That’s what she SHOULD be suing for….a nice hotel stay.
I think the judge should throw this giant gavel at the dad. Teach him a lesson!
3) It’s Not Your Fault You’re Young And Smart. This girl, according to sources, has a $20,000 scholarship and wants to go to school out of state to Vermont. Does it really matter that $20,000 probably doesn’t come close to covering out of state tuition costs? Not to me, it doesn’t. I think she’s completely entitled to whatever education level she desires, if only because she wants it. I don’t care if there are less expensive options. I really don’t care if this is a logical choice at all. If the girl wants it, she should have it.
4) Dad Had A College Fund And It’s For Her. Does it really matter that a 529 plan is in a parent’s name? If dad (or in this case let’s just call him “daddy”) set aside money, it should be the girls. Daddy should waive his right to dole this money out as he sees fit. It doesn’t matter that he earned it. It doesn’t really matter that he probably took all the risk in investing the money, does it?
5) Nobody, AND I MEAN NOBODY, Puts Baby in a Corner.
Do we need more reasons this is a great idea?
Photo: Sam Howzit
Peer to peer loans, sometimes called social lending, is a fascinating phenomenon and a great way to obtain low rate loans or boost savings. Since the financial crisis and credit crunch started in 2007, many borrowers have found it difficult to obtain affordable personal loans. At the same time, interest rates have plummeted, making it difficult for savers to achieve decent returns. P2P lending brings these two needs together and provides a platform for sensible loans and reasonable interest for savers. What many potential borrowers don’t realise, however, is that there are ways to maximise your chances of landing such loans.
1) Check out your credit reports
Some P2P borrowers forget that it is not only lenders and financial companies who can look at their credit reports, they can too. When you check your credit report you will be able to see if there is anything that is potentially hurting your credit score and may put off P2P lending individuals. The UK government, for example, has passed legislation that means you can see your full credit report for only £2 and many companies offer a multi-agency report free as part of a free trial.
2) Dispute any inaccuracies on your credit report
It is quite possible that there will be inaccurate information on your credit report and this could hurt your credit score and lessen your chances of landing personal loans. This might include out of date information about previous residents at your address or errors about your own history. If there are mistakes, challenge them and have them removed from your file.
3) Tackle delinquent accounts
Lenders want to be as sure as they can be that you will pay your loan instalments in full and on time. If you have any credit cards, loans or other financial agreements that are in arrears or have missing or late payments then these should be brought up to date before completing your profile and making any applications for loans. It is a good idea to establish a solid six months of payments before making any loan application.
4) Reduce your debt to income ratio
One of the most important factors that potential lenders will look at is your ability to pay back the loan. A key criteria here is your debt to income ratio. Put simply, the lower that ratio is the better chance you have of acceptance and the lower your interest payments will be. Anything you can do to bring your debt repayments down will have a positive effect on your application.
5) Be realistic in your application
Potential lenders will look at your income and outgoings and make a judgement about what you can afford before offering any low rate loans. Asking for more than your circumstances, such as credit score, credit history and debt to income ratio, would suggest is reasonable is counter-productive. You won’t get the loan and you will appear naive or even desperate. Instead, be realistic in what you ask, based on the understanding you have gained of your own credit report.
You attend your first ever 401k meeting….and they hand you some pie charts.
Oh, no.
First of all, I should say I love pie. Especially apple pie.
But I hate generic pie charts in retirement plan books.
I can’t tell you the number of boring-ass financial meetings I’ve attended where some dude in a suit is plowing through a bunch of pie charts while his clients pretend to be awake.
Rule one of asset allocation: Chuck the pie chart.
Most of the time, these charts are based on your age and risk tolerance. Nothing like putting a few square pegs in round holes, huh? I’m sure yours will fit just nicely into this….oh, wait, it won’t fit? Let’s just
Jam it home.
What about your goal? What about “How much do I really need my money to earn?”
Nope.
Asset allocation, or (to use the five dollar word) “diversification”, starts with what you want for yourself, doesn’t it? Don’t you think you should try to achieve your real goal?
1) Write down what you want. I know that may seem like a shock to you. The National Endowment for Financial Education (NEFE), The Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) and the College for Financial Planning (FPA) all recommend starting with your goal.
You want to use a generic pie chart instead?
Good luck with that the next time the market drops.
2) Here’s the next amazing step: read through different types of investments to see which ones actually have historically met your goal. I think my head just exploded. Really? Who thought that you could actually look back at investments and see what they’ve accomplished?
Some thoughts:
Gold and Collectibles: Good for people who can actually predict the future. Ms. Cleo and Nostradamus should have loaded up. Gold is five times more volatile than the stock market. Think you know where it’s headed? Think again. (This doesn’t mean I don’t like gold. It means that you can’t tell me it’s going to be through the roof in three years, moron on Twitter…..).
Stocks: This is like saying that you should always have cake after dinner, but generally, ten years or more and you’re looking good with stocks. If you need the money next year, you’ve done about as well at the casino.
Bonds: Depending on the type, over five years.
….and so on.
