What Happens During a Car Accident Compensation Claim?

The accident wasn't your fault and you've just left hospital with an injury that is going to leave you out of work for months. It's a scenario that happens all too often and the perfect recipe for a car accident compensation claim.

Starting a car accident compensation claim is easy when you choose the right company. Compensation culture in the UK has grown and grown over the last few years with more and more claimants realising that they do have somebody to fight their corner. Why should you be made to pay the price when a car accident was not your fault?

If you have incurred medical expenses, loss of earnings or expensive car repairs as the result of the accident, it's time to get moving and get the claims process started. Once you have the claims process started you can get on with recovering from your accident safe in the knowledge that your compensation claim should be settled soon.

Whilst most car accident compensation claims go through without a hitch, there are many claims that need a little professional assistance. For example, insurance companies will often try to wriggle out of their part of the claim and insist that their client was not at fault. In these cases, a professional compensation lawyer will take care of everything on your behalf and represent y. In these cases, a professional compensation lawyer will take care of everything on your behalf and represent you to protect your rights and ensure that you get what you are entitled to.

Many compensation companies work on the basis that they receive a percentage of the amount awarded to you. This figure should be made clear to you from the start and there should never be any upfront charges to pay. You should also only ever deal with a company offering a no win no fee promise. If for any reason your case is dismissed without compensation being awarded, you will not owe a penny.

Car accidents can vary in severity, but it you have been injured in an accident that occurred through no fault of your own, it's time to take action and start the car accident compensation claim process. Don't suffer when you don't have to. You could be entitled to thousands of pounds in compensation even if you suffered no other injury than severe whiplash - this can cause you to be signed off work for months and you can bet your employer will only pay you for the minimum statutory period.

Start your compensation claim today and speak to a professional compensation and injury lawyer who will work patiently and professionally on your behalf to get 100% of the compensation that you deserve.

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Three Reasons for Getting Mechanical Breakdown Assistance

Mechanical breakdown assistance is the kind of insurance that reimburses you for all your vehicle repairs. This is like a substitute for the normal factory warranties. In this kind of coverage, the total mileage and various restrictions are affected. It is very important to consider the warranty offered before purchasing extra coverage. It is also important to key in the costs of all the payments. In addition, you should know all the deductibles and exclusions from the policy.

When you consider getting a breakdown cover, you should always be conscious about the time you will need it. You first find out the total time your factory warranty takes. It is also important to decide how long you will be under it. Something you should consider when it comes to this kind of coverage is that it has restrictions and mileage. This means that you should get this coverage when your car is new.

Normally, warranties provided by factories take at least 2-4 years or about 35,000 miles. There are those warranties that normally cover all the repairs your vehicle might need, which are not related to maintenance. Another kind of warranty is the powertrain that involves all the main mechanisms that involve the engine and transmission. It could not be advisable to get an extended coverage in form of breakdown policy in the case where you have a long coverage and a lot of time for the warranty to expire. The following reasons could lead you to purchasing this kind of breakdown cover.

1. You could buy it to keep your qualifications in place. These include the restrictions of the years and the mileage. This applies when you are given an extended factory warranty period. For instance in the case where you have a limit of 30000 miles to cover to get coverage though you have covered only 12000 miles. This still requires you to get extra coverage. It is important to do a comparison between the extended warranty and cost of coverage. You should note that in the case of a warranty, the coverage is similar but upfront payment is required. When buying a fresh car, you could add all the warranty costs to the loan or you could similarly buy it differently.

2. This kind of insurance helps make up for all the expensive repairing costs. It is however important to know the items your policy covers before buying it. You should know that you would most often be required to pay for a monthly cost for this insurance. If you expensive items like the transmission or the engine, then you could be forced to pay it from the pocket.

3. This policy covers rental cars too and all tow services. It could be impossible for you to use a car without this policy in the case where you cannot afford its maintenance.

It is important to note that wear and tear cases are not included as coverage for this policy. In addition, all repairs that result from poor maintenance like when you need a new engine or when you fail to add oil are excluded. It is important to make enquiries on these before your chose to buy any kind of policy.

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UBIT - It's a Good Thing, It Means You're Making Money!

If there ever was a subject that will stop an accountant is his or her tracks it is UBIT, which stands for unrelated business income tax. The origins of UBIT are obscure. This tax was placed on some taxpayers to "level the playing field" for certain businesses.

