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Access to financial advice seems to be everywhere, Internet, magazines, TV, etc, but how do we get the best financial advice around while avoiding falling into the traps of an unscrupulous advisor? Let’s start by explaining what a financial planner does. A financial planner is an investment professional who evaluates the personal finances of an individual on short-term and long-term financial goals. Unlike specialists such as lawyers or tax preparers, a financial planner will analyze your entire financial picture such as taxes, investments, insurance, education goals, housing goals and retirement. Start your research by looking into self-regulatory organizations such as the Certified Financial Planner Board of Standards, here you can find board certified and recognized financial planners. If you are interested in planners who also sell insurance products, you can visit www.naic.org which is The National Association of Insurance Commissioners. The FINRA, Financial Industry Regulatory Authority is the largest independent regulator of securities brokers. Their website, www.finra.org offers a broker check tool where you can look up the professional background of a securities firm or broker. The information made available through BrokerCheck comes from the Central Registration Depository online registration and licensing database. It lists background professional information on about 660,000 currently registered brokers, 5,100 registered securities firms and thousands of previously registered firms and brokers.

There are a few questions you can ask planners when you are searching for the right one. For example, ask what kind of education, formal training or credentials they have, what licenses they hold and if they are registered with the Securities Exchange Commission (SEC), the state or the Financial Industry Regulatory Authority (FINRA).  According to the SEC, an advisor that manages $25 million or more of client assets must be registered with the SEC and if they manage less than that, they must register with the state securities agency in the state where the business is located. Ask how long they’ve been practicing or whether they are licensed as an investment or life insurance broker. Depending on the type of advice you are looking for, knowing what financial products they are licensed in, will help you decide whom to choose. You can also ask them for references of some of the clients they have advised. Ask how they are compensated, if and how they earn commissions and by who. Another important question to ask is if they will be responsible for evaluating and updating your plan on a regular basis or if others will be involved such as other partners in the firm. Asking these and other questions in advance will help you narrow down the advisor you want to work on your financial plan and who you feel most comfortable with.

There are four ways financial planners earn their fees. Commission only planners make their money by the investment or insurance products they sell their clients. So the plan they outline for you is free, but any products you sign up for will cost you. A fee-based planner or broker charge upfront fees for services provided and a commission for securities traded or insurance products purchased by you. Fee-offset planners charge an annual or hourly fee, however if you buy any financial products from them, the commission earned on these products will be reduced from the fee. Fee-only planners charge only based on the services they offer. Their fees could be based on a percentage of the client’s annual assets or on a per-hour rate. These planners do not sell financial products and earn no commissions.

When looking for a planner, you can look at some of the professional organizations mentioned earlier or others like the Chartered Financial Consultant (ChFC , (PFS) Personal Financial Specialist, Accredited Financial Counselor (AFC) http://www.afcpe.org or Registered Investment Advisor (RIA). It’s important to do thorough research when selecting a financial advisor. The research will pay off when in 10 or 20 years we see our lifelong savings are intact and growing.

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Ever driven through a neighborhood and noticed there is a bank in almost every block corner? It’s easy to spot a well developed and financially stable neighborhood by the number of banks it has. But if you take a turn into a neighborhood that’s struggling, it’s almost impossible to find a bank branch and the only ATM available is in the local bodega that charges a high fee for its use. These are the so-called unbanked or underbanked communities and it’s where a new breed of banking is surfacing. These hybrids of banks and check cashiers are popping up in under-developed areas where affordable and convenient banking services are needed to serve low-income earners.

Unbanked communities made up of people who are not part of the mainstream of banking customers are not a small group. According to a June 08 survey by The Center for Financial Services Innovation, it is estimated that 40 million US households (106 million individuals) are either underbanked or unbanked. That means that the individuals who make up this number either have only a basic checking or savings account or no bank accounts at all. 685 banks responded to the survey sent out to 1,300 banks. 53% of those who responded said that they teach financial literacy and education sessions targeted towards these communities and 25% designed marketing strategies aimed at them.

Individuals in unbanked communities are mainly immigrants, low-wage earners and minority group members who go to check-cashing facilities to cash their work checks often at high fees. Reasons for going to these high fee facilities include distrust of the banking system and the need for transparency. According to surveys, low-income wage earners looking to cash their checks feel that the best place for this transaction is a supermarket or a check cashier facility where they know the exact fees. This is in contrast to banks where there is a lack of transparency and fees are not always clearly laid out. Distrust of the banking industry has reached new highs in the wake of the financial crisis, even among those who bank with more traditional financial institutions. It seems everyone wants visibility into what’s going on with their finances these days. However, the drawback to not having a bank account is that unbanked communities are unable to build a credit history or take advantage of interest accruing accounts.

Banks that cater to these unbanked communities have been increasing over the past several years. Many banks and other organizations have realized the potential for growth and economic development by banking these underrepresented areas. For example, in 2003, Key Bank started a check cashing service in Cleveland and by the end of 2008, Wal-Mart opened 1,000 Money Centers across the U.S. Wal-Mart’s Money Centers offer a variety of services including low cost check cashing with wire transfers and utility payment services. Conventional banks such as Citibank has also taken an interest in unbanked areas and sees the potential. It partnered with the United Way of Greater Los Angeles (UWGLA) to create the UWGLA Saving for the American Dream asset- building program which helps promote economic development to low-income families by mitigating language and cultural barriers and meeting the banking needs of the these areas.

