NEW YORK (CNNMoney.com) — Withdrawals from 401(k) retirement saving plans saw their biggest spike in over ten years, Fidelity Investments said on Friday, in the latest sign of a dismal economy.

Fidelity reported that 62,000 Fidelity participants made hardship withdrawals from their 401(k) workplace plans during the second quarter. That’s up from 45,000 participants during the prior quarter, a 37% increase. That means that 2.2% of Fidelity customers took a hardship withdrawal in the second quarter……

Unbeknownst to the majority of 401(k) owners, they could have created a banking system that would have allowed them to withdraw funds, determine their own payback schedule, and not have to worry about the potential tax consequences if the person were to lose their job, were unable to pay the loan back, or switched jobs and could not “roll” that loan to his/her new employer. Remember if you take a loan from a 401(k) and don’t pay it back or lose your job, you now have a tax liability and potentially a penalty if you are under 59 ½ years old.

There is a 401(k) alternative, creating your own banking system, to access funds, determine your own payback schedule, and if you have to change jobs or lose your job it won’t have a tax affect on the loan. Keep in mind that even within our own banking systems we want and need to pay back the loans, but they can be paid on our terms…..not theirs.

Better yet, within your own banking system you are paying YOURSELF back, which can be a substantial difference over time in creating wealth.

To learn more go to: www.becomeyourownbank.com

–Dan Thompson

Guest Post by Alicia Eberle

Two common forms of insurance companies – mutually owned and publicly traded
There are two common forms of insurance companies: 1) mutually owned, and 2) publicly traded.So why does a life insurance company’s ownership structure matter to a policyowner – to you?

When choosing a life insurance company, it’s important to know how a company is run. While both a mutually owned company and a publicly traded company can provide you with life insurance protection, the company’s ownership structure is one factor that can help guide you as to which company is right for you.

Key considerations
By asking the following questions, at a high level, you may learn the differences in how a company is run and what drives its business strategy:
• When making decisions, who comes first – policy owners? Shareholders?
• Does your insurance company have the financial strength to always keep your needs
a top priority?
• Will you be able to take some role in the decision making process of your
insurance company by exercising certain voting rights?

Mutually owned insurance companies
A mutual company is owned by and accountable to its members and participating policyowners,not stockholders. Mutual companies have no shareholders; instead, policyowners and members are often described as sharing in its ownership. Members who are insured under certain policies issued by a mutual insurance company may be eligible to vote for its board of directors and, those who also own the policy, may be eligible to share in dividends the company may declare.
Of course, dividends for a given policy are influenced by such factors as policy series, issue age,policy duration, policy loan rate, smoking status, changes in experience, and are not guaranteed.Publicly traded insurance companies

A publicly traded company must balance the interests of its policyowners with the earnings expectations of its shareholders. Shareholders typically judge a company’s performance based on a number of factors, including projected earnings for the next quarter or the next year, which might conflict with the long-term interests of policyowners. Knowing how a company is run may be one factor to help you decide which works best for you. Learn more about prospective companies before deciding which company is the right choice.

© 2010 Massachusetts Mutual Life Insurance Company.
CRN201201-129572

Guest Post by Alicia Eberle @ http://investmentspeak.blogspot.com/

Do you remember the movie “Back To The Future?” Wouldn’t it be nice to have a DeLorean equipped with a Flux Capacitor that would allow you to go back in time and live a part of your life over again? Maybe you would just make a minor adjustment or two regarding some decisions you made that could make things dramatically better? If you are like me you probably dream of all the things you could have “invented” because you knew what was coming and you could be on the forefront to all the new technology. Do you remember in the sequel where Biff was able to bet on every major sporting event and made millions because he already knew the outcome? How nice would that be to have a sure thing.

Since none of us have a DeLorean time machine and it’s probably not going to be available in our lifetime the only thing we have available to us is comparing what we have done to what we could have done. What would you have done different with all the money you have made over your lifetime?

I think one of the biggest mistakes made in the world, from a financial perspective, is that we spend more time trying to understand and being involved in “investing” rather than “financing.” In reality financing plays a much greater role to our economic wealth than investing does. Yet we take what little extra we have at the end of the month and invest in an IRA or a 401(k) or maybe we put in money every month in a mutual fund. Meanwhile we are spending and wasting more money on financing or paying cash for things than most investments could ever return.