The best example of how UBIT is used is for the competition between a non-profit and a for-profit enterprise. The college book­store sells books to students and others within the structure of their "non-profit" umbrella. The college bookstore, because it is non-profit, is not taxed the same way as a for-profit enterprise. A non-profit does not pay taxes on most operations and there­fore can afford to sell books at a lower cost than the for-profit store across the street. Since both the college bookstore and the for-profit bookstore are competing for the same customers, the college bookstore has the advantage of being treated differ­ently for tax purposes and the advantage of this preferential tax treatment may allow the college bookstore to sell their books for less, thus attracting customers away from the for-profit store.

This is where UBIT jumps in to save the day. The government has placed a tax burden on the non-profit enterprise for running a business, i.e. selling books, under the main business of running a college. This same philosophy and set of rules is applied to an IRA's investment in real estate when there is debt related to the purchase of that real estate. So what is bothering the accoun­tants among us?

•The tax rate for UBIT is high, ranging from 26% to 34%.

•Calculation of this tax is, for those not familiar with the rules, complicated.

This sums up the issues. Now, for following through on what these issues mean for someone investing their IRA in real estate, continue reading.

Should I Invest in Debt Leveraged Real Estate with my IRA? The answer to this question is dependent on "doing the numbers". For any investment, calculation of the rate of return should encompass all variables, including the tax treatment of the cash flow from the investment. In the case of UBIT, simply stated, it is paid on the debt-financed portion of the net income. For example, a property purchased using 100k in IRA funds and 200k in non-recourse debt would be taxed as follows:

Calculation (simplified)

Percent Debt: 67%

Net cash flow after deductions for 67% (percent of debt of total investment) of operating expenses, interest expense and de­preciation, using 67% of the improvements to calculate depreciation: $12000

Unrelated Business Income: .67 * 12000 = $8000

Allowable deduction of $1000 applied 8000 - 1000 = $7000

UBIT based on maximum rate: .34 * 7000 = $2380

The tax of $2380 would be paid directly from the IRA. There are three things worth pointing our here.

1. This calculation should be part of determining the return on this investment and should be considered as any other expense.

2. This level of income MIGHT NOT have been generated if not for the leveraging power of the loan and

3. Rather than viewing this as going from 0% tax to 34% tax, it should be pointed out that if this investment were outside the IRA, it would be taxed at the normal income tax rate ranging from 25% to 28% a differential of 6% to 9%.

4. An "internal rate of return" inside the IRA should be calculated taking into consideration the advantage of the tax-deferred/free portion of the income.

Other details of UBIT calculation: the debt-financed proportion is defined as the average loan balance for the year divided by the depreciated basis. It may be in the best interest of the IRA to pay down the balance of the loan as quickly as possible, if cash is available, in other to decrease the debt-financed proportion of the Net Income that is subject to UBIT. Again, each deal must be analyzed. The cash flow from the property, rather than applying it to the unpaid balance of the debt, can be placed in another investment that offsets the burden placed by UBIT and this should also be included in the analysis of the investment.

This is a somewhat simplistic version of the actual calculation of UBIT but illustrates the magnitude of what this tax actually is. It needs to be part of a thorough evaluation of the investment.

What if I Sell? What Rules Apply?

The sale of a property that is debt leveraged is handled, for tax purposes, in two parts: the equity or IRA portion and the debt leveraged portion. The IRA portion of the sale proceeds goes directly back to the IRA custodian for reinvestment, tax-deferred and intact. The proceeds from the portion of the property purchased using debt also goes back to the IRA custodian but is taxed at the capital games rate. This tax is paid out of the IRA proceeds available in the account.

Qualified Plans and UBIT

UBIT applies only to IRAs with regards to debt financing. When using a qualified plan such as a 401(k), the rules are different. UBIT will NOT apply for purchases make using leverage within a 401(k) providing:

•The price of the property is fixed

•The financing of the property is a "new loan" and not owner-financed

•Use of the property or any claim on the property by the former owner must not exist

This is one reason that acquisition of income-producing property by a qualified plan such as a 401(k) is more advantageous than that acquired with an IRA, but there are other rules, such as those described above, that must be examined and followed before going under contract for the purchase of real estate.

