Daily Archives: October 26, 2017

Finance Prompt One

This is my example of financial health:  I have always saved some monies for rainy day such as losing a job, and I do not believe in blowing everything you make because you want to live for today.   I believe in being thankful for so many things I do have and do not believe in living beyond your means.  My situation is unique and am a very blessed or lucky individual.

Others, however, are struggling like the short game you can play at the end of the financial matters page about what it is like to be unemployed and what it feels like when you are down to the last $1000.  So unless, you have lots of monies saved, I guess you can lose it all then you end up taking any job offer.

Under Finance matters, some workers called contractors and a good percentage of work go to temporary agencies and I guess these workers are mis-classified as contractors even if when they work full-time.   These companies are saving monies by not paying insurance companies for these workers and save a lot of monies.

I guess if you’re a student; you will need to read all the options if you have to take out a loan and how or when to pay back and about loan forgiveness for the people who qualify.   Please look over  “A Student Aid Bill of Rights – proposal and Presidential Memorandum by the Obama administration. Pretty powerful, “basic” healthy public  policy around financial issues most of us face. ” Student debt issues and a helpful resource.  These topics are discussed in detail at the Finance matters page.

As far as Policymakers regarding finance that can cover all kinds of loans, credit cards, etc.; I really do not know how to comment on this.  There are many departments just for finance;  Federal Trade Commission, The Budget Office, IRS, etc. plus all of the state departments for finance.   For instance, our healthcare is still not even resolved by the Trump administration; the democrats and republicans do not agree on everything.  This is what I heard when I was watching the morning news.  Anyway, the government department control all revenues, funding, and expenses; so I am not sure what to say on the major work by policymakers but I have stated my opinions below.

Federal Trade Commission even offers advice on who is responsible for debts that a loved one may leave behind and who will have to execute and pay off these debts from estates.    There are some exceptions for some situations.   This is also under Finance matters page.

For more information, look over finance_2017 slides; it has all kind of information through links about various topics from seeking information, who to contact, how to file bankruptcy, etc.

As consumers; we should not live beyond our means like getting a huge house or focusing on new vehicles.   Some people put themselves in lot of credit card debt; I know a few people who do not know how to get out of their debts because they have to keep paying these companies interest payments and that is pretty much their minimum payment.   Just be thankful for what you have; if you have extra monies then spend it on things you been waiting or wanting.

We should even be careful about how many children we choose to have if you are not in a solid relationship.   Another example, if there is a way to petition some workplace positions’ salaries to be reduced as these people are paid way too much then the government could pay more for public education.   One more example, government should have a cap on how many children can be on Medicaid so some people are not taking advantage of this program and we should vote for a cap also.   This would save the government lots of monies and hopefully then it will go towards needed funding.

 

 

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Finance Matters Prompt 2

The Fiduciary Rule requires financial advisers to  put customers first and they are restricted from accepting any kind of compensation or payments that would create a conflict of interest. The rule basically states that financial advisers must put the clients best interests’ ahead of their own for their retirement savings.

Prior to reading both of these articles, I had no idea what the fiduciary rule was. I barely know anything about financial advisers or about retirement savings, other than you should start doing it early on. “4 Arguments Against the Fiduciary Rule Debunked” by Patrick Tucker explained the fiduciary rule better for me. The author was going against the arguments people had for the rule and explaining why they could be incorrect which helped me understand it better. The first article did have a better definition of the fiduciary rule, but the rest of the reading was a little tough for me to understand.

Glossary Building 2

I started out researching the fiduciary rule for this weeks post prompt. Right then, I came across a word I had never heard before. It may come as no surprise, but that word was in fact “fiduciary.” I continued on reading, hoping to gain some more knowledge. I ended up coming across two more words that spark my interest, “robo-advisors” and “index funds.” Now, it needs to be stated that I am the furthest thing from having a business working mind, or anything of that sort. So, these words could be simple terms to some but to me, they are a challenge. I wrote down the three words so that I could come back to them after I finished my readings.

The articles I was reading were completed and I still did not fully understand the three terms. I knew that a fiduciary was a person that acted under the fiduciary rule. Meaning, they legally had to give appropriate financial or legal advice that would benefit their specific client at the moment, rather than benefiting themselves. I searched around and saw that my own understanding of the term was pretty spot on, but dumbed down a bit for myself. After that, I turned to robo-advisors and found that the word means almost exactly what you would think. A robo-advisor is a legitimate online system that provides financial advice with hardly any human interaction. The software was created with algorithms that manage clients assets to optimize financial success. Pretty cool, but would you trust that? I then needed to understand and identify what the term “index funds” meant. Index funds are mutual funds. These are specifically designed to watch the returns of the market, and track it. An index fund holds all of the stocks on an index, which is basically just a list of investments. This one is still a little fuzzy for me and hard to grasp but I got a better understanding of it when I did research of my own. Since Tucker’s article (in this weeks post, prompt 2) was so difficult to understand, it helped me immensely to research these terms on my own. That way it was easier for me to grasp his concepts and ideas.

Definitions:

Fiduciary: involving trust, especially with regard to the relationship between a trustee and a beneficiary.

Robo-Advisors: a class of financial advisor that provide financial advice or portfolio management online with moderate to minimal human intervention.

Index funds:  mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).

Understanding Fiduciaries

The fiduciary rule, something I personally have never heard of until today, seems like a no brainer. Apparently, financial advisors are allowed to give advice that is not in the best interest of their clients. Their advice will, in turn, benefit the advisors instead. All of this is 100% legal unless you are, what is called, a fiduciary. This is a term for a group of professionals that are legitimately required to put the clients’ interests and benefits before their own. This “fiduciary rule” seems like it should be an obligation for everyone in the financial advising world however, it sadly is not.

Both the articles, one written by Kathryn Lee and the other by Patrick Tucker, came down to the same conclusion. The fiduciary rule is, in fact, a good one. Tucker and Lee are in favor of fiduciaries and think that financial advisors, who do not work under this rule, are scammers and con-artists. I, myself, happen to agree with them. The article written by Lee was much easier for me to understand. She got right to the point and explained exactly what a fiduciary is and how the rule works. Lee also explained that it is legal for financial advisors to give one-sided advice to clients, which I was not aware of. Reading her article, I was able to pinpoint exactly which side she stood on as well as gain information I was uninformed of. The tone in Tucker’s article was too far over my head. I have very little knowledge in the legal world as well as the financial world, so it was difficult to comprehend much of the vocabulary he chose to use. It was also a challenge to identify which side Tucker took because of the lack of familiarity I had with his writing. I think that it is very important to understand that many clients go to financial advisors and fiduciaries because they are unaware of laws and legal terms. Which is why, regarding the readings, Lee’s article is more consumer friendly. If I was seeking financial help, I would now know to look for a fiduciary or be weary of all financial advice I was receiving.