Savings Tips For Low Income and Young People

                                          Savings Tips For Low Income and Young People

If the world is a perfect place, it would be very easy to put away or save 15 percent of our salaries every year as soon as we hit our early 20s. Basically, we will be in good shape financially  by the time we turn 65 if we save that much so early  - starting from our early 20s. Unfortunately, the world is not a perfect place. For many people in their 20s, getting a job is a difficult task. Besides, many of them still have to repay the student loans they racked up while in college. With these challenges, they are not thinking about saving for retirement at this time. However, without knowing it, they are actually playing a very dangerous game.

The above explanation confirmed irony about the state of U.S. economy today: Even though it is better to begin saving for retirement when we are in our early 20s, we are constrained by tough job markets and growing student loan balances, among other issues. A natural question to ask at this point is this: what should the low income and young people do? Here are two helpful tips.

Save Anyway

Whether or not you have a full time job after college, saving for retirement can still be difficult. This is because you have demands on your paycheck, from paying rent and credit card bills to building up an emergency savings. So if you can’t afford to save up to 15 percent of your income, you can try 5 percent or 6 percent. You can also bump up your savings rate by a percentage point or two every year. In my opinion, it is best to continue with this approach until you hit the benchmark – 15%. Note that, regardless of how much you earn, it is important to continuously  stash away small amount – an approach that is much better than waiting until your income goes up. In fact, you can amass as much as $650,000 by the time you reach 30 if you save 6 percent annually  and increase your savings by 2 percent per year, starting at age 25. In contrast, if you wait to start saving until your income goes up, you may be 35 years before this happens. And by then, you can accumulate merely about $400,000 by the time you hit 65 years even if you contribute 15 per cent of your income annually.

Take Advantage of Tax Credits

You might be able to take advantage of certain tax breaks to make  savings or contributions more affordable if putting away as little as 6 percent of your income is a stretch for you. For example, contributions to a 401(k) plan are often made before tax. If you are paid every other week, for instance, you would contribute about $68 per paycheck if you earn $35,000 per year and save 5 percent. However, your take-home pay will only be reduced by about $58 because you save on taxes.

You can also open a traditional Individual Retirement Account(IRA) and get a tax deduction for every dollar you contribute, up to the  maximum allowed, if you are not eligible to participate in a 401(k) or other workplace retirement plan. In 2012, the maximum allowable amount for this form of IRA  is $5000. However, if you are 50 and over, you may be allowed to contribute up to $6000¹.

Notes

1. Bigda C.(2012, July 29): Savings Ideas for those Who Make Less Money. The Baltimore Sun(Business & Jobs) p. 4

What Job Seekers Want To Know About Job Search

Some job seekers are often told that searching for employment can sometimes be a full time job. I consider this to be one of the biggest lie of this century. The bottom line here is that getting yourself acquainted with the the creative approach to job-hunting or career-change can pay rich dividends. With a good job you can pay your bills, take care of your family, and  live happily ever after.

Here are some of the most common questions which job seekers asks, along with my typical answers.

Can I rely on the Internet to Get A job?

Generally speaking, the online job application process is not efficient. This is because of the fact that the online job postings has not only  destroyed the value of the resume but has also ruined the old-fashioned mail-and-wait strategy that was once popular for job hunting. Of course, the use of technology  has simplified the process of looking for jobs. However, that approach had also made it harder to get a job, for many reasons. First, even though many recruiters post job ads online, only a very few of them has the time to sift through the thousands of resumes they receive for the jobs posted. Second, because most of the employers believe that the  number of people applying makes it hard for individuals to stand out (and that the quality of online applicants may be diluted), they often rely on referrals from company employees and professional colleagues. The truth of the matter is that, when it comes to today’s job hunt, advocacy matters more than qualifications. In other words, to get their next job, serious job seekers will need to leverage the best of technology to find and recruit the best referrals. This way, they can receive or gain the greatest return on their job hunting efforts.

How Can I Focus My  Job Hunting Effort?

