bhaktajan 0 Report post Posted January 12, 2009 This should serve as a model of inspiration for ourselves [can it work for us too?]: 'Nun Fund' Directs Investment to Socially Responsible Companies Paris 30 July 2003 Two decades ago, a Roman Catholic order of nuns helped create <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com<st1:place w:st=" /><st1:place w:st="on"><st1:country-region w:st="on">France</st1:country-region></st1:place>'s first ethical investment fund - requiring that stock market investments go to companies following strict social and environmental criteria. Today, these socially responsible investments have become popular in <st1:country-region w:st="on"><st1:place w:st="on">France</st1:place></st1:country-region>, and elsewhere. It was not divine inspiration, but worldly need that drove Sister Nicole Reille to seek salvation in the stock market. The year was 1983, and Sister Reille's international order - called Notre Dame - had few options for financing its work and the nuns' retirement. The sisters needed to make some investments, but they were not interested in just any investments. Instead, they created a special fund that funneled their francs into the convictions they preached - to companies with good records regarding the environment, how they treat their employees and how they operate in developing countries. The nuns drafted a list of 20 funding criteria - ranging from whether companies hire handicapped or immigrant workers, to whether they encourage economic development in poor countries. At the time, Sister Reille admitted, many French financial experts raised their eyebrows at the nuns' foray into the stock market. Skeptics considered the sisters idealists, whose ethical investment strategy would not survive the cold, hard realities of the business world. Companies would send representatives to the nuns to talk about possible investments, but only, she believes, out of politeness. Today, few people are questioning the nuns' methods. After their first fund, New Strategy 50, the sisters launched a second called Ethical Action, in 1998. The two funds have grown at the very respectable rate of roughly eight percent a year - although both suffered during the recent stock market downturn. Some 80, mostly female, Christian orders have since joined the funds, along with a sprinkling of lay people. Last fall, Sister Reille's order sent her to <st1:City w:st="on">Rome</st1:City>, where she preached the virtues of ethical investment to other branches of the Roman Catholic Church, and to the <st1:place w:st="on">Vatican</st1:place> bankers. But she said she did not get the response she expected. The French sister said her counterparts from other congregations were not interested in talking about investment. The <st1:place w:st="on">Vatican</st1:place> bankers told Sister Reille they already knew all about ethical investments, and said they were not interested in her suggestions. <st1:place w:st="on">Vatican</st1:place> bankers did not reply to requests for an interview for this report. But Sister Reille assessed the <st1:country-region w:st="on"><st1:place w:st="on">Vatican</st1:place></st1:country-region>'s criteria for socially responsible investments as rudimentary. Elsewhere, the advice of Sister Reille, and like-minded French nuns, is being taken more seriously. Sister Reille travels regularly overseas to meet with bankers and religious orders about ethical investments. And in <st1:country-region w:st="on"><st1:place w:st="on">France</st1:place></st1:country-region>, financial analysts like Laurence Loubieres say it was Sister Reille and her colleagues who helped launch a nationwide interest in socially responsible investment. Ms. Loubieres firm, Meeschaert Bank of <st1:City w:st="on"><st1:place w:st="on">Paris</st1:place></st1:City>, manages the nuns' two funds. She says popular concerns about global warming, deforestation and poverty in developing countries, helped fuel French investment in these ethical funds. Other experts say recent scandals regarding mismanagement in major international firms like Enron also pushed many French investors to funnel their money into companies with good ethical records. Today, roughly 100 funds claiming to be socially responsible exist in <st1:country-region w:st="on"><st1:place w:st="on">France</st1:place></st1:country-region>, most founded by banks and other non-religious institutions. Many companies have also hired ethics specialists, who promote their firms' good qualities. Still, the ethical investment movement in <st1:country-region w:st="on">France</st1:country-region> is modest compared to those in the <st1:country-region w:st="on">United States</st1:country-region> and <st1:country-region w:st="on"><st1:place w:st="on">Britain</st1:place></st1:country-region>. But experts say the trend is gathering pace. Eighty percent of the ethical funds in <st1:country-region w:st="on"><st1:place w:st="on">France</st1:place></st1:country-region> were created between 1999 and 2002. That