Posts tagged: income

The Top Three Ways To Invest Your Pension Fund

yearly investmentsSaving for our future is one of those things we all know we should be doing. However, whether we actually get around to it is another point entirely. It is so easy to just put off sorting out for another day. But when the time comes for you to retire, you will need to have some kind of plan in place for your next steps. Chances are you will have been putting money into a pension scheme in addition to the workplace pension you will be entitled to receive. But, what do you do if this isn’t enough to tide you over? With other financial issues looming over us as we approach retirement age, such as whether you have the best life insurance policy, our retirement funds should be the least of our worries. If you are thinking about investing your pension fund, don’t rush into it. We all want to enjoy our retirement, but make sure that whatever you are investing your money in is right for you.

Property investment

Real estate is quite literally hot property these days. If you’re looking to invest your pension somewhere, look no further than the real estate sector. The best way to go about this is by acquiring property through a real estate IRA. This way, you open yourself up to unique investment opportunities and you can be sure that you are putting your money into a secure asset. It also has the added benefit of being able to rise in value, which is perfect for if you are hoping to pass the property down generations. You also don’t need to be restricted to houses or apartments when investing with an IRA. You can also claim farmland or holiday resorts, or commercial property such as shopping malls.

Stocks and shares

The stock market might initially seem like a bit of a daunting minefield. But, it could be the perfect place for your pension to go if you have chosen to self-invest. In fact, in provides a great opportunity to protect against rising inflation and bring in higher returns than cash and bonds. You can go into ‘direct investment’ into the stock market via a stockbroker. This essentially means that you buy shares in a single company, which makes you what is known as a shareholder. If you want to minimise the risk associated with investing in stocks and shares, instead consider investing indirectly. This way you can invest your money in a number of different companies rather than just one.

Precious metals

This may appear unusual at first, but precious metal investment has soared in recent years. They are a hard investment, which means that they are also hedged against inflation. If you are looking to invest in precious metals, you will need to comply with the rules and regulations set up by your pension account. Gold, silver, palladium and platinum are all approved by IRA accounts. You will need to purchase the metals yourself through a dealership, and then keep them in an approved depository.

How To Get Your Product Into The Stores

store products to profitGetting retailers to stock your product is notoriously difficult. The development process is often long. The money that you need to risk is high. And often the terms you end up with aren’t much to write home about.

It can be brutal for smaller players. But, as with most business operations, there’s a process than can improve your chances.

Have A Plan

Before you start out even developing a product, it’s a good idea to have a plan. In that plan, you want to map out all the usual financial metrics that will tell you how many units you’ll have to sell to make a healthy profit.

But you also want to include all those stores that you plan to approach. For many products, it’s necessary to sell a large number of units to break even. So this may influence the type of retailer you approach. If you’re looking to market a new health food product, you might want to plan to pitch to chains of newsagents.

Just make sure that your product complements their current advertising persona. It wouldn’t make sense for you to advertise health food in a fish and chip shop, for example.

Be Direct When Pitching

Getting time with retailers is difficult. Like other resources, their time is finite. They want to know immediately why they should stock your product and how it is priced.

All they care about is whether your product will improve their business’s bottom line and you have to make sure that it does.

Adapt To Their Systems

One common stumbling block in the way of getting a product into the stores is using the right systems. Often smaller companies are prevented from retailing because they haven’t completed a GS1 application.

Fortunately, there are plenty of barcode solutions out there that allow you to quickly and cheaply register. Having a barcode ready to go with your product will make it more attractive. It’s just one less thing for the retailer to have to think about.

Understand The Needs Of The Retailer

It might be the case that your product is amazing for the consumer. But is it amazing for the retailer too? Retailers want products that will sell reliably. If your product is something quite quirky and different, they may be reluctant to take it on.

This is where doing your research can help. Find out whether any of your competitors has stocked their products with other retailers. Then find retailers with similar characteristics. It’s likely that they will look at your product favourably if their competitors offer your competitor’s product.

Don’t Give Up

Too many entrepreneurs think that the only way to success is to land one big contract with a big retailer. However, this is rarely what happens, even for the most successful products.

Rather businesses start off small, using independent local stores to get their product off the ground. Then follows a long, drawn-out process that involves a lot of setbacks and rejection. Often, it’s only after many years and tremendous effort that products find their way into the big retailers. But if you stick it, the rewards are there for the taking.

Running an Efficient Life

time is moneyWhen you are in the game of finance, you need to focus on every bit of energy you are expending. Maximizing the use of your time will directly impact your earning potential. When you aren’t respecting your time, you are lowering your earning potential. As the old saying goes, “Time is money.”

Find ways to make your life more efficient and you will find yourself increasing your earning potential tremendously. Work commute got you losing 30 minutes every day? Start listening to audio tapes or making conference calls on your way to work. The time you spend listening to audio tapes will pay off in increased knowledge that you can apply at the work place. If you decide to make conference calls for work, you can get some of the early morning networking out of the way so that you can get to work tackling the day’s projects all the sooner. At the least, use that time to stay in touch with your loved ones so that you can focus once you arrive at work.

When you are at home, you need to run your house more efficiently, too. Instead of spending valuable time every day driving to a grocery store, have your food delivered to your home. By spending a few minutes, you can set up a recurring order through Peapod. If a recurring order doesn’t sit well with you because you like diversity (it is the spice of life), one-time orders are just as easy to submit. With a fast ordering system, you will be saving hours every week. Rather than walking around in circles in a grocery store, relax in the comfort of your own home or place your orders while on the subway home from work.

