Tuesday, January 19, 2010

Money is the number one of source of stress for men

Money is the number one of source of stress for men, way above health, relationships, and terrorism, according to a Harris poll conducted. This is no surprise as your portfolio is shrinking every month, inflation is draining the dollars out of your wallet. No wonder the needle on your tension meter is pointing to full count, two outs, in the bottom of the ninth. Stress prevents you from being top of your game. After all, when you feel stressed, you will have trouble solving problems that are causing your anxiety in the first place.

Actually most financial worries actually have straightforward solutions. Not to say that they are easy to fix – they are not. But once you see the path clearly, once realize there is a solution, the tension will melt away. And that frees you up to attack the problem with all you have got.

Am I going to lose money to inflation?

Only if you let market turmoil scare you into making bad decisions. While you may howl in pain every time you see a grocery bill or the numbers on the petrol pump, the really nefarious effect of inflation is what it can do to your nest egg. With such low interest rates with banks, your real return on this “safe” investment is actually less than zero, after taxes and inflation.

In the short term, the stock market looks awful. But over the next few decades, it’s one of the few options for increasing your wealth. “People in their forties should be predominantly invested in equities,” says financial planner Ric Edelman, author of The Lies About Money. “Too many people have their money invested too conservatively. Their fear of losses is what is actually going to cause them financial failure.”

Do I need life insurance?

This is the rare financial problem that has a fairly black-and-white solution. It does not matter if you have a family or not, but if you have a family that relies on your income, you will need insurance even more. The more complicated question is how much insurance do you need? First, add up the assets you will leave behind. Second, estimate the obligations you want to cover – the mortgage and child care, for instance. Subtract those obligations from the value of your savings to figure out how much insurance you need.

Will I be get hit by a car and become disabled?

Disability causes many more financial problems than premature death does because it’s more common, fewer people have adequate insurance, and it’s more costly. Let’s face it: Dead men don’t need incomes. But if you are disabled, you do. There are three key factors to consider when choosing a policy: How much does it pay? How long a period does it cover? And how does it define disability? The answer to the first question depends on your family’s needs. As for duration, a general recommendation would be a policy that will pay you until you are at least 65.

Will my children blow their inheritance in the upcoming IR?

Teens nowadays should be able to buy anything they want and some have the thinking that “I deserve to be rich because my parents are rich.” To inoculate your children against Paris Hilton syndrome, start early. Experts recommend giving children and allowance to teach them how to save, budget, and spend within their means, regardless of your income. Give them opportunities to practice with smaller sums of money and even make mistakes in the process.

If you still worry that your kids will inherit more than they can handle, set up an irrevocable trust to hold the assets when you die. You can stipulate that they cannot touch their inheritance until they finish university or reach a certain age, or even that they must use the money to, say, buy a home or start a business. If that seems like too much parenting from beyond the grave, appoint trustees to disburse funds. Naming your kids as co trustees will encourage them to learn money-management skills.

How do I tell my wife we’ll be retiring without a house unless she lays off the gold card?

Couples can go on a mental shopping spree and create a wish list, with each person writing down the future events that he or she is most excited about, whether it’s vacations, home improvements, paying for university fees, or getting chin implants. “Why?” Because people need a carrot tied to the end of the stick. If you don’t know that your goals are, there’s nothing to work toward. If you do it right, you will both be excited about brainstorming ways to achieve your financial goals, but the real magic of this exercises is that it makes you partners, not adversaries.

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