Rules and Information

IRS Code Section 512 defines Unrelated Business Income, Section 513 defines what is an unrelated trade or business and IRS code section 514, specifically (C)9 addresses how UBIT is applied to debt-financed real estate purchases by IRAs and Qualified Plans. IRS Publication 598 pulls these three code sections together in a "plain English (or Spanish)" guide more directly appli­cable to the calculation of UBI and UBIT.

Summary

When debating the pros and cons of using leverage within an IRA to purchase an income property, the questions should never be "How do I avoid UBIT?" but rather "How much will the IRA grow using debt leverage and paying UBIT?" and "What is the resulting rate of return within my IRA?" The other due diligence items such as physical condition of the property as well as ques­tions on the ability of the cash stream to service the loan and pay expenses, including UBIT, should also be taken into consider­ation. Dismissing an investment because of the potential payment of taxes should never be a deal killer. Consult with your legal and tax advisors regarding investments involving potential UBIT within your IRA.

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Roth 401K - Great Retirement Savings Plan

Roth 401K is a kind of plan for retirement savings that is authorized by US congress. It falls under Internal Revenue Code. Its features combine the normal 401(k) retirement plan with the IRA plan. Anyone is eligible to join this plan so long as his employer offers it. It is the discretion of the employer to decide if he will provide this service in addition to the traditional one.

With this plan an employee can choose to contribute some funds through the post-tax elective deferral instead of or in addition to pretax elective deferral under his traditional 401(k) retirement plan. The employer is permitted to contribute a matching amount on the employee's set Roth contributions. Such contributions by the employer are allocated to the pre-tax account.

This savings plan is funded by after-tax dollars unlike traditional 400(k) that is funded by pre-tax dollars. This means that any earnings on Roth are tax free and also penalty free. This applies if the distribution is made at least 5 years after the investor makes his first contribution and before he attains 59 and a half years. The workers contribute through payroll deductions just like in other retirement plans.

This plan is especially ideal for younger employees who are currently being taxed in a low tax bracket but who expect to pay higher taxes when they reach the age of retirement. As an employee, one is able to roll his contributions to a Roth IRA account if his employment is terminated. When it comes to retirement, one can roll over his funds to Roth IRA tax free.

There are many benefits of joining this plan. Since you make the contributions with after-tax dollars, the account is able to grow tax-free. If you make any withdrawals during retirement, they are not subject to income tax so long as you have had the account for at least five years and you are at least 59 and a half years old. The prospects of tax-free money makes this plan very attractive to many individuals.

Individuals with high incomes who are not able to contribute to traditional plans due to some restrictions in their income could find this plan beneficial. This is because this system has no such restrictions. It does not require the investor to meet certain income thresholds in order to participate. Those who would like to have tax-free withdrawals but their income is more that the traditional plans threshold would also find it ideal.

This system could also be beneficial to those who would like to diversify their future tax risk. It is always advisable to invest in different investment vehicles or accounts which are taxed differently. This investment plan offers a great alternative to tax-free investments compared to other tax-free investments. The future is unforeseeable and one never knows when such a plan may come in handy.

Adoption of Roth 401K is gaining momentum. It is an additional way of diversifying investments for the future. Some of the large firms have adopted it and this has motivated even the smaller firms to adopt it. This plan is now a permanent legislation and is thus here to stay.

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Must Know! - Real Estate IRA Investment

When you're thinking about the idea of the advantage and disadvantages of a real estate IRA, there are some things to remember and to take note. The real estate IRA investment will work like any of the IRA accounts. Also, you will get some tax deductions in this; you will still get free tax profits, and most importantly you will still be the one who will decide about what you could invest in.

In order to do this you must follow all the rules and policies of the IRS provided with their retirement plans. However, yes you do have few policies to follow that do not necessarily concern to other kinds of real estate investments.

The most common type of a real estate IRA investment is the rental property. Actually any kind of real estate that makes income or costs has a special rule to follow and must be aware of. The custodian is the one who will help you to make sure that all policies and rules are followed; still the full control of the responsibility will be in your hand. Then let's proceed to the key ideas for success.

1. The process of real estate IRA in the property investment - anything in your self-directed IRA has will surely go back to your IRA account. When you make money in this investment, the funds needs to be in your self-directed account. When you're depositing the funds in your personal IRA account and afterwards put it in the self directed IRA account, this can be considered as a result for disqualification. Your money will never go back to you personally and also you can never use this money for your own expenses. But there is exception, unless you are qualified for some withdrawals. Any kind of action that can result to penalties or disqualification. Here is the only thing you can do, the renters or payers need to make checks out of your self-directed IRA account. Remember to check your custodian and Trustee Company has the money to set up. In this way, you could have the renters make all the payments straight to your account.

