Posts Tagged ‘Wealth’
Financial Wealth: Reduces Burden for Future
Financial Wealth: Reduces Burden for Future
The word wealth is derived from the old English wela, which form an Indo European word stem. Wealth is the abundance of valuable resources or material possessions or the control of such assets. Financial Wealth has been designed to offer a premium financial advice service for those clients who seek high quality, tailored financial advice and would like direction and guidance in helping achieve their personal goals and lifestyle objectives. Everyone in this word wants financial wealth. Most of us believe in if we struggle hard, work with full focus and work non-stop we will become rich.
Financial Wealth provides us with the expertise required in our complex financial world. Money can be earned, spent, saved and invested. The best time to invest for the future is when you are young. At the young age the best part of investing is we don’t have to pay the taxes, or it reduces the tax burden and the best time to plan for the retirement. There are several books of different writers with an advice on wealth building. Some of them are “Cashflow Quadrant” by famous entrepreneur Robert T. Kiyosaki and “Your Money or Your Life” which explains how to make money and at the same time enjoy the life and use the money more wisely rather than spending on small things.
Long term investment is actually possible for everyone. There are several companies which provide the advice for financial wealth investment. If we start thinking from right now and plan for the next 10 years we will able to save money for the unexpected disaster. Millionaires are common people, they are among us, the only difference is they have the courage to think and do things differently. They simply took dare in their life and took a large risk, which resulted in a big change.
What You Need to Know When Pursuing Wealth
Product Description
This book is designed to meet the requirements of people who desire achieving great wealth by implementing very simple and yet powerful concepts that have the potential to change your life completely…. More >>
Financial Statements: Wealth Starts With Your Personal Financial Statements
Financial Statements Introduction:
Financial statements generally take the form of records of the financial performance of a business. They provide information about the profitability and general financial health of the organisation. A company’s financial records usually consist of:
* Income Statement
* Balance Sheet
* Cash Flow Statement
An income statement, also called a Profit and Loss Statement, shows how a company’s sales or revenue translate into profit (net income) over a specific period (normally one year). It’s a record of how much a company has earned, what expenses it has paid and the resulting profit or loss.
A balance sheet, also known as a statement of financial position, is a summary of what an entity is worth at a particular point in time. It summarizes what a business owns (its assets), what it owes (its liabilities) and its net worth (its equity or capital). While the income statement is a summary over a period of time (usually a year), the balance sheet is a summary at just one point in time. The balance sheet is a “snapshot” of a company’s health
A cash flow statement is a summary of a company’s ingoing and outgoing money over a specific period (normally one year). It is such a valuable report because it shows the cashflow strength of a business unlike the income statement which contain non-cash items.
The Importance of Financial Statements:
Financial statements are crucial instruments used by a company’s management and investors for analysis and decision-making. They pore over the numbers and create every ratio imaginable in an effort to create the most accurate financial story possible. Without financial statements knowledgeable management and investment simply wouldn’t be possible.
The Importance of Personal Financial Statements:
Everybody knows that company’s product financial reports, but it is not as widely known that you can produce your own personal financial statements. Your own income statement and balance sheet which tells you your own financial performance, just like a company’s financial statements.
Company management know that it would be impossible to run a company without financial reports giving them information about their financial strength, productivity, goal setting and so on. Is it any less logical that you need your own personal financial reports to know how well you are performing financially, just like a company’s management?
Your financial statement will tell you your financial strength. They will tell you whether you fall into the poor, middle class or wealthy class. Current statements can be compared to prior statements to create a trend, a story, over time. You can also use your financial statements for scenario analysis, such as looking at he impact of an investment on your financial position or the impact of interest rates rising.
Your Personal Income Statement:
Income statements following the following structure: Income – expenses – taxes = net income (also called net profit).
Rather than simply listing your incomes and expenses by item it is useful to categorise them in a way that will help you know whether you have the income and expense profile of a poor, middle class or wealthy person. The Internal Revenue Service (IRS) in the U.S. classifies all income and loss items into three categories: active, passive and portfolio.
In brief, active income is income from your salary, wages, fees, commissions, and sole proprietorship business.
Passive income is income that’s received, usually regularly, by an individual who doesn’t materially participate such as rental from real estate, royalties from patents and license agreements, and businesses you own.
Portfolio income is investment income from paper investments such as stocks, bonds, mutual funds in the form of interest received or dividends or capital gains (or losses) from their sale.
