How to Choose the Right Broker

by Justin Weinger on May 19, 2013

As they seem to be all over the television every day you’ve probably seen ads that feature a very well-dressed stock trader out on the links, golf club in hand, bragging to the camera about the piles of cash that he’s been making. Maybe you’ve seen the one with the moving truck driver talking about the fabulous house he bought his wife with the huge pile of dough he made from day-trading. These commercials are hardly subtle and what they’re saying is that basically there is no need for guys like you and me to hire someone ‘professional’ to invest our money.

The simple fact is that on Wall Street today there’s a revolution taking place that’s been underway for about the last 10 years and it’s a showdown between high fee brokers and brokerage houses and discount online brokers in an all-out tug-of-war for their clients investing dollars. The question many new investors ask is simply this; “if even Merrill Lynch has gone discount and lowered fees for many of their services, why would I want to pay a broker big bucks to do it when I can do it myself?” Simply put, with companies like a SureTrade or Datek offering transactions for less than $10, why would someone even consider a full service brokerage house?

In reality what full-service brokers have done is leaves the door wide open for discount brokerage houses to come in and sweep up after the mess they made, failing to deliver the value that they promised and creating many horror stories about unscrupulous traders who convinced their customers to either buy or sell what they shouldn’t have in order to simply generate more fees. Even worse are the ones that, due to the higher commissions, sell their customers a bunch of inferior in house investments with returns that are mediocre at best.

On the other hand there are definitely brokers out there that not only gives excellent counsel but do exactly what they say they’re going to do and provide excellent returns on their recommended investments. Not only that but their counsel can be invaluable if you’re a new investor who either lacks experience or doesn’t have the time to research on your own.

In reality this competition between full-service and low to no service brokers has actually been able for investors who have ended up getting improved customer service at lower costs. If you’re trying to decide on which side of the fence you’re going to land here are a few things that you’re going to need to consider.

Full-service brokers.

  • Merrill Lynch, Salomon Smith Barney, Prudential.
  • Higher commissions and higher fees.
  • A higher and wider range of services and amenities.
  • Solid financial advice  that can save you when the markets turn choppy.
  • Full and in-depth research.

A full-service brokerage can offer you beautiful funds, estate planning services and tax advice as well as set up a financial profile based on your goals income and assets, advising you appropriately based on those factors. If you’re keen on buying individual stocks and don’t have the experience or time needed to do the required research yourself you’d be best to find a good broker to help you. .

Of course even if you have the money required to do this you’ll still want to get their commission schedule and find out exactly the kinds of fees that you going to have to pay as well as knowing exactly how your broker is going to get paid. This will not only clue you in on what your costs are going to be but also let your new broker know that you’re not going to sit idly by while they rack up expenses on you.

Discount Brokers.

  • Much lower fees and virtually no commissions.
  • A much smaller range of services and amenities if any.
  • Little to no advice.
  • Basically no research whatsoever.

The fact is, with a discount broker you’re not going to get any advice, you’re not going to get any research and you’re certainly not going to have anyone to hold your hand and lead you down the right path. In some cases the problems that people face with online brokers include hour-long waits for customer service, servers that are completely clogged up and missing checks that have a habit of not arriving.

If you have some experience with investing there’s a good chance that you can use a discount broker and make a lot of testing decisions on your own. Frankly, if you can, why not get the stocks you want as cheaply as you can? On the other hand there are some discount brokers (Charles Schwab and Waterhouse securities come to mind) that have been adding account management services and advice services as well as beefing up their mutual fund offerings. They might not be as dirt cheap as their pure online competitors but they’re not nearly as expensive as most of the full-service brokers are either and, as such, may be worth a look.

The choice of course is completely yours. We favor the middle road with a company like Charles Schwab that offers some basic services and advice at a competitive rate.  That being said, if you have hundreds of thousands of dollars in the stock market you have probably done it using a full-service broker or you just happen to be a market genius. Either way you probably already have a set routine for what you’re doing and don’t really need our advice. (As a matter of fact, give us a call and give us some advice.)

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When should you start collecting Social Security?

by Justin Weinger on May 15, 2013

Social Security has been around for quite a few years and is relied upon by millions of retired people as either one of their sources of income or their sole source of income. The amount of money that a person receives from Social Security is based on the earnings that they made during their entire working life and thus the more that you earned while you are working the larger your benefits will be.