2. Real Estate IRA expenses with regards to the property - property expenses on the self-directed 401k or the traditional IRA really are not those much different in the process of income. You should process the funds directly in your IRA account. When you want to make an improvements or some renovation of your property, you should deduct the expenses out from your IRA account. You don't have to get money from your pocket to improve your property. When the fund isn't in your account and you have decided to make things personal, your account can be subjected to disqualification.

3. Some key factors to remember in your real estate IRA account. You might get a partner or you can invest with your family members, friends or colleagues, although you should be accurate in your records. If you have thirty percent of the funds, then thirty percent will come in your IRA account for outflow and will surely get thirty of it directly in your income.

Giving yourself to the real estate IRA does not have to be difficult; it must always know the policies and rules of it. Your custodian will guide you and help you to ensure if you are following this rules, but the responsibility is still yours.

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Best IRA Investment Accounts - How To Find The Best IRA Investment Accounts!

One of the best ways to invest is through an IRA investment account, and one of the main keys to success in investing in these types of accounts is to find the best possible IRA investment. There are many things to look for when choosing an IRA investment, and here are just a few of them!

Consistent Returns

When utilizing any type of investment to earn money, especially an IRA account, one of the things that you defintiely want to look for are consistent returns. Consistent returns show that the investment has the track record of growth and this can help to ensure that the that particular IRA investment account has amazing potential for growth as well as profits in the future.

Like all investments, there is nothing guaranteed with IRA accounts, but having consistent returns can really help you decide which one to invest in and which one to choose, as the chances and potential for growth and great profits are much greater with an account with a consistent history than for one without it!

Ability To Start Easily

Some IRA accounts make people jump through loopholes to get started, this is unnecessary. Being able to get started easily with your investment account is one of the main keys to success in investing. You want to be able to set up your account fast and be able to start investing right away, so that you can start earning money quickly and easily with your account!

Return Rates

Of course, when you invest want to find some of the best return rates possible. By finding the best rates you can hopefully earn the most profits and have the most money possible by investing. Looking for great return rates also helps you decide which account you would like to get started with whether you're starting with a little bit or a lot of money.

Amount To Start With

You want an IRA investment account that lets you start with a little or a lot. Why? Because IRA investment accounts that let you start with a little are usually very confident in their profits and their system. By letting you start with a little, they're confident that they can make you a lot of money off the little but that you deposited and that they're making you such amazing returns that you're very likely to deposit more into that particular IRA investment account!

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401K Vs IRA Battle

Who will the Winner be in the 401k vs. IRA Battle?

There are a lot of people out there who do not know what to do with their money following the recent economic troubles. People lost a great deal of money when the economy went bottoms up and in turn this has now made them afraid to commit to investing. To ensure that you make no mistakes on your choice of investment for your retirement I am going to do a comparison between the main choices that you have. Here is my 401K vs. IRA vs. Physical Gold comparison.

We are first going to have a look into the 401k and the benefits of investing with it.

Basically a 401K is your standard retirement plan which you will be given a choice through your work of investing some of your wages in each month. One of the leading advantages of investing money with a 401k is the fact that you are not required to pay a single penny of income tax until the day comes where you decide you will take your money out. Often if a person with this type of retirement fund tries to withdraw any of their savings prematurely then they will face heavy takes costing them a lot of money if they are not 100% sure what they want out of a retirement fund.

When your retirement savings are tied up in a 401K then you can often feel very uncomfortable and vulnerable because you have no control over your money whatsoever. In this day and age there are an increasing number of people who are getting to their retirement age who thought their money was safer than it is turning out to be in their 401K's. In 2008 when the economy first took its major dive people quickly started to realize that their money was not as safe as they had first thought it would be. All though the 401K does have some benefits I would not recommend it if you are looking for long term investments.

401k vs. IRA: Time for the IRA!

IRA funds usually can be placed into 2 different common types that people can open for retirement. There are so many options available out there that this first type of IRA that we are going to look at in my opinion is easily passed by and it is called the traditional IRA, it does carry some advantages but definitely more disadvantages. I feel that its main problem is that you can only start getting your money distributed when you hit a certain age. Basically the rule here states that after you reach 70 you have got to start withdrawing your money weather you like it or not so come 70 and a half you have to make that first withdrawal. One of the main down falls of this type of IRA is that you can really run into some troubles with the IRS if you fail to withdraw your savings in time. This fact makes it a bad option for a retirement investor.