Low-income neighborhoods benefit from these new banking facilities from the services they offer such as payroll cards. These are stored- value cards issued by employers instead of paper paychecks. Like direct deposits at commercial banks, the money is deposited directly into a bank account from which the employee can use the card to withdraw money from an ATM machine. Opening a checking and savings accounts is also easier since these banks offer very low minimum balances and fees.

In addition to Key Bank, Citibank and retailers like Wal-Mart who have expanded their services to include unbanked individuals, other facilities like CheckSpring have been created solely to service these neighborhoods. CheckSpring is a development bank founded in 2007 and headquartered in Bronx, New York. The bank offers personal loans, credit building services, residential mortgages and home equity loans and lines of credit. In addition to check cashing, bill pay, money transfers and online banking, the bank serves businesses in the area with commercial lending, currency services and checking and savings accounts. Prior to the recession, many cities had major branch openings from banks like Washington Mutual, HSBC and others. However, this Bronx community had not seen a bank branch opening in the past 25 years.

The transition to becoming banked has worked well, most of the customers who come into CheckSpring for check cashing services end up opening bank accounts by enrolling in a savings clubs. The savings club later converts into a regular savings account when a certain balance requirement is reached. This is the ultimate goal of these developmental banks, to convert unbanked individuals to bank account holders.

It’s evident that more banks see the economic potential of these communities and are trying to gain market share by targeting the areas that where ignored in years past. While many banks have either expanded into these communities and new developmental banks have sprouted giving these areas an economic lift, there are still many underrepresented places without adequate banking services.

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Investing in gold and other precious metals is one of the best ways to maintain your footing in an otherwise unstable economy. But while gold, silver, platinum (and their lesser known cousins ruthenium, rhodium, palladium, osmium, and iridium) have maintained their status as solid investments, you need to be wary of unscrupulous dealers and the many scams they perpetrate on unsuspecting investors.

What glitter isn’t always gold

Scams include anything from selling gold plated jewelry to polished hunks of metal that are made to look like gold bars. Selling bullion ETF’s and making customers believe they are buying real gold or silver when in fact this is not the case is another scam. Some companies are not even legally registered to sell precious metals. Last year, the Iowa Insurance Division (IID) issued a cease and desist order against a NJ based company called National Bullion Investors, LLC. The company was not legally registered and the investor who bought from them lost $5000. IID also took action against a Florida based company called Barron Trading Group for similar reasons.

If you are buying precious metals in the form of commodity futures or option contracts, the United States Commodity Futures Trading Commission (CFTC) recommends investors be careful of companies selling these financial instruments with promises of big gains and little or no risk attached. This is considered misrepresentation by the offending company and requires legal action. Companies selling these and other varieties of metal investments reach prospective investors through radio, television, newspaper ads or websites. Some even make cold calls to customer pushing for the purchase of gold, silver or platinum. According to the CFTC (cftc.gov), these companies will ask for various forms of fees such as commissions, interest charges, loan origination or storage and shipping fees that are not disclosed up front.

The sales pitches businesses use are not a problem, the problem starts when they overstate their ability to predict where the prices of precious metals will go and how little the customer is at risk of losing. When a company approaches you with an elevated sales pitch, talks down risk exposure and does not disclose fees from the start, these are all red flags.

Also, a big giveaway is the storage location of the metal. If the company refuses to clearly state where the metal is stored or gives you a runaround when you ask about it, there might be a problem. If the company you want to buy from does not say you are buying on “margin” or that you will have to send them additional funds if the price drops, start looking elsewhere.

Always search a company’s background in the Better Business Bureau (bbb.com). Here you can find out how reliable the company is, whether it has performed well in delivering services and products to customers and what complaints, if any, have been filed against them. The North American Securities Administrators Association (NASAA) can also assist your research. It is an international organization whose goal it is to protect the investor. For investors who have any issues regarding a scam, who want to look for information or wish to locate their state regulator and contact them directly, visit nasaa.org. You can also contact the National Association of Attorneys General through naag.org for updates in laws or issues that might affect your investments or for questions and concerns regarding scams. Questions about futures compliance could be addressed to the National Futures Association and to find out if your broker or firm is registered with the Commodity Futures Trading Commission (CFTC), go to nfa.futures.org/basicnet/.

If you are looking to buy coins, you are better off buying from a legitimate source like the US Department of the Treasury through usmint.gov. Gold bars can be purchased through a number of accredited manufacturers, for more information, go to Gold Bars Worldwide. Gold Bars Worldwide is sponsored by the global gold advocate World Gold Council gold.org that also gives research and statistical information on gold.

Amerigold is a known seller of gold, silver or platinum. The Better Business Bureau rated Amerigold with its highest grade of A+ for operating in a trustworthy manner and making good faith on resolving customer concerns. Silverseek.com and platinumguild.org are also reliable websites to look for information or retailers on silver and platinum.

Diversifying your portfolio with precious metals is a good option, but it has to done cautiously and after thorough research. Time of course is essential. As Paul Mladjenovic, the author of Precious Metals Investing for Dummies put it, “In a world of precious metals, the longer the term, the better your chances become for building wealth.”

