What is a trust? What are the different types of trusts?
Trusts are a way of holding assets with a specific goal in mind. At its simplest, a trust can be used to avoid probate, a sometimes lengthy process in which a will is made public along with the assets bequeathed. A trust allows for fast transfer and no public disclosure. Depending on the current estate tax laws (the death tax) a trust can help preserve an estate exemption. e.g. Say the law reverts back to a $1M exemption. Note, this is $1M per deceased person, not per beneficiary. My wife and I happened to have assets of exactly $2M, and I die tomorrow. Now she has $2M, and when she passes, the estate has that $2M and estate taxes are based on this total, $1M fully taxed. But - If we set up trusts, that first million can be put into trust on my death, the interest and some principal going to the surviving spouse each year, but staying out of the survivor's estate. Second spouse dies, little or no tax due.  This is known as a bypass trust. Another example is a spendthrift trust. Say, hypothetically, my sister in law can't save a nickel to save her life. Spends every dime and then some. So the best thing my mother in law can do to provide for her is to leave her estate in trust with specific instructions on how to distribute some percent each year. This is not a tax dodge of any kind, it's strictly to protect the daughter from her own irresponsibility.  A medical needs trust is a variant of the above. It can provide income to a disabled person without impacting their government benefits adversely.  This scratches the surface, illustrating how trusts can be used, there are more variation on this, but I believe it covers the basics. With the interest in this topic, I'm adding another issue where the trust can be useful. In my article On my Death, Please, Take a Breath I described how an inherited IRA was destroyed by ignorance. The beneficiary, fearing the stock market, withdrew it all and was nailed by taxes. He was on social security and no other income, so by taking small withdrawals each year would have had nearly no tax due. (and could have avoided 'market' risk by selling within the IRA and buying treasuries or CDs.)  He didn't need a trust of course, just education. The deceased, his sister, might have used a Trust to manage the IRA and enforce limited withdrawals. Mixing IRAs and trust is complex, but the choice between a $2000 expense to create a trust or the $40K tax bill he got is pretty clear to me. He took pride in having sold out as the market soon tanked, but he could have avoided the tax loss as well. He was confusing the account (In this case an IRA, but it could have been a 401(k) or other retirement account) with the investments it contained. One can, and should, keep the IRA in tact, and simply adjust the allocation according to one's comfort level.  Note - Inheritance tax laws change frequently, and my answer above was an attempt to be generic. The current (2014) code allows $5.34M to be left by one decedent with no estate tax. "From a more technical point of view, a trust is a legal relationship between 3 parties: Trusts can take many forms. People setup trusts to ensure that property is used in a specific way. Owning a home with a spouse is a form of a trust. A pension plan is a trust. Protecting land from development often involves placing it in trust. Wealthy people use trusts for estate planning for a variety of reasons. There's no ""better"" or ""best"" trust on a general level... it all depends on the situation that you are in and the desired outcome that you are looking for." A trust is a financial arrangement to put aside money over a period of time (typically years), for a specific purpose to benefit someone. Two purposes of trusts are 1) providing for retirement and 2) providing for a child or minor. There are three parties to a trust: 1) A grantor, the person who establishes and funds a trust. 2) A beneficiary, a person who receives the benefits. 3) a trustee, someone who acts in a fiduciary capacity between the grantor and beneficiary. No one person can be all three parties. A single person can be two of out those three parties. A RETIREMENT trust is something like an IRA (individual retirement account). Here, a person can be both the grantor (contributor) to the IRA, and the beneficiary (a withdrawer after retirement). But you need a bank or a broker to act as a fiduciary, and to handle the reporting to the IRS (Internal Revenue Service). Pension plans have employers as grantors, employees as beneficiaries, and (usually) a third party as trustee. A MINORS' trust can be established under a Gift to the Minors' Act, or other trust mechanisms, such as a Generation Skipping Trust. Here, a parent may be both grantor and trustee (although usually a third party is a trustee). A sum of money is put aside over a period of years for the benefit of a minor, for a college education, or for the minor's attaining a certain age: a minimum of 18, sometimes 21, possibly 25 or even older, depending on when the grantor feels that the minor is responsible enough to handle the money.
