The Smart Investor https://infoforinvestors.com The Smart Investor offers timely, trusted and actionable financial information for every investor, from early investors to financial advisors to high net worth individuals Tue, 23 Jul 2019 10:49:16 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.2 https://infoforinvestors.com/wp-content/uploads/2017/09/cropped-Logo-1-32x32.png The Smart Investor https://infoforinvestors.com 32 32 The Smart Investor offers timely, trusted and actionable financial information for every investor, from early investors to financial advisors to high net worth individuals.<br /> Whether you are just starting out as an investor or maintaining a net worth that is already sizable, we have the information you need. Our content is original and objective, and we curate the information we publish in order to optimize your ability to make smart financial decisions. Stock market investing, fundamental and technical analysis, real estate trends, funds and a broad personal finance section. We Helping people plan, save, and invest to reach their financial goals is essential to who we are. we are here for you every step of the way - provide you with powerful data, unbiased news, and strong analyses.<br /> Be The Smart Investor.<br /> The Smart Investor yes episodic The Smart Investor myworldprice@gmail.com myworldprice@gmail.com (The Smart Investor) The Smart Investor The Smart Investor offers timely, trusted and actionable financial information for every investor, from early investors to financial advisors to high net worth individuals. The Smart Investor https://infoforinvestors.com/wp-content/uploads/powerpress/The_Smart_Investor_Logo.png https://infoforinvestors.com myworldprice@gmail.com The Smart Investor offers timely, trusted and actionable financial information for every investor, from early investors to financial advisors to high net worth individuals Whether you are just starting out as an investor or maintaining a net worth that is already sizable, we have the information you need. Our content is original and objective, and we curate the information we publish in order to optimize your ability to make smart financial decisions. Stock market investing, fundamental and technical analysis, real estate trends, funds and a broad personal finance section. We Helping people plan, save, and invest to reach their financial goals is essential to who we are. we are here for you every step of the way - provide you with powerful data, unbiased news, and strong analyses. Be The Smart Investor. Los Angeles, California The Best Ways to Maximize Your Cash Back Rewards https://infoforinvestors.com/credit-cards/guides-credit-cards/maximize-cash-back-rewards/ Fri, 01 Mar 2019 14:10:05 +0000 https://infoforinvestors.com/?p=6409 https://infoforinvestors.com/credit-cards/guides-credit-cards/maximize-cash-back-rewards/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/maximize-cash-back-rewards/feed/ 0 <p>A cashback is a benefit that many credit card companies offer on some of their rewards credit cards.  Cashback refers</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/maximize-cash-back-rewards/">The Best Ways to Maximize Your Cash Back Rewards</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> A cashback is a benefit that many credit card companies offer on some of their rewards credit cards.  Cashback refers to the amount of money that the card company gives back to you based on what you spend through your credit card.  Some cards even give you bigger cashback opportunities on your purchases when you enroll in quarterly promotions or by shopping through their virtual shopping portals.

Often, card companies will set a limit or a maximum amount on how much you can earn back on promotions or quarterly rewards programs.  For example, they can let you get 5% cashback at gas stations but only up to $1,500 for the quarter and just 1% cashback on all other purchases.  Just make sure you’ve read the terms and conditions of the offer so you can fully understand and maximize your card’s cashback rewards program.

When shopping around for a cashback card, check out the percentages you’ll get back but don’t forget the annual fees because you might end up paying more than what you earn.

For example, Uber’s new Visa card offers a cashback of 4% on restaurant and bar purchases, 3% on hotels and airfares, 2% on online purchases (including Uber rides) and 1% for other purchases.  Surprisingly, they do not charge an annual fee (for now).

The percentages may not appear material but over the course of time, they do tend to accumulate.  Take a look at this:  if your monthly credit card bill is $3,000 and you always pay it in full, a 1% cashback means an extra $30 for you.  That adds up to $360 a year that you get for doing nothing – or more accurately, for spending.

Redeeming Your Cashback Reward

You can redeem your cashback in several ways, such as:

  • Via a bank deposit to your account. The card company can credit the cashback you have earned directly into your checking or savings account.  Some card issuers will allow you to cash out your balance without having to accumulate so much amount.  But make sure you’ve read the terms and conditions of your cashback program to know the redemption thresholds set by your issuer.
  • Get it thru a statement credit. In this mode, you get to apply your cashback to pay for your current credit card balance.  It may not be sufficient to pay the total amount but it will help defray your card payments.
  • Redeem a gift card. Some card companies have tie-ups with popular merchants that will allow you to get a gift card for your cashback reward.  You can use the gift card or eCertificate to buy items from the merchant.
  • Donate it to charity. If you advocate a movement or support a cause, some card issuers accommodate donations to select charities from cardholders. You may opt to donate some or all of your cashback rewards to a charitable organization that you want to support.

Maximize Cash Back Rewards – Plans, Tips and Tricks

There are many ways to increase your cash back rewards. However, it can take a lot of time to calculate and drill down to the small details. The key is effectiveness – quick, relevant and valuable. Here are the most effective ways to maximize your cash back rewards:

1. Use Your Credit Card for Ongoing Expenses

Most consumers do not realize that they do not need to spend more to earn rewards – they think that they should use their cards to make big purchases.  As a result, they subconsciously start looking for justification to buy things in order to increase their spending totals.

Well, this is a wrong approach aside from it being a dangerous one.  For one, they begin to incur more debt and next, they would have more expenses (most of them unnecessary).  If you’re an average consumer who does your daily spending using cash or debit cards, simply replacing your mode of payment with a cashback credit card will push your card spending total without jeopardizing your finances.

Think about this: almost everything that you buy or pay for your daily needs – gasoline, utilities, groceries, entertainment, rent – you can pay using a credit card.  You can simply consolidate all spending onto your credit card and then pay it off with cash when the credit card due date comes.

