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Tax planning: Steps and strategies

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Tax planning is widely known to be the manner of forecasting one’s tax liability and creating ways and methods to reduce it. This involves analyzing one’s financial situation from a tax perspective, with the goal of tax efficiency. Here are some steps for businesses to perform this crucial exercise in financial planning. 

Start early: The tendency for most people is to do taxes in March or April when the deadline for settling tax returns is already looming near. Start earlier to have more time to estimate one’s investment gains and losses, as well as income. 
Calculate tax liability: Know these liabilities and work toward them. This need not be a difficult thing to do if one has a relatively fixed income and salaried employees. Engage the services of a tax expert if you find yourself in the dark when it comes to computations. 
Profile risk level: Here, find a good level of investment risk that one’s current financial status and other personal circumstances permit. In coming up …

The right way to set up a self-directed IRA

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When it comes to IRA assets, investors must make sure that they are investing their money profitably and legally. To prevent prohibited transactions, especially with self-directed IRAs, those who are saving up for their retirement years must be on the lookout for fraudulent offers. Those who are aiming for a self-directed IRA should act accordingly: 

1. Avoid investing in prohibited investments. An IRA cannot be invested in collectibles (art, antiques, gems, etc.), precious metals, and life insurance. When a broker approaches a potential investor to direct their IRA through these means, it is a fraudulent deal. 
2. Ask questions and check the broker's credentials. Setting up a self-directed IRA can be tricky for those who will be doing it for the first time. Before investing in assets, there should be a lot of questions. Factors such as valuation, liquidation, and distribution might determine if it's worthwhile to invest. FINRA also has a broker check that will reas…

Debunking the 'earn more vs. save more' argument

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As a person begins to earn money, he or she could be thinking of either earning more or saving more. For years, the argument about whether one should earn more or save more to become financial independent has ruled the minds of those in the workforce. 

On the one hand, the "earn more" side suggests that the best manner to experience financial freedom is by having a larger income. If one is an entrepreneur, there is no upper limit to this idea. On the other hand, the "save more" team tells individuals that saving more and spending less is the most sufficient way to become financially independent. The statement that one would spend more if one earns more is based on behavior and mindset; its counter-statement says that it is easier to save as one earns more is focused on math and logic. As both are correct, this debate shall be put to rest as people must only focus on widening the gap between income and spending. 
To be financially free, a person must widen the…

A Primer On Asset Protection Planning

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There would always be market uncertainties; no one can change that fact. Combine that with a litigious society and occasional amendments in tax laws, asset protection planning has become more important than ever.
Asset protection is defined as a set of techniques or strategies that seek to guard one’s properties from being taken by someone else through a lawsuit or civil money judgments. Generally, this is done by limiting creditors’ access to assets subject to claims, which are called nonexempt assets. They are insulated by repositioning them into exempt assets, which are out of the reach of creditors’ claims. When done properly, asset protection is done in a legal manner, avoiding perjury, fraud, concealment, or tax evasion.
The most effective asset protection planning takes a proactive approach; it is not implemented when a judgment creditor is already about to begin a claim on the properties.
In every U.S. state, there are laws that protect judgment creditors from de…

Now is the perfect time for millennials to save for retirement

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Millennials are often regarded as financial freewheelers. People are always quick to assume that the twenty and thirty-somethings of this era do not take their financial health and retirement seriously. However, more and more millennials are becoming concerned and are taking charge of their future.

Now is the perfect time for millennials to save for their future. Options may be unavailable for them when they start saving late. A study led by The New York Times zoomed in on the financial lives of five millennials who were saving for their future. The research landed on these conclusions: 
-These millennial savers are taking advantage of Roth retirement funds. These include individual retirement and 401(k)’s that are different from traditional retirement schemes made after tax. 
-Millennial workers to contribute as much as what their employers are willing to match in a 401(k). 
Aside from taking care of their retirement funds, there are also millennials who have diversified inve…

Huge Advantages Given By Iras

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Individual retirement accounts, or IRAs, came into existence decades ago because of the steady decline of defined benefit pension plans. People wanted to control how they saved money for retirement and IRAs were just the thing to do so.But not only did IRAs give control to individuals, they also provided some very attractive advantages.



People went for traditional and Roth IRAs more than any other IRAs because of the benefits both types offered. A perfect example of which was tax-free growth. These IRAs earn money and grow, and no taxes are levied on the dividends and capital gains.
It’s also a huge convenience that the contribution deadlines are the same. People with traditional and Roth IRAs can contribute to the IRA for the entire calendar year, up until April 15 of the succeeding year.
Contributions depend on several factors, along with the personal preference of the individual. People should note that after-tax money comprises the account contributions of Roth IRAs, while tr…

Market Downturns: Prepare For The Bear

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Predicting when a bear market would strike is no easy task, compounded by the fact that many market events are rationalized only in hindsight.Today’s knowledge and tools, however, mean that it is possible to make reasonable guesses on the onset of a bear market.  

Many signs can suggest a decrease in consumer confidence.Higher borrowing costs, coupled with weakness in lending stocks, usually signify that investor confidence isn’t what it used to be.Stocks may not lead the rally as often as they did during the aplomb of the bull market.  Image source: Bloomberg.com
Consumer confidence may also wane, which can be a strong indicator of a potential downturn on the horizon. 

Ironically, the very overconfidence of investors could be a sign of a bear market ahead. Avoiding overconfidence could be one of the most important skills any novice investor can learn.   

Even if bear markets cannot be accurately predicted, it pays to be prepared for them anyway. Because the losses of a bear market cannot …