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Archive for the ‘Finance’ Category

Introduction.

If you’re lucky enough to have had an end of year bonus the inevitable question you’ll be facing is – what to do with it? Needless to say if you’ve got any debts then it makes sense to pay those off first and save yourself a wad of cash in interest payments. Alternatively perhaps you might be looking to add your bonus to a personal loan so you can finally do that home extension or that once in a lifetime holiday etc. However, the positively worse thing you can do at the moment is put it in the bank with interest rates still being so low. So, what are the other investment opportunities at the moment to get your money working for you?

Upward investment opportunities.

In 2011 the hotly tipped upward investments are global equities and US bonds. In terms of global equities Germany is strongly tipped to have solid growth through 2011 whilst China, everyone’s favorite in 2010, will be at risk of over-heating, with rising inflation rates wiping out any potential early gains. Japan, like the US, is probably best avoided for equities as its increasingly older national age profile make any long-term growth prospects increasingly look unlikely to give any significant yield. Any emerging market has a downside of course, which for 2011 as US finances start to show some recovery will be conflicts with the USA on trade, along with currency and political concerns. Regarding bonds, the “steady Eddy” of investments, look for pretty well any home-grown index-linked bonds.

Commodities and property.

By and large commodities will remain a more risky investment through 2011. The one exception to that will remain – Gold. Gold has been riding high for two or three years now and, as global economies start to recover, Gold will stay as the safe haven for investments right up until all the major global economies are fully recovered. The one investment that still holds that ‘toxic’ label is property - in anything but very long term real estate planning. Mortgage foreclosures are still flying out meaning that general property prices will remain deflated with an anticipated fall of around 2% in value over the year. That trend looks set to continue for a good few years and with mortgages being so hard to get, 25% deposits not being that unusual even for folk with a good credit score. So, unless you can afford for your money to be tied up for 10 or 20 years, you could actually lose money and fall into debt with a property investment, rather than making money from it.

Introduction.

The next few weeks will see the main rush in Christmas shopping building up to a climax around 20^th December, with an anticipated online shopping peak in the first few days of December. With so many of us still suffering from the effects of the recession and unemployment – that inevitably will mean reaching for the credit card every time we make a purchase, be it on the High Street or online. The net result of that is that come the New Year – we’re deep in debt to a high interest rate credit card! So, is there an alternative to credit card debt at Christmas?

Take out a Christmas loan.

The simple answers is that yes, there is an alternative to having to repay credit cards at incredibly high interest rates – take out a Christmas loan. Before you decide oh no, that can’t possibly be a good idea before Christmas – think on this. Every time you use your credit card to pay for a Christmas gift you are, in effect, taking out a small personal loan. The credit card company doesn’t lend you the money for free, they add interest to it that has to be paid back in full next bill – or the interest you pay will keep on rising. So, if you can’t pay for all your Christmas gifts and shopping from your savings or your regular pay check – taking out a personal loan to pay for Christmas should cost you less than using your credit card.

Advantages of a Christmas loan over using credit cards.

There are three main advantages to using a personal loan for your Christmas shopping over using your credit cards. First – by looking online for personal loans you will find countless pre-Christmas loan offers at interest rates far below those of the credit cards. Secondly, when borrowing the money – you can decide how long you take to repay it, so you’re not having to meet the short repayment deadline set by a credit card company. Thirdly, using a personal loan for your Christmas shopping will be every bit as convenient as using a credit card. Both in High Street stores and online – all you need to do is use the bank card that the loan was paid into.

Introduction.

If you’re in the process of selling and buying homes you won’t need telling how stressful it can be. For everyone those stresses include: finding the new place you want to buy, negotiating on the price, arranging a new mortgage and then finally organizing the move itself. As if all that isn’t stressful enough – what if you need to actually buy the new property ahead of selling your old home? You can’t afford to take out two mortgages at once – so how are you going to pay for the new home ahead of selling the one you’re in now? The solution to both those questions is – you need a bridging loan.

What is a bridging loan?