Get the point? Real diversification, dear readers, is going to be based on your personal end-game. Start there. Or not. Avoid pie charts, but load up on pie. Yum.
Ah, the budget.
While I dream about hot, soapy fun, I’m not sure that “a budget” is what I had in mind. Sure, I’m into crazy stuff as much as the next guy, but this whole budget and soap thing….I thought, “I’ll pass.”
…until I was recently looking at my dishwasher.
Then I thought, “I’ll pass….out! This is awesome!”
Here’s hot, soapy, and the key to my biggest budget dreams of all time.
When I want to get stuff done….you know, real stuff, like washing dishes or clothes, I don’t do the job by hand. I throw in a few ingredients and let a machine handle it.
People tell me that they like to budget by hand. I don’t get it. I could wash my clothes by hand. They’ll probably smell a little and I’m fairly certain I won’t do a wonderful job….but I could do it.
Instead I just press a button.
I’ve got better things to do than sit around and worry about how I’m spending every penny. I could be playing video games, running, or working on writing an article about budgeting…..(how META!)
Instead, try these ways to create the automatic thrills of a budget lifetime:
1) Soak in your expenses without writing stuff down. Ummm….how unbelievably wild and crazy. Using a system like Mint or YNAB instead of writing out every expense? Oh la la.
2) Wash down easy purchases automatically by avoiding the store. I’ve been using Amazon’s Subscribe and Save for some time now for basic household expenses. Not only do I get great prices, but I know what a large portion of my grocery budget is going to be before the month begins. This also saves me time at the grocery store, so I can spend more time writing crazy dishwasher/budget analogies.
3) Rinse yourself in free, credit protecting services. Afraid you’ll damage your credit by missing payments on your credit card? Ask your lender about automatic minimum payments. Sure, you want to stay ahead of the game, but if you accidentally overlook a payment, you’ll keep your credit intact. …and nothing is sexier than a perfect credit score.
4) Spin your investments by reinvesting dividends. I swoon when people start talking to me about dividends. Is it getting hot in here? Until you’re ready to start spending your fortune, use the power of automatic dividends to build your savings quickly, and better yet….without paying attention.
5) Dry out any rough investments by scheduling alerts when your funds drop more than your risk tolerance can stand. Who wants to worry about the financial markets? Well, I do, if there’s something to worry about. Here’s a plan: use alerts to tell you when there’s something you should pay attention to. Until then, spend your days sprinkling rose pedals across your bed and singing horrible love songs. Or not.
Aren’t those sexy? I know what you’re thinking. “How can I get more of these tips, but on my mp3 player or phone?” Check out the Stacking Benjamins podcast every Monday or our single-interview Short Stack on Fridays for more overwraught analogies…..
My brother just sent me this hilarious SNL Amazon.com skit video….talk about hot, soapy dream! 🙂
Finding a credit card amongst the sea of choices today is daunting. Although you want the ease of swiping a card, and getting on with your day, you also strive for extra benefits. From points to free restaurant dinners, you’ve seen all the credit card incentives. However, United Explorer card benefits pinpoint your exact needs: travel luxuries. From growing flyer mile amounts to free checked bags, you have a travel partner with United.
You know you’ll use your credit card throughout the year, but United Explorer’s bonus offers may entice you to use this card more than others. Each calendar year, after spending $25,000, you automatically receive 10,000 bonus miles. Every year these bonus miles are available, making your trips across the globe easy to finance.
In fact, United Explorer wants you to have a solid start with flyer miles. When you charge $1,000 in the first 90 days after you receive the card. United Explorer automatically credits your account with 30,000 bonus miles. Your traveling will never be the same.
The glamor of flying has been tarnished recently with frustrating baggage fees and cattle call seating. Keep your party steeped in the lap of luxury with United Explorer’s benefits. If you are traveling as a couple, both of you are allowed one free checked bag when you fly with United. Even if you travel solo, you still have one bag that is free from high check-in fees.
Avoid the clamor of the group as everyone tries to board the plane at the same time. With United Explorer, you are allowed priority boarding, giving you time to stow your items in relaxing comfort. You can sit down before the rest of the plane boards.
Continue to fly with United to see your flyer miles grow exponentially. For example, you fly between Los Angeles and New York, and charge the tickets on your United Explorer card. Instead of earning traditional miles, you actually receive double miles for that trip.
Your other purchases are also not without their benefits. Regardless of the purchase, from dinner to that new cell phone, you earn one mile for each dollar spent. Those miles quickly add up. Use your credit card to charge almost every purchase, even a quick stop at a convenience store. You can pay off your balance at the end of the month to avoid interest charges, while still gaining crucial mileage.
You are not limited with blackout dates using United Explorer card’s benefits. Any United flight can apply to your miles, including family flights with Asiana, US Airways, Lufthansa and others. In the past, your miles used to expire with other flyer programs, but maintaining a United Explorer card in good standing allows you to have miles that never expire. Save them up for a trip around the world. It is all up to your plans and spending habits.
If you have another United card, take advantage of the Explorer benefits by converting over. You are not applying for a brand new account, you are simply transferring your account. As a result of the change, you keep your original credit card number, but still receive Explorer benefits. If you have your credit card number on file with several merchants, this benefit makes the card change easy and trouble-free.