Similarly, expenses that are associated with your active income are active expenses, and so forth for your passive and portfolio expenses against your passive and portfolio income. Your active income is generally not tax deductible while your passive and portfolio expenses are tax deductible. Thus we refer to active income as bad expenses and passive and portfolio expenses as good expenses.
Income Statement:
Income (Realised)
- Active
- Passive
- Portfolio
Expenses
Deductible expenses
- Passive
- Portfolio
Non-deductible expenses
Net Income
Your Personal Balance Sheets:
Balance sheets follow the following structure: Assets = Liabilities + Equity or Equity (or net worth) = Assets – Liabilities.
Just like your personal income statement it is useful to categorise your personal balance sheet in a way that will help you know if you have the assets and debt profile of the poor, middle class or wealthy person. Assets and liabilities can be split into good and bad assets or liabilities.
Good assets are investments. In short, they put money in your bank account. Good liabilities refer to debt that is used to buy good assets, which makes the debt expense (interest payments) tax deductible.
Bad assets refer to anything else. They take money out of your bank account. They cost you money to own them. Bad liabilities, is debt that is used to buy bad assets, which makes the debt expense not tax deductible.
Just like your personal income statement, your good assets and good liabilities can be categorised as passive or portfolio based. There is no active assets or liabilities because the income is from your wage and thus there is no asset or liability.
Balance Sheet:
Assets
Good assets
- Passive
- Portfolio
Bad assets
Liabilities
Good assets
- Passive
- Portfolio
Bad assets
Net Worth
Poor, middle class and wealthy:
The makeup of your income, expenses, assets and liabilities and how they interact tells a story-your financial story. By filling in your financial statement, you can tell which class you’re in and a great deal about where you are on your wealth journey.
The poor, middle class and wealthy each have a different story, a different financial makeup, which is reflected in their financial statements. Each class’s financial statement is unique. You won’t have a poor- or middle class-looking financial statement and be wealthy.
To become wealthy, you need to understand your financial statement and create a plan to change it so that it looks like that of a wealthy person.
The poor earn only limited active income and no passive or portfolio income. They have little or no good assets or bad assets.
The middle class earn primarily active income, and little in the way of passive or portfolio income. They have little in the way of good assets and loads of bad assets and thus have little good debt and loads of bad debt.
In contrast the wealthy earn primarily passive and portfolio income and little in the way if active income. They have loads of good assets which provide the passive and portfolio income and few bad assets (compared to their wealth). The wealthy have loads of good debt (at least while they’re accumulating their wealth) and little or no bad debt (compared to their wealth).
So what does your personal financial statement looks like? The poor, middle class, the wealthy or a combination?
Preserve Your Wealth By Drawing Retirement Money From Taxable Accounts First
When speaking about taxable accounts, I am referring to those accounts into which you deposited money after taxes. Personal accounts like checking and savings fall into this category. There is no tax advantage to having these accounts, as dividend and interest earnings are taxed annually. So, the term taxable account, applies to these sorts of accounts, for which there has been no tax deferment.
It is better to withdraw from these types of accounts for living expenses, etc. in retirement. This will help sustain the wealth in your tax-deferred accounts and allow them to continue growing.
If you didn’t have to withdraw money from either your taxable or tax-deferred accounts for retirement, your tax-deferred accounts would grow more quickly than the taxable accounts. That is because of the rate at which the tax-deferred accounts compound. However, if you have to withdraw from those accounts, you lose part of the return.
Your taxable accounts will deplete themselves slower than your tax deferred accounts, because only the interest or dividends is taxable. The majority of what you withdraw from your taxable accounts is after tax money and not subject to being taxed again. All of the money that you withdraw from your tax-deferred accounts is immediately taxable.
When you withdraw expense money from your tax-deferred accounts, you have to withdraw more than the expense amount because some of it will be eaten up in taxes. Withdrawals from your taxable account can be done in the specific amounts you need for expenses since none of the withdrawal is taxable. So the taxable account runs down slower than the tax-deferred account.
When you withdraw money from your tax-deferred account, you are withdrawing funds the interest will use to compound; therefore, you are stunting the growth of your taxable account in addition to depleting it.
If your tax-deferred account requires that you withdraw a specific minimum, only withdraw the minimum and use your taxable accounts to offset any additional expenses.