Other resources to look into:

Investing in Gold: Invest.gold.org

Marketwatch.com

Minerals.usgs.gov

National Mining Association: nma.org

International Monetary Fund: imf.org

Gold Anti-Trust Action Committee: GATA.org

Silverstrategies.com

Photo: (clagnut)

Famous diamonds like the Hope from India, the Yellow Tiffany from South Africa, and the Williamson Fancy Pink inspire the imagination and are so valuable they seem almost like fictional objects of desire. Their size can leave you in awe and you can practically go blind from their beauty when in their presence. But diamonds can also be a practical investment. In markets where inflation rates have soared; investors have sought out diamonds as a way to put a hold on the value of their currency. The wealthy have used their diamonds to get them through tough economic times such as during WWII and the Asian economic crisis of 1997. In our current economy, investing in diamonds is paying off for many.

A Rich Man’s Game

According to the international diamond wholesaler Ajediam, prices for diamonds have increased on average 15% each year since 1949. However, investing in diamonds comes easier to those deep-pocketed individuals with the extra money to spare. Capital requirements for diamond investing is high and most new investors are already millionaires. The price of a premium cut 1-carat diamond can range from $14,000 to $25,000 depending on the quality. Diafon.net and Ajediam.com have graphs and current prices on diamonds.

Determining Value

The value of a diamond is based on the 4 C’s (Cut, Clarity, Color, Carats). Cut refers to the way a diamond has been shaped, its faceting pattern and its polish or surface finish. Clarity or purity is a diamonds’ ability to let light in and reflect its brilliance. For example a diamond with a clarity grade of LC/ IF has no internal or external spots so it is valued higher than a stone with minimal flaws. Color is also a factor. Most diamonds are white or colorless but the most rare and priciest diamonds are the naturally colored or “fancy” stones. Carat is the weight of the stone. In contrast to the 1-carat mentioned earlier, a 3-carat stone could be priced at $40,000 or more depending on its distinct characteristics.

Whether or not man-made diamonds like cubic zirconia and moissanite have a negative affect on the value of natural diamonds is debatable. These synthetic look-a-likes can be created at much lower costs than a real diamond and although fakes are of increasing quality and size, the inherent value of a true diamond would be difficult to surpass. Diamonds are the hardest natural substance known. They are not only used for jewelry but also in manufacturing. Some examples include their use in lasers, x-ray machines, and to enhance the sound of those fancy speakers you just splashed out on.

Diamonds as an Investment

It may sound contradictory but a big part of the allure of diamonds for investors comes not from their romantic symbolism but from their practicality. Diamonds are easy to carry. An investor can easily carry thousands or even millions of dollars worth of diamonds in a small pouch (we’d suggest they also travel with an armed guard). Also, their value is not directly linked to the stock market, making them an ideal financial instrument that holds its value in times of recession and increases in value during inflation. In this way a diamond investment is very similar to a commodities investment.

According to Pastor-Genève, a worldwide wholesale dealer of high end colored diamonds, the key to making a worthwhile investment is to buy the most rare and largest diamond you can find. Naturally colored yellow, pink, sapphire blue and green diamonds occur as a result of a chemical reaction with other natural substances in the earth and are more difficult to come across. Due to their rarity, these are considered the most valuable, even more so than white diamonds.

Diamond investing, for all its appeal is not without its drawbacks. Diamonds are easy to buy but not easy to sell. Large-scale frauds and scams have made jewelers apprehensive and the most rare and high caliber diamonds have a better chance of being purchased. Not to say your 1-carat diamond will not be purchased, it’ll just take longer. Selling your diamond at a profit also will take time. A rare blue diamond can take at least five years to double in price and a yellow diamond can take eight to 10 years. In addition, supply and demand play a key factor on selling power. According to Pastor – Genève, the ration of white to colored stones is 10,000 to 1, so if you have a white stone, chances are it will be more difficult to find a buyer for it.

Tips

When shopping for diamonds always buy them at wholesale or near wholesale prices. If the price of the diamond is five to 10 percent more than the cost, keep looking for a better deal. Go to a reputable dealer who sells GIA certified diamonds. GIA is the Gemological Institute of America, a non-profit institute considered a foremost authority in gemology. Diamonds certified by EGL USA Group, the world’s premier independent gemological laboratory is another option.

Diamond Funds

Funds that capitalize on the long term value and appreciation of diamonds are another way of investing in these precious stones but you’ll still need a lot of money to get in the game. KPR Diamond Fund requires a minimum investment of US$ 250,000 and the minimum investment required to participate in the Diamond Circle Capital Fund is $1 million per individual stone. Like the KPR Fund, the London based Diamond Circle Capital PLC’s goal is to produce long-term appreciation of its portfolio of diamonds. To create this appreciation, the company invests in large white and rare polished, high quality diamonds.

Diamonds have proved their worth as a stable commodity that maintains its value in the worst of economic times. While, there’s a bit of a catch 22 here in that you need to be fairly wealthy to begin with in order to invest in diamonds, you can get started for just a few thousand dollars and rest assured that, in the long run, that investment has a very good chance of paying off.

Banks have always been viewed as the safest place to park your money but, in the wake of the financial crisis, this perception has changed. Not only have people’s confidence in the stability of banks been shattered by collapse of WaMu, etc., but ever increasing bank fees and executive payouts have engendered distrust. On a more practical level, there are just fewer banks to go around. Many banks have either folded or been swallowed up by larger financial institutions, forcing people to look around for more options.