The best strategy is to compile a least of at least 15 employers. This list can be compiled from four main categories(1) Trending companies, which means, those companies that are involved in emerging or new industries; (2)Posting Companies: those companies who put ads on job search engines such asCareerBuilder.com, Yahoo.com, and Indeed.com; (3) Alumni organizations: those companies that have previously recruited professionals from your college or school; and (4) Dream employers: those places where you have always wanted to work. It is important that you prioritize your list according to internal referral potential, current hiring status, and personal appeal.

How Can I Contact Potential Referrals?

First, spend as much as one hour a day to identify and talk to potential referrals who work at the company of your interest. To find the potential referrals at your top target companies, I recommend that you look for them in alumni directories, Facebook, LinkedIn, and other social networking websites. Second, make a cold call to find several contacts for each company of your interest. You can also send emails(without mentioning a particular job) to these contacts. In your email, you can request for an opportunity for an informational interview. It is important that, after your initial email or contact, make just one follow-up attempt per contact. Do not bother to contact those who did not respond after the first follow up email.

How can I Recruit Referrals?

Spend up to  30-40 minutes in each informational interview with each contact who respond to your email. The goal of the informational interview is to solicit information, build rapport as well as obtain a referral for a job opportunity in the company where your interviewee work. To do this, you need to ask questions that are focused on the interviewee knowledge. Hence your questions should focus on the trends impacting on the contact’s business, what you can do to prepare yourself for a career in the business, and so on. With good questions, you can convert your contact to a mentor, and, with time, to a reliable

 referral.

Tips For Investing in Stocks

Tips For Investing in Stocks

Most people thought that investing in stocks and mutual funds is only for the rich. In fact many people think they don’t have enough knowledge or money to invest. But the truth is that this is not the case. By signing up with an online brokerage firm such as ShareBuilder.com and Scottrade.com you can tread softly and successfully  into the stock market. This is because, unlike a full-service brokerage firm,  these  online brokerage firms will provide you with a low fee or cost structure that you can afford. Besides, they typically provide access to tools to help you determine when to buy and sell as well as extensive research and analysis on stock performance over a given timeframe.

Here are a few tips that will help you to make money in the stock market.

Use the Right Online Brokerage Firm

Broadly, for someone with little investment experience and money, it is best to use online brokerage firms like TD Ameritrade and ShareBuilder. This is because they do not require any account minimums. Besides, their fees per trade is small – about $9.00 to $9.99(see table 1). You should, however, consider using services such as  Charles Schwab, Merrill Edge, and TD Ameritrade if you would like the option to pay extra for broker-assisted trades. These companies have a network of branches where you can hire a financial adviser or talk to someone about your stocks. Note that different brokers offers different investment options. While some of them offer wider selections of stocks or mutual funds, others may be offering bonds, certificates of deposit and exchange-traded funds.

Table 1- Popular Online Brokerage Firms

Brokerage Firm	Trade Price	Minimum Initial Investment
TD Ameritrade	$9.99	$0
ShareBuilder	$9.95	$0
Scottrade	$7.00	$500
Merrill Edge	$6.95	$0
E-Trade	$9.99	$500

                     

Be Conscious of Your Safety

It is best to use a brokerage firm that is a member of the Securities Investor  Protection Corporation (SIPC). You can verify this from the SIPC  website which is at www.sipc.org.  To find out if there have been a disciplinary actions on your brokerage firm, you can check its background with your state’s securities regulator or with the Financial Industry Regulatory Authority(www.finra.org) . The rule of thumb here is to avoid brokerage firms that has bad records at these agencies. One more thing: be wary of emails purportedly sent by your online brokerage firms attempting to collect information such as financial or personal data. In addition, always install updated antivirus software and firewalls in your computer.

Select the Right Stocks

It is better to pick low-priced stocks from companies with a healthy cash positions(or low debt ratios). The secret: First, select companies with low-priced stocks. Next, examine the company’s balance sheet. If the company’s current assets exceeds its current liabilities, then the stock passes the litmus test and you should  buy it. Otherwise, don’t buy it.

Don’t Expect Too Much – Be Realistic!

You should keep stories of overnight riches from stock market out of your mind. Stock investing is not like that. Making money in the stock market takes time – it involves a slow, smart and steady approach to stock investing.