When we look further into the Roth IRA we can quickly see that it also carries problems of its own, such as it is not tax-deductible. One of the other points that I have discovered regarding the Roth IRA is that you have to pay your full tax amount in one lump for each year because it does not reduce your adjusted gross income. My conclusion is that the Roth IRA is looking to be the best and safest investment option that is available in today's market. The only other thing I would suggest is looking into one that allows you to add physical Gold.

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Retirement Accounts - Who Is In Control?

Are you in control of your retirement account? Who is making money from "your" hard-earned money that you have saved for years? Are you happy with the 1% to 3% return you have got? I am sure a lot of you are asking who is getting 3%. With these low returns do you really think that "you" are the one making the money?

Sure, the economy has something to do with your low return. Things are tough now, money is tight, and no one is setting the world on fire. I am sure I could sit here and give you a thousand excuses why your retirement investments are not performing but that is a job for your financial planner. Think in terms of golf, you could be having a terrible day on the course, but that one good shot is the one that you will remember, just like that one good quarter makes you forget about you retirement account's past performances.

Now, I am sure that you "think" you are in charge of these accounts because you have picked how you would like your investments allocated, 20%in fund A, 30% in fund B etc. These Funds or Groups A,B,C etc. are recommended by your financial planning firm, these are good groups that have a consistent track record over the years (because if they did not the firm would not have any customers). Please understand I am not criticizing your financial planner (this is how they make a living), I am just saying that if your accounts are not performing well it is a little too easy to take the blame yourself for how the money had been allocated.

Are you familiar with True Self Directed Retirement Accounts? If you are not, now is the time to start to do your homework. If you are comfortable with the Government's Social Security Program and that Taxes will not be changing the landscape of America just continue to follow yesterday's path and hope for the best. 97% of retirement accounts follow this plan, allowing someone else to profit from their account. 3% make maximum returns by relying on what they know and investing for themselves.

Unfortunately "yesterday" is not "tomorrow" and tomorrow is what you need to be concerned with. Do the words "self-directed" scare you? Again I am telling you, you need to do your homework! The words "self-directed" should excite you, not scare you. There are so many investment options you have available to you that could be earning tax-free or tax-deferred dollars. Most of us fear the unknown; the more you know the less to fear. So to answer the question "Who is in Control"? Maybe we should be asking "Who Do You want to be in Control"?

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Roth 401k - Working With Financial Planning Professionals To Get The Best Results

If you are participating in an employee-sponsored Roth 401k, do you believe it is your responsibility to manage your funds, or do you prefer to leave it to your employer to oversee accounts?

This question is not intended to make you feel irresponsible. As a matter of fact, your decision to participate in the company retirement program or Roth 401, shows a level of personal responsibility lacking in a large majority of people.

But does it make you wonder about what exactly is happening to your money while it's sitting in the employer accounts?

Of course, you can always look at the account statements and see if your principle is sound and your investments are growing in value. This is usually enough to make most employees quite comfortable when it comes to leaving their money in the hands of their employer.

But other than making sure the funds are withdrawn from your paycheck, there is little else your employer does to affect the growth and security of your funds. This responsibility often falls to a professional financial firm hired by the company you work for.

You may not know it but you pay for these services with money taken out of your investment account. Unfortunately, you seldom get the opportunity to evaluate whether or not their services are worth it.

Fortunately, you do have rights when it comes to the management of your retirement capital.

It is possible for you to meet with the company-hired financial planner on a regular basis to get an accounting of exactly what they are doing. You are also allowed to give them input on managing your personal account.

This rarely-taken-advantage-of opportunity can have a positive impact on the overall performance of your account, especially when these professionals are personally held accountable.

Establishing a working relationship with a professional financial planner can have other advantages.

For example, if you should decide to leave your place of employment, not only can you use the services of the financial planner to help you roll over the funds in your Roth 401k into a private IRA, but they can also help you find the best investments for consistently growing your money until you're ready to use it at retirement.

Now, if you were dissatisfied with the services of the financial firm used by your former employer, you can locate your own. But before you do, be sure to set some standards by which you will make your hiring decision.