includes a fund started three years ago by a prominent French relief group, the Catholic Committee Against Hunger and for Development. The Catholic Committee's finance director, Bernard Mazzaschi, said the group's first ethical fund has fallen roughly 30 percent in value since it was launched in the midst of the world economic slowdown. But Mr. Mazzaschi said, new Catholic congregations are still joining the fund. He said their investments are for the long term - and he predicts that sooner or later, the fund will begin earning a profit. One of the goals of ethical investments is to pressure companies to adopt more ethical business practices. The success of that effort is the subject of some debate. In addition, there are disagreements over what constitutes an ethical investment. The concept can be used as a political tool, as some groups call on investors not to put money into countries whose policies they do not like. Still, Sister Reille said the emergence of new ethical rating agencies in the 1990s has forced companies to worry about their social standards. The rating agencies now report on the ethical behavior of every company on the French stock market. And Sister Reille is working with professional investment experts to develop a set of guidelines for ethical investment she hopes will be adopted by investors throughout Europe, including those at the <st1:country-region w:st="on"><st1:place w:st="on">Vatican</st1:place></st1:country-region>. Quote Share this post Link to post Share on other sites
bhaktajan 0 Report post Posted January 26, 2009 11 Things You May Not Know About Your IRA IRAs have built-in flexibilities. Here are some little-known features that will help you get the most out of your contributions. The most important part of your individual retirement account (IRA) is the fact that it is "individual". You can customize when you make deposits, take withdrawals and pay taxes on distributions. You can even control what happens to it after you die. Want to take advantage of all that your IRA has to offer? Read on for some little-known features that will help you get the most out of your contributions. 1. You can contribute to more than one IRA. It is possible to end up with more than one IRA for a number of reasons. For example: · You had an existing Roth account and then rolled an old 401(k) into a Traditional IRA. · Your adjusted gross income (AGI) rose to the point where you were no longer eligible to contribute to your Roth IRA, so you opened a Traditional IRA. · You inherited an IRA from a loved one, but you already had one of your own. · You maintained your Roth account and opened a Traditional IRA to take advantage of tax deductions. Contribute to as many IRAs as you want, but the total deposited in all IRAs is limited to the annual maximum amount. For example, the annual maximum contribution for 2008 is $5,000. So, if Bob deposits $2,000 into his Traditional IRA, he can also contribute $3,000 to his Roth account during the same year. 2. All IRA contributions must be made in cash. This limitation may be irritating if you're rolling over an account and you don't want to liquidate the assets. Cash contributions force a new basis for investments inside the account. The basis of the IRA is important because when you take a distribution from a Traditional IRA, you pay taxes on the gains and income from your investments, but not on the basis. 3. IRA losses may be tax deductible. One of the main advantages of an IRA account is the ability to defer taxes on gains and investment income. But you can't use losses inside the IRA to offset gains. This is because the IRS gives you a reprieve after you liquidate the account: If the total distributions from your IRA are less than your basis in the account, you can deduct the loss after all assets are distributed from the account. . You control your required minimum distributions. Traditional IRA owners must begin taking distributions by April 1 of the year after they turn 70.5 years old. The minimum amount distributed is based on the balance of the account on December 31 of the previous year and the owner's life expectancy. For each year thereafter, the required minimum distribution (RMD) must be withdrawn. If you have multiple Traditional IRAs, you don't have to take RMDs from all of them. You can combine the total balances from the end of the previous year to calculate your total RMD and actually take the distribution from one account or a combination of accounts. For example, you may prefer to liquidate the investments in one account over the investments in another account. 5. All beneficiaries are not created equal. One of the benefits of owning an IRA is the ability to transfer funds directly to beneficiaries without going through probate. This is because spousal beneficiaries can claim inherited IRAs as their own. This flexibility allows the spouse to control new contributions and distributions. Non-spousal beneficiaries cannot treat inherited IRAs as their own. They can't add to them and they must completely liquidate the account within five years of the death of the owner. Keep this in mind if you plan to leave IRA assets to your children or grandchildren. 