Financial Planning and Investing

Written by Ioannis Evangelos Haramis


What exactly is financial planning, and why is it so important?

Financial planning isrepparttar process of determining how to manage money, investing, present and future financial goals, andrepparttar 111838 strategy that should be undertaken to obtain them.

Because our goals and desires change as we do, financial planning and investing is a task that is never finished. How we are financially able to reach these goals, andrepparttar 111839 risk we are willing to take to get there, necessarily means that any financial plan must be specifically tailored for an individual or family.

Financial planning begins by taking into account each individual's assets and liabilities at that particular point in time.

The asset category includes life insurance and monetary investments of all kinds, along with physical assets such as a home, automobiles and other items.

Liabilities may range from personal loans, credit card debt, and loans taken to obtain hard assets, such as mortgages.

Next is where sources of ongoing income and increases in hard asset wealth enter intorepparttar 111840 equation. Income most usually is earned by employment, but other sources, such as possible inheritances, must also be considered. Increases in hard asset wealth, such as rising home prices, will be affected by general economic conditions as well as owner enhancements.

From here, things get trickier, and this is whererepparttar 111841 true planning begins!

Our particular stage in life -- whether we are young, old, or somewhere inrepparttar 111842 middle -- will usually lead us to desire a particular set of goals. Financial planners often break down our life cycles into distinct phases. Which phase we are in is often determined by age but will also be dictated by how much risk we are willing to assume.

Reverse Mortgage Explained

Written by Ken Chukwell


Can't remember how many times I've been asked "What is a reverse mortgage"? Reverse mortgages are a great way to get a loan using your primary asset. As in all cases of financial lending,repparttar flexibility comes at a price. A reverse mortgage is a loan using your house and is referred to as a “rising debt, falling equity" kind of deal.

To compare reverse mortgage to a more traditional one,repparttar 111837 type of mortgage commonly used when buying a house can be classed as a “forward mortgage”. To qualify for forward mortgage, you must have a steady source of income. Becauserepparttar 111838 mortgage is secured byrepparttar 111839 asset, if you default onrepparttar 111840 payments, your house can be taken from you. As you pay offrepparttar 111841 house, your equity isrepparttar 111842 difference betweenrepparttar 111843 mortgage amount and how much you’ve paid. Whenrepparttar 111844 last mortgage payment is made,repparttar 111845 house belongs to you.

Onrepparttar 111846 other hand a reverse mortgage process doesn’t require thatrepparttar 111847 applicant have great credit, or even that they have a steady source of income. The major stipulation is thatrepparttar 111848 house is owned byrepparttar 111849 applicant. Generally, there is also a minimum age required as well,repparttar 111850 olderrepparttar 111851 applicant,repparttar 111852 higherrepparttar 111853 loan amount can be. As well, reverse mortgages must berepparttar 111854 only debt against your house.

Differing from a conventional “forward mortgage”, your debt increases along with your equity. Instead of making any monthly payments,repparttar 111855 amount loaned has interest added to it - which eats away at your equity. Ifrepparttar 111856 loan is over a long period of time, whenrepparttar 111857 mortgage comes due, there may be a large amount owed. Furthermore, ifrepparttar 111858 price of your home decreased, there may not be any equity left over. Onrepparttar 111859 flip side, if it was to increase, this could allow for an equity gain, but this isn’t typical ofrepparttar 111860 marketplace.

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