Every once in a while, as an adult, I kind of like to do some retrospection and contemplate what I would have done differently if I could go back. Unfortunately the list is long. Looking back on our lives as a young married couple,  and then as new parents, and now as grandparents, I think if my kids and grandkids wanted financial advice from me what I would say to them? Here is what I’ve come up with: “Control the banking or financing equation in your life and it will have a much greater impact on your wealth than investing will.”

What do I mean by that? Have you thought about what a typical teenager, growing to a middle aged adulthood, and what they will deal with when it comes to financing? For some it’s much worse for others not quite as extensive, but here is a short list of what is typically borrowed or financed (or paid cash for, which is another method of financing, but we’ll discuss that in a future article):

School (Education)

Several Cars – maybe 7-10 cars by the time they are 45 years old

One or more homes

Medical Expenses

Dental Expenses – Braces for the kids

Repairs (car, home)

Appliances

Vacations

Remodel

Credit Cards – clothes, food, gas, entertainment

And the list goes on and on….

My best guess is that it can easily add up to 60-80% of all their after tax income went to some form of payment……financing.

So what if you could recapture some if not all of that money? The 60%-80% is typically spent or given to someone else for them to increase their wealth….right? So why not increase yours?

Think about a wage earner making $50,000 a year after taxes. If he/she/they are spending or paying $2,000-$4,000 per month to someone else, that is lost money and lost opportunity…..forever! It would be an incredible wealth builder to recapture and be able to put in their account the majority of those financing costs…..wouldn’t it? What if you were paying yourself $2,000 to $4,000 per month and building your wealth.

So as a grandparent, I want all of my grandkids, and their parents too for that matter, to understand that if they can control the financing in their lives (debt to others) and create a private banking system for themselves in which they borrow and pay back loans and finance all their needs with the “family bank,” they will do more to create wealth, without the risk of investing, than otherwise would be lost by financing through others.

One of the things that I will be doing is setting up a banking system for each one of our grandchildren as they are born. After just a few short years of funding, they will never, EVER have to borrow a single dollar from anyone else throughout their entire life.

Think about this…… what if the $2,000-$4,000 per month in our example above was coming directly back to them each month! You can’t offset the cost of financing by investing, investing is just not predictable enough or without significant risk!

That is how you build wealth.

Grandparents! Let’s not let our kids and grandkids make the same mistakes we did. We can make a huge difference in their lives by teaching them a lifetime skill to control the financing equation in their lives by creating their own private banking systems.

Guest Post by Jonny Pean.

Establishing a budget is the first step towards efficient management of personal finances. There are always many things which we want to do and which we can do and budgeting is the only way which helps to bridge the gap between the two.

Firstly, individuals should always try and figure out the need why a budget is needed. One need to have a proper good solid reason or else one won’t feel motivated to carry it. Reasons can be anything like saving for a big vacation a new car or merely to get rid of all the debts. After that individuals must carefully examine their spending. Examining the spending trend helps one to understand the various heads for which money is being used.

Thirdly, individuals must ascertain why and where they are spending. The trend of expenses should be studied and one should try and figure when and why the limits are crossed. Moreover, one should also figure out those expenses which are by no ways productive and can easily be controlled. For instance, – the charges paid every week to withdraw money from the ATM, if individuals start withdrawing money monthly instead of weekly, they can easily save on weekly charges.

Below are some handy tips, which can assist in making the budget effective –

• One should try to maintain a list of expenses according to their priority and dates when they are due. Discharging payments on time helps to escape the penalties, overdue fees and late charges.
• One should always try and make use of cash for all kinds of purchase. Credit cards should be only kept for emergency needs, and they should not be used as a regular method to discharge payments.
• Savings and investments must be incorporated compulsorily. Good investments give rewarding returns and thus increase the money income. On the other hand, savings help individuals to handle the unpredictable and emergency situation efficiently.

Besides the above mentioned tips, individuals must properly analyze their personal situation and accordingly initiate steps.  Conclusively, budgeting is very vital and individuals who fail to plan budget simply plan to fail.

Guest post by J. Grace Liao.

A pension is a form of deferred compensation earned overtime through employee service. Traditionally the pension arrangements were classified as defined contribution plans and defined benefit plans.

A defined contribution plan is a retirement plan whereby the firm contributes a certain payout each period to the employees’ retirement account based on any number of factors including the employee’s age, compensation, profitability, years of service, or even a percentage of the employees’s contribution. In this plan, the employee assumes all of the investment risk.

In a defined benefit plan, the firm promises to make periodic payments to the employee after retirement based on the employee’s years of service and his/her compensation near retirement. Since the employee’s benefit is defined, in this plan the employer assumes the investment risk.