6. A basis is needed for IRA transfers, but not rollovers. It is common for individuals to move accounts from one financial institution to another. If you just decide to maintain the same type of IRA account with a different company, that's considered a "transfer". All assets are moved "in kind" (as they are), without liquidating anything. In this case, it's your responsibility to retain the original basis on the account; the receiving institution will request a copy of a statement proving the basis. You need to have an accurate basis amount for Traditional IRAs, because distribution amounts above the basis are taxable. IRA assets above the basis can be rolled into other types of retirement accounts, but the basis must be maintained in the IRA, or it will be considered a taxable distribution. A rollover involves moving your money from one type of retirement account to another. For a rollover, you must liquidate the previous holdings to move cash into the IRA, so the basis becomes irrelevant. 7. You can deduct IRA fees from your taxes. Financial services firms may charge annual fees on top of transaction fees for the purchase or sale of investments. You may be able to deduct these fees using 1040 Schedule A. 8. Your annuity can act like an IRA. Your annuity can operate under the same rules as an IRA. The benefit is that annuity policies were designed to provide retirement income for life. Some annuities also offer optional features not available in regular IRAs. The downside is that annuity premiums, which contain insurance payments, can be higher than other investments. 9. IRAs are non-fiduciary accounts. Brokerage accounts allow you to give your financial advisor written authorization to make investing decisions and routine transactions without notifying you first. Often, a flat fee is charged for managing the account. This type of fiduciary activity is not allowed for IRAs. 10. The IRS and/or your financial institution may limit the kinds of investments you can hold in your IRA. The IRS limits which investment types can be held in an IRA, but your financial institution may have additional asset restrictions. For example, the IRS allows some gold and silver coins, but most financial institutions will not. Also, some mutual fund companies may not allow individual stocks to be held in their IRAs. Quote Share this post Link to post Share on other sites
bhaktajan 0 Report post Posted January 26, 2009 10 Retirement-Wrecking Moves Retirement should be a time to relax and enjoy the fruits of a lifetime of labor. Unfortunately, for many people bad decisions push the retirement horizon out of reach. As such, it is imperative that individuals understand the effects of these bad choices and take steps to avoid them. Let's examine 10 mistakes that can sabotage your retirement plans. Procrastination Many individuals are forced to postpone retirement because their nest eggs are not sufficient. This can be avoided by starting to save early. The amount you will need to contribute each year depends on how soon you start your savings program. Even in instances where you can't afford to add the maximum amount that projections determine you need to save for the year, adding what you can afford can go a long way toward reaching your goal. For more, see Compound Your Way To Retirementand Why is retirement easier to afford if you start early? Thinking it's Too Late to Get in the Game Some of the common reasons for starting to save for retirement late in the game include pure procrastination, having to start over after a divorce, and getting the opportunity to contribute to a retirement plan for the first time after immigrating to the country at an advanced age. Regardless of the reason, thinking that it's too late will only compound the issue. Instead, you should look for ways to start saving. This may mean doing without many items that are not basic necessities. It is possible for individuals to achieve their post-work goals, even if retirement is just around the corner. For more tips, see Can You Retire In Five Years? Missing Opportunities While saving can be challenging, there are many opportunities that make it easier. Unfortunately, many people overlook these opportunities and miss out on the benefits. Big mistake! For example, employers that offer benefits under a 401(k) or SIMPLE IRA often include matching contribution features. However, many employees fail to receive this benefit because of a lack of awareness and understanding. Don't let opportunities to increase your savings pass you by. Not Considering Healthcare Needs The need for heathcare increases with age. This includes the need for more frequent check-ups and preventative healthcare, as well as the need for long-term care, both at home and in nursing homes. Individuals who fail to implement contingency planning to cover health-related