2. Buy From Online Cashback Websites

You can find some really good websites that act as the middleman between customers and online retailers.  The cool thing is that they give you a percentage of the commission.

The offers range from a couple of percents when you buy some clothes or book a hotel room to hundreds of dollars for signing up for a new mobile contract.

Just remember that the websites don’t always guarantee the money so don’t buy something through the cashback sites based only on the extra cash you’ll get.  In other words, make sure that the money is in your account before you spend it.  Always keep in mind that the cashback deal isn’t always the best one around – check other sites and promotional offers because you might find a more superior deal even without cashback.

Pay attention to the site’s instructions and follow them carefully so you can build up a reasonable amount faster.

Ebates (for Web, iOS, Android)

Ebates is a free affiliate marketing site and offers cashback to its members when they buy from their partner retailers including Nordstrom, Panasonic, Groupon, and Amazon.  They offer a bonus gift card of $10 (if you use it at Macy’s, Wal-Mart, Target, or Kohl’s) or $5 (if you apply it at Ebates) for your first purchase via Ebates.

Ebates has a partnership with over 1,800 retailers and boasts of 10 million (and counting) members who have already benefited from about $1B in cashback rewards.  Like Coupon Cactus, Ebates sends the cashback rewards once every three months.  Members can opt to receive their money via check or thru PayPal.

Like many other similar sites, Ebates’ retailers offer different deals but most of them give back a percentage of how much a member spends on the retailer’s sites.  The average rates range from 1.5% to 2% but some sites will offer “up to” 12% or even higher.

One cool offer of Ebates is their Double Cashback deals where some retailers give two times as much cashback they normally offer.

Honey/Honey Gold

Honey uses a browser plug-in that searches and applies the best discount codes at store checkout pages and tracks Amazon price dips – though it works a little differently.  “Each reward is a surprise,” the company claims because members won’t actually know the cashback percentage until after they’ve bought from the sites.

For example, it could be 1% to 5% on eBay, up to 10% at Wal-Mart and so forth.  Their model isn’t exactly straight-up cashback.  Members must accumulate points and later redeem them for gift cards and only at around a dozen stores.  You can use Honey Gold if you can’t find a cashback option for one of the other groups.

ShopAtHome

Being in existence for more than 30 years, ShopAtHome has helped 80 million users get discounts, offers and cashback rewards from 4,000 online merchants that include Wal-Mart, Ralph Lauren, and Crate&Barrel.  With this site, you can save money on just about anything that you buy.  The site pays cashback thru Amazon gift cards, check, or PayPal.

Creating an account is free and easy and by doing so, you already start to earn a reward.  Once you’ve logged in, you can start looking for online and in-store cashback deals.  Remember that you must log in to your ShopAtHome account before visiting the retailers’ sites or you may not get any cashback rewards even if you make a large purchase.

Another way to earn cashback is by accumulating points in their ShopGold Rewards program.  This segment of the site gives points to members for answering surveys, playing games and referring their friends to become members.

2,000 ShopGold points equal $20 in gift cards, 4,000 points equals $40, and so forth.  However, you can only redeem your Gold Rewards for gift cards only – they will not pay via check or PayPal.

3. Pay For Large Purchases With a Credit Card Instead of Cash or Debit card

Are you ready to buy that state-of-the-art home entertainment system?  How about the latest MacBook Air?  All set for that family grand cruise you’ve been saving for?

You can use your rewards card for all these purchases and reap great benefits.  Imagine that with just one swipe of your card, you can add hundreds – or even thousands of dollars to your spending totals and get a truckload of points for them.

What’s even better is that you get extra benefits to using your credit card for making these purchases such as better fraud protection and extended warranties on the goods.

But listen carefully.  You should only do this if you have the equivalent cash on hand to pay for these items and were really decided to go ahead with the purchase in the first place.  You can say that you are simply optimizing your planned expenditures to get the most out of them.

Do not deceive yourself into justifying a major purchase that you don’t want, don’t actually need, or can’t afford in the guise of the rewards you can get in return.

4. Shop at General Credit Card Cashback Websites

Here’s an amazing (but pretty easy) way to get cashback.  There are new services that link directly with your credit card and you don’t have to do anything out of the usual to get rewards.  Just dine at restaurants, book a hotel room and purchase your regular stuff and get cashback like magic.  Oh, did we mention that they work even if your credit card provider already gives you cashback?  If that isn’t a home run deal, we don’t know what it is.

The small catch is that this isn’t going to work everywhere but only from stores that are part of the given program.  This means that you will have to do a bit of an advance check.

Does the idea of getting a 30% cashback savings when you eat out appeal to you?  We know it would.  And would you want this offer to be available to many popular restaurants?  Obviously, you would.

Well, here are some examples of these services:

Yelp Cashback

You may as well call this “Dosh for restaurants” because the process model is very similar:  enroll and link a credit card, dine at partner restaurants, and earn cashback.

However, you can’t link the same card for both Dosh and Yelp although they both leverage third-party e-commerce company Empyr which handles the actual payments.  This could be why there are a lot of overlaps between the two sites both in restaurant and cashback rates.

Between the two, you stand to save more with Dosh but if you spend a lot on restaurants, Yelp Cashback is worth checking out.

Dosh

Members can get a lot more from Dosh because their merchant partners include in-store and online purchases in the cashback program – including hotels.  The process is simple:  just link one or more of your credit cards to your Dosh account then browse for current offers.

Like what?  How about 5% back at Payless, 10% cashback at Double Dave’s Pizzaworks and a $25 bonus for your first hotel booking using their app?  They also offer the option to transfer your cash to your bank account, donate to charity or receive it via PayPal.

