Monthly Archives: October 2015
When people think of financial advisors, they think of professionals who can help with retirement and investment planning. But if you look at the histories of some financial experts you will see that financial experts actually offer a broad range of services that you can benefit from.
The next time that you are unsure how to go about solving a financial problem, you should give some consideration on going to see a certified and experienced financial advisor. The advice you can get from a trained professional will help you to plan for some of the most important moments in your life.
Pay For Your Child’s Education
When your child is born, you immediately want the very best of everything for your little bundle of joy. But everything can be expensive, so you narrow it down to the very best of the things your child will need to make planning more affordable. The problem is that having a child is expensive and the more planning you can do and the more time you can give yourself to prepare for big expenses, the easier it will be to handle them.
Soon after your child is born, you should make an appointment with a financial advisor to start saving for your child’s college education. You can give your child a huge start on their adult life by helping them to get an education without the burden of student loans. A financial advisor can help make those plans a reality and put your mind at ease.
Plan For A Big Vacation
Do you dream of spending a month in London, England but have no idea how you could pull it off financially? Instead of giving up on your dreams, you should talk to a financial advisor and put together a plan to make those dreams come true. With good planning and the help of a financial expert, you will be sipping tea along the banks of the Thames River before you know it.
Protect Your House
You and your wife just closed all of the paperwork on your first house and you cannot wait to start your life together. While it is not pleasant to think about, part of responsible planning involves creating contingencies for situations that could threaten to take away that home. If you are a two-income family, then what would you do if one of you passed away before the mortgage was paid?
A financial advisor can help set up programs that will cost you very little each month, but they will protect your financial investment. When it comes to protecting your home and your family, you can get peace of mind when you talk to a financial advisor.
Plan For The Future
Do you want a rainy day fund that you can use when emergencies happen? Do you plan on doing a large remodeling project to your home and you want to start putting together the funding for it? Financial advisors offer more than just retirement planning services. You can talk to a financial advisor about any long or short-term savings need you may have and work with your advisor to put together a plan.
When it comes to planning your financial future, it is always best to leave the details to a professional. You should sit down with a financial advisor and lay out all of your plans for the future and see how a financial expert can help make your plans come true.
Putting down more than 20% on your New Home? That might be a mistake.
Many Americans believe that buying a home with cash is something only the very rich can do. The fact is however that, in the second quarter of 2014, almost 40% of all the homes purchased in United States were cash deals.
While that may sound like a dream situation to most, the fact is that purchasing a home with cash, and thus not taking on any debt, might not actually be the best way to put your money to work in the long run. Below are three reasons to consider not paying for cash for your next new home, even if you have the cash available. Enjoy.
Reason 1: The loss of your home mortgage interest deduction. One of the biggest benefits of financing a new home is the home mortgage interest deduction that the IRS gives homeowners. What this does is give a homeowner the right to deduct interest paid, up to $1 million, on their first and/or second home, which can be a huge tax savings.
Using a $300,000 home loan as an example, the IRS would give a tax savings of almost $4000 in the first year, money that you would not get back if you had paid cash for your new home. This also lowers the effective interest rate that you have on your home mortgage loan as well.
Reason 2: The loss of leverage from your real estate purchase. When you own real estate you get rights to the full market value fluctuation on that real estate, whether you borrowed 90% to purchase it or paid it completely in cash. Using the same $300,000 home loan from Reason #1 as our example, let’s say that your home appreciated 2% in the first year. That’s $6000 return on your investment.
Now let’s say that your neighbor purchased a similar property for the same amount of money but only put 20% down. That same 2% means they get a $6000 return on their investment as well but, since they only invested just over $80,000 (their $60,000 down payment and 12 mortgage payments), it means they’re actually getting a return of 7.44% compared to your 2%.
The fact is, one of the best benefits of buying real estate is the leverage that you get from doing so, one that’s practically unmatched in any other type of investment. Think about this way; what if you were allowed to purchase stocks with only a 20% down payment, but allowed to keep all of the appreciation that they made?
Reason 3: Paying cash for a new home isn’t the best way to get a return on your money. This one gets a little tricky but still is worth considering. Yes, paying cash for your home means that you’ll pay much less an interest because you won’t have a mortgage. Right now the cost to borrow money is approximately 2.5% and, if you can find an investment that will produce a net return that’s greater than that, you might be better off borrowing money to buy your house and investing the rest of the cash somewhere else.
Simply put, while being able to pay cash for a new home is certainly an achievement worth celebrating, the fact is that there are a number of better ways to use your money to make more money than using it to purchase a house outright.