When living off of your retirement accounts, you should speak to your financial advisor in order to determine the nature and amount of your expenses. In this manner, you can set up a planned series of withdrawals from your accounts in order to cover your living and miscellaneous expenses while maintaining the wealth of your tax-deferred accounts. This will help you to enjoy your retirement years without unnecessarily depleting your personal wealth.
Withdrawing money from your retirement accounts is a very tricky decision. Before making any such withdrawal, you should be aware of the tax consequences. Here is a useful discussion on the subject by an expert on the subject – Chintamani Abhyankar.
Inflation is Taxing Your Wealth – so Pay Attention to It!
Intended Audience:
Investors and Retirees looking to preserve their buying power and wealth. Remember that inflation doesnât destroy wealth, it merely transfers it â and the average person is on the losing end.
Summary Points to Take Away
(1)Â Inflation doesnât destroy buying power of wealth, it merely transfers it between those holding currency and the governmentâs printing it.
(2)Â Inflation is a silent tax on everyone holding the currency of the government printing the money (this tax has no borders).
(3)Â Individuals can fight inflation and preserve their wealth by: (a) Purchasing inflation sensitive assets such as commodities, precious metals and real estate (b) Locking into debt levels at the current low interest rates and purchase inflation resistant assets with the proceeds.
Analysis
When governments print money to purchase goods and serves, they get the full buying power of those dollars at the expense of reducing the value of dollars held by the general public. Once the additional dollars are used in the market to purchase goods, there is an increase in the supply of currency available without a corresponding change in the level of available goods and services to purchase. In other words, if there are more dollars chasing around the same level of goods, itâll effectively take more of those dollars to purchase the same level of goods prior to the expansion of currency. The most important thing to note here is that the money supply doesnât increase till the government actually spends those dollars on goods and services. This implies that the government is provided the full buying power of the newly printed currency when the dollars are spent. It is only subsequent to those government purchases that more dollars enter the marketplace, which cases inflation to arise, which effectively reduces the buying power of anyone holding the currency. The conclusion here is inflation doesnât destroy wealth; it just destroys YOUR wealth by transferring buying power from individuals holding the currency to the government printing it. Individuals arenât asked if the government can reduce their wealth, they just do it without being held accountable. Thatâs why Iâm referring to it as the silent tax, the one you donât know youâre paying.
When you hear people crying about the former U.S President Nixonâs decision to go off the âgold standardâ during the 70âs, you now know what they were complaining about. Back when the U.S. was on the gold standard, currency couldnât be printed without acquiring additional gold to back it up; thus, buying power couldnât be stolen from those holding dollars like it can be today by simply printing more currency.
If you were in favor of the Wall Street and automotive bailouts before, this may change your mind as the costs wonât just be borne by tax payers, but by anyone holding a USD (transferring wealth from the average person to those working in the financial and automotive sectors). This would have serious repercussions for savers and retirees who now have to survive on fewer goods as their dollars wonât take them as far. Also note currency devaluation has no borders; thus, it wonât be just the citizens of the U.S. giving up their buying power, but rather ANYONE holding a USD.
Why will governments continue to print money? Because presidents arenât remembered favorably if they raise taxes or cut benefits. Most governments (such as the U.S.) canât bring budget deficits under control unless this is done. In my view, the continued printing of money by government bodies is almost a certainty. Evidence that the government printing presses will continue to run is seen through the current discussions of bailouts of troubled financial institutions and massive low interest loans to automakers throughout North America.
Where to go From Here?
Individuals can retain their buying power by purchasing inflation resistant assets that in times of inflation provide a store of value by producing more debased currency to keep the owners buying power in check. As you can imagine currency is the worst asset you can hold as it is on an everlasting path to $0 as governments continue to expand the money supply through the printing of money to fund budget deficits. See below for a list of options for the average individual to protect their wealth:
(1)Â Commodities â can be purchased through ETFs that focus on certain types of commodities such as oil, natural gas and agricultural products.
(2)Â Precious metals â similarly to commodities can be purchased through ETFs. As well precious metals can be physically purchased (bullion, coins, etc.).
(3)Â Real Estate â investors with enough capital can purchase rental properties or those without the sufficient funds needed can participate through REITs (sold through ETFs and your local financial institution), which essentially is partial ownership of a holding company with many investment properties.