United Explorer card offers the world at your fingertips. With the added benefits for miles, baggage and seating, you are treated as royalty with any United flight. Keep this card handy for all your everyday needs to benefit with United Explorer’s fantastic program.
Small businesses provide 55 percent of all jobs in the United States, notes the SBA, proving the American dream is certainly alive and well. You might feel like competing with big business is not worth the hassle, but since 1990, big business has cut 4 million jobs, while small business has accounted for 23 million net new jobs since the 1970s.
But you know success does not come easy. There is always more to do and more to learn. Follow these stress-free measures to make a smashing debut as the most effectively managed small enterprise in America.
You do not need millions of dollars to start up your business. Once you have a concept in mind, create a plan for minimizing startup costs. The IRS recognizes the time and energy spent on creating a business and offers up to $5,000 in deductions for every $55,000 spent on organizing, planning and starting your business.
Be sure to keep accurate records so your deductions can be granted. Many people cringe at the prospect of documenting expenses for a business, in addition to personal expenses. Balancing your own budget is hard enough, and separating yourself from your enterprise can be daunting.
A simple solution to this common problem is creating a business expense account to track your expenditures. Certain credit card companies make this task easier by offering deals specific to small business owners. Every time you make a purchase for your business, use your business card and save yourself the hassle of juggling several bank accounts. Don’t make the mistake of combining personal expenses with your business endeavors and your purchasing history will speak for itself.
Along with startup costs, there are other ways you can deduct expenses from your taxes. According to the IRS, you can write-off the business use of your home and vehicle. Some expenses, such as rent for an office, employee pay and even interest charged on money borrowed toward your business, are eligible for deductions. This is why it is profitable to keep accurate records of your transactions. Services like Intuit calculate federal and state payroll tax for you, so you’ll have a better idea of what to expect. When tax time comes, you can provide the proof needed to reap the benefits of being a small business owner.
Our economy depends on small business to survive. Pew Research group found 71 percent of the public held a positive view of small business, while only 25 percent thought of large corporations in the same light. Perhaps the American public is supportive of small business owners because they are like everyone else — working hard to make a living. There has never been a better time to be the owner of your own business. Go ahead, quit your day job and begin the journey of a lifetime— but don’t forget to keep your record books straight, as it will pay off in the end.
Here’s a quick lesson in human behavior:
Fed quantitative easing, problems in the Ukraine, soft volume numbers in the stock market. It seems like a recipe for more downer days in the stock market. It’s also a recipe for worriers to worry even more.
…Yet the market continues to roar back.
Did you get caught?
Did you move money to the sidelines when the market was low and then miss out on the upswing (essentially losing money and locking it in….).
A better question might be: did you do anything at all?
When I was an advisor we had some clients who wanted to see some action if the markets sank. We should be doing something, dammit!
The more experienced guys in the office insisted that we talk about re-diversifying the portfolio with our clients like the guy helping ease the suicidal lady off the window ledge. It didnt matter that we already had damned good diversification in our portfolios.
When the markets moved, here’s how we’d end meetings:
We’d move a few things around to prove to clients that we were doing something about it.
That was “the show.” Let me tell you what we were really doing:
…we were watching the market very closely and hoping that it rebounded soon. That way, the phone calls from clients would stop and we could quit pretending to be market gurus (even though we’d been insisting with our clients that we weren’t market gurus….AND that there’s really no such thing……).
At first I thought this was nonsense.
Why would we move a few funds around if we believed they were the right places to invest? Why would we abandon the strategy? A friend of mine, we’ll call him Joe, told me everything I needed to know about human behavior my second year practicing.
He said, “Either they’ll get rid of the fund they don’t like or they’ll get rid of you. Which would you prefer?”
You know the answer to that one.
So, answering my own question, it was nonsense for the client, but made perfect sense for the advisor. Sadly, most clients thought that it made sense also.
If you have a good fund with a track record and your long term diversification says to keep that fund, you should hold on to it. Don’t just hold on with your eyes closed and teeth clenched; hang on while knowing what you’re doing. Here is what you should know:
1) Make sure your fund is keeping up with its benchmark. Some funds track the S&P 500, while others follow the NASDAQ or a certain sector of the market. Use Morningstar.com to find out what your fund tracks and to see if it’s keeping up with ‘the Joneses.’
2) Is your goal still the same? If you have a fund, it’s really only a fuel for your goal, isn’t it? When your goals change, your diversification should also change. If you’re in the best fund in the wrong part of the market, you’ll never be able to use the fuel.
3) Pay attention to taxes and turnover. If your fund is outside of tax shelters, track a metric called turnover (also found at Morningstar.com or any of the reliable search engine sites). Turnover show how much of the portfolio your manager is churning to keep his head above water. This movement can create taxes and unnecessary expenses. Turnover of 100 percent means that all of your positions are changing in a twelve month period.
So the market’s been moving around…..what do you do now? Check out your funds to make sure you’re in the right spot to meet your goals, and then do nothing.