5. Avail of Post-Purchase Cashback Services

The last option for maximizing the cashback till is a post-purchase cashback service.  It works by providing rebates after the fact but usually by looking at your purchases.

If you’re saying that it could be invasive of your privacy, well, you’ve already read this far.  Many of these services required your credit card number to be able to do what they’re supposed to do for you.

Let’s check out three notable providers by starting with the one that can score you price-match refunds without you having to do anything.

Walmart Saving Catcher

If you’re a regular Wal-Mart customer, you should be using this.  Use the Wal-Mart app when you pay then scan the QR code at the bottom of the receipt.  Submit the receipt to Savings Catcher and wait.  The app compares what you paid for against the advertised prices of local competitors.

If it finds an eligible item with a lower price, Wal-Mart gives you the difference in the form of a Wal-Mart e-gift card or a Bluebird card credit.

Paribus

There are many online stores that offer price-matching or price protection schemes for their customers.  If you buy something and then the price drops, you can get a refund for the difference between the old and the new prices.

What Paribus does is to track your purchases and when they find a lower price, they contact the store’s customer services on your behalf to get a refund.  The service is free but you have to give them permission to monitor your email so they can automatically look for electronic receipts.

To learn more about this, you can read articles about getting price-drop refunds without even trying.  You may find a similar tool (Earny) that provides the same service – but they keep 25% off whatever refund they collect on your behalf.

Receipt Hog

Would you have any objection to sharing your receipts for market-research purposes?  If not, scan them and send the images to Receipt Hog. For every qualified receipt that you send, you earn coins that you can accumulate and exchange for cash or gift cards. They also give opportunities to members to earn additional coins by participating in surveys, playing online games, referrals, and connecting Amazon accounts.

Some people don’t like this app because it always wants to know your location (in order to work).  This is not the only player in this field, there’s also ReceiptPal and other apps that also give you rewards for your electronic receipts.

You be the judge if the effort you put in merits the small reward you can get. We’re mentioning it because it is another form of cashback for free.

Bottom Line

Cashback is an added benefit that many credit card companies make available on some of their reward credit cards.  There are a handful of ways how you can get the most of your cash rewards; we’ve given you the most common ones.

Admittedly, since technology is constantly churning out new ideas, there could be other tools and services we did not mention or cover here.  If you’re actively using one of them or if you know a site or app that’s worth sharing to others, please mention it in the comments section.

The post The Best Ways to Maximize Your Cash Back Rewards appeared first on The Smart Investor.

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A cashback is a benefit that many credit card companies offer on some of their rewards credit cards.  Cashback refers A cashback is a benefit that many credit card companies offer on some of their rewards credit cards.  Cashback refers The Smart Investor yes 14:35
Short Selling: 5 Crucial Steps For Success https://infoforinvestors.com/investing/stock-market/short-selling-success/ Mon, 28 Jan 2019 16:30:44 +0000 https://infoforinvestors.com/?p=6234 https://infoforinvestors.com/investing/stock-market/short-selling-success/#respond https://infoforinvestors.com/investing/stock-market/short-selling-success/feed/ 0 <p>Often, the media would have no kind words to describe short sellers whom they often brand as villains of the</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/stock-market/short-selling-success/">Short Selling: 5 Crucial Steps For Success</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Often, the media would have no kind words to describe short sellers whom they often brand as villains of the financial markets.  Some present them as evil traders who would willingly drive down the stock prices of good corporations just to earn money from it.

However, a deeper analysis of these activities could typically bring them to light as heroes of the trade.  For one, they help identify over-valued companies and bring their prices to a more accurate level.  Short sellers also provide the liquidity that the market needs to function well.

What is Short Selling?

In concept, short selling is offering a buyer something that you do not own and in stocks, it could be something that you don’t even have on hand with you at the time of sale.

It takes a bit of unlearning to fully grasp the concept because many people struggle at the thought of how it can be possible at all. And a good many also question the legality of the practice – but hey, in the financial market, a lot of things are going on that defy traditional ways and values.

An investor may turn to short selling if he sincerely believes with conviction that the price of a particular stock is about to go down soon.He would sell now when the price is high and hope that the price goes down later so he can buy it back again.Experts advise against the practice because the potential for losses to an untrained investor is very high.It is actually riskier than the initial selection of stocks on which to put your money on.

Remember, when you buy a stock for X number of dollars, your maximum potential loss is whatever X amount you have paid for it.  When you short sell a stock, there is actually no limit to the amount of money you could lose in an instant.

The Basic Steps in Short Selling

Before you consider yourself a stock trading genius and dream to make gazillions of dollars by short selling stock, here are five steps you must consider:

1.  Research

You can find a lot of information about the short position from many sources.  You can start at nasdaq.com, which provides short interest data for stocks available on the Nasdaq, New York Stock Exchange (NYSE), and the American Stock Exchange (Amex). The site is great if you want to see data for each of the past 12 months because the trend can tell you if the short position of a stock has been increasing or decreasing over the past year.

Here’s a great tip to find more very useful information:  Go to Yahoo! Finance and type in the stock/company name in the Quote Lookup box then click the Statistics button.  When you scroll down, you will see a header that says ‘Share Statistics’ which will show you the most recent data for the following information:

  • Shares shorted up to a certain date
  • Short ratio
  • Short percentage of float as of a certain date
  • Number of shares shorted as of the previous month

The last item would be identical to whatever information Nasdaq.com would give you.

The item ‘Short Ratio’ or “days to cover” is information on how large the total short position is in a stock vis-à-vis the average daily volume.

The Short Percentage of Float basically is the total number of shares shorted divided by the “float” or simply the total number of shares freely available for trading by the investing public.