expenses could find that a large percentage of their savings must be used to cover these costs. Prevent this by ensuring you have adequate health insurance. For related reading, see Failing Health Could Drain Your Retirement Savings. Spending Too Much Too Soon or Too Late Those entering retirement are often faced with the fear of spending too much too soon and, as a result, may hoard their savings to the point of just barely getting by. While caution should be exercised to ensure that your nest egg lasts throughout retirement, living on a diet of bread and water takes caution too. On the other hand, individuals who decide to splurge during their early retirement years without any regard for the future may find their bank accounts running dry. For more, see Enjoy Life Now And Still Save For Later. Making Ineligible Rollovers to Your IRAs Ineligible rollovers can mean having to pay severe penalties to the IRS. In addition, any taxable portion of the amount rolled over to your IRA must be included in your income for the year the distribution occurred. To ensure that this doesn't happen to you, you need to know which assets are not rollover eligible. For example, a common mistake is to assume that the RMD amount can be taken after the rollover is made. This is not the case because the first amount withdrawn during a year for which an RMD is due includes the RMD amount. For more see Common IRA Rollover Mistakes. Making Excess Contributions to Your IRA IRA contributions are limited to the lesser of 100% of eligible compensation or the contribution limit for the year. Should you contribute more than the allowable limit to your IRA, you must remove this excess amount from your IRA by the applicable deadline. Similar to ineligible rollovers, failure to remove the excess amount by the deadline will result in you owing the IRS a penalty of 6% of the amount for each year it remains in your IRA. To learn more, see Correcting Ineligible (Excess) IRA Contributions. Making Ineligible Roth Conversions A roth conversion is viewed by many as a good financial planning move because earnings accrue on a tax-deferred basis, while distributions are tax-free if qualified. However, not everyone is eligible for a Roth conversion - certain income limitations apply. If you make an ineligible Roth conversion, it can be corrected as a recharacterization. Should you fail to recharacterize an ineligible conversion on a timely basis, the amount will be treated as ordinary income from your Traditional IRA and an excess contribution to your Roth IRA. Therefore, not only would you lose the tax-deferred status of your IRA assets, but you would also owe a 6% penalty for each year the excess contribution remains in the Roth IRA. Failing to Distribute Your RMD You must begin taking RMDs from your Traditional, SEP and SIMPLE IRAs, qualified plan, and 403(b) accounts the year you reach age 70.5. Exceptions apply to qualified plan accounts and 403(b) accounts if you are still employed and your employer allows you to defer beginning RMD from such accounts until after you retire. Failure to distribute your RMD by the applicable deadline will result in you owing the IRS an excess accumulation penalty of 50% of the RMD shortfall. You may apply for a waiver of the penalty, but you are generally required to pay the penalty first and request the waiver thereafter. See Missed Your RMD Deadline? Engaging In Prohibited Transactions You are prohibited from using your IRAs in certain transactions. For example, your IRA cannot be used as a loan, serve as security for a bank loan, or be used to invest in collectibles. Engaging in these transactions could result in loss of tax-deferred status for the assets involved in the transaction and, in some cases, loss of tax-deferred status for the entire IRA. Learn more about avoiding prohibiting transactions in IRA Assets And Alternative Investments. Estate Mistakes "In this world nothing can be said to be certain, except death and taxes." -Benjamin Franklin Poets rage against it, daredevils defy it, undertakers depend on it, but the end comes for all of them in turn. Still, as ffice:smarttags" /><?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com<st1:place w:st="on">Franklin</st1:place></st1:City> observed, the problem is death and taxes. While facing your own mortality isn't pleasant, proper estate planning can save you - well, not exactly you, but those you leave behind - a lot of trouble. Avoiding these common mistakes is a good start. Dying Without A Will Dying without a will is like asking your family to hand-dig your grave without the benefit of shovels - things get messy, mud gets thrown and everybody just wants it to be over. Assuming this isn't the impression you want to leave your loved ones with, a will is essential. There are many things to consider, such as what to do if you end up on life-support, who will care for minor children, and so on. Resolving these issues will give you peace of mind now, and keep the family peace later. (See Getting