That being said, there are also a number of factors besides how long you worked that will affect the amount of Social Security that you will collect every month. One of the most important is when you begin to start collecting your payments. Although seemingly simple the fact is that your Social Security payments could change drastically depending on when you start collecting them and for how long. With that in mind we put together a blog that will help you to decide what’s best in your particular case and will allow you to collect as much as you can from Social Security. The way we see it, you worked hard all your life and you deserve to get as much as possible back from Uncle Sam. Enjoy.

When it comes to Social Security there are two ages that are most important to keep in mind. The first is that 62 years old is the earliest age at which you can start receiving Social Security benefits. The second is what they call the full retirement age or FRA. This age will change depending on the year you were born but is basically the age at which your full Social Security benefits will be paid. If you were born before 1938 the FRA is 65 and this age will gradually increase depending on the year that you were born up until 1943. If you were born between 1943 and 1954 the FRA is age 66 and again gradually increases until 1959. For those born in 1960 or later the FRA is 67.

While the total lifetime benefits that you have earned will not very greatly if you choose to retire and start collecting benefits at 62 or if you choose to retire at your specific FRA there is still the fact that, at 62, your payouts will be reduced. It is thus recommended that, if possible, you wait until your specific FRA date to start getting payments so that you will receive the full amount. Another aspect that needs to be considered is that of spousal benefits because, as women generally tend to live longer than men, collecting Social Security at a later date will mean that your surviving spouse will receive more money after you’re gone. (Your mileage may vary on this one.)

Another very important aspect of Social Security is called Delayed Retirement Credit. What this means is that, if and when possible, you can hold off on collecting your Social Security benefits beyond your FRA you will actually allow your benefits to accrue interest, in some cases equaling hundreds of dollars a month in extra benefits. For example, if you were born in 1943 you will receive an increase of 8% on whatever your total benefits would be for every year that you don’t collect Social Security. This varies depending on the year you were born so be sure to check with Social Security if you’re keen on determining how it will affect your benefits. Keep in mind that after the age of 70 delayed retirement credit will no longer increase your benefits.

What this leaves you with is basically three options;

  1. Receive reduced Social Security benefits at the age of 62.
  2. Receive full and unreduced benefits at your specific FRA.
  3. Receive increased benefits by using delayed retirement credit any time after your specific FRA and up to the age of 70 years old.

One of the most important factors in the choice you make is going to be your life expectancy and whether you expect to reach it or not. Depending on your age and your health you may wish to start collecting as much as you can as soon as possible or, on the other hand, you may wish to delay payments and increase the total amount that you and your spouse will receive.

Single people that plan to work beyond their FRA probably have the easiest decision as waiting until after they reach this specific point in time will mean that they receive the most benefits.  No matter who you are or what your retirement plans are talking to a retirement planning professional is probably a good idea.

Hopefully this little blog has opened your eyes to a number of ideas and possibilities about the Social Security benefits that you are going to receive. We hope you enjoyed it and that you’ll come back and visit us again soon for more excellent financial advice on a wide variety of topics. See you then.

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Money Saving Tips Everyone Can Use Part 10

by Justin Weinger on May 9, 2013

Welcome back for our 10th and final money-saving tips blog. (Well, at least for now.) If you have read all 10 of these blogs you should have found at least a dozen money-saving tips that, hopefully, you have already started to use. Frankly, any of the tips that we have presented and the advice that we have given is just common sense stuff. For all we know you may already have been using many of them but, the fact of the matter is, there are many people who don’t know the first thing about saving money and that’s why we put this blog series together. Now that were almost finished, you no longer have any excuses to not save money every day. (You might actually find that you resent us now. Ha Ha.)

These last few tips won’t exactly save you money directly but they are part of a sound financial plan. Very few people use a plan when it comes to their money. Of course when we say plan we are speaking of a budget because that’s the most important plan that you can have financially.

No matter who you are, what you do, how big your family is or what type of profession you are involved in having a budget is one of the most vital tasks that you need to accomplish if you haven’t done it already. Creating a budget not only shows you, financially speaking, where you are but it will also act as a guide to where you should be going and what you should be doing with your money. There are very few people that can get ahead financially without using a budget to do so.

