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Even if you're already convinced you that saving in an IRA is a sensible thing to do, you still have a little bit of research to do. There are two main types of IRA accounts, and selecting the one that's best for you can be a daunting process. Fortunately, you can figure this out in relatively short order by following these three steps.
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It's alarming how off-track so many people are with managing their 401(k). From missing out on company matches to overloading on company stock, they're at high risk of never being able to reach a comfortable retirement because of misguided choices. This is more common than you think -- surveys that track 401(k) participant behavior consistently show that far too many continue to make the wrong moves. So consider this my personal GPS navigation system for getting you to your retirement destination on time and in good shape.
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Just what is it that you want your retirement dollars to do? As you get closer to your retirement goal, you may want to work on preserving your portfolio. As a result, you may find you no longer want to take on a lot of risk. So think about what you want your investments to do. And if you are now in a position to preserve your wealth, don't be afraid to shift more of your investments to bonds or cash. If your retirement is at least 15 years away, you can probably afford to keep more of your retirement plan in stocks. Focus on solid growth investments, such as large-cap stocks. True, the market is full of wild ups and downs, but you have time on your side. Just don't panic when the inevitable downs come your way (as they have over the past three years). Keep socking it away.
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What's the best way to motivate Americans to save, invest and prepare for retirement? Some behavioral finance experts suggest using the carrot. Others suggest using the stick. And still others suggest using a combination of carrot and stick.
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The first time Dwight Ford visited Panama City two years ago, he was in for a big surprise. "I thought I would see guys pulling banana carts," he recalls. Instead, he found a thriving capital city and international banking center. "The value was staring me in the face." So was the prospect of a blissful retirement in a 31st-floor penthouse condominium overlooking the Pacific Ocean. Dwight and his wife, Marciana Wilkerson, who lived outside Washington, D.C., put 10% down on two side-by-side condos selling for about $440,000 each when the luxury high-rise was under construction. Today, the condos in the fashionable commercial district of Punta Pacifica are worth close to $700,000 each. The couple plan to sell one and use the cash to pay off the other after moving in this spring. "We'll have no mortgage, and I get to choose my neighbors," says Dwight.
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Co-ops and condos can be a good option for first-time homebuyers. They are also attractive alternatives for people who own a house but want to downsize because they don't need the space anymore. But while co-ops and condos generally cost less than free-standing houses and require less upkeep, there are still some potential pitfalls. First, some definitions: When you buy a condominium, you get a deed and title to an apartment and contribute funds for the upkeep of common property such as the grounds, building exterior, lobby and elevators. Condo owners pay real estate taxes and in general can rent or sell as they wish.
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You've found your dream condo, and you're ready to relax among the mango trees and swaying date palms. Hold everything. To keep from getting stuck with a lemon, you've got to do some homework. Here are the seven most important questions you need to ask before buying a condo.
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The dream of owning your own home is as American as apple pie--and (supposedly) better for you. Over and over, we are told that homeownership will make you happier, healthier and wealthier. Heck, it's even supposed to make you a better citizen. Of course, there are times when, depending on your age, your savings and your income, buying a home can be a smart decision and an excellent way to build wealth. But is buying a home really such a universally good idea?
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This is one tab the house won't pick up. It's among today's most popular retirement-savings strategies: Buy the big house, hope the real-estate boom continues and then trade down at retirement, thus freeing up home equity that will pay for years of early-bird specials. Sound appealing? Trouble is, you will fork over a heap of dollars -- and you'll end up with a surprisingly small nest egg.
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It's no secret that business has been more difficult lately for U.S. home builders -- demand for new homes saw its biggest drop since 1990 in 2006, according to the Commerce Department. Faced with rising home inventories, home-building companies are offering incentives and, in some cases, slashing prices to attract buyers. "It is the best time to buy a new house," says Harley E. Rouda Jr., chief executive officer and managing partner of real-estate firm Real Living Inc. "Builders are being very aggressive in terms of selling down their inventories."
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