Started On Your Estate Plan for more information.) The Devil Is In The Details There are lots of small details to take care of in estate planning. Some of these are obvious, like finding a guardian for living dependents and setting funeral arrangements, but others are more subtle. For example, you need to make sure that the beneficiaries on your retirement plans (IRAs, 401(k)s, RSPs, etc.) are up to date, and that you choose a reliable executor and set up durable power of attorney to direct assets and investments. The Gracious Dead Waiting to die before dispersing your wealth raises the likelihood of a big tax bill. By taking advantage of tax-free gifts to family and friends each fiscal year, even the largest estate can be whittled down to a manageable size before the cut-off date. It is important to keep abreast of any changes in the annual gift-tax amount as well as overall changes in federal estate taxes. Changes in the latter will help you decide how much you need to give away to get within the tax-exempt estate limits. Besides, giving now will probably be more personally satisfying than giving posthumously. Inadequate Insurance Life insurance is vital to single-income and lower income families. If your estate doesn't amount to enough to replace your income in terms of supporting your family, then the death benefit from a life insurance policy may be the only way to provide for your loved ones. Calculating how much yearly income you will need to replace will determine how much life insurance you need to carry, but you need to make sure those calculations are redone when your financial/personal situations changes, such as if your beneficiary predeceases you or your mortgage is paid off. To learn more, read How Much Life Insurance Should You Carry? Thinking Inside The Box One the easiest slip-ups to make is not looking into alternatives. Gift giving is one example, but there are many ways to avoid a traditional estate transfer with the accompanying taxes. Revocable living trusts, joint ownership, gift splitting, credit shelter trusts and many more alternatives exist for people facing large post-mortem tax bills. With the ever-changing exemption limits on estate taxes, more and more alternatives are bound to pop-up. (See Tax Efficient Wealth Transfer for more ideas.) The Long Goodbye In addition to having accurate life insurance, you will need to pay careful attention to your medical coverage. If you are not covered in the case of long, terminal illness, you may find yourself out of pocket for medical expenses. The costs of an extended stay in a hospital, long-term care, new treatments, or a home nurse can make the distribution of your estate a moot point. Having a dread disease rider on your policy or catastrophic illness insurance can reduce the risk of losing your nest egg to medical costs. (To learn more, read Let Life Insurance Riders Drive Your Coverage and Long-Term Care Insurance: Who Needs It?) Time Is On Your Side The fact that you're reading this suggests that even if you've made one or more of these estate planning mistakes, it isn't too late to reverse the damage. Withdrawing life support, funeral arrangements, and who gets what are very personal decisions, but there are professionals to help once you have the basics done. Consulting with your accountant or estate lawyer may be necessary if you have a complicated estate involving many tax issues (how to transfer the family business, etc). To get started, check out our Estate Planning tutorial. Quote Share this post Link to post Share on other sites
bhaktajan 0 Report post Posted January 26, 2009 9 Ways To Go Bankrupt It may seem obvious, but anyone who continuously spends more than they are making will be facing bankruptcy in no time - but there are some other ways to become flat broke. Here we'll examine 9 habits that can put you in the poorhouse. Obtaining Too Many Credit Cards Credit card abuse is one of the leading causes of consumer indebtedness. After obtaining a first credit card, you may find that they multiple rapidly; soon your wallet holds a card for every store you've ever been to. The general consensus is that credit cards are necessary in order to achieve a better credit rating, but unfortunately, 20 credit cards will not give you a 20 times better credit rating. In addition, these cards add to the temptation to purchase unnecessary items that would not otherwise be affordable. This will inevitably lead to a dire financial situation. To learn more, see Take Control Of Your Credit Cards. Paying Credit Debt With Credit Cards Most people who hold a credit card will receive offers from competing credit card companies or banks for a balance transfer with introductory rates as low as 0%. All this will do is extend the deadline for payment on your bill and put you in a worse situation where you can assume even more debt. Furthermore, most balance transfers charge transfer fees, and their low introductory rate will often skyrocket after a few months. This new interest rate could