If the short percentage of float in a stock were to reach 100%, it means that every single available share of a stock has been sold and the short sellers have to buy them back before the investors or brokers can sell them again.  Take note that realistically, 100% would be impossible to achieve but we needed to use it to explain this concept.

Pay Attention to This:

If you are dealing with a large-cap blue-chip stock, take note that they often have an exceedingly low short position relative to their float.

The primary reason is that a large number of shares find their way into mutual funds and other institutions where they stay in the respective investment portfolios for a long time.

  These stocks also have the quality of remaining stable and do not usually go down so short sellers do not find them interesting.

Now, when it comes to riskier stocks, you’ll find they have short percentages.  Investors and traders have an array of reasons for taking a big short position in a stock.  Some may speculate that a stock’s price may have gone up way too high and is set to correct by going down.

Others may look at a company’s unimpressive showing and predict that its shares will continue to plummet.  Some may just simply believe that a stock may be too overvalued and some may believe that a company’s missed earning targets would adversely affect its stock prices.

2. Pick Your Best Shares to Short

Seasoned traders normally keep track of several stocks at any given time.  They would normally short stocks that are already under their radar for some period.  Many would use a screening tool to aid the process of selection basically to sort through different stocks.

A good candidate would be one that is falling through a series of lower lows with higher volumes – which indicates that the sellers are taking control.

One good lead is to look for stocks that rebounded from an apparent downtrend partnered with an overbought signal.  These stocks may have rallied to the upper band of the trading pattern but most likely show that its momentum has ended and is about to dive anew.

Even if you feel you have selected the best stock to short, it’s a good idea not to immediately begin shorting.

  You can wait for a little while just to be able to confirm the downward trend.  The technique is not to accurately predict the price fall but to jump in after it has started to move downward.  Yes, you may miss the first 10% of the decline but your patience will pay off and you can still come out with profits. You can read more about in our technical analysis section.

3. Stick to Short Selling Rules 

Former hedge fund manager and CNBC commentator Jim Cramer propose 6 vital rules to short selling.  Here is a condensed summary:
1. Never pick a company with a very good image.  If you pick a company with a very positive public image, shorting its share would be extremely risky.  You have a better chance for success if you short unpopular companies.
2. Check if the company is likely to attract a takeover offer.  You might have picked a troubled company with valuable assets and it can draw a buy-ought offer from another company and send the price skyrocketing. If the company fits that profile, take it off your list of shares to short.
3. Don’t short a stock because it appears overvalued.  Stock valuation is not an exact science and can be insanely irrational at times.  A popularly overvalued stock can become doubly overvalued just because of public perception.
4. Avoid shorting common stocks with put options.  It may look attractive for shorting but unlike a real short position, options can drive you to think that the price will go down.  It can let you take a bearish position with limited risk.
5. Be wary of other short sellers who invite you to join their mob.  The problem with “ganging up” on a stock is that the other sellers could bail out at any moment.  They can just exit the trade in a flash and you may end up holding an empty bag.
6. Be comfortable to hold on to your cash when times are uncertain.  Markets have a tendency of going sideways for long periods.  Only move in to short a stock if you’re absolutely confident that its price will fall soon.

4. Have a Plan

Probably the most important thing you could do when short selling is to have a protection program for your order in place.

You can request for a buy-stop or trailing buy-stop order to help curb any loss on a short sale.  A buy-stop order initiates a market order to buy back the shares when they reach a pre-determined price.  A trailing buy-stop order will make a readjustment on the trigger price if the stock moves on a downward trajectory.

Use the technical signals and understand the basic chart patterns to set stop trigger prices so that you can contain any possible loss to maybe just one-third of your profit target.

For example, you’re short selling a stock at $10 now and aims to repurchase them when the price goes down to $4 so you make a $6 gain.  You can set a stop price at $12 so if you incur a loss, it will just be up to $2 per share.

Of course, every trader knows how difficult it is to get clear technical signals – so you must learn how to adjust accordingly.  And one more thing to remember:  there’s no guarantee that your stop order will take effect exactly or near a stop price.

5. Understand the Ins & Outs of Short Selling

Shorting stocks isn’t as easy to do as it sounds because of the hidden risks that could drain your bank account or make shorting a losing venture.

One good example is if the stock pays a dividend, the timing of the release might obligate the seller to pay for it himself.  Obviously, this would be an additional cost and would cut in on the anticipated profit from the deal.

Another situation would be when stocks become difficult or even unavailable to borrow during the short sale.  The best thing to do is to totally avoid sorting such stocks.  It could put you in a spot where you have no choice but to buy back the shares at a disadvantageous price.

Tip: Always look at the amount of “short interest” in stock – or, how many shares of that particular stock have actually been sold short.  Then, you can decide whether you still want to short it or shift to another stock.

If a stock has a relatively high level of short interest, its price could go way up when any positive news comes around.

This is because traders would hurry to grab the shares so they can cover their short positions.

6. Be prepared to make a mistake

It’s downright impossible to take away all the risks that come with a short-selling transaction.  You should be ready for the fact that you would get things wrong many times and get them right a few times so institute some protections for this eventuality.

A good short seller has a lot of discipline and prudence.

After all, you don’t want to lose your money on your deals so try to cover your back and minimize your loss when you don’t get it right.

Warning to New Investors:  Avoid Shorting Stocks

You can only short sell-through margin accounts because of the potential exposure to unlimited losses on the part of the short seller.  If you only have a cash account, you cannot do this practice.  If you want to prevent short sellers from borrowing your shares without your permission, just open a cash account.

Anyway, this is a good safeguard for you because it helps eliminate rehypothecation risk. Rehypothecation is the practice of banks and some brokers of using collateral assets of borrowers and clients for their own purpose.

So, combining these two elements, the risk of unlimited losses and use of a personally-guaranteed margin account is a dangerous mix in the hands of an inexperienced investor.

