04/17/2008
You're Having a Baby!
Parenting may be one of the most rewarding experiences you'll ever have. As you prepare for life with your baby, here are a few things to consider.
Adjust your budget now for expenses you will incur. Buying the gear to furnish a nursery is the easy part. The ongoing expenses of baby formula, diapers, clothing, and baby-sitters, will impact your monthly budget in a big way. Redo your budget to figure out how much your total monthly expenses will increase after the birth of your baby.
Decide if both of you will continue to work. Run the numbers on expenses you will incur should both remain working and compare these to the savings you could enjoy by one parent staying at home. Weigh this against the peace of mind you would get from having one spouse stay home with the baby.
Review your health insurance. Medical expenses increase during the pregnancy and delivery, so check your maternity coverage. Don’t forget you'll have another person to insure after the birth. Good medical coverage for your baby is critical, because health-care costs can really add up over time.
Life insurance protects your family's financial security if something unexpected happens to you. Your spouse can use the death benefit to support your child and meet other expenses. Even if you already have life insurance, you should consider buying more now that you have a baby to care for.
You and your spouse should update your wills with the help of an attorney. You'll need to address what will happen if an unexpected tragedy strikes. Who would be the best person to raise your child if you and your spouse died at the same time? If the person you choose accepts this responsibility, you'll need to designate him or her in your wills as your minor child's legal guardian. Guardianship typically involves managing money and other assets that you leave your minor child.
Set up a college fund to save for your child's education.
Having children costs money. However, you may be entitled to some tax breaks that can help defray the cost of raising your child. There are exemptions and credits that may apply to your federal tax situation, but you’ll need to get your child a social security number to start the process.
Consult your friendly home town banker for your financial planning needs, or for personal referrals to legal and tax professionals.
04/14/2008
Investing 101
Here are some basic principles that may help you invest successfully.
Long-term compounding works in your favor. Put simply, compounding pays you earnings on your reinvested earnings. For example, you invest $10,000 at 8 percent. In 20 years, your $10,000 investment would grow to $46,610; $68,485 after 25 years; $100,627 after 30 years. The point is that money left alone in an investment offers the potential of a significant return over time.
Successful investing means enduring market volatility. Keep your cool in the short term and you will benefit in the long term. The longer you stay with a diversified portfolio, the more likely you are to reduce your risk.
Asset allocation is the process of spreading your investment dollars over several categories of assets, usually referred to as asset classes. These classes include stocks, bonds, cash, real estate, precious metals, collectibles, and insurance products. Asset classes can be subcategories such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds, and tax-free municipal bonds. The key is to divide your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time. If your investments in one class are performing poorly, you will have assets in another class doing well.
Liquidity refers to how quickly you can convert an investment into cash without loss of principal. Generally speaking, the sooner you'll need your money, the wiser it is to keep it in investments with less volatile price movements. Therefore, your liquidity needs should affect your investment choices.
Dollar cost averaging is a method of accumulating shares of stock or mutual funds by purchasing fixed dollar amounts of these securities at regularly scheduled intervals over an extended time. When the price is high, your fixed-dollar investment buys less, but when the prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment results in a lower average price per share than you would get buying a fixed number of shares at each investment interval. To maximize the effects of dollar cost averaging, be sure you can keep investing even when the market is down.
Periodically review your investment portfolio. Investments appreciate at differing rates, so after a while, your asset allocation mix will change and need to be rebalanced. Rebalancing involves restoring your portfolio to your original asset allocation decisions.
Contact your friendly home town banker for all of your investment needs.
Back to President's Articles
04/17/2008
You're Having a Baby!
Parenting may be one of the most rewarding experiences you'll ever have. As you prepare for life with your baby, here are a few things to consider.
Adjust your budget now for expenses you will incur. Buying the gear to furnish a nursery is the easy part. The ongoing expenses of baby formula, diapers, clothing, and baby-sitters, will impact your monthly budget in a big way. Redo your budget to figure out how much your total monthly expenses will increase after the birth of your baby.
Decide if both of you will continue to work. Run the numbers on expenses you will incur should both remain working and compare these to the savings you could enjoy by one parent staying at home. Weigh this against the peace of mind you would get from having one spouse stay home with the baby.
Review your health insurance. Medical expenses increase during the pregnancy and delivery, so check your maternity coverage. Don’t forget you'll have another person to insure after the birth. Good medical coverage for your baby is critical, because health-care costs can really add up over time.
Life insurance protects your family's financial security if something unexpected happens to you. Your spouse can use the death benefit to support your child and meet other expenses. Even if you already have life insurance, you should consider buying more now that you have a baby to care for.
You and your spouse should update your wills with the help of an attorney. You'll need to address what will happen if an unexpected tragedy strikes. Who would be the best person to raise your child if you and your spouse died at the same time? If the person you choose accepts this responsibility, you'll need to designate him or her in your wills as your minor child's legal guardian. Guardianship typically involves managing money and other assets that you leave your minor child.
Set up a college fund to save for your child's education.
Having children costs money. However, you may be entitled to some tax breaks that can help defray the cost of raising your child. There are exemptions and credits that may apply to your federal tax situation, but you’ll need to get your child a social security number to start the process.
Consult your friendly home town banker for your financial planning needs, or for personal referrals to legal and tax professionals.
04/14/2008
Investing 101
Here are some basic principles that may help you invest successfully.
Long-term compounding works in your favor. Put simply, compounding pays you earnings on your reinvested earnings. For example, you invest $10,000 at 8 percent. In 20 years, your $10,000 investment would grow to $46,610; $68,485 after 25 years; $100,627 after 30 years. The point is that money left alone in an investment offers the potential of a significant return over time.
Successful investing means enduring market volatility. Keep your cool in the short term and you will benefit in the long term. The longer you stay with a diversified portfolio, the more likely you are to reduce your risk.
Asset allocation is the process of spreading your investment dollars over several categories of assets, usually referred to as asset classes. These classes include stocks, bonds, cash, real estate, precious metals, collectibles, and insurance products. Asset classes can be subcategories such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds, and tax-free municipal bonds. The key is to divide your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time. If your investments in one class are performing poorly, you will have assets in another class doing well.
Liquidity refers to how quickly you can convert an investment into cash without loss of principal. Generally speaking, the sooner you'll need your money, the wiser it is to keep it in investments with less volatile price movements. Therefore, your liquidity needs should affect your investment choices.
Dollar cost averaging is a method of accumulating shares of stock or mutual funds by purchasing fixed dollar amounts of these securities at regularly scheduled intervals over an extended time. When the price is high, your fixed-dollar investment buys less, but when the prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment results in a lower average price per share than you would get buying a fixed number of shares at each investment interval. To maximize the effects of dollar cost averaging, be sure you can keep investing even when the market is down.
Periodically review your investment portfolio. Investments appreciate at differing rates, so after a while, your asset allocation mix will change and need to be rebalanced. Rebalancing involves restoring your portfolio to your original asset allocation decisions.
Contact your friendly home town banker for all of your investment needs.
Back to President's Articles