Securing Your Financial Life
In a recent survey, 74.5% of individuals
with at least $1 million in net worth felt that the world is a
dangerous place (Source: Financial Planning, June 2007).
While there might not be much we can do on an individual level
to reduce crime, war, or even stock market corrections, we can
take all appropriate steps to mitigate the risks under our control.
If you're looking for ways to increase your financial security,
consider the following tips.
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Surviving Spouses and IRAs
When a surviving spouse is the sole beneficiary
of a traditional IRA, he/she has the option of treating the inherited
IRA as his/her own (or roll it over into his/her own IRA) or remaining
the beneficiary on the account. Which option to choose largely
depends on the surviving spouse's age.
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Taking Care of Your Children Financially
Caught up in the day-to-day routine of raising
your children, it's easy to forget to take care of other financial
decisions involving them, including naming a guardian, purchasing sufficient insurance, saving for college, teaching money basics, saving for your retirement, and gifting assets to your children.
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Avoid This Mistake
Finding a way to live decades in retirement
without worrying about running out of money can seem like an overwhelming
task. That goal depends on many variables and assumptions, including
your life expectancy, your retirement age, your lifetime earnings,
your retirement expenses, retirement income sources, your investment
rate of return, and future inflation. If you're wrong on even
one of those variables, funding your retirement could be in danger.
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A Look at Bond Ladders
While bonds are subject to several types
of risk, two of the main types are interest rate risk, or the
risk that interest rate changes will change your bond's value,
and reinvestment risk, or the risk that interest and principal
cannot be reinvested at the current bond's interest rate. It is
difficult to simultaneously reduce both risks since a rise in
interest rates reduces reinvestment risk and increases interest
rate risk. Thus, you need to find a balance between the two risks.
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