Spending Habits

When Your Term Deposit Matures

May 10, 2018 By Twila Van Leer

Term deposit accounts are among the low-maintenance savings options. You deposit the money and then sit back and wait out the specific time you have chosen – six months to five years in general — while the interest builds. The interest tends to be better than in a regular savings account, making term deposit one of the best ways to diversify your long-term investments.

But when the maturity date rolls around, there are several options you might consider to continue the benefit of your term deposit:

Take no action and let the fund roll over automatically. Doing this will maintain the account at the current interest rate. Review interest rates before making the decision. Obviously, if rates are trending downward, you might want to consider another savings scheme.

Cash out the interest and roll over the initial investment. This approach allows you to balance spending and savings and maintains the investment to earn more interest.

Increase or reduce the investment. If you have more money to invest or need some of the term deposit money for some other purpose, make that analysis the guide to what you do as the term deposit matures. Take into consideration your personal circumstances and your long-term investment goals before acting.

Adjust the term. If you went with a longer period for the initial term deposit, but feel that your current financial status might benefit from a shorter term, re-deposit the money at a shorter term, say six months to a year. Some institutions allow you to make additional contributions to the account for the duration of the term. Flexibility is what allows you to make the best savings decisions over time.

Cash out the account. If you had a specific savings goal in mind when you deposited your money in a term account, such as home repairs or a new car, simply cash out the entire amount. Restart a new account when you are ready and have a new objective in mind.

How To Get The Best Airfares

March 21, 2018 By Twila Van Leer

If you fly a lot, you should be routinely getting the best possible fares. So here are seven tips that will help you accomplish that:

• Research. Comparison sites such as Kayak or Google Flights can provide current prices. Use the calendar view to see how prices line up at different times of the year. When you know what the regular prices are, you’ll recognize a deal when you see it.
• Stay updated. Some sites update frequently to advertise flash sales and error fares. Airfare watchdog, Thrifty Traveler and Secret Flying post deals throughout the day and supplement with Twitter and Facebook posts. Many deals are time-sensitive and you have to be flexible to take advantage of them. If a deal seems right for you, don’t wait. Book it immediately.
• Look for shoulder season or off-season flights. The high-demand months are March, April, July, August and December. That’s when fares are highest. They correlate with school breaks and holidays. “Shoulder” months are May, June, October and November. Not only are flights less expensive then, but weather is usually milder and there are fewer crowds to deal with. Off-season months are January, February and September, and you’ll find the lowest fares then.
• Fly on Tuesdays, Wednesdays and Saturdays. Airfares are priced on supply and demand, so these days offer the best fare deals because of low demand. Demand is highest on Mondays, Thursdays and Fridays.
• Book early, but not too early. The best time to find the best rates is 45 to 90 days before you plan to fly. Too early or too late can lock you into a rate that might drop before your planned departure.
• Use the 24-hour cancellation policy. If you see a cheap fare in which you are interested, snap it up. That gives you 24 hours within which to make further considerations. Use the time to check to see if you can find a better deal. You haven’t anything to lose if you decide to cancel if the airline you chose has a 24-hour cancellation policy. Obviously, you need to be aware of that before you make the jump.
• Get back the difference. If you have booked a flight and subsequently see the same flight on a different airline at a lower price, check and see if the original line has a price-matching policy. Some airlines charge a $40 service fee, but you don’t have to use the policy often to recoup that cost.
Booking the best airfares is a complex mix of research, flexibility, decisiveness, timing and luck. Vigilance is the operative word. But the effort can pay off and you can save enough money for even more flights. It’s worth it.

Americans Are Shopping Differently

March 19, 2018 By Twila Van Leer

Americans aren’t shopping like they used to do, and that is having a great effect on retailers as they try to cope with the added competition posed by online buying and other technology-related changes in the market.

Nobody feels the changes as much as the shelf-stockers, sales personnel, cashiers and others who used to handle things with no competition. They are hustling to address changes in customer behavior and preferences.

Mundane tasks like tracking inventory and checking out customers have been automated and the retailers are trying to capitalize on the thing they do have – direct contact with the buyer.

Sometimes the retailer is interacting in a whole new way. A Best Buy clerk, for instance, may find himself in the customer’s home helping to compare and analyze the choices in electronics. At Walmart, a worker skims the aisles hand-picking products to fill online orders. They will be delivered to the consumer who waits in a car outside the store.

Some advocates for the retail workers believe this may over time mean fewer, but better-paid, employees. As of now, the better pay part of the equation has not been apparent.