Once you have a budget in place then it’s just a matter of using that budget, sticking to the budget no matter what and then using all of the tips that we have given you to save even further. Simply creating a budget is not going to do very much. You have to actually know what the budget says, follow some common sense rules when using it and make sure that everyone in the family is on board as well, including your spouse.

 If you have and are using a budget, congratulations. That is truly the first up to financial freedom and a future where you have sufficient money to do the things you want to do, go where you want to go and live the lifestyle that you are accustomed to.

One last vital task, or rather habit, that you should acquire is to find new ways every day of not spending money. If that sounds kind of silly we can assure you that it is not. The person who can leave their house, go out into the world and purchase only what they truly need, leaving behind the trivial, unneeded or unnecessary items that so many of us waste our money on, and get back home having only spent their money on truly necessary items, is the person that will have the most money in savings and in their retirement accounts.

We really hope that you have enjoyed this money-saving tips blog series and that some of the information that we have presented has hit home with you. Good luck in all of your efforts in the future to save money, cut down on spending and increase the amount of savings and retirement income that you have. Of course, be sure to come back and visit us regularly as we always have new, updated and interesting financial information to share. Take care!

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Money Saving Tips Everyone Can Use Part 9

by Justin Weinger on May 4, 2013

Welcome back for more money-saving tips that everyone can use. We hope that so far you have been able to pick up at least a few tips that are already starting to save you money. Statistically, if you can use about a dozen of the hundred or so tips that we have given you should be able to save between $100 and $200 a month. Today we have a number of other excellent tips for saving money at home, on the go or wherever. Enjoy them, use them and would you do save money make sure you put it towards retirement or in the back. Enjoy.

1)       grow your own vegetables and fruits. The simple fact is that depending on where you live in the country you should be able to grow your own fruits and vegetables with just a modicum of effort. Not only will the save you money in the long run but, because these fruits and vegetables will be loaded with pesticides and herbicides, your family will get a lot more nutrition and a lot less chemicals. Besides, there’s nothing like eating fruits and vegetables they just picked out of your own garden.

2)       When you have a moment be sure to check out your community calendar. Many people have no idea how many excellent, interesting events happen around their town every day because they’re so busy with their own lives but they don’t bother to look. If you’re keen on finding out what’s going on around your town usually you can find that info at the library or in your local paper and find all sorts of interesting and even free things to do.

3)       If it’s possible, start using public transportation. Larger towns and cities have a bus line, trains and subways. Of course there’s always carpooling if it’s possible and it’s a good way to get to meet your neighbors. In many cities you can find a monthly or annual transit pass that, usually within about 2 to 3 months, will pay for itself.

4)        If you cut your hair really short and you aren’t worried that you don’t have the latest style, then cutting your own hair is a great way to save money. The average person needs a haircut about once a month and, if you’re a guy, that means about $20. If you do some quick math you’ll see that that means a savings of $240 per year which is quite a little bit of change.

5)       If you are stuck in debt planning how to pay the debt down and get out from under it should be on your to do list. Frankly if you’re drowning in debt you are probably wasting all sorts of money in late fees and other financial penalties. If that’s the case it may be a good idea to talk to a financial specialist figure out a way to get out from under the debt and start using the extra money to fund your retirement instead.

6)       We talked about it already but it begs repeating; if it’s possible you should start to carpool. This will not only save you money and gas but will also save you money and car repairs and car maintenance fees.

7)       Rather than wait until something around the house breaks, why not set up a monthly maintenance check of your home and all your major appliances. Frankly, waiting for something to break is what they call reactive and what you need to really be as proactive.

8)       If you’re going on a long car trip, an excellent way to save money is to pack a lunch for everyone rather than stop at a fast food place along the way. This will save you that only some money, but also quite a bit of time that would be better spent having fun at your destination.

How’s that for a great way to start your day?! Eight excellent tips that will help you save money, save time and cut down on maintenance and repairs of your car and major appliances. We hope you enjoyed them all and that you found one or two that you can use. Please come back and join us soon for another group of excellent money-saving tips. See you then!

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