Bank online

Online banking is a relatively recent phenomenon that has become increasingly popular as consumers become more comfortable with doing the majority of their activities — from shopping for books or music to booking their airline tickets — in the cloud. Most major banks offer online services today, which provide 24/7 access to your accounts and advanced services such as the ability to pay bills online. There are even Internet-only banks such as First Internet Bank of Indiana or Smartypig that, because they don’t have the overhead of physical infrastructure, can offer substantially higher interest rates on savings accounts. Smartypig pays an APY of 2.75%. Let’s take a look at the pros and cons of online banks.

Pros

1. They tend to offer higher interest rates than local banks due to lower overhead costs such as paper mail, lease and other real estate expenses.
2. Some banks offer customer service available 24/7 or till late evening hours.
3. You can quickly initiate transactions online such as a transfer, withdrawal request or a bill payment in a matter of minutes.
4. Most paperwork can be filled out on the computer and transmitted electronically.
5. You can set up alerts so the bank will let you know when your balance is low.
6. Less paper mail such as bank statements and utility bills will decrease the amount of paper trail left behind for identity thieves.
7. No Fees- The majority of online banks do not charge fees. HSBC for example has no monthly fees and no minimum balance requirement for their online savings account.

Cons

1. Limited Access – you can’t just drop off your deposit like you would at a local bank. It must be mailed or transferred from another account.
2. At some online banks, the customer doesn’t have the opportunity to get to know the staff. Calls are often handled through a random system where you will get to speak to different customer representatives every time you call for an issue.
3. Make sure you select a bank with many ATM’s available, otherwise you will end up paying fees for using machines not part of the bank.
4. It takes longer to clear a deposit.
5. Paperwork requiring signatures has to be done through mail, taking longer to process.
6. Your bank’s website can go down, limiting access to accounts temporarily

Just to give you an idea of the services online banks offer, HSBC has an online savings account with an interest rate of 1.85%. Wachovia has several online services available in addition to online banking such as bill pay, brokerage and retirement accounts. Bank of Internet has an online interest checking account that pays an APY of 1.30% and a high yield savings with an APY of 2%. At the time this article was written, national overnight averages for savings accounts were of .77% for interest checking accounts and 1.39% for a savings.

Although some consumers have remained skeptical about doing their banking online, the majority have been easily seduced by the ready access to balances and the ease with which these services categorize transactions. The advancements in technology and privacy protection have also pushed more people to take the leap.

Bank locally

On the other hand, with distrust in the banking industry at a fever pitch, some people are taking solace in the old-fashioned comfort that can be found in a local brick and mortar bank where you know the teller by name and she remembers yours. Let’s take a look at the pros and cons of local bank accounts.

Pros

1. Easy access – you can just drop off by your local branch to make deposits or get cash withdrawals.
2. Familiarity – by becoming a regular customer, you get familiar with staff, getting to know some on a first name basis.
3. Quick access to cashier’s and certified checks.

Cons

1. Limited hours of operation – At most banks, after 4 or 5 pm you can’t get a representative to help you – you’d have to wait till the next day.
2. Interest rates tend to be on the low end in comparison to online banking.
3. More opportunity to spend your money because it is so easy to access it.

With the banking industry in a state of reorganization, there’s never been a better time to be a customer. All banks, whether an established brick and mortar institution or a scrappy newcomer that only exists in cyberspace are scrambling to regain your trust. Of course you want the best interest rate you can get but you’ll also want to consider things like ease of access to your money, any fees that may be associated with your accounts, and the security and stability of the financial institution in question Decide what options you would like to have and what you can do without when considering the pros and cons of either method of banking. And it doesn’t have to be an either/or decision. The best approach if you decide to open an online account is preferably to keep your local bank account open, this will enable you to have the access you need to some of your cash if an emergency arises.

When looking over your investments, do you ever wonder how the value of the companies you’ve put your money in is determined? What factors decide how well a company is really doing? What’s the source of the company’s financing? Will it meet or exceed this quarter’s projections? While some consider the stock market to be little more than a house of cards, subject to the whims of individual investors, there are, in fact, some very real and measurable things that can help you to diagnose the financial health of a company.

Take a statement

It’s not an interrogation but you’ll want to ask the hard questions before you invest. Only by examining and drawing conclusions from a financial statement, will you truly know how well a company is doing. At first glance, you will see that a financial statement is made up of three main sections, the balance sheet, the income statement and the cash flow statement. Each statement depicts a different aspect of the overall financial picture of a business. The balance sheet details companies’ current assets such as cash and prepaid expenses. It shows the financial position at a particular date. This statement tells you what the current liabilities or existing debt the company has, that has to be paid within that year. Examples of debt include accounts payable, salaries payable or income taxes payable. The amount of current assets over current liabilities determines the amount of working capital or leftover cash the company has to cover other operating expenses. Whether or not there is enough money left over after the current debt is paid off, tells you whether the company is on solid financial ground or might be headed for destruction.