A bridging loan is simply a loan that can be arranged for you to provide you with immediate cash to complete a property transaction. Bridging loans are only intended as short-term loans, normally lasting a few weeks at most. However, they will be secured loans against the value of the property you’re currently about to sell. A bridging loan is a very formal way to borrow money and will require you to complete several forms and have a good credit rating. So, on that basis you are recommended to find a reputable online loans advisor or mortgage broker to guide you through the process. There are two types of bridging loan that you can apply for – closed and open.

Closed bridging loans.

A closed bridging loan is for home owners that need to buy their new property ahead of completely selling their existing one. To enter into a closed bridging loan agreement you will already have to have someone committed to buying your current home with a formalized sales contract between you. Closed bridge loans are the easiest type to get, especially through a recognized bridging loans broker and are usually for a specific and very short period of time.

Open bridging loans.

An open bridging loan is a higher risk one for the lender and so will often have a higher interest rate than a closed bridging loan. This is because they can be applied for ahead of there being any agreement between you and a potential buyer for your existing property. With no potential buyer in place this type of bridging loan has no specified loan period – making it an ‘open’ agreement.

Introduction.

Whether you’re looking for a new credit card or are concerned about the safety of using your credit card – at last there is a new safe credit card that you can ask for. Currently only available as a Visa credit card it is the ultimate in new safe credit cards not only having an in-built chip, but also its own built-in keypad and LCD screen.

Visa CodeSure.

Following months of trials in Europe the new credit card known as Visa CodeSure can now be being rolled out to banks. The card is the same size as the normal credit card you’re already familiar with and, on the front, looks exactly the same too. The difference is when you turn the credit card over. By the signature strip you’ll now see a small screen and a tiny 10 digit pressure keypad. The significance of this is that now, prior to a transaction being you enter the PIN number only onto the card – not a card reader that is not permanently in your possession or control. The result of this is a massive reduction in the risk of credit card fraud by a reader recording both your credit card number and its PIN. Visa CodeSure also means the end of the need to remember your Visa Verified id and password when making online transactions or needing to carry your own separate card reader around with you. Instead on entering your PIN onto the card a unique one-time pass-code will appear on the card screen instead.

The cost of safe credit cards.

The cost of the new credit card to you should be $0 – with the banks themselves picking up the bill for a credit card which is, understandably, much more expensive than the current ones in use. However, with credit card fraud still rising by around 15% a year surely that’s a cost the banks won’t mind if they are truly serious about reducing credit card crime. One thing to watch out for as a user of these new credit cards is that they do have an on-board battery to power them, that has a life-cycle of about 3 years. No problem really as all the banks need to do is have credit card expiry dates within the lifetime of the battery. But, as it contains a battery, please do remember to be a green card user and dispose of it in an environmentally friendly way.

Introduction.

With so many people struggling now to take out personal loans – it has been almost inevitable that some unscrupulous lenders would try to worm there way into the market. As the High Street banks become less inclined to offer loans especially to low credit score borrowers – the more people turn to online loans providers to get hold of the cash they so desperately need. For most people, most of the time, this is not a problem at all and there are many great offers out there to be had in online loans. However, if a personal loan provider wants to charge you an up-front loan fee before giving you any of the loan cash – you’re better off refusing them and seeking your loan from another online lender.

Bogus loan companies.

Even if you have the worst possible credit score imaginable, there really is no reason for a finance company to ask you to pay a fee up-front before deciding whether or not to offer you a loan. Any company that insists on you making a payment before giving you the cash should be treated as at best suspicious – if not a downright bogus loans company who have no intention at all of lending you any money. A typical scenario is for you to work through the application procedure only to find that before the company can process your application you have to pay an ‘administration fee’ of anything around $100 to well over $1000!

3 reasons not to pay an up front fee for a loan.

