A Brief Guide to Good Financial Planning

A Brief Guide to Good Financial Planning

Rate information contained on this page may have changed. Please find latest savings rates.

Financial Planning is an essential service for most people. What are some key concepts you need to know about the process and why is it necessary?

Whether you use a broker or financial planner for your personal financial needs, it’s important to take control of the process. Just like when one invests one’s own money into stocks, so one should monitor and evaluate long-term personal financial planning goals.
 
There are only six steps to good financial planning:
 
Establish and define a professional relationship
 
Your Financial Planner will define their responsibilities and the type of service that they will provide. Together, you should agree on the duration of your professional relationship and how you make decisions. You must make the decisions based on your own thorough research, along with the advice of your Financial Planner. Always know what the relevant commissions are. Loyalty is very important.
 
Gather information and set objectives

In this step, your personal and financial goals are defined. Your Financial Planner will gather all the necessary information and documents before giving you advice and will also discuss your time frame for results. Be realistic and honest, as it’s your financial future that’s being mapped out.
 
Conduct a financial needs analysis

Your Financial Planner analyzes your current situation to determine what you must do to meet your goals. This includes analyzing your assets, liabilities and cash flow, your current insurance cover and your investments and/or tax strategies.
 
Prepare report and present to you

Your Financial Planner will offer you recommendations that address your goals, based on the information you provided. Make sure you read all the information the Planner provides, and make a decision based on doing your own homework.
 
Implement financial plan as agreed

When agreeing on how the recommendations will be carried out, your Financial Planner will serve as your ‘coach,’ coordinating the process with you and professionals such as attorneys. Stick to the approach and don’t try to change it based on the vagaries of the market or slightly higher CD rates at a different institution.
 
Monitor the financial plan

Your Financial Planner is responsible for monitoring your progress towards your goals, and providing you with periodic reports to review your financial circumstances. Ensure all reporting is transparent and accurate, and that you receive statements from the institutions you invested in, and not just the broker. This will allow you to rule out many “Madoff-style” frauds.
 
10 principles to good financial planning
 
  • Set measurable goals
 
  • Understand the effect your financial decisions have on other financial issues
 
  • Re-evaluate your financial plan periodically
 
  • Start now - don't assume that financial planning begins when you get older
 
  • Start with what you have - do not assume that financial planning is only for the wealthy
 
  • Look at the total picture - financial planning involves more than just retirement planning or tax planning
 
  • Don't confuse financial planning with investing
 
 
  • Do not wait until a financial crisis to start planning
 
  • Take control - you are in charge of the financial planning process

(Some) E*Trade Savings Accounts Sold to Discover Bank

Rate information contained on this page may have changed. Please find latest savings rates.

Through the ever changing banking dynamics, everything is for sale. This includes bank accounts, especially to those companies who are not necessarily in the banking business. E*Trade, known as a discount brokerage firm, has a banking division which at points in recent history helped the company stay afloat. However, in a further effort to commodify, well, everything, some accounts were sold. Those online savings accounts that were not tied to brokerage accounts were sold to Discover Bank. The actual transfer of asses occurred on March 7, 2010.

Through the ever changing banking dynamics, everything is for sale. This includes bank accounts, especially to those companies who are not necessarily in the banking business. E*Trade, known as a discount brokerage firm, has a banking division which at points in recent history helped the company stay afloat. However, in a further effort to commodify, well, everything, some accounts were sold. Those online savings accounts that were not tied to brokerage accounts were sold to Discover Bank.The actual transfer of assets occurred on March 7, 2010.
 
While this is not a major set back by any means, it serves as a great example of the disloyalty of banks to current consumers. Granted, at the time of the sale the savings interest rate for E*Trade was 0.51% APY and Discover is now 1.34% APY, so consumers won in a certain regard…and we all need to savor small victories.
 
The deposit sale is "in keeping with the strategy of reducing the bank's balance sheet and, therefore, the capital required to support the bank," Bob Druskin, E*Trade Chairman and interim Chief Executive, said during a conference call last month.
 
This does allow Discover to grow its deposit base, but it poses small challenges to consumers. One of which is the new minimum deposit that Discover Bank allows through its automatic savings plan. E*Trade allowed for as little as a dollar to be transferred from a checking account to their online savings account, Discover has a minimum of $25.
 
Fortunately, in this case, the consumer “won” by getting a higher rate, but that may not always be the case. As internet savings rates are quietly still declining (see ING at 1.1%), one will question how long this medium will continue to thrive and we will revert back to local banks…maybe even with passbook accounts!

Top Savings Rate Stays at 2% - Average Down to 1.4% APY

Rate information contained on this page may have changed. Please find latest savings rates.

Savings rates dipped very slightly this past week with the average dropping from 1.41% APY to 1.40% APY. Despite this drop, the top savings rate remained at 2% (ReadySaver.com from Southern Community Bank). Everbank also continued to offer their promo rate of 2.25% APY for the first three months on new money. After three months, the rate drops to 1.26% APY for a 1-year blended APY of 1.51%.

Savings rates dipped very slightly this past week with the average dropping from 1.41% APY to 1.40% APY. Despite this drop, the top savings rate remained at 2% (ReadySaver.com from Southern Community Bank). Everbank also continued to offer their promo rate of 2.25% APY for the first three months on new money. After three months, the rate drops to 1.26% APY for a 1-year blended APY of 1.51%.

Other notable rates include Franklin Synergy Bank at 1.75% APY and EBSB at 1.67% APY.

For those of you looking to deposit your money into a larger bank, student lender Sallae Mae just opened an Internet bank and is offering a 1.25% APY savings account. It was 1.35% APY last week.  American Express Federal Bank is offering a 1.30% APY.

The table below shows the trend with savings rates as well as select cd rates. For savings, the trend is generally down.

TrendofSavingsRatesandCDRates

Compare the top savings rates.