The income statement is a summary of the profits a business has earned for a specified period of time. This is where you would see the amount of revenue or profits obtained for a companies’ products or services and the expenses incurred for salaries, supplies or income taxes. The difference between the revenue and expenses gives you the net income, which when compared over a period of say two years shows you how the net income is rising or falling, a fairly good indicator of how profitable the business is. Basically, this statement tells you if the company has revenue coming in.

The cash flow statement is particularly important when considering new ventures such as an internet startup. The ability to balance cash flow now is a sign that the business has a long and profitable future ahead of it. This reports the cash going out and coming in from operating, investing and financing activities. In this statement, changes in the net cash flow indicate the company’s ability to meet its debt obligations and pay dividends, how much external financing the company is using and its ability to generate cash flow in the future. Operating cash flow can be described as the cash effects from revenue and expense transactions. Investing cash activities comes from the purchasing and selling of properties or assets and financing cash activities shows how owners of the company have used loans from creditors to finance their business.

Know the facts

Investing should never be based on emotion. While you might be tempted to invest in a company because you like its products or because you’ve just read a favorable article about it in a magazine or newspaper, you should make sure you’ve done your research before ponying up your hard earned cash. Think of the financial statement as a kind of scorecard that helps you determine which company is the one you should invest in. What you’ll find is a hard look at the financial structure of a business that shows you what it’s really made of. Ask yourself a few questions and see if the statements help answer them. Does the revenue exceed expenses in the income statement? Does the amount of assets exceed liabilities on the balance sheet?

Notes often accompany financial statements. Read these notes carefully as they disclose information that can help you interpret the financial information on the statements. The notes reveal any changes that could have an impact on the company’s finances. It can provide some startling insights such as what type of debt the company purchased, for how long and for what purpose. For example, the notes might state that company A entered into a two year term note of which the proceeds were used to purchase the company’s out of state manufacturing facility and headquarters. Essentially, the notes are a complement to the statement providing more details. If you’re a shareholder, it’s your company. So you’ll want to make sure you know as much as you can about it.

Source:photobunny

Investing in bonds, like the name implies, is all about establishing a relationship. So as with any relationship, you should make sure you understand the potential implications before you commit. In this case, you are entering into a financial relationship with an institution, loaning it money in exchange for locking in an interest rate. The borrower is either a company that issuing a bond in order to acquire capital to expand their business, or a government agency that is doing so in order to fund a public project such as the building of a school.

Bonds are more predictable than stocks. But the different types still vary in terms of how risky they are. You can determine the degree of risk by taking a close look at the interest rate. If it seems certain that you will be able to earn back the bond’s principal by the date it matures, then consider it low-risk. Typical low-risk bonds include Treasury bonds and corporate bonds issued by large public companies. Higher-risk bonds include mortgage-backed securities and the infamous and so-called junk-bonds, a bond that is rated below investment grade at the time of purchase. These can be seductive due to their higher yields but carry a much higher risk of default and are not considered a good bet for the investor who is looking at bonds as a relatively safe investment.

When looking around for which bonds to invest in, it’s best to research all your options. Here is a quick look at what is available.

Government Backed Securities

Government-backed securities come in the form of Treasury bills (T-Bills) notes and bonds. T-bills are short-term US government securities with maturity of a year or less. They can be bought through a broker, a bank or directly from the government. At maturity, the buyer of the T-bill receives the full amount stated on the bond certificate. The difference between the face amount and the amount the bondholder paid for the certificate is considered the interest gained, also called the discount yield. This interest is exempt from state and local income taxes, but not from federal income taxes.

Treasury notes have longer terms than T-bills and their interest rate is fixed. Notes are issued for two, three, five, or 10-year periods. Note and bond owners receive interest payments every six months. This interest must be reported as interest income on federal tax returns.

I Bonds

I bonds are savings bonds backed by the US government. The difference between these bonds and the regular treasury bonds is in the interest gained. The rate earned on these bonds is actually a combination of two rates: a fixed interest rate set when the investor buys the bond and a semiannual variable rate tied to the current inflation rate. The maximum purchase for an I bond is $5,000 per calendar year, and the interest stops accruing 30 years after it is issued. Earnings from these bonds are exempt from state and local taxes, and federal taxes can be deferred until the bond is either redeemed or reaches the maturity date. If this bond is cashed to pay education expenses, it is completely tax-exempt. However, if the bond is redeemed within the first five years, the holder will be penalized the previous three months’ interest rate, there is no penalty fee if cashed after five years.

TIPS (Treasury Inflation-Protected Securities)

In addition to I Bonds, another way to protect your investments against inflation is by purchasing inflation indexed $1,000 bonds known as TIPS. Tips are guaranteed to beat inflation because the principal is adjusted every six months according to the consumer price index. During the time you have the bond, the principal amount increases if inflation occurs, however, the interest rate on these bonds never changes and is set when the security is purchased. The term on TIPS is from five to 30 years and interest is paid out to investors every six months until maturity.

Series EE

Series EE savings bonds are issued at a deep discount from face value and pay no annual interest since the interest accumulates within the bond itself. Interest is paid out when the bond matures and it is federally taxed but exempt from state and local taxes. This bond is similar to the tax benefit an I bond provides in that the Series EE bond’s interest is exempt from federal income tax if used for funding a college education. When searching for current rates on bonds, look at TreasuryDirect.