The simplest possible of reasons here is that there is no guarantee that having handed over your cash – that they’ll then agree to your loan request at all. The chances of you being ripped off like this are quite high from companies demanding up-front payments – it really is just a scam for them to get money from you. Second, OK so the company you’re borrowing money from wants to make a profit itself – fair enough they’re not a charity, but if they need you to pay them for a bit of administration in advance – then you really should worry as to whether they can afford to lend you the money in the first place. Third, even if a loan company says you’re a bad risk to lend money to – that’s no reason to get you to pay them for giving you a loan before you’ve seen the color of their money, they’ll soon enough recoup any expenditure they make through the interest rate they charge you anyway.

Introduction.

Following months of uncertainty regarding the economy, the general consensus of opinion now seems to be that it is finally time to start buying again. We’re not talking here about things like electrical goods for the kitchen, furniture or TVs etc – but the bigger items that we tend only to buy when we think our jobs are secure, our finances are sound and the national economy is stable. Such bigger items are things like a new car or home, things most of will need to take out a loan for like an auto loan or a mortgage.

Are you ready to start buying again?

Having gone through an economically unstable period you’re probably one of the millions of American’s that haven’t been spending money of things that were not seen as essential. Instead, and rather than banking spare cash with the interest rates having been so poor, that was the time to pay off debts like credit cards and personal loans so that now the economic climate is brighter – you’re no longer saddled with those old debts and can start applying for new loans confident that your credit score is good. However, when starting to spend money again on big items – should you protect yourself against another downturn in the economy?

Protecting your new purchases.

Let’s face it nothing could be worse than starting to pay for something like a new car only to lose your job, fall behind with the payments and end up having the auto repossessed. The solution to this is to take out redundancy cover on an auto loan or new mortgage – to make sure that if your job does fold your payments will be covered. When taking out redundancy cover do make sure the contract you sign is exactly what you need and take special care to check with your boss that your job is safe. The reason for this is that quite often redundancy cover insurance can be ruled invalid if, at the time of taking out the cover, your job was under threat. Also, be aware that mortgage redundancy cover will rarely pay off the whole mortgage if you should lose your job, but will more likely agree to pay your mortgage for a fixed period giving you breathing space to find a new job.

Introduction.

It’s a fact, but worldwide financial instability and political uncertainty is once again wreaking havoc with USA money markets, quite apart from our own ‘home-grown’ financial problems. One result of these problems has been a rise in the rate of inflation from -0.4% in 2009 to nearly +2.4% already this year, or put another way in less than a year inflation has risen 3%. The net result of this is that interest rates on loans will be rising – something that can hit anyone paying off their student debts really hard.

The cost of graduating.

This rise in inflation and interest rates means that all but the best paid graduates, with large loans to repay, will be particularly hard hit as the re-payments will rise completely out of proportion to their wages; with the risk that whereas last year they were making great in-roads into paying off their student loans – they will now find the gains they made last year wiped out and even reversed this year. As if that’s not bad enough, with many graduates having to take out personal loans on completing their courses to afford things like the clothing they’ll need for their new jobs, fitting out an apartment to live in or even just needing an auto loan to buy a car so they can get to work – having all of these loans whilst struggling to establish yourself in a new job can seem just too much.

Consolidate your debts.

If you’ve recently graduated and are struggling to repay your loans the solution is to seek a debt consolidation loan; putting all of the separate loans together – meaning that you have one repayment to make, to one company and at one interest rate. As student loans traditionally have lower interest rates than other types of unsecured loans, you will need to make sure that the actual student loan you’re repaying isn’t better left as a separate loan and then just consolidate the other ones. Either way, the fewer companies you have to deal with when clearing student debt the better.

Introduction.

Tired of that 9 to 5  job, tired of being tied down to doing ‘what the man says’ etc, then perhaps you’re ready to have a shot at home trading. Home trading isn’t just sitting in front of your computer at home selling the odd bit clutter that you no longer want on eBay, oh no. Becoming a home trader means that you’re moving into the world of stock trading, but rather than having to suffer the city rush hour – you’ll be surfing the internet from the comfort of your own home.

Stock trading systems.