With many customers using their electronics to compare prices before making any buying decisions, the nature of in-store selling are changing, Sometimes, a clerk spends time explaining the merchandise, only to have the customer comment, “I’ll buy it online.” Sales people have to work harder to hold their ground.

In 2017, some 66,500 retail jobs disappeared. Some of that loss was made up by hires in accounting jobs in distribution/call centers. The hardest-hit areas of retailing are in clothing and consumer electronics. Department stores have been hardest hit, but many small businesses also are feeling the pinch.

Retailers who survive are scrambling to meet the challenges. The jobs they offer are likely to involve new duties. How these jobs will change depends on three factors: the pace at which online shopping expands; the changes that occur with robotics and shifts in hourly pay. Entry level jobs in retailing will disappear. There will be more pressure to perform. So far, surveys of these personnel show, the pay has not kept pace with the new demands.

Walmart, hustling to meet the Amazon challenge, now has 18,000 personal shoppers with very specific guidelines to do the picking for customers. They have 30 seconds to find an item or, if it is not available, to find a suitable substitute. They report that they come to know the tastes of certain repeat customers and routinely satisfy their shopping desires.

Target stores, too, are training more specialized sales persons in such areas as clothing, consumer electronics and beauty products. They pay them more for the expertise they bring to the job, which results in greater sales.

Retirement Sneaks Up On You

February 13, 2018 By Twila Van Leer

When you are young and just starting down the employment path, it’s easy to ignore the fact that you’ll face retirement some day. But some day is not as far away as you think. If it arrives and you haven’t prepared, you may face some tight living in your “golden” years.

How much you need to save to be prepared is a personal question. How well do you want to live in retirement and how much do you earn? A rule of thumb is to estimate what you will be earning the year you retire. Subtract your retirement income, such as Social Security, pension, trust accounts, etc.) and then multiply it by the number of years you expect to live after retirement. Not exact, but at least a figure to shoot for.

The answer to how much you should be saving, simply put, is “as much as you can, but not more.” The earning years should not be miserable in order to finance the retirement years. But retirement savings must be high up on your priority list.

You can’t get a loan to finance your retirement. To make the figures more real, make a pie chart with five “slices.” Label them “bills,” “debt,” “spending,” “short-term savings” and “long-term savings.” If the long-term savings (i.e., retirement) is too small, look at the other categories and see where it is possible to make a shift. Possibly you need to trim short-term savings a bit in favor of long-term. Be wise, don’t decimate your emergency funds to make the difference. Be willing to sacrifice a few things, like lunching out, being too free with entertainment expenses, making unnecessary clothing purchases. Focus first on the necessities.

What kind of retirement account should you consider? How long do you have before retirement and how much do you make? Taxes should be a large part of your consideration. Some programs, such as an employee-sponsored 401(k), allows you to defer payment. Optimize your contribution to a company plan, especially if your employer offers a match.

Speak with a professional if you need help understanding your options, how to invest to maximize your returns. He or she can guide you through the maze of possibilities and help you adopt the best plan for your circumstances.

Yes, there are many questions. But the one that can be easily answered is: When do I start? The answer: Now.

Make That Windfall Count

February 7, 2018 By Twila Van Leer

An unexpectedly large birthday gift, a cash bonus at work, a bequest from a deceased relative. You just never know when you might find yourself with $1,000 or more that isn’t committed to your current budget.

What to do with it? David Bach, New York Times bestselling author and co-founder of AE Wealth Management, has three suggestions that will make the gift more valuable than it appears on the surface. (Sure, allow yourself a little splurge, but don’t blow the whole amount.)

• Build up your rainy day fund. If you haven’t yet reached a goal of having six months’ living expenses on hand in case of a financial emergency, you can buy another $1,000 (or whatever amount) of mind’s ease. A safety net can spare you a dilemma when life takes a sharp right turn and you lose your job, have a medical emergency, car repairs – any one of those little clinkers that make life interesting. Your emergency fund will grow faster if you put it into a high-yield online savings account, or a money market account that pays reasonable interest.

• Increase your 401(k). The more you set aside in your employer-sponsored retirement account, the better. Use your windfall to increase your contribution to the retirement plan by 2 percent. Especially if your employer matches a set amount of the contribution, you’ll have a deeper cushion when you retire. A 401(k) offers significant tax advantages.

• Open a “dream account”. If you are looking into the future and seeing yourself at a Super Bowl game, signing up for grad school, traveling outside the country – you name it – a bit of unexpected money can give you a jump start. Open an investment account specifically for that dream. Commit yourself to adding to the amount regularly and before you know it, you are en route to the end point of that goal.