Corporate bonds

Corporate bonds are long-term interest bearing debt issued by a corporation. Corporations issue bonds as a way to increase company funds to finance major projects, expansion, acquisitions or refinancing. These are long-term taxable bonds (10, 15, 20 years or longer) that pay the highest interest rate of all the bonds, due to increased risk of default. If a company is facing financial trouble, corporate bondholders are paid first before short-term creditors. Moody’s Bond Survey and Standard and Poor’s are rating services that grade bonds based on the credit risk of the corporation or municipality issuing the bond. The quality and creditworthiness of the issuing company is displayed through these bond ratings. A high quality bond rating of AAA from Standard and Poor’s, means the bond is of the highest investment quality, suggesting the company will have the ability to pay both principal and interest at maturity. A rating of DDD means the corporation is in default and the bond (also referred to as a junk bond) is extremely risky and more than likely, the company won’t be able to pay back the principal and interest.

Municipal Bonds

Local governments issue long-term bonds in the form of municipal bonds called “munis”. These are tax free and tax-exempt bonds that are used by the local governments to finance public improvement projects such as roads, bridges and parks. Their interest income is not subject to federal income taxes. If you live in the municipal bonds’ issuing state, its interest income is exempt from state and local taxes. Capital gains on these bonds are taxable. These bonds offer a lower interest rate than corporate bonds, because of their tax-exempt advantages. Municipal bonds could bring in an after-tax return higher than a corporate bond.  There are also a variation of these bonds, so when researching look through sites like Morningstar.com or Bloomberg.com to see which type of bond best fits into your future financial picture.

Money doesn’t grow on trees but that doesn’t mean that going green and making green are mutually exclusive. With the economy locked in a choke-hold due to its over dependence on gas and oil, there is a growing interest in alternative energy. For the past several years, more companies around the world have realized how important it is to protect and preserve our planet, spurred on in part by the possibility of a tax incentive. In an effort to motivate corporations into jumping on the green bandwagon, in 2005, Congress passed an Energy Bill that offered subsidies for companies implementing clean energy technologies. Companies like GE have embraced the change by implementing environmentally friendly policies, while companies like the wind turbine company Vestas (VWDRY) developed several new environmentally advanced technologies of its own. For you, the environmentally conscious and socially responsible investor, there are now plenty of options available.

Green investments are investment vehicles such as stocks, bonds, ETF’s and mutual funds of companies that produce energy efficient or environmentally friendly products. Businesses that have modified all or part of their facility operations to become environmentally conscious are also considered to be part of the green movement. Some, like the French mineral water company, Vittell, even pay farmers on the land above its equifiers to use fewer chemicals in an effort to diminish the possibility of chemicals seeping into the water.

With President Obama calling for growth in employment opportunities in corporations that manufacture solar panels, wind turbines and energy efficient equipment, it is likely more corporations will fall into the green investments category. Companies going “green” are implementing what is known as socially responsible initiatives (SRI). These include anything from promoting recycling programs to introducing electric cars or protecting parts of the rainforest from deforestation.

For a company to be considered green, fund managers screen them to make certain the company fits the particular funds’ philosophy or cause. For example, an environmentally neutral fund might eliminate industries from its’ portfolio which perform animal testing, manufacture weapons or have significant environmental issues. The Domini 400 Social Index (KLDDSI), which was the first socially responsible index launched in 1990, follows 400 large cap US corporations selected based on social and environmental standards. The Portfolio 21 (PORTX) fund concentrates on small-cap (less than 1 billion in market capitalization) clean-techs and large-caps with sustainability programs.

The Social Investment Forum, a national membership association that focus on socially and environmentally responsible companies, keeps track of the financial performance of socially responsible balanced, bond (fixed income), equity large, medium and small caps and international global foreign funds. Socially responsible investments can also be listed as mission investing, ethical investing and sustainable investing. According to the Social Investment Forum, as of 2007, there were 260 socially screened mutual fund products in the US with assets of $201.8 billion compared to 55 SRI funds in 1995 with only $12 billion in assets. Given the growth in the number of companies going green or adopting green policies, it is likely you will see many more green investment vehicles.

The green sectors are alternative energy which is energy generated from the sunlight, wind or water that can be replenished naturally, carbon offset or carbon neutrality which means maintaining the balance between producing and using carbon-dioxide emissions by let’s say, planting trees, and energy efficiency or cooling, heating and lighting of buildings more efficiently. Some other sectors include environmental tech, that is, specializing in air and water quality and waste management, reducing emissions by pollution control and carbon capture and green projects that involve education, food distribution and recycling programs.

Several companies are making great strides in the way they use our current technology to reuse products, while others have developed new and improved methods. Nova Biosource Fuels (NBF) for example, takes slaughterhouse leftovers and turns rendered fat into diesel fuel. An alternative fuel company, Gushan Environmental (GU) makes biodiesel from used cooking oil at plants throughout China. United Technologies (UTX) develops more efficient helicopters and jet engines while First Solar (FSLR) makes the solar industries lowest-cost thin film solar panel.

Investing in any stock can be risky and green stocks are no exception. It is important to do thorough research before putting money down on any particular stock, bond, fund or whatever investment vehicle you choose. Many of the green companies are still new and riskier due to their innovative technologies. A good way to get your feet wet is by balancing your portfolio adequately with low to moderately risky investments, this will help diversify and prepare your portfolio to weather any stock market storm.