"If there's indeed no reason to trust GS, i.e. those are just guides   then the question is: Why do investors seem to care? Because there's a reason to trust. You're just reading the bottom line - the target price range. More involved investors read the whole report, including the description of the current situation, the premises for the analysis, the expectations on the firm's performance and what these expectations are based on, the analysis of how the various scenarios might affect the valuation, and the evaluation of chances of these scenarios to occur. You don't have to trust everything and expect it to be 100% correct, analysts are not prophets. But you do have an option of reading their reports and critically analyzing their conclusions. What you suspect GS of doing (""I tend to believe those guys just want themselves a cheap buy price a few days before Q2 earnings release"") is a criminal offence." "This is the textbook for the course. Probably a little excessive for a casual purchase lol but it literally has everything you would ever need to know about trusts and is like ~1500 pages. Even goes into tax and what isn't a trust relationship for example corporation's assets and other interesting stuff.   https://www.amazon.com/Loring-Rounds-Trustees-Handbook-2017/dp/145487158X/ref=sr_1_2?ie=UTF8&amp;qid=1507755967&amp;sr=8-2&amp;keywords=trusts+charles+rounds  As far as other sources go I don't really think I am in a position to recommend much as I am still learning. This website: https://www.quimbee.com/activity ; covers a bunch of basic law school courses in general. but again, its a paid subscription but I think it is only like $15 a month. I use it all the time to help me practice and learn the concepts better for various subjects. I'm a 3L now and that website has helped me and also a ton of my friends and has videos which I find much more helpful than just reading walls and walls of legal text. If you did the ""Wills, Trusts, and Estates"" section, that alone is probably worth the $15 monthly fee. I can even refer you and get a $25 amazon giftcard apparently lol" "Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back.  I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests.  Most of the time these are scams.  When I get a call telling me ""you won a free cruise"" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth.  For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web.  I don't give my personal information to web sites I can't trust.  If they look the least bit shady, I'm out.  Also, I use different passwords at different web sites.  I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software.  I don't install anything I didn't get from a trusted source.  I pay for software when necessary, so finding a trusted source is not hard.  But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be ""gifted"" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut.  The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing.  If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver.  Once I have the drive platter, I scratch the heck out of it.  Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do?  I'm curious, too." "A TFSA is a tax free savings account.  It is a type of account where you can buy various investments like stocks, bonds, or funds (mutual, exchange traded, and money market).  There are some other options but it's best to see what your bank or broker will allow. You probably specified the type of investment when you opened the account.  You can look at your statements or maybe online to see what you're invested in.  My guess is some kind of HISA (high interest savings account).  This is kind of the default option for banks. The government created these accounts for a variety of reasons.  The main stated reason was to encourage people to save.   Obviously they also do things to get votes.  There was an outcry after the change to a type of investment called ""investment trusts"".  This could be seen as a consolation prize.  These can be valuable to seniors for many reasons and they tend to vote more often.  There was also an election promise to eliminate capital gains taxes in some fashion. It's not profitable for the government, in fact it supposedly cost the federal government $410 million in 2013.  Banks make money by investing your deposit or by charging fees. You can see what every tax break 'costs' the government in lost revenue here http://www.fin.gc.ca/taxexp-depfisc/2013/taxexp1301-eng.asp#toc7" A security is a class of financial instrument you can trade on the market.  A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k.  The loan has two components. a.  The payment stream (meaning the principal and the interest) from the loan b.  The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top).  The originating bank lends $180k of their own money.  Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it.  The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less.  The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient.  Very similar to insurance, really, except the other way around.  One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1.  One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for. "I am not a lawyer, and I am assuming trusts in the UK work similar to the way they work in the US... A trust is a legally recognized entity that can act in business transactions much the same way as a person would (own real property, a business, insurance, investments, etc.). The short answer is the trust is the owner of the property. The trust is established by a Grantor who ""funds"" the trust by transferring ownership of items from him or herself (or itself, if another trust or business entity like a corporation) to the trust.  A Trustee is appointed (usually by the Grantor) to manage the trust according to the conditions and terms specified in the trust. A Trustee would be failing in their responsibility (their fiduciary duty) if they do not act in accordance with the purposes of the trust. (Some trusts are written better than others, and there may or may not be room for broad interpretation of the purposes of the trust.)   The trust is established to provide some benefit to the Beneficiary. The beneficiary can be anyone or anything, including another trust. In the US, a living trust is commonly used as an estate planning tool, where the Grantor, Trustee, and Beneficiary are the same person(s). At some point, due to health or other reasons, a new trustee can be appointed. Since the trust is a separate entity from the grantor and trustee, and it owns the assets, it can survive the death of the grantor, which makes it an attractive way to avoid having to probate the entire estate. A good living trust will have instructions for the Trustee on what to do with the assets upon the death of the Grantor(s)." "1. Interest rates What you should know is that the longer the ""term"" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy ""bonds"" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the ""average duration"" or ""average maturity"" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of ""complicated"" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also ""floating rate"" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also:" This isn't a DIY area. You should talk to a lawyer about setting up a trust. Also, does the irresponsible person acknowledge that they are irresponsible? Are the legally competent? Or are you looking at a 20 year old with a big check coming down?