Efficiency is incredibly important if you are to be successful in the world of finance. You need to find ways to streamline every system you can, and then you will find success pouring in.

The Advantages of High Yield Bonds

financial bonds detailsA high yield bond, also known as a junk bond, is one that has an inferior credit rating when compared to corporate, treasury, or municipal bonds. The greater amount of risk associated with these bonds, however, conversely result in a higher yield than most traditional bonds. The two leading rating agencies S&P and Moody’s rate these bonds lower than BBB and Baa respectively.

There are, however, several advantages to investing in high yield bonds. There are also techniques you can use to lower the risk attached with these bonds. Forming high yield mutual funds will reduce the loss that you will incur in the event that a company defaults. Some of the benefits of these junk bonds are:

Increase Your Income

The yield of junk bonds can actually far surpass those of the traditional government or corporate bonds or even certificates of deposit. There are two main reasons for this. The first is that the high yield bonds are generally considered ‘risky’. This unfortunate risk assessment means that companies with low credit ratings need another hook. This arrives in the form of higher interest rates on the money invested. Thus, in the event that the company does well, you will receive much more money than you invested. The second explanation is that these bonds have very little correlation to the traditional investment market. This way you can still make a profit even if the stock market’s performance declines.

Capital Growth

The advantage with investing in companies with poor credit ratings is that these ratings are not fixed. The improvement of the market, industry, or corporation that you have financed with, can usually affect the credit rating of the company. This means that the credit rating can go up. This would automatically result in the rise in the price of your high yield bond. This is known as capital appreciation. You can observe growth in your capital due to a number of reasons including improved reports, mergers, acquisitions, or other economy-related events.


Junk bonds may not be the safest asset to invest in. There are, however, still some ways that companies attempt to take the sting out of any defaults. For instance, it is a much better option to own bonds in a company than to be a shareholder in the same corporation. In the event a corporation is forced to liquidate, bondholders have a better claim to the capital structure of a company than stockholders. This means that they are more likely to receive payment. The discrepancy between the initial investment and the final payment is known as the ‘recovery rate’. The assets of a deteriorating company will be first divided among the bondholders before the shareholders. Even investors who hold bonds with a very low rating are more likely to be reimbursed than the average stockholder.

High yield bonds may be a more volatile investment than more traditional investments, but their considerable income yield may be well worth the risk. Furthermore, there are many ways that you can negate these risks with high interest rates and mutual funds. This ensures that your venture is a little more reliable.

How Will The Flat Rate Pension Affect You?

Pension after retirementAlthough it isn’t due to be introduced until 2016, the flat rate state pension is a major shake up of the retirement benefits system and will have an impact on anyone retiring after that time. It’s therefore important to understand what it means and to carry out a pension review accordingly.

If you’ll be retiring before April 2016 then the changes won’t affect you and you’ll be paid a state pension under the current system. Currently this is £107.45 a week for the basic pension or £142.70 if you get the additional pension based on National Insurance contributions or you get pension credit.

Retirement After April 2016

If you reach state pension age after April 2016 then you’ll receive the flat rate pension rather than the existing one. This involves some major changes as follows:

1. You’ll need to have made National Insurance contributions for at least ten years to qualify for a pension (currently it’s only one year) and this will only get you £41 a week.

2. To get the full state pension you’ll need to make 35 years’ worth of NI contributions (currently you only need 30 years).

3. With 35 years’ NI contributions you’ll receive £144 a week at today’s values. Since state pensions are adjusted for inflation this is likely to be more when the policy comes into effect. The new pension will be adjusted in line with the CPI index or 2.5% each year, whichever is higher.

4. The second state pension, pension credit and other top-up schemes will cease. However, if you’ve already built up an entitlement to a higher pension through second pension or SERPS contributions before 2016 this will be protected but you won’t be able to add to it.

5. You’ll be able to take time out to raise a family and still build up state pension qualifying years, which isn’t currently the case.

6. Eligibility for a pension will be on an individual basis, so married couples will each get their own pension rather than the married couple’s rate that’s paid at present. The other side of this is that a widow without enough qualifying years for a full pension will no longer get a portion of her husband’s pension after he dies.

7. If you’re still in a final salary pension scheme with an employer you’ll end up paying more in NI contributions as the contracting out option will no longer be available.

8. The state pension age will be reviewed every five years starting in 2016. It’s currently planned to increase it to 66 in 2020 and 67 in 2028.

Additional Pensions

Because the changes mean the end of the second state pension if you need to increase your income in retirement you’ll need to look at other means. These changes overlap with the government’s plan to have all employees enrolled in a workplace pension scheme which will give them an additional means of saving for retirement.

Low earners and the self-employed, who may in the past have found it hard to build up enough contributions for a full state pension, will benefit most from these changes.

If you’re on a higher income want to save more for your pension then you’ll need to look at other alternatives outside of National insurance such as starting a private pension plan or a SIPP. If you’re in a pension scheme with an employer you could also look at making additional voluntary contributions (AVCs) to boost the value of your pension pot.

Kay Brown is a writer who has a keen interest in personal finance. With the imminent changes to pensions, she suggests conducting a pension review so that you know the impact that the flat rate pension will have on your retirement.