demand income generating strategies

Whenit comes to today’s market environment, informed investors are employing the concept of a sustainable income portfolio.

If you’re an American born in or before 1966—”The Income Generation”—you can establish renewable income solutions that won’t require you to cannibalize the principal balance of your nest egg. Instead, you can place your hard-earned savings in investment strategies that generate consistent streams of income, while helping to ensure the return of your original principal.

For many people who are in or near retirement, retirement savings are not enough. That is why a strong retirement income planning strategy is so important for people who want to make the most out of their retirement.

The trickiest challenge of our generation is the fact that we’re living so long. Today the average life expectancy in the United States is over 78 years, compared to a life expectancy of 68 years in 1950. Advances in healthcare have made it possible for people to remain active and to remain productive well past the age of 65. This can sometimes lead to financial problems. Statistically, if you’re a couple in your 60s, there is a 50 percent chance that at least one of you will live into your 90s. This means that you’re going to need a strategy designed to help provide security in retirement for up to 30 years. Not 20 years, not 25 years, but income for a full 30 years. Unfortunately, even the average financial advisor that specializes in growth-based strategies can’t see much further than 5 to 10 years. This, however, is where the income model comes in. Why? Because an income specialist does see 30 years ahead and helps you to prepare for many of the possible contingencies during that time.

Basicfinancialtermseveryoneshouldknow

Listening to financial professionals can often feel like hearing a foreign language. The terms used and their perceived complexity keep many interested people standing on the sidelines—but these terms are usually a lot more straightforward than you think. Below, we’ve compiled a list of financial terms everyone should know. You’ll probably be vaguely familiar with most of them but don’t know what they truly mean and how they can impact your personal financial decisions.

Net Worth: We’ve all heard this phrase referring to athletes or celebrities, but few know how it’s calculated and how to use it for their own financial benefit. Net worth is calculated by subtracting your liabilities from your assets. Include all bank accounts, investments, home values, and even vehicle values when calculating assets. All debt, including remaining mortgage balances, credit cards, or student loans, factor into your liabilities. By figuring out your net worth, you’ll get an overall picture of your financial health and can make changes to your goals accordingly.

Rebalancing: As personal investing continues to grow in popularity, more and more people manage their own portfolios without the help of professionals, and amateur investors can easily overlook asset allocation principles like diversification. Professional traders and amateurs alike should familiarize themselves with the rebalancing process to maintain their desired strategy. Rebalancing keeps asset allocation at your predetermined levels by buying or selling di erent investment vehicles. As markets swing, your allocation can quickly go haywire, so look to rebalance your portfolio at least twice a year. Bonds: We’ve all heard the word, and have probably been gifted one at some point, but few know the details behind the transaction that takes place when purchasing a bond. When you buy a bond, you essentially become a lender, typically to the government, and there are corporate bonds, as well. You’ll receive periodic interest payments, and the full amount of the bond will be returned to you at maturity. Bonds continue to be viewed as one of the safest ways to invest, although the returns are typically smaller than other investment options.

Compound Interest: Another term we’ve all heard but probably don’t fully understand is compound interest. The simplest way to view this is interest stacked on top of interest. When saving or investing, compound interest will help your money pile up faster. For example, you may receive interest for any deposits into an account that’s already accruing interest on the balance. Compound interest should also be looked at closely when dealing with debt. You may be paying interest at the outset of a loan, plus any added to the balance through the course of your loan. It truly is a double-edged sword.

Capital Gains: One of the most popular financial terms around tax season, capital gains, refers to the increase in an asset’s value compared to its original purchase price. Capital gains are not realized until you sell an investment, and the tax rate varies depending on how long you’ve been holding that asset. Long term capital gains refer to assets held for more than one year. These gains are taxed more favorably than regular income and short term gains. Any capital gains increase your tax liability, and capital losses lower them, so be sure to keep a detailed log of your trading if you’re going at it alone.

By increasing your understanding of the language of finance, you’ll be better equipped to put your money to work and start reaching your financial goals. Whether you’re trying to maximize your gains using compound interest or looking to lower your tax liability by holding onto an asset long term, expanding your knowledge will only help you make sound financial decisions. The further you dig, the more resources you’ll discover to enable your money to grow.

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