If you’re a newbie or a speculator who doesn’t fully understand the risks involved in short selling, the results could be disastrous to your investment.  You need to at least have some form of protection available such as buying an appropriate out-of-the-money call option at a reasonable premium.

If you can’t explain the last sentence of the previous paragraph without having to Google the definition of the terms, shorting a stock is way over your league – you’d better keep your hands off it for the moment. There many ways to understand the stock market basics including special games for beginners.

The post Short Selling: 5 Crucial Steps For Success appeared first on The Smart Investor.

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Often, the media would have no kind words to describe short sellers whom they often brand as villains of the Often, the media would have no kind words to describe short sellers whom they often brand as villains of the The Smart Investor yes 11:43
How To Be a Credit Card Deadbeat? Here Are The Best Tips https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-deadbeat-tips/ Wed, 02 Jan 2019 22:30:55 +0000 https://infoforinvestors.com/?p=7011 https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-deadbeat-tips/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-deadbeat-tips/feed/ 0 <p>You may not be aware of it, but bankers and financial experts classify credit card users into two types:  Revolvers</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-deadbeat-tips/">How To Be a Credit Card Deadbeat? Here Are The Best Tips</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

You may not be aware of it, but bankers and financial experts classify credit card users into two types:  Revolvers and Transacters.  However, in this area, credit card companies look at their customers differently.  The truth is, they classify their credit card customers into three distinct types.  They are:

1. The Revolver

Believe it or not, the credit card companies love this type of customer.  In fact, if you fall under this type, you bet your credit card issuer would like to keep you as a customer for as long as they can.  Why do they love Revolvers?  It’s quite simple.  These customers provide the revenues for the card companies – you might say they keep the issuers in business.

The Revolver is the type of customer who does not pay off his balance in full at the end of each month so that he allows the interest to build up on the unpaid balances.

Over time, the balance will increase in total and the cardholder eventually has to pay it.  You can find Revolvers all over the country.  This diversity ranges from minimum wage earners to businessmen to high-powered financiers.

It doesn’t matter whether you’re the kind of card user who buys a high-priced item on a small-time budget or an online businessman who uses your card to purchase your inventory when there’s a sale.  If you carry a balance from month-to-month or if you only pay the minimum (or slightly over the minimum), you’re still a Revolver.

We’re not saying it’s necessarily bad to be a Revolver.  We just like to point out that revolvers ultimately end up paying more for the things they buy than most people do because of the additional interest on the credit.

2. The Card Hacker

Let’s get this straight:  we do not refer to a con artist, identity thief or malicious computer prankster when we say card hacker.

The card hacker is the creative cardholder who try to outsmart the card companies by taking advantage of their offers to the hilt.

One way is by opening two cards at once. The first one will be with big bonuses, double rewards in key categories but very high APR.  The second card will be a bare-bones reward card or one that offers zero-interest balance transfer cards that has no interest for the first 12 months.

Once the two cards are ready, the Hacker will use the big rewards card to purchase merchandise worth a few thousand dollars they have already budgeted.  It could be a state-of-the-art jacuzzi or a European holiday for the family.  Then, they quickly transfer this charge over to the card with the low rates on balance transfers.  Now, you can see how it will play out for the Hacker.  He ends up with a huge stack of rewards from the first card, he’s able to buy the big-ticket item he wants, and he now has a full year to pay it off interest-free.

Does this sound easy, exciting and perfectly legit?  Yes, but remember that it has its own risks.  Before you attempt credit card hacking, remember that some cards will charge you a balance transfer fee for the privilege.  If the fee is higher than the value of the rewards you got, you might end up losing money in the end.

3. The Deadbeat

Deadbeat here does not mean a person who doesn’t pay his debt.  In the credit card realm, they are quite the opposite.  A Deadbeat is actually a very responsible credit card holder who has a lot of positive financial sense.  However, credit card companies don’t make much money from Deadbeats so they don’t like them and they call them with a negative name.

Deadbeats practice a simple financial stewardship rule that benefits card holders but leaves credit card companies frowning.

This is the practice of paying the credit card bills in full every month.

As far as they can help it, staunch Deadbeats will never pay a single cent in interest to keep their credit cost as rock-bottom as financially possible.  Deadbeat is a cousin to the easy-going Transacter.  Transacters usually pay their balances in full and on time but once in a while, they allow a small amount of balance to remain from month-to-month.

Deadbeats are financially responsible people – they control their spending to only how much they can afford.

 Bargains, sales, and special promotions don’t appeal to them so much.  You may be a Deadbeat and you’ve noticed that you are not too popular among your family and friends because of your self-control.  Don’t let that affect you because ultimately when these people realize they are paying a lot more than you are, you will have the last laugh.

Why Companies Consider “Credit Card Deadbeat”?

The lifeblood of credit card companies is the money they collect from cardholders in the form of interest, fees, and other charges.  Any time you let your balance revolve by carrying it from one month to the next, you will have to pay interest and finance charge for the amount.  Credit card companies love this kind of transaction because they bring the real income and profits to the company.

When you settle your balance in full each month, the card company does not collect interest, so they don’t make so much money off it.

  Of course, they earn from merchant fees they collect from the stores whenever you use your card but that is minimal.  That being said, you don’t bring in great business to the credit card company, so they label you as Deadbeat.

Be a Credit Card Deadbeat

You can be a Deadbeat (or a Transacter) and save thousands of dollars in interest by following these tips:

Don’t Carry a Balance

By simply paying off your credit card balance every month (or even twice a month), you can avoid paying interest charges.  Some people pay the balance every time they get their paychecks.

If your employer pays you every week and you immediately pay your balance when you get your weekly pay, that is a good discipline that will reap rewards.  You will never be late, improve your credit, never pay interest, and have an easily manageable debt.

