Money Rant

By Jerry Glynn

 Retirement plans have an increasingly important role to play in terms of providing an income source in our later years. You have probably already heard of the concept of the “three-legged stool” of retirement, which symbolizes how Social Security, personal savings, and company retirement plans form the triad upon which we can derive funds to pay for our expenses later in life.

These plans actually serve many other purposes for both employers and employees, and they come in quite a few different varieties. Surprisingly, very few people really have a clear understanding of the plans that they have in use, despite the important role that they play in our lives. In order to clarify these issues regarding retirement plans, some of the more common plans are discussed below.

Qualified Retirement Plan. This type of plan meets the various requirements of the Internal Revenue Code or IRC, as well as the Employee Retirement Income Security Act of 1974 or ERISA. Retirement plans that conform to these requirements are qualified for a number of considerable tax benefits, some of which are tax deductible contributions on behalf of plan participants in the year that these contributions were made, the exclusion of contributions and earnings from taxable income until the year of withdrawal, the non taxation of earnings on the funds held by the plan’s trust, and the delay of taxation on a plan’s benefits by the transferring of those amounts into other tax-deferred plans such as IRAs.

Nonqualified Retirement Plan. These types of retirement plans do not meet the requirements of the IRC or ERISA, may be discriminatory in their usage and are typically used for providing deferred compensation to certain people. Since these types of retirement plans provide greater flexibility to employers, they are not usually subject to the same favorable tax treatments that qualified plans are given. Furthermore, employers are not eligible for tax deductions until the time when the employee receives the proceeds from the plan.

Defined Benefit Plan. This type of retirement plan is what is commonly known as the traditional company pension plan, so called because of the definite and determinable nature of the ultimate retirement benefit as a dollar amount or a percentage of the employees wages. A calculation of a combination of the years of employment, the wages, and/or age the age of the employee is typically used in order to determine these amounts.

Defined Contribution Plan. In a defined contribution plan, the contribution is defined, although the ultimate benefit that is to be paid to the employee is not, and each one has an individual account. The benefit that the employee will can gain upon retirement will depend on the amounts that he or she has contributed as well as the accounts investment performance throughout the years.

Individual Retirement Account or IRA. This type of retirement plan is a personal retirement savings plan that is available to any person of any age, who receives taxable compensation during the course of a year.

Visit our site for more information about the IRA rollover process.

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The Importance of Learning about Personal Finance
By Ben Needles

 There are a number of different reasons as to why a person should learn about personal finance, but it is perhaps understandable that most people can not see these reasons for themselves. Personal finance is a difficult topic to learn about and for that reason a person just naturally tends to shy away from it, making excuses in an attempt to avoid having to learn about it. Well, personal finance is extremely important and here are some reasons why.

Money Flow

If you understand personal finance, then you will understand your money flow a lot better. There are a number of people that muddle through life paying their bills and their mortgage payment with the money that they have and then spending the rest of it or maybe letting it sit in their bank account. These are people that have no idea how personal finance works, so even if they end up making the right decisions they are doing it through luck.

While there is nothing inherently wrong with this particular approach, dont you think that you would feel much better if you knew exactly what was going on with your money flow? The old saying is that knowledge is power and if you know about your money flow, you arguably have the most important individual power that exists in the world today.

Uncertainty and Fear

Human beings as a species have an irrational fear of uncertainty. In this respect, we are no different from any of the other mammalian species walking the planet, because all of them have been conditioned through thousands of generations of being eaten and killed to be afraid of what they dont know. Uncertainty and fear therefore go hand in hand and when they do this in relation to something as important to your basic survival as money, the paralyzing effect that fear can have on you is something that is not even pleasant to think about.

Compare this situation however to a situation where somebody knows about how their money flow works and understands their entire personal finance situation. This person is not a person that is likely to be afraid, since there is no uncertainty involved with their financial situation. It is a lot easier to be afraid when you have no idea where your money is coming from and where it is going.

Utilization

If you truly understand personal finance, then another thing that you definitely should understand is utilization. A person that does not understand or appreciate personal finance is a person that is unlikely to save a lot of money, instead spending whatever they happen to have left after monthly expenses on entertainment and impulse purchasing. While there is nothing wrong with being a consumer on this level, it is something that might hamper you later on in life when your income begins to dry up and you realize you have no prospects on the horizon.

If the person does not spend a lot and does not understand personal finance, the same thing could happen. While the money in your bank account is available to you instead of having been spent on something impulsive, it is still not being utilized to its fullest extent.

Only a person with an understanding of personal finance would know that money being saved should at the very minimum be placed in a high interest savings account and later on should also probably be invested in things that yield a much higher interest rate. This difference in understanding and ultimately in utilization comes specifically from an understanding in personal finance.

About the Author (text)

Canada Financial Guide offering information related to the Canadian Financial industry. http://www.canadabusinesssite.com

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How the Credit Crunch Affects Online Business
By Musa Aykac

 According to a report, while High Street expenses are on the downward side, there seems to be no stopping to the escalation in online shopping. Since July 2005, when unpleasant weather hit Britain, spending was at its worst. But reports indicate that this year’s holiday would bring an upsurge in High Street. Looks like high street patrons are still ready for spending on luxury goods and other essentials.

Two-tier spending patterns:

Can we conclude that these spending prototypes reveal a two-tier pattern - those only just moving by and those who have considerable disposable income to spend? All said and done, it remains a fact that consumers are nonetheless purchasing and the only difference that can be noticed is that spending methods have shifted from high street markets to the home PCs.

When higher energy and food bills dent the confidence of the consumer, falling housing prices, shoppers will try to investigate more vigorously before making any purchase. This is where Internet shopping beats shuffling from shop to shop in the city. Price comparison sites help online shoppers to grab the cheapest deals available; hence if consumers are able to purchases essentials more cheaply online, they will prefer to go for it. This will leave them with surplus money to spend on electronic items, holidays etc. It is an established fact that online sales are on the upper side.

Businesses to ready themselves for online boom:

Companies have been advised to start doing business Online immediately, else risk on missing on an opportunity to earn potentially large profits. For the last few years, the Internet has gradually been eating away the high street malls.

Online shopping versus Credit crunch Survey:

Worsening economic environment is having a downbeat impact on online spending. Based on one survey of a few thousands of adults in the United Kingdom, it was found that the falling housing prices, the all pervasive credit crunch and worsening economic scenario would result in online customers spend more wisely. More and more number of people are switching to comparison search engines and reviews of users to make the most informed buying decisions, and to get the best worth for purchases made.

If your organization responds to the emerging financial crisis by scaling back processes, or by slashing jobs and cutting forecasts, you may as well not imagine greening your existing business, particularly if your sustainability strategy requires new capital investment. Nevertheless, the current economic turmoil should reflect on ways that makes a business really sustainable.

Around 64% of the respondents informed that the rising credit crunch and economic problems would lead them to decrease their spending in general. Whereas a notable 56% respondents informed that their online purchases would not be affected by credit crunch, or it would rather increase.

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