There are several stock trading systems you can use to operate as a home trader from ones that are highly automated according to pre-set parameters to ones that give you personal and total control as to which stocks you buy or sell and at what prices. To go into home trading you do need to have a good head for money and at least an idea as to how the stock markets work, preferably by having previously had some sort of investment portfolio, even if it was managed by someone else. After that, if you think about the mess the so called professionals made of all our investments just a few months ago – surely you can’t do any worse than they did? Alternatively, using Web 2.0 technology you could join a group of other online stock traders to share expertise and information, in order to learn about day home trading as you go along.

CFD trading.

CFD or contract for difference trading is a way of trading from home over the internet without needing to invest any real assets. A CFD trader watches the changes in prices of stocks, indexes and foreign currencies looking for advantageous margins of trade between the opening and closing price. CFDs work by a seller agreeing to pay a buyer the difference in the value of an asset between the price at the start of a contract and its conclusion.

Introduction.

Everyone wants to find that elusive way to make money without any risk or too much hard work. Well the fact of the matter is that anyone with some spare cash can make even more money from it – if they’re prepared to be a little bit patient and take a small risk with it. The answer is quite simply to invest your spare cash in a business that’s either in need of a loan or looking for partners to perhaps finance a new project.

Considerations for investing in a business.

Quite simply with bank interest rates being so low at present – you might as well put all your cash under the mattress for all the money it will currently earn in the bank. So, instead of waiting for the day to come when the banks finally start to pay you a decent return on your savings – why not get that cash earning more money for you by investing it instead? If you’ve never invested in a business before this might seem like a big step to make, the key thing to do here is not just to randomly pick a business to invest in. Instead, find one that meets your values and ethics and, perhaps even more importantly, think about the people you’re investing your money with rather than just the business. If one business might seem to offer a fantastic return on your investment, but you don’t like the people you’re dealing with; your gut instinct to invest in  another company even if it offers a lower return might well be the best one to make.

What about social lending networks?

If you’re still not too sure about dealing face-to-face with someone to invest your cash in, why not look into social lending groups. Social lending groups have been around for a long time and now invariably operate through the internet.  Individuals, or small businesses, needing to borrow money advertise on social lending websites for potential investors. You can choose the type of businesses to invest your money in and, if the required loan amount is beyond your personal capability, you can join a group of lenders who together can make up the full loan amount.

Introduction.

As the money markets start to get themselves back into gear – what chance do first time buyers have of getting a good mortgage deal? Whereas before the credit crunch getting a 100% or even better than a 100% first time mortgage was as easy as a trip to the supermarket, post credit crunch all of the great deals simply melted away. The situation now is that without a big wad of money to put down as a deposit getting any sort of a mortgage is still tough for the first time buyer.

Things are improving.

The good news is that, even compared to six months ago, things are starting to look up in the mortgage markets, especially the highly competitive online mortgage deals. You’ll still not find that 100% or better mortgage offer, but the days of being asked for a whopping great 25% or even 30% deposit do seem to be over and deposit requests are falling and seem to be settling around 10%. Of course even a 10% deposit is still a hefty sum to find, a fairly modest apartment in most places will be $150k, so finding $15,000 as a deposit is still a big ask. So, is anyone out there prepared to offer 95% mortgage loans reducing the deposit requirement? Well, yes you will find online 95% mortgage offers for first time buyers, but the catch is that they will carry a higher rate of interest on the mortgage.

Loan to value calculations.

If you’re struggling to make a big deposit for the dream home you want to buy and so are looking for a 95% mortgage, the company making the loan will make a loan-to-value calculation to determine exactly what mortgage deal to offer you. To get the very best mortgage deals at present you still need to offer at least a 23.2% deposit, a lot yes but better than last year when it was 24.3%. So, without wishing to be too over-simplistic; if you can make their full deposit target you’ll get the best interest rate - let’s say 3.5%. If you can’t make that full deposit – you will still get your first time mortgage but with interest rates to penalize you, which on a 95% mortgage could easily exceed 5%.