be much higher than what you had with the original card. For more, see Expert Tips For Cutting Credit Card Debt and 6 Major Credit Card Mistakes. Buying Too Much House When it comes to buying a home, bigger isn't always better. On top of the mortgage, taxes, maintenance and utilities will take a significant chunk out of your monthly budget, and homeowners who buy more house than they can afford can quickly become overwhelmed. Furthermore, certain types of mortgages, such as adjustable-rate mortgages (ARMs), allow homeowners to purchase an expensive home with lower mortgage payments for a certain period of time. However, when short-term interest rates rise, homeowners with ARMs feel the squeeze as lenders raise their rates. For more, see ARMed And Dangerous and American Dream Or Mortgage Nightmare? Putting All Your Eggs In One Basket Another way to lose your money is to put all of your eggs in one basket by investing in one company or industry. For example, if your portfolio holds only airline stocks and it is publicly announced that all airline pilots are going on an indefinite strike and all flights are canceled, share prices of airline stocks will drop. Your portfolio value will decline considerably. However, if you diversify into stock from other forms of transportation, like trains, you will see a less noticeable decline. If you invest in stocks from companies across a variety of sectors, you will be reducing your risk even more. For more see The Importance of Diversification. Not Building An Emergency Fund Living life on the edge can involve filling your life with exciting (and sometimes dangerous) activities such as surfing and skydiving, or it can involve being on the brink of bankruptcy. If losing your job would mean being evicted from your apartment, defaulting on your mortgage, or having your utilities shut off, you are living too close to the edge. Putting three to six months' worth of your income in the bank so that you have it on hand should you need it is a great way to give yourself some breathing room if your paychecks come to a temporary halt. To get started, read Build Yourself An Emergency Fund and Are You Living To Close To The Edge? Ignoring Identity Theft Tactics According to the Federal Trade Commission, approximately 10 million Americans are victims of identity theft each year. You can help protect your credit rating and finances by educating yourself about identity theft and safeguarding your personal information. For example, shredding any documents containing social securities numbers, bank account numbers and other personal information prevents would-be thieves from obtaining your information through dumpster diving. Get insight into how the perpetrators do it in Identity Theft: How To Avoid It. Getting A Divorce Before April 2005, bankruptcy was often used during divorce proceeding by an ex-spouse who was looking to avoid alimony and other family obligations. In April 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The BAPCPA limits bankruptcy abuses by classifying divorce, separation and domestic support obligations under non-dischargable debts. However, for divorcées who are unable to adjust to receiving a single income, filing for bankruptcy is still possible provided that certain conditions are met. For more, see Changing The Face Of Bankruptcy. Failing To Address Your Current Financial Situation The worst thing to do when facing rising debt is to ignore the situation completely. If debt-collection agencies are calling you, instead of avoiding their calls, negotiate with them. Even if you owe a lot, a creditor will often settle for something rather than nothing. Using Risky Short Selling Strategies Short selling can be a risky investment strategy with limited gains and potentially unlimited losses. The riskiest short selling position is naked shorting; however, in 2007 the Securities and Exchange Commission (SEC) amended Regulation SHO to limit naked shorting by removing loopholes that existed for some broker/dealers. Under Regulation T, investors must hold 150% of the value of the short position in a margin account at the time of the short sale. The funds held in the margin account serve as collateral should the price of the stock underlying the short position skyrocket instead of decline. For more, see our Short Selling Tutorial. Avoiding Bankruptcy Most financial experts strongly suggest that clients in financial distress should do everything in their power to avoid filing for bankruptcy. The repercussions of this action can last for 10 years on your credit score, and bankruptcy proceedings are fairly complicated. There are other ways to come out of debt without the financial consequences of a bankruptcy claim. For more, see: · What You Need To Know About Bankruptcy · Debt Consolidation Made Easy · Digging Out Of Personal Debt Quote Share this post Link to post Share on other sites
kshama 17 Report post Posted February 4, 2009 What an eye-epener this is. Quote Share this post Link to post Share on other sites