Since 1990s, retirement plans combining features of both defined benefit and defined contribution plans have become increasing popular in the United States. This kind of plans are referred to as hybrid plans.

According to Wall Street Journal report on July 10, State governments are increasingly taking a page from the 401(k) plans that dominate the private sector. That is, the public sectors are shifting from the traditional defined benefit plans to the hybrid plans to cut the cost and reduce the risk the government is bearing. This could make government jobs less attractive because the once guaranteed-retirement payments for government workers now might not be a bedrock benefit anymore.

In Georgia, Act 757 of 2008 (Senate Bill 328) created a hybrid retirement plan for Georgia state employees. The “Georgia State Employees’ Pension and Savings Plan” (GSEPS) provides a defined benefit plan (DB) and 401(k) plan for new hires on and after January 1, 2009. Group term life insurance does not be provided, and the employee contributions in GSEPS correspondingly was reduced from 1.5% to 1.25% for the DB. The Cobb County approved the New Hybrid Defined Benefit/Defined Contribution Plan and, effective January 1, 2010, all new employees are automatically enrolled in this new plan.

By J. Grace Liao:

Finance professional currently working in non-emergency medical transportation industry

An immediate annuity is the arrangement of a regular flow of income checks to you. You can receive this income, based upon your preferences monthly, quarterly or annually.The checks can start to you as fast as within one month of deposit, and …

You can utilize savings that you have through other retirement plans, savings plans or even through deferred annuities… The immediate annuity calculator gives you a quick estimate of how much your monthly income can be.

Several Options

You have several options as well. Such as…

You can receive a guaranteed amount for as long as you live.
You can receive a guaranteed amount for a certain number of years, such as 15, 20, etc.
You can even have a guaranteed amount for the life of the primary person and the beneficiary that you choose…
These options center upon a scheduled guaranteed fixed income to you. There may be other choices depending on your needs…

First, you are only taxed on your earnings, not your principal. But, speak to your tax advisor for the latest, as tax laws can and do change…
This also means that by shifting assets into an annuity, that you may be able to forego capital gains taxes. (But again, speak to your tax advisor…)

One other important option to know is that the interest rate on your immediate annuities can be set by you. You can make it variable, or you can make it fixed.

Guest post by Tony Durso:

Tony Durso founded www.Annuities-Financial-Planning.com to help people get the financial information they need in our current economic times. You can find out about annuities and how they work. You can get the information you need to update or modify your financial planning. Read up on 401k’s and IRA’s. There are even a multitude of calculators available to help you calculate savings, determine monthly annuity income that you will receive, etc. This site allows prospective investors to educate themselves on annuities and other financial planning options. Investors can receive a free annuity quote or speak to a Certified Financial Planner.

A simple annuity definition is that it is an amount of cash that you receive for money invested. The amount that you invest resides with an insurance company. The insurance company is in charge of your money and responsible to see that you get paid the agreed upon amounts.

The derivation of annuity comes from Medieval Latin annuitas, from Latin annuus, (yearly) from annus (year).

Annuity means a specified amount of money that ispaid during specific intervals. The amount depends on the type of annuity and amount of funds you make available. Annuities are often a major part of retirement income streams, providing dependable income.

You can receive a set monthly amount for the rest of your life if that is how you wish your annuity to be set up.

An annuity can be paid at the beginning of the term:Annuity Due.

Or it can be paid at the end of each term: Ordinary Annuity.

Variety of Options

• Pay out as long as one’s spouse is alive…

• Pay out for a fixed amount of years regardless if the investor passes away during the term…

• Fix in high interest rates to give you an advantage when rates are low…

• Guarantee a payment to your heirs…

• Some will not pass to your heirs, but provide you with better payment options while alive…

The above are some typical examples.

Guest post by Tony Durso:

Tony Durso founded www.Annuities-Financial-Planning.com to help people get the financial information they need in our current economic times. You can find out about annuities and how they work. You can get the information you need to update or modify your financial planning. Read up on 401k’s and IRA’s. There are even a multitude of calculators available to help you calculate savings, determine monthly annuity income that you will receive, etc. This site allows prospective investors to educate themselves on annuities and other financial planning options. Investors can receive a free annuity quote or speak to a Certified Financial Planner.

Guest post by Justo Fuentes.

As a Business Development Officer for “The Best Business Bank In The Business” I assist people finance needs and dreams. Let me say that I love my job and the business that I’m in.  That being said I am not afraid to tell anyone that will listen that there is such a thing as “Bad Debt” and that if at all possible to avoid it like the plague.