As it is with finding any other professional services, it's always best to start with recommendations from people you know and trust. If close friends or family members currently use a financial planner, ask them about this firm's reputation and overall financial management capabilities. Then you can ask for the contact information so you can set up an interview.

During the interview be sure to ask for references and documented proof of success.

Now, if you aren't able to get a recommendation, you can always hire your bank, credit union or insurance company to provide these retirement planning services for you. Since you already have a working relationship with these people you can probably count on them to provide reliable service with satisfactory results.

In either case it's vital that you do your due diligence if you're going to find professionals who can be good stewards of the Roth 401k money you are relying on to provide a secure and happy retirement.

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What You Need To Know About Investment Gifting For Your Graduate

Recently, an investment savvy friend of mine, looking to start his young graduate on the road to wealth, was evaluating the benefits of a Roth IRA vs traditional IRA.

You see, setting up investment funds for young people is the latest trend in graduation gifting. Not only does the growing value of one of these accounts provide the gift that keeps on giving, but it helps teach young people about the importance of saving and investing.

Of course, making the decision to give such an important gift may not be as straightforward as it first appears. There are some important issues that you must first take into consideration before heading over to your banking institution.

First, and most important, is your relationship with the graduate. How well do you know their current financial needs?

If you're the parent you'll probably be aware that you son or daughter is going to have some expenses as they head out into the adult world. Paying off student loans, relocating for a new job or just buying new clothes for a job search can mean your child might be better able to put a cash gift to immediate good use.

However, if you're not the parent, but a beloved family member, you won't get a lot of "say-so" in how your monetary gift will be spent. Since your intentions may be more future-oriented, setting up an investment fund may just be the way to go.

Next, trying to decide between a Roth IRA vs traditional IRA means determining if the graduate would benefit from the pre-tax savings of a traditional, or after-tax benefits of a Roth.

Regardless of which account you decide to open, you'll need a minimum contribution of $1000.00 to get what's known as a Custodial IRA going. As the parent or guardian, you will be in charge of managing the funds on behalf of the child.

That being said, however, you must be sure the graduate is employed and has an earned income. Graduation or birthday checks, as well as, allowance, don't qualify as earnings.

The great thing about having one of these savings accounts is that the young person can easily develop the discipline to contribute $100.00 per month just by setting up automatic withdrawals from their paycheck into their savings account.

If their place of employment doesn't offer this type of payroll service, the young person can still be encouraged to make regular contributions simply by making it clear how, with this early head-start, their earnings could potentially benefit from all the years of tax-deferred earnings.

It's important to be aware that any and all monies placed in the Custodial IRA are considered to be an irrevocable gift and are the total property of the child. Furthermore, once the child reaches the age of majority as determined by your state (i.e., 18 or 21), you will no longer be in charge of the funds and the young person can choose to withdraw any and all assets as they see fit...even though the purpose of the IRA is to provide for their retirement.

If you've made all the necessary considerations, decided between a Roth IRA vs traditional IRA, then you're probably ready to make a gifting decision which can have a significant impact on the financial future of your graduate. After all, isn't the future what graduation is all about?

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The Death Cross - How To Trade It

In this article I'm going to show you some ideas on how you can use the Death Cross and the Golden Cross in your personal trading. By the end of this article you'll see the Death Cross and Golden Cross can be an important event to watch for. The ideas presented in this article can be used for standard brokerage accounts when trading stocks or ETFs. It can also be used in retirement accounts such as IRAs and 401Ks. The concept behind following this signal is to warn you upcoming market weakness or market strength. Using this important signal may help you generate more gains and more importantly, keep those gains!

The Death Cross is simply when a 50-period simple moving average (SMA) crosses under a 200-period SMA on a daily chart. Such a signal is believed to warn of upcoming bearish market activity. The opposite signal is called a "Golden Cross" and is alleged to warn of bullish market activity. But does the Death Cross or the Golden Cross hold any merit? Using TradeStation's EasyLanguage coding language it's simple to create a trading system that is always in the market switching between a long position and a short position based upon a moving average crossover. Here is what the entire trading system code looks like:

if ( verage(Close,50) crosses above Average (Close,200) ) then buy ("Golden Cross") next bar at open; if ( Average(Close,50) crosses under Average (Close,200) ) then Sell short ("Death Cross") next bar at open;

In order to get a long-term feel for this system I'm going to use the S&P500 index going back to 1961. The trading system will have an initial trading account size of $20,000. To keep the position sizing simple each signal will use $10,000 to determine the number of shares to purchase. By dedicating $10,000 to each trade we are attempting to normalize the number of shares we purchase based upon the cost per share. Back in the 1960s one share was around $70 while today it's worth over $1,000.

