How to Make Money Investing in 401K Plans in 2015-2016 and Beyond

Torie, like millions of other people, knows that she needs to make money investing in 401k plans in 2015-2106 and beyond (she has a couple) in order to retire comfortably. What she also needs to know: 401k asset allocation, how to pick and manage her best 401k investment options, and the outlook for 2015 and 2016. Let’s take a look at how she and you can make money in 2015, 2016 and beyond (or at least make the best of it) if you’re in the same boat.Although it’s been easy to make money investing in 401k plans in recent years, this is not always the case. The first thing Torie and you need to do is to set a goal (Torie’s is to retire in about the year 2040). Second, be honest about your personal risk tolerance. Torie’s is “moderate” – but definitely not aggressive! Third, review your present 401k asset allocation to determine whether the investment options you hold are in line with your risk tolerance. Are you in the best 401k investment options, and in the right proportion?Finally, you need to understand that 2015 and 2016 could be a difficult time to make money investing in 401k plans. The reason: weak economic forecasts make yesteryear’s best 401k investment options vulnerable to losses. Stocks are pricey and so are bonds. Assuming your risk profile is similar to Torie’s (she would like to make money but wants to avoid heavy losses) what can you do now to stay on track, make money, and avoid heavy losses if 2015 and beyond turns ugly? We’ll use Torie as our example.A number of years ago Torie decided that she wanted to make money investing in 401k plans, but wanted to keep things simple. She had changed jobs once and was planning on another change in the future. With both employers she had set her plan up with 50% going to a safe stable account and 50% to a Target 2040 fund. She was busy and pretty much ignored her statements over the years. After all, her goal was to make money investing, and she could see at a glance that her portfolio balance was growing. Now, she needs to take a closer look at her 401k asset allocation to see what percent is invested in each of her two 401k investment options.In early 2015, a closer look revealed that both plans had a portfolio asset allocation far riskier than she had expected. The target fund represented almost 80% of her assets in her first plan and 75% in her current plan. What happened, and what action should she take to get back on track and still keep things simple? What happened was that her target 2040 funds turned out to be one of the best 401k investment options in her plans and they far outperformed her safe stable accounts.The other best 401k investment options had been stock funds, but Torie considered them to be too risky. With the target fund most of her money was actually invested in stock funds, with the rest in bond funds; and both fund types had performed well heading into 2015. Her plan was to continue to make money investing in her 401k by holding her target fund and a safe investment. That way she was invested in stocks and some bonds as well to give here her portfolio some balance.What she now needs to do is to REBALANCE her 401k asset allocation so that 50% of her portfolio assets are again equally invested in each of her two chosen investment options. That cuts her risk considerably and it fits her comfort level. Now, can you or Torie make money investing in 401k plans in 2015-2016 with a 401k asset allocation that is allocated half to safe investment options (money market funds or stable accounts) and half to stock funds or target funds? Yes, unless the stock market falls and bonds also take a hit.How can you make money investing in 401k plans in 2015 and beyond if both stocks and bonds get hit hard? You would need to move the vast majority of your money to the safe havens available. In other words, your best 401k investment options would be the stable account that pays interest (if one is available) or the money market fund (which your plan should have, but currently pays very little in dividends). For the average investor who needs long term growth (like you and Torie) this is an extreme measure.Remember, your real objective is to make money investing in 401k plans, so you can have a secure retirement. Moderate risk is part of the program. I use Torie as an example because her situation is typical. Her 401k asset allocation fits her (and likely your) risk tolerance and should produce growth over the long term. She has chosen the best 401k investment options to reach her goal of retirement in 2040 (if you plan to retire in 2030 go with the 2030 target fund, and so on). Half of her money is safe and the other half has growth potential.Plus, she has a plan to manage her 401k investment options. If the markets get ugly in 2015 and 2016 she will not make money investing in 401k plans, she will lose money. But she has money going into her target fund every pay period buying shares at cheaper and cheaper prices, and money going into and accumulating in her safe investment. Anytime her 401k asset allocation shows that 60% or more is in the safe account she will REBALANCE back to 50%, which means taking money from the safe account and adding it to the target fund. Then, when the markets turn, she’s well positioned to make money investing in 401k plans for a secure future.