“Bad Debt” is anything I would classify as borrowing money for stupid purchases.  We’ve all heard of it or maybe even have taken part in it.  Who knows why we do it, maybe we want to keep up with the Jones, make ourselves happy if but for a moment, or make a purchase that at the time seemed like a real need.  All I know is that those purchases are typically made with a credit card.  These credit cards are still relatively easy to get, easy to use, and re-use over and over again.  The great thing about them is that the credit card company for the most part doesn’t care what you buy; they don’t judge you if you buy a latte, lunch, new shoes, tickets to a ball game, pay for a vacation, or buy things to make “priceless” memories.  All they hope for is that you use their card to do it.

Whether you an individual or a business, credit cards are easy to access.  But, I discovered a new tool that will hopefully assist you in giving some serious thought about your next credit card purchase.  The tool is a website, http://www.therealdamage.com/.  On this site you put in the dollar amount of the proposed purchase and it calculates the interest and principle that will need to be paid prior to you being debt free again.  Are those designer jeans for $125 really worth $281.25?  Try it for yourself, see if you wont agree with me that there is such a thing as “Bad Debt”.

If you ever want more of an eye opener just Google “credit card horror stories”.

By Justo Fuentes @ sblending.wordpress.com

I was driving across Southern Idaho the other day and was searching for something to listen to on the radio when I came across a financial planner talking about the current economy.

As a “recovering and reformed” financial planner I was interested in what he had to say.

I remember back in the mid eighties when we did some research on mutual funds we would go back 3-5 years and we could show some pretty descent double digit averages.  Then we could put together an analysis showing the client a very nice return over the past 3-5 years.

As the economy progressed into the nineties it was easy to show 3, 5 and even 10 years of descent growth. There were a few glitches along the way, Black Monday in 1987, the 1994 recession, and a stalled economy here and there, but for the most part showing clients 5 years of reasonable return was easy to do.

Then came the turn of the century. As you know the Y-2k scare had many investors tucking away their capital in fear of losing all their money, not from a drop off in the economy as much as from a computer error. Then the dreaded day of September 11^th attack in 2001.

Not long after 2001 many advisors found that they needed to go back 10 years to show any kind of return enticing enough for an investor to risk his/her capital. In the eighties and nineties it wasn’t hard to show 9-12% over 3 to 5 years, but after 9/11 you had to look back for 10 years to find that same reasonable risk reward ratios.

Fast forward through the downturn in the markets and the economy since 2007 and here we are now. Listening to this financial advisor on the radio shocked me. He was trying to peddle the same old information about diversification and asset allocation and how over time your money does just fine in the stock market. However, something had dramatically changed. Where we use to have to look back 10 years to show a descent average rate of return to prove this out, this financial advisor was telling investors that they need to look back 35 YEARS now! Come on, 35 years? Who can wait 35 years for their portfolio to perform? It’s crazy.

The average American doesn’t start saving for retirement until they are in their mid to late forties. Which means from age 45 to age 80 this “average” investor is suppose to let this portfolio go without worrying. Is that possible? Could you do that? I know I couldn’t.

Whereas the eighties and nineties provided ample opportunity to achieve a reasonable rate of return in a 3, 5 or even 10 year time frame, it appears that a 35 year time frame is what an investor needs to look at in order to be satisfied with the return. That is unacceptable to me, but it’s the world we live in, and it’s why I have elected to steer away from risk and stick with those strategies that work over time and put you in control.

Dan

It’s finally finished. “Discovering Hidden Treasures” by Dan Thompson. Here’s what its all about…

We live in a new financial world where much has changed, yet most advisors are still peddling the same old stuff. They preach asset allocation, diversification, risk-tolerance, and all the other buzz words of traditional methods that frankly are NOT working. People are postponing retirement, or having to live on much less than they had anticipated. The stock market and real estate have changed dramatically. It’s time to assess what you are doing.
Inside this book you will learn about hidden treasures of knowledge which will help you see how to create, retain, and transfer wealth. These are methods and strategies not often taught in the financial community, but can assist in handling many financial concerns.

Questions like:

What is going on in the economy and how does it effect my financial plan?
How is best to save for retirement?
How can I jump-start my retirement?
How can I create additional tax advantages?
Where is the best source for financing my personal and business needs?
How can I protect my assets and pass them efficiently to my heirs?

These and many more questions will be answered as you read through the book. You will find it easily understandable and full of common sense.