Next, I opened a chart with daily data for the S&P E-mini from 1961 to September 30, 2011. I then applied the strategy to the chart while making no deductions for commissions and slippage.

Before we start looking at some of the numbers I want to break this study into two parts: Shorting a Death Cross vs. going long the Golden Cross. What interests me is how well the system functions going long vs going short. In other words, what does the SMA cross tell us about a bearish cross vs a bullish cross? Are they different?

Shorting The Death Cross

Net Profit: -$1,000

To simply short the Death Cross may not be very profitable. There is nothing in this picture that suggests we have an edge simply shorting the S&P index upon a Death Cross signal. Maybe we should be taking the Death Cross as a buying opportunity? Why not? We want to be opposite the crowd, right? Below is the equity graph when we go-long at every Death Cross.

Going Long The Death Cross

Net Profit: $1,000

Interesting! Unlike shorting the Death Cross, going long actually produces a positive result. Counter intuitive to common knowledge, I would say. Yet, it's not much of a profit for all those years of trading and it's certainly not an edge we can take advantage of. All in all this strategy is a wash much like shorting the Death Cross.

Going Long The Golden Cross

Net Profit: $39,000

This is a much improved net profit! We seem to have a clear edge going long the S&P 500 when a Golden Cross is triggered.

Summary

Combining what we have now learned I would say moving your investing accounts into cash when a Death Cross forms may be a good idea. This would be done in my opinion to prevent drawdown and thus avoid the pain seeing your profits evaporate. It's certainly can be much more psychologically appealing to be in cash when those big bear markets hit. Shorting a Death Cross does not have much of an edge and only after a Golden Cross does the market hold a strong bullish edge.

Upon a Death Cross signal the market shows general weakness to the upside. This weakness can be difficult to short. Moving into cash during this time may prevent you from experiencing significant drawdowns.

Upon a Golden Cross signal the market has demonstrated a lot of bullish activity. This one is easy. When a Golden Cross occurs, going long the market may lead to strong gains over the coming months and years. This is when you should be in the market.

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How to Offer a Low Cost 401(K) Plan

Any employer wishing to provide a solid benefits package to its employees is likely to offer a 401(k) plan. However, just because an employer offers a plan does not necessarily mean that this vehicle is the best mechanism for an employee to save for their retirement. Especially for smaller employers, the "all in" cost of a 401k plan may amount to more than 2% of plan assets. Thus, an employer should pay close attention to all of the costs of their plan to assure that they are providing a great benefit to their employees.

According to a study by Deloitte and the Investment Company Institute1, over 74% of a plan's all in" cost is attributable to investment expense. Thus, ensuring that your plans offers investment options with low expense ratios is the best way to ensure that you're offering a low cost 401(k) plan.

1) Include index funds - Because index funds only track a certain market index rather than attempt to outperform it like actively managed mutual funds, their operating costs are much lower. According Morningstar, index funds are 0.51% cheaper than actively managed funds.2 Furthermore, over time; many index funds have proven to outperform their actively managed counterparts.

2) Include ETFs - Like index mutual funds, ETFs are a basket of securities that attempt to replicate a market index. While we are beginning to see some actively managed ETFs surface recently, for the most part, ETFs are passively managed funds. Like index funds, their primary benefits are their low cost and market like performance. Morningstar reports that the average expense ratio for a passively managed ETF is only.56%.3 However be sure to consider the commissions that will be charged for the purchase and sales of ETFs. Yet, even when factoring in these commissions, including ETFs in a plan's lineup if likely to reduce the overall cost of a plan.

3) Avoid funds with revenue sharing - Revenue sharing is when mutual fund companies pay either a broker dealer or recordkeeper a payment for the distribution of their funds or servicing of accounts using their funds. Revenue sharing payments can come in the form of 12(b)(1) fees, sub-transfer agency (Sub TAs), or shareholder servicing fees. Any of these types of payments increase the overall management fee of the fund itself. Unless your 401(k) provider uses all revenue sharing payments to offset plan expenses, you can lower your overall plan cost by sticking to funds that don't include these payments.