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Credit Cards Are a Real Estate Investor’s Friend

If you don’t have a credit card, you really should get one. Today, almost everyone in America has one, and so should you. Using a credit card is an important way to build better credit. But if your credit rating is so bad that you can’t get a credit card, don’t worry. Help is available. There are privately operated agencies that specialize in obtaining credit cards for “hopeless cases,” and they only collect a fee if they succeed. They’re usually listed in the Yellow Pages under “Credit Cards” or “Credit Counseling.”These agencies may also advertise in your local newspaper’s classified ad section, or even in the big national papers such as the Wall Street Journal and USA Today.If you cannot obtain a major credit card like Visa or MasterCard, you may still be able to obtain a nationwide retail card even without the help of a special agency. Wards or JC Penny credit cards are ofter among the easiest to acquire, and they are good at any of their stores across the country. A Sears card, though, is generally a little more difficult to obtain.If you cannot obtain a national retail credit card, try going to a major local merchant, such as a department, furniture, or appliance store. Since they often have their own credit cards or charge accounts, you can try to open your own account with them. Since you live nearby, they may be more willing to issue you their card. You should then use it and pay a few monthly installments and then apply for a national card.But if nothing else works, try this: Go to a bank that offers Visa or MasterCard, and ask if you could open a charge account with a credit balance. This means you would apply for a credit card in the usual way, and then send along with the completed application a check for several hundred dollars. Ask the bank first how to handle this.What you are requesting is that the bank Visa or MasterCard extend credit to you in the amount already covered by your check. It amounts to paying in advance for charges in the future. After yo have exhausted your credit balance, be sure the bank is willing to continue extending credit in this fashion for as much of an advance deposit as you are able to make. After a time, your bank should be willing to extend a small line of credit to you without the necessity of depositing in advance. If so, be sure to make all future payments on schedule for whatever you charge to the account. This begins to establish a good credit history, which is the surest way to build better credit.If you don’t have to start from scratch and already have one or two credit cards, you should ask for others from other national creditors, such as American Express or Discover. Also get another national retail card like Sears or even Home Depot. You can secure one type of card for each type of purchase, and you should definitely start using these cards wherever you used to pay in cash or by check. You want these purchases and your payments to be reflected on your credit report. Continuing to pay in cash or by check does you absolutely no good in terms of improving you credit rating. Use the cards with your merchants and send your checks to the credit card company. Then later, when you go in for your first mortgage loan, your excellent credit history will have already been estabished.But you must be careful. Don’t go hog wild with all your extra credit cards. If you think you may have trouble keeping a handle on your purchasing, restrict yourself to the use of one or two cards only. Another “trick” of any potential major lender is to add up the credit limits for all your credit cards, which can be a fairly high amount. And even if you never use all those cards, a potential lender might easily think that you could be tempted by such high credit limits to go in over you head and obligate yourself to high monthly payments which you could never afford. So be careful. Evaluate your ability to make payments, and maintain only as many cards as you can handle.Nowadays, because of the feverish competition among credit card issuers, many such companies have lowered their annual fees and interest rates to some very affordable levels. Sometimes there is no annual fee, and sometimes the initial rate of interest is lower than most home loans. Be aware, however, that those rates ofter increase sharply after six months.You can easily find out which bank credit cards have the lowest fees by contacting Bankcard Holders of America. For about $4.00, this organization will send you a list of banks with low credit card monthly interest rates, and also banks that charge no annual fees. You may contact this group at: (540) 389-5445.Something else you can always do to build your credit with the cards you already have is to ask for higher credit limits. You can always ask for increases in the thousands, but even if you credit card companies will only boost your limit by $250 to $500, it is still worth asking for. There is even good reason to believe many credit card issuers will increase your limit faster if you don’t completely pay your full balance due every month.Here’s an idea you might try. If you normally pay the full balance due each month, the next time you charge a significant amount (over $100) don’t pay it off completely when you receive your next statement. Instead, make a payment that is 20 percent higher than the stated minimum monthly payment due. Keep making payments in this percentage range, and in six months or so you should automatically be given a higher credit limit without even having to ask for it!One reason why you want to build up your credit card limits is for the convenience of the cash advance. What this amount to is an emergency short-term loan on your signature only. No collateral, no mess, no fuss.When an extraordinarily attractive real estate investment comes along that requires a down payment or some repiar work, you can borrow on your credit cards up to their credit limits. You can take advantage of a lot of real estate bargains if you can quickly put your hands on five or ten grand. And this you can do with credit card cash advances. (Another way to get cash through credit is via overdraft protection programs, which are discussed later.)Many or most credit cards charge higher rates of interest on cash advances, and some even charge a slight percentage of the cash advance itself as a service fee. Still, however, the advantages of having such instant access to goodly amounts of cash greatly outweigh the disadvantages. For example, buying property for only fix-up work using your credit cards to buy materials could prove to be quite profitable. Usually there is a 30-day grace period on your credit card balance before the company charges interest (although this may not be true for cash advances); but if you are only holding an investment property for as long as it takes to fix up and sell again, you could simply pay the minimum amount due each month-which includes that month’s interest-until the property sells, at which time you pay off the entire credit card balance and more than likely pocket a nice cash profit.Using your credit card in this way will cost you at whatever their annual rate of interest is, which nowadays could be different for purchases as opposed to cash advances. But even if the interest they charge you is in the 18 to 21 percent per year range, when you apply that loan as a down payment on property that will earn over 100 percent per year return on your investment-it makes sense to use the credit cards, doesn’t it?

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There is an excessive amount of traffic coming from your Region.


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