If you’ve been investing in the stock market for the last couple of years, you’re probably feeling like you’ve been taken for a dizzying roller coaster of a ride. Head still spinning? The more stable investment vehicles, Savings accounts, CDs, and Money Market funds can provide some relief. While they may not offer the highest interest rates available they do provide an appealing safety cushion in times of economic uncertainty. And when it comes to saving for retirement, sometimes slow and steady can win the race. Let’s start off by explaining the basics of some of the most popular investment vehicles available to you.

Savings Accounts

The good thing about a savings account is that you have access to your cash whenever you need it and if you open a savings account that gains interest, you will be making money off the money you are saving. Now, let’s be honest, the interest you will earn might not be very high, depending on the bank you choose it will vary, but it’s better than having the funds in a non-interest bearing account that just sits there. Typically, a bank requires the holder of the account to maintain a minimum balance of $25 to $100. No fees are assessed as long as the minimum is maintained. The national overnight average at the time this article was written was 1.42% for savings accounts. Don’t forget that interest on your savings account has to be reported as income on your federal and state returns because interest earned on this account is taxable.

Each bank has its own set of policies, but in general, fees and penalties might apply for excessive or early withdrawals, inactive accounts and maintenance. You might also see added charges for requests such as account information by telephone, by computer or in person and ATM transaction fees, so please be sure to read through the information you receive from the institution when you open an account. It will list all costs and penalties you might incur. Better yet, read over the information on fees and penalties on the bank’s website or ask for this type of information from the banks’ representative before committing yourself to any one bank.

CDs

A certificate of deposit is the type of instrument you buy when you want to earn interest on your funds while they are “locked” for a fixed period of time. The amount you need to purchase a CD ranges from $100 to $100,000. The fixed period of time could be anywhere from 7 days to 10 years and interest earned on the CD is typically a fixed rate for the entire term of the deposit. The longer the term of the CD you purchase, the higher the interest rate will be. At the end of the term when the CD matures, the holder of the CD will collect both principal and interest accrued. CDs are insured through the Federal Deposit Insurance Corporation and the National Credit Union Share Insurance Fund (NCUSIF) if bought through a depositing institution that is insured. The NCUSIF is administered by the federal National Credit Union Administration agency. It insures member savings in federally insured credit unions, just look for the NCUA logo. Make sure the institution you are buying from is insured by either of these organizations. When shopping around for CDs you might come across different types. Here are the basic ones you’ll find.

Variable CDs

This type of CD is also called an adjustable-rate CD, its interest rate is adjusted up or down periodically. The holder of the CD is allowed to lock a rate at anytime before it matures.

Bump-up CD

Allows the holder of a CD to increase or bump up the interest rate to the higher market rate once or twice depending on the bank and keep it at that rate for the duration of the CD even if the rates drop again.

Brokered CDs

These are CDs bought in volume by brokerage firms that find the best CD rates available and resell them to individual investors. The amount varies by bank but usually, there is a minimum required amount of lets say $10,000, in order to purchase a brokered CD.

Uninsured CDs

Uninsured CDs are actually investment certificates and not the regular CDs that are most commonly refered to as basic certificates of deposit. These financial instruments are not insured and can be recalled by the issuing institution and reissued at a lower interest rate right before it matures. You might recall recently, Robert Allen Sanford, chief of Sanford Financial Group was accused by the SEC for misrepresenting the safety and liquidity of uninsured CDs.

Callable CD

This type of CD gives the issuing bank the right to terminate (call) the CD after a set period of time if interest rates fall. If this happens, you will receive your principal plus unpaid accrued interest.  The advantage to buying this type of CD is that it tends to have a higher yield than a regular CD.

Money Market Accounts

Money market accounts are high interest earning accounts. These typically pay a higher rate than regular savings accounts and are offered in a variety of ways. There are two government insured money market accounts. One is the super NOW account and the other is the money market deposit account.

Super NOW Accounts

Super NOW accounts have limited checking privileges. Minimum initial deposits range from $1,000 to $2,500. If your balance falls under the required minimum, the interest rate earned decreases to the lower level of a regular NOW checking account. You can only withdraw your funds through a check, electronically or with a debit card.

Money Market Deposit Accounts

This type of account has a minimum required balance and varying (tiered) interest rates based on the size of the account balance. You will have different fees for transactions and account maintenance depending on the bank you choose. Although these accounts pay a higher interest than the super NOW accounts, if your balance falls below the required minimum, the interest rate will also drop to the lower rate of the regular NOW checking account.

Money Market Mutual Funds (MMMF)

The government does not insure these accounts just as stock market investments are not insured. The account is held in a mutual fund investment company that brings together the cash of many investors. This money is then invested in debts and short-term maturities of less than one year. The interest earned by these accounts is generally higher then all the other money market accounts and interest is earned daily. Usually there is a minimum check limit of $200, which means that if you want to withdraw some of your funds, you have to withdraw at least some of the amount set by the bank. Several banks don’t have this requirement so make sure to shop around.  So when shopping around for the next safety cushion, do your research and read all the information you can get your hands on before signing on the dotted line.