4) Avoid variable annuities - Many insurance providers "wrap" an added expense on top of a mutual fund. To the average investor, it appears as if they are invested directly in the mutual fund. However, their returns will not match that of the mutual fund due to these added expenses, which can sometimes amount to more than 1%.

In addition to the above suggestions about the investment lineup, the following are some additional ways that an employer can assure they are offering a Low Cost 401k plan:

Force Out Terminated Participants with Low Balances If your plan document allows you to force out terminated participants with balances less than $5,000, you should be diligent in doing so, especially if your recordkeeper or TPA is charging a per participant fee. Additionally, if your plan is around 100 participants, by distributing balances of these participants, you may lower your total participant count whereby you will not have to incur the added expense of performing an annual audit.

Join a Multiple Employer Plan (MEP) A MEP allows many unrelated entities to become a part of the same 401(k) plan. If you are a small employer, it is possible that joining a MEP could be a cheaper option for you than a standalone plan whereby you may be subject to minimum fees because of a low participant count or asset size. Additionally, a MEP may allow you access to cheaper investment options because of the collective size of the plan.

Because every dollar of fees paid by the participants reduces their retirement nest egg, it's important that consideration be given to every possible way to lower plan costs. These suggestions should help get you started in your quest to offer a great low cost 401k plan to your employees.

1 Defined Contribution 401(k) Fee Study (2009). Deloitte and Investment Company Institute. 2 U.S. News and World Report, "Why Investors Are Flocking to Index Funds", March 16, 2010. 3 How ETFs Have Reshaped Investing. The Wall Street Journal, April 18, 2011.

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Simple 401(K) Asset Allocation Options

Studies have shown that the more investment options available in a 401(k), the lower the participation percentage. This is because most employees lack the desire or knowledge to carefully select their investment options. One way an advisor can mitigate this issue is by offering an asset allocation option that provides a participant exposure to stocks, bonds, and cash through a single fund. Two of the most common types of asset allocation funds in 401(k) plans are target date funds and customized 401(k) portfolios, i.e. "managed models".

Target Date Funds Target Date Retirement funds are becoming an increasingly popular investment option in 401(k) plans. If your recordkeeper offers an open architecture 401(k), then you will have the benefit of choosing among target date offerings from multiple fund families. All target date funds follow a "glide path" which is essentially the percentage of assets allocated to stocks, bonds, and cash. Most mutual fund families offer these funds in 5-year increments, although some may only offer 10-year increments. As the target date approaches retirement, the funds get more conservative, lowering their allocation to equities and increasing their allocation to bonds and/or cash.

Many investors are unaware that there are really two separate types of target dates funds; "through retirement" funds are designed as an investment that is supposed to be held in one's retirement years. As such, these funds typically have an equity allocation of 50-60% around age 65, decreasing to 20% thirty years after retirement. The concept of these funds is that one's retirement could last many years, so they need to maintain a fair amount of equity exposure to make one's retirement balance last. Vanguard is an example of a fund family that offers "through retirement" target date funds.

The other type of target retirement date funds are known as "to retirement" funds. As the name implies, the goal of these funds is to get one to retirement, at which point the primary goal becomes generating income while minimizing risk. J.P. Morgan's offering is an example of a target retirement fund that can be classified as a "to retirement" fund; its equity allocation at age 65 is only 33%.

"Managed Models

Whereas target retirement date funds are almost exclusively comprised of funds from a single fund family, managed models can include funds from multiple fund families. Some recordkeeping systems will limit the models to include only funds available in the plans' core lineup. However, other open architecture 401(k) platforms may allow funds outside of the core lineup. Managed models are a great way to include EFFs in 401k plans. While many ETFs are appropriate when used in models to reduce volatility while increasing returns, they may not be appropriate as standalone investment options.

Managed models are extremely flexible and can be established as either age based or risk based products. Since there isn't a published glide path that needs to be followed, an advisor can employ either a tactical or strategic allocation approach. This allows a tactical advisor to take advantage of market opportunities by changing the risk level of the portfolio. For the advisor using a strategic asset allocation, a managed model can be automatically rebalanced quarterly, semi-annually, or annually.

In summary, for the majority of participants, it is a good idea to leave asset allocation in the hands of a professional. Rather than attempting to decide how much money to allocate to the major asset classes and ultimately to funds within those asset classes, selecting an asset allocation fund such as a target date fund or a managed model is a great way for participants to receive proper exposure to both equity and bond markets.

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