Financial Planning In These Strange Times

Investing is neither as difficult, nor as costly as some characterize, you don't need a Master of Finance degree, or necessarily a financial planner, but some basic principles. First, pay your self first. Always set money aside, if its nothing but a savings account, and $5 - put something away.

Second, anything that appreciates in value is worth owning, rent or lease anything that depreciates in value, and know when there is a difference. A person owning a home which is going up in value is not as well off as a person who owns a home which they rent. This is due to the cost associated with living in your own home, and market fluctuations if you decided to get out. Rentals, however, benefit from the tax exemptions provided by maintenance and management of the rental property. In bad market times, the property can still generate income, while acting as a tax break.

Third, don't be afraid to invest. The easiest, and most beneficial form of investment is an Individual Retirement Account. Usually a money market/mutual fund type account which allows you to defer your taxes until retirement through a traditional IRA, or pay taxes only on the interest itself over the length of investment in a Roth IRA, which reduces the amount of tax you will pay once retired.

Both of these IRA's allow you to diminish the amount of Adjusted Gross Income you use to calculate your taxable income when filing, but you must remain within the allowable annual limits, typically $4000/person, $8000/married couples and if you're 55 or older, you can double those amounts as a 'catch-up' period before retirement.

Stock market investment is also not difficult, look at what you use, you drive a GM made car, with NIKE sneakers you bought at MACY'S, and drink Coca-Cola, you already know what to buy, you just have to set up a brokerage account, with a discount broker, and watch the markets from time to time - and not become afraid of changes in the market.

Recently Fannie Mae, and Freddie Mac both dipped down below $0.50 a share. Today they were trading above $1.20 a $200 purchase of Fannie Mae at its $0.35 low would have picked up 571 shares and would be worth $753 less than a week later. Freddie Mac, at its $0.25 low 800 shares, with a current share price $1.32 would net $1056 less than six days later.

Trust though, slow and steady investment, is the key, fear is the only thing which can prevent your benefiting from it.