One good technique to make sure you never carry a balance on your credit card is to have a solid budget and stick to it.  Here are 2 important things to remember when making your budget.  They are:

Have a Saving Plan

Set aside some amount for things like a car breakdown, emergency home repairs, and sudden out-of-pocket medical expenses because these things can demolish your budget.

Make a budget for things you have a weakness for

You might believe that buying frivolous stuff is not a good financial stewardship practice.  But some of us pursue a hobby of sorts (although others may call it a weakness) like buying the latest sunglasses, collecting comics, or pampering your pets.

There must be a provision for these items in your budget because you will torture yourself when you can’t spend for them because you have no funds.

Pay on Time

Credit card companies have a reputation for charging cardholders left and right fees such as interest charges and late payment penalties. So, to avoid paying them, pay your balance on time.

As we’ve said before, paying your balance every time you have the resources to do so should prevent any stiff late payment penalty and damage to your credit score.

Work on Your a Credit History

Perhaps the simplest way to build a credit history is through credit cards.  If you are still in college, don’t worry because a lot of card companies have credit card products that college students can easily qualify for.

If you are getting a credit card because you want to build a credit history, then build a good one.

One way is to pay your bill in full every month.  Over time, consistently doing it will result in a good credit score.  Of course, managing your credit card responsibly is not the only way to build a good credit history.

Whether you have a mortgage, or an auto loan, or a personal loan from a bank, lenders will report your payments to the credit bureaus and that will build your credit .  Even your gym membership can find its ways to your personal credit history to the credit bureaus.

So, if you are late in your payment of the membership fee, you can hurt your credit score over such a small thing.  Students or recent graduates are highly unlikely to have their own mortgage or car loans, so credit cards would be the easiest route for them to build their credit history.  The other benefit of paying your card in full is that you also don’t pay interest.  That is totally different from a mortgage where the lenders will charge you interest every month.

Have 2-3  Cards, Maximum

Normally, an average person can comfortably live with one or two cards.  If you are just establishing credit, we suggest that you just get one card.  You may opt for a secured credit card which banks will give if you have a corresponding deposit account with them.  If you have a secured credit card, you offer your deposit as security up to the amount of your credit limit for as long as you use the card.

When you choose a credit card, look for one that can give your rewards but does not charge an annual fee.  If you have no choice but to get one with an annual fee, just make sure that the rewards outpace the fee.

If you get more than two credit cards, you will have a harder time tracking and managing all of them.

Calculate Your Credit Utilization Ratio

You need to mind your credit utilization ratio.  This is the proportion of your balance at the close of your billing cycle in relation to your total credit limit.  According to Experian, you should try to keep your credit utilization rate at 30% or below.

You might damage your credit score if you go beyond that threshold.  Credit scoring models would interpret a high credit utilization rate as a sign of possible overspending and irresponsible money management.  Therefore, it is riskier.

Know The T&C of Your Credit Card

Yes, we know that the fine prints on your agreement are long, boring and wordy but you should read it anyway.  Don’t rush but read through it.  Understand the many provisions such as grace periods, late payments, interest rate, and interest escalation clause in case of late payment.

Would you have to pay additional fees if you spend over your limit?  Is the interest rate different for a cash advance? Can you request for a waiver of the membership fee?

Summary

Credit cards can be helpful, useful and safe for managing your finances if you handle them well.  They can help you consolidate regular multiple bills into one payment.  You can link many recurring payments on your credit cards such as your mobile phone bill, your various monthly subscriptions, and even your charitable donations.  Most credit card issuers will let you pay online and many will also let you arrange for your payment to automatically come from your deposit account.

Disciplining yourself to be an intelligent consumer and knowing how to manage your credit card correctly will make you a Deadbeat.  Yes, the credit card company might dislike you, but we’re pretty sure your wallet will love you.

The post How To Be a Credit Card Deadbeat? Here Are The Best Tips appeared first on The Smart Investor.

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You may not be aware of it, but bankers and financial experts classify credit card users into two types:  Revolvers You may not be aware of it, but bankers and financial experts classify credit card users into two types:  Revolvers The Smart Investor yes 11:00
Credit Card Chargeback: 6 Useful Tips For Success https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-tips/ Wed, 02 Jan 2019 21:25:24 +0000 https://infoforinvestors.com/?p=7004 https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-tips/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-tips/feed/ 0 <p>What is a Chargeback? In its simplest definition, a chargeback merely reverses a credit card sales transaction.  In the Visa</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-tips/">Credit Card Chargeback: 6 Useful Tips For Success</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

What is a Chargeback?

In its simplest definition, a chargeback merely reverses a credit card sales transaction.  In the Visa 2016 chargeback management guidelines, it says that a chargeback “provides an issuer a way to return a disputed transaction.”

It pushes back up the line the debt for the items the cardholder has purchased:  from the purchaser to his card issuer, to the merchant’s bank, and then back to the merchant.  All of these steps happen within the transaction processor’s network.  It deletes a charge from a cardholder’s statement and, through a middleman, “charges back” the original amount to the merchant.

It is a powerful tool for the consumer.  With the chargeback process, the merchant loses a sale and absorbs the costs of processing the chargeback.

In addition, credit card companies apply additional charges to merchants who have too many chargebacks.

What Does a Chargeback Cover?

You can resort to a chargeback for any of the following reasons:

  • The merchant goes into administration – the store where you’ve purchased from has gone bust.
  • The quality of the item is unacceptable – the goods were not according to their description or were defective.
  • Non-delivery of items – you never received the goods that you’ve paid for and the company refuses to refund you.
  • A technical issue on your transaction – it could be an expired authorization or a processing error by the bank.
  • Clerical error – the merchant charged you multiple times or billed you for an incorrect amount.
  • You were a victim of fraud – someone committed fraud and made a purchase you did not authorize

The Timeframe for a Chargeback Claim?