If anxiety over doing your taxes has reached a fever pitch, you’re not alone. The vast majority of taxpayers wait until dangerously close to midnight on April 15 to file. And one of the biggest contributors to this procrastination is a lack of understanding around exactly which form to file. We can’t necessarily making filling out your tax forms any less boring but we can give you the information you need. Here is a summary of the forms you will most likely need and what each form reports.

The most commonly used tax forms are 1040, 1040A and 1040EZ. The individual income tax return form 1040 is a standard; it is used across the board whether you make $20,000, $150,000 or more in annual income. Form 1040 is used to report wages, salaries, filing status, exemptions and itemized deductions. Form 1040A is similar to 1040 except it does not report items such as alimony received, business income, rental real estate, royalty income and other taxes such as unreported social security and Medicare tax. 1040EZ is the most basic tax return; it is primarily for single and joint filers with no dependents. The Internal Revenue Service website is the best and most reliable place to obtain all the tax related information you need. It has all the forms you need to properly file your taxes. Publication 17 is the best resource provided by the IRS to assist tax preparers. The publication summarizes important tax changes that took affect within the last year and discusses these changes in detail. Another publication that details tax law changes is Publication 553, Highlights of 2008 Tax Changes. Both of these publications can be obtained through the IRS.

W-2’s are the tax forms most of us receive. These come from our employers and report wages, tips, social security, Medicare, withheld income taxes, severance pay and other types of compensation. For the lucky ones who have won the lottery or received any type of gambling winnings of $600 ($1,200 from bingo or slot machines) or more in the past year, they will receive Form W-2G from the place that awarded the funds. Form 1099-MISC reports other forms of income such as rent or royalty payments of $10.00 or more. It also reports prizes and awards from TV and radio of $600 or more. The form can be used to report payments made to physicians or other types of medically related expenses or income from contract or freelance work. If you made any donations to a charity throughout the year you should receive a statement from the charity stating the date of the donation and the amount you contributed. This will be used as proof for your tax deduction. If you don’t receive any statement from the charity, make sure you have a canceled check or a copy of one with the name of the charity, the date and the amount donated.

Companies paying out dividends report dividend and distributions such as capital gain distributions or non-taxable distribution for those who have investments on Form 1099-DIV. Interest obtained from bank savings, checking or other interest bearing accounts is reported on Form 1099-INT which is provided by your financial institution. Commonly used schedules which are attached to tax returns are Schedules A and B (reports itemized deductions, interest and ordinary dividends), Schedule C (reports profit and loss from a business), Schedule D (reports capital gains and losses) and Form 2441 (for child and dependent care expenses).

This year, there are additional tax credits you may be eligible for. The Recovery Rebate Credit is for people who did not get a Stimulus Payment or if other circumstances changed during the previous year. If it was your first time or you will be buying a home between April 8, 2008 and July 1, 2009, you may qualify for the First-Time Homeowners credit. Also, if you earned less than $41,646 in 2008, you may qualify for the Earned Income Tax Credit. Find out more on the IRS website or talk to your accountant to see whether you qualify.

If you are the type who likes to do your own taxes, you can start by signing up for Mint.com. Mint.com automatically categorizes your transactions and allows you to tag expenses and income as tax related. Don’t forget to tag health care expenses, unreimbursed business and any interest you’ve earned. Mint.com can export your transactions so they can be imported into a spreadsheet that you can use to estimate your taxes.

Three popular software programs for doing your taxes are TaxCut from H&R Block, TaxAct, and TurboTax from Intuit. TaxCut is more for people who are already comfortable filing their own taxes or are familiar with concepts such as tax-exempt dividends and cost basis. TaxACT handles both simple and complex returns, offers a free deduction examiner, and lets you prepare, print and file your federal tax return for free. TurboTax is perhaps the most comprehensive, with easy to understand explanations that help clarify over 350 possible deductions and credits. The IRS also provides a Free File service. It allows those who earned $56,000 or less in 2008 to use their tax software and e-filing for free in either English or Spanish.

If you feel more comfortable having someone else prepare your taxes, make sure you select someone you trust professionally. This is a long-term relationship and one that is nearly as important as choosing a doctor or a lawyer. You’ll want someone who has a few years under their belt preparing tax returns for people in your particular situation. Be leery of any tax preparer who guarantees a certain amount of refund or who bases fees on a percentage of the amount of the refund. These types of tax practitioners are not working for your best interest. As the taxpayer, you will ultimately be responsible for what is on the tax return, it is extremely important to select the right person. Researching an individual through your local Better Business Bureau will reveal whether the person has had any questionable history or complaints filed against them. You can also look for individuals who are Enrolled Agents (EA), Certified Public Accountants (CPA) or Tax Attorney’s. These professionals provide tax preparation, representation before the IRS, tax planning and other financial services. For individuals who are 60 years of age or older, trained volunteers from non-profit organizations provide free tax counseling and basic income tax return preparation through the Tax Counseling for the Elderly Program (TCE), sponsored by the IRS. AARP also offers an IRS sponsored tax aid counseling program for seniors. The Volunteer Income Tax Assistance Program (VITA) also offers free tax help to low- to moderate-income (generally, $42,000 and below) people who cannot prepare their own tax returns.

Armed with this information, you can make this year the year you won’t stress out at the mere mention of tax returns. Let this year be the one where you will have all your paperwork ready, file your return early or on time and keep a smile on your face as you await a hefty refund.