(4)Â Take on additional fixed debt at the current low rates, so that the debt level in terms of buying power will decline as inflation transfers wealth from the lender to the borrower. As well you could purchase inflation resistant assets (commodities, precious metals, real estate, etc.) with those borrowed dollars to enhance your returns.
Donald Trump talks about the keys to building wealth
Building wealth becoming successful www.1richzone.com
Credit & Debt Consolidation : Transforming Debt Into Wealth
Transforming debt into wealth is possible. Pay off the debt and then investing wisely with the open credit line. Learn about transforming debt into wealth from a registered financial consultant (RFC) in this free personal finance video. Expert: Patrick Munro Contact: www.northstarnavigator.com Bio: Patrick Munro is a registered financial consultant (RFC) with outstanding sales volume of progressive financial products and solutions to the senior and boomer marketplace. Filmmaker: Reel Media LLC
10 Simple Financial Advice Rules That Can Create Wealth
Money is what “makes the world go round.” And one of the most difficult propositions in life is to manage money.
While some are born with great financial acumen others need to be methodical and follow sound advice.
Here are a few basic tips:
1. Inculcate frugality within you; desist temptation to spend now save later. Every dollar earned must be divided into four parts: one part to meet essential expenses; one part to be invested in short-term savings; one part for retirement savings; and one part for emergency expenses.
2. Create with expert advice an infallible financial plan. Plan your credit report, taxes, and expenses. Keep a watch and learn how to regulate yourself.
3. Avoid the debt trap set by credit card companies and the easy availability of loans. Only spend what you have in hand and not any monies in advance.
4. Learn the art of investment. The World Wide Web is a reliable resource for information, reviews, and guidelines on investments. If doubtful seek expert advice on investments; the ideal is to balance investments into sure-fire investments, medium risk investments, and high risk investments.
5. Make wise decisions when buying a home, office, and more. Avail a mortgage that works for you. Property can be a good investment when bought after deep thought and in allocation where the appreciation is high.
6. Teach every family member how to invest and the secret of handling money wisely. Even children need to learn from a young age.
7. Insure your interests. Take enough insurance but learn the art of saving on premiums, clubbing policies, and umbrella policies. Know how to save money every step.
8. Spend prudently. Plan your luxuries and eating out. Learn how to shop sensibly and not indulge.
9. Avoid lending money or borrowing money. Financial matters are best handled alone and not through family or friends.
10. Review your financial plan regularly and make the necessary adjustments. As a family grows needs change. Begin saving for college and education from the early years. Teach the children never to take you for granted. Discuss things with your family members.
Use expert advice when needed so that you are always protected financially. Read websites such as that hosted by the Federal Trade Commission to protect America’s consumers: http://www.ftc.gov.
The World Wide Web is a knowledge highway and brings financial advice to the finger tips. Keep abreast of money management, taxation, insurance, and property laws. Plan for retirement and be secure in the future.
Traditional Financial Planning: for Financial Health of Your Wealth
Everyone wants to save money in tax-efficient way but this is not always easy. Sometimes after taxes it seems that there was no earning, leave alone savings. But traditional financial planning services provide certain financial tools so that you can save money in tax efficient way, you can plan your retirement and you can do beneficial investments also.
In fact, traditional financial planning involves certain savings and investment issues so that you can enjoy your whole life without any financial burden and you can always have a sense of financial security. It includes the planning of your retirement, insurance instruments and also long-term capital growth solutions. Now, you can do a tax-efficient investment which is encouraged by government also.
This is true because the tendency of UK Governments in recent years has been towards encouraging taxpayers to save and invest. Traditional financial planning firms can provide valuable suggestions so that you can utilize various tax efficient products. These days, savings vehicles such as individual savings accounts (ISAs) offer the opportunity of tax-free savings. Also, investment opportunities such as venture capital trusts (VCTs) and the enterprise investment scheme (EIS) provide the possibility of tax breaks for investors.
Likewise, there are many tax-efficient tools which you can get to know by opting for a traditional financial planning firm. These firms can also provide consultation regarding investment for your children, retirement planning (pension reforms, inheritance tax, wills, responsibilities of trustees etc) and estate planning. Some concrete financial plans can work for you at low cost for your future if you are opting for these financial planning firms.
Furthermore, you also can also choose various insurance life cover which can provide help to you and your family at the time of any financial hardship. Hence, traditional financial planning firms can provide great help to you so that you can enjoy a good financial health always.