As a rule, consumers have between 60 and 120 days from the time of the original purchase to file a chargeback.  After that, the card companies give merchants 45 days to respond, should they want to dispute the claim.  These are the rules of the credit card processing companies and they vary according to the card issuer whether they be Visa, Mastercard, American Express, or Discover card.

After the merchant submits their response, the merchant bank will investigate the case and come out with a decision.  In case there is a need for arbitration, the entire process can take much longer to complete.

1. First, Talk to the Merchant

Most credit card companies will advise that you to first reach out to the merchant and try to resolve the problem.

Most of the time, if a customer is unhappy with something, the merchant will refund their money.

Many consumers do not realize how loud their voices are as a customer and what kind of power they actually have over the merchants.  The consumer has a right to demand from the merchant to make things right to the satisfaction of their customer.

There are reasons why this is a good first step aside from taking a shot at the merchant’s customer-focused values.  Having a paper trail that tracks what you’ve done and who you’ve talked to can be an important card in case your claim gets lost, or if the merchant disputes your claim.

Keep a bit of a journal so you know exactly who you’ve already talked to and what the results have been.  Banks process a lot of these matters on a daily basis, so sometimes you can end up talking to different persons each time you call.

2. Theft or Fraud: Understand The Suspicious Charges

In case there’s a purchase on your credit card that you did not authorize, the law says you’re liable for the first $50 in unauthorized charges.  However, most card companies will not impose this amount on you if you report the charges immediately after you discover them.

If you suspect that someone has stolen your card or your card number, immediately call your credit card company, cancel the card and arrange for a replacement.  The issuer might even monitor the transactions on your account for a period of time. Go through the most recent charges to your card with your card issuer to make sure that all of them are legitimate purchases.

In a lot of cases, you won’t have to take drastic measures.  In fact, your issuer would probably inform you about fraudulent use of your card before you even notice it yourself.  If you suspect there has been theft or fraudulent use, you can file a police report or a fraud affidavit with the Federal Trade Commission.

3. Know Your Rights And Responsibilities

If you raise a dispute with your card company, they must investigate and get back to you within two billing cycles but not later than 90 days.  You don’t have to pay a charge that is subject to the dispute, but you should continue paying for the undisputed portion of your bill.

In light of this, the card company can’t report you to the credit bureaus as paying late and they cannot also collect interest on the disputed amount.

Not paying the disputed amount is actually the right thing because it preserves your rights to challenge the error under “claims and defenses.”

However, the Federal Trade Commission allows the card company to apply the disputed amount against your credit limit.  For example, if you have an available credit limit of $10,000 and you dispute a charge of an airline ticket of $3,000, you will only have $7,000 in available credit until they resolve the dispute (unless you’ve asked for a credit limit increase).

If you get a ruling in your favor regarding the dispute, the issuer should cancel the charge and any related interest.

On the other hand, if you lose the dispute, you will be responsible for the charge and any accumulated interest pertaining to the disputed period.  If you still don’t pay at that point, you risk damaging your credit.

4. Don’t Give Up Too Easily

If you have a valid complaint and you believe that your merchant is wrong but refuses to refund your money, don’t take no for an answer.

In such a case, you’ll want to get in touch your card company.  Some issuers will require a written dispute but the easiest way to start the process is to call the customer service number on the back of your credit card.

Always provide proof to back up your claims.  Show emails to the seller, ads for the item in question or proof that you’ve returned the product.  These are helpful pieces of evidence.  You may need to provide copies of these documents to the credit card issuer.

Before you make the call, check your records if you have unintentionally signed away any rights.

  For example, if you are disputing a contractor’s work on your home, check the contract first.  Sometimes, contractor’s contracts provide a clause that protects them from credit card disputes.  There is still a way out of this, but it makes the process more difficult.

5. Know Your Limits

Avoiding a dispute in the first place is always easier and less costly than fighting for a chargeback reversal.

The truth is, some chargebacks are harder to fight than others.  It would be better if you can avoid these types of situations if possible.

For example, it is usually easier to get a reversal on chargebacks that come from North America or Western Europe.  Chargebacks that originate from Russia, Ukraine, or Indonesia, are almost always impossible to win.  The lesson here?  Merchants should carefully scrutinize the original transaction for any indication of fraud or irregularity before going ahead.

6. File Under ‘Claims and Defenses’

If your dispute turns out to be unsuccessful, you have another chance – file a complaint under “claims and defenses”, a process that the Federal Trade Commission introduced in 1975.  Unlike billing errors, a consumer has up to one year from the time of purchase to file a ‘claims and defenses’.  However, you must satisfy these four criteria:

  • The amount subject to the dispute is more than $50;
  • You must not yet have paid the disputed charge;
  • You must make a good-faith effort to claim a refund from the merchant, and;
  • The merchant’s location must be within 100 miles of your home and within your state (this requirement does not apply for online purchases).

When you communicate with your card issuer after their billing error’s deadline (whether it’s 60 or 120 days), let them know that you will be using your claims and defenses right.

In a lot of cases, you won’t have to go through this avenue.  If you’re a good customer (even if you’re credit card “deadbet”) , your card issuer is going to try their best to help you because they don’t want to lose your business.  It might be confusing to some, but it’s good to know about it.  In case you’re not okay with how your dispute turned out, there is a secondary mechanism to get a chargeback.

The post Credit Card Chargeback: 6 Useful Tips For Success appeared first on The Smart Investor.

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What is a Chargeback? In its simplest definition, a chargeback merely reverses a credit card sales transaction.  In the Visa What is a Chargeback? In its simplest definition, a chargeback merely reverses a credit card sales transaction.  In the Visa The Smart Investor yes 8:51
Prosper Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/prosper-loan-review/ Thu, 27 Dec 2018 11:02:11 +0000 https://infoforinvestors.com/?p=6630 https://infoforinvestors.com/loans/loan-lender-reviews/prosper-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/prosper-loan-review/feed/ 0 <p>Prosper Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect the</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/prosper-loan-review/">Prosper Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Prosper Personal Loan Review 2019

Rating: 4 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

Prosper – About The Lender

Prosper is the first peer-to-peer lending marketplace, established in 2006 in San Francisco with $13 billion in loans. Peer-to-peer lending is a platform that matches lenders with borrowers.

Prosper focuses on the mass market of borrowers and their personal loans can be used for a wide range of reasons. They also have a lending arm for medical costs, Prosper Healthcare Lending.

Loan Specification

  • Loan amount range$2,000 – $40,000
  • Interest rate rage 6.95%-35.99%
  • Terms36-60 months
  • Origination fee2.4% – 5%
  • Late payment fee$15 or 5% of the amount due
  • Returned payment fee$15 or 5% of the amount due
  • Prepayment feeNone
  • Minimum credit score640
  • Funding Up to 14 days and then 1 to 3 days to deposit
  • Personal information (including address, phone number, email, and SSN)
  • Proof of Monthly income

Pros

  • Competitive Interest Rates – Prosper’s interest rates are competitive for borrowers with good credit histories and a strong cash flow.

  • More than One Loan – The borrower can get multiple loans at a time from Prosper.

  • Peer-to-Peer – The Prosper platform matches up borrowers with investors. Many borrowers like knowing that their payments and some interest go back to lenders who are everyday people.

  • Business Use – Prosper allows for borrowers to use their personal loans for business use. Other lenders do not allow for personal loans to be used for business

  • Service Wide Range of Borrowers – Prosper works with all types of borrowers, from prime to those with poor credit. They also have a wide range of rates.

  • Soft Pull Inquiry – Prosper allows for an initial soft pull inquiry so the borrower can get an idea of the options for which they may qualify.

  • No Prepayment Penalty – The borrower can pay off the loan early without any fees.

Cons

  • No Joint Borrowers –Prosper does not allow for joint borrowers.

  • Potentially Long Turn Around times –It can take up to 14 days to fund your loan and then a few days after to send your money. If you need money more quickly, there are other providers that can turn around your application much faster.

  • Potential to Go Unfunded –There is a possibility that your approved loan might end up not being funded. If investors do not want to invest in your loan, you will not be able to move forward.

  • Origination Fee –Prosper deducts a one-time origination fee of 2.4 to 5.00% (link) of your loan amount directly from your loan funds. This should be considered in the pricing of your loan when you apply.

  • Not Available in All States –Prosper does not operate in Maine, Iowa, and North Dakota.

What Can a Prosper Personal Loan Be Used For?

Prosper loans can be used for debt consolidation, home improvement, short-term and bridge loans, car purchases, baby expenses and adoption costs, engagement rings, small business costs, military loans, green loans, and special occasions

Debt Consolidation

Prosper debt consolidation is paying off one or more prior unsecured loans with the new Prosper loan. Instead of multiple payments to multiple lenders you can create one payment to one lender. The advantage of a debt consolidation loan with Prosper is that the payment and term are fixed so you know exactly when you’ll be out of debt. The idea is that you can take a high revolving interest credit card and save money by replacing it with a low rate fixed installment

Home Improvement

A Prosper home improvement loan is for home repairs or projects. The advantage of using a Prosper home improvement loan is the promptness of receiving the funds. Typically, it takes a month or more to get an equity line of credit on your home.

Short Term and Bridge Loans

Prosper loans do not have any prepayment penalty and have short terms. Borrowers can use Prosper for short-term financing or as a bridge for any gaps in long-term financing. Or if borrowers find a better rate they can pay off the loan early without penalty.

Car Purchase

Prosper allows their personal loans to be used for car purchases without using the car as collateral. Many times car loans are cheaper but if you are unable to get credit, Prosper may be a good option. Because many lenders require that the car be used as collateral, they will limit the type of car you can get. For example, with Prosper, you could use the loan to pay for a salvage title or classic car when with other lenders you wouldn’t be able to.

Business Loans

Prosper allows personal loans to be used for business use. Many other lenders only allow this type of loan for personal use. The loan can be used to purchase inventory, fund payroll, or pay for any other general business needs. It can help pay for your startup or fill gaps in financing when otherwise it can be difficult for a small business to get financing.

New Baby or Adoption Fees

A Prosper loan for baby and adoption can be used to help manage medical bills for a new baby or legal bills for adoption. The cost of living increases when you have an addition to your family and a Prosper loan can help cover those costs

Engagement Ring and Special Occasions

Using Prosper for an engagement ring will reduce the overall cost of one of the biggest purchases of your lifetime. You can also use Prosper for special occasions like to pay for your dream wedding.

Green Loans

Prosper green loans are home improvement products that help your home become more energy efficient and environmentally friendly. Many green projects can cost a lot upfront but will help you save money, in the long run, every month on your energy costs. Prosper can help with the upfront cost through a green personal loan.

Military Loans

Prosper offers military loans to help those in the armed services with expenses such as moving costs.

Prosper Application Process

The application process is a little different with Prosper because you not only apply but also create a profile for potential investors to evaluate you as a risk and accordingly lend you money for a portion of the loan. You being the process by checking your rate through a soft pull.

Prosper will ask you some basic information and give you a couple of rate and loan options. Then you will need to provide more information so Prosper can do a hard pull or credit check. This is where they will get the information they need to give you your rate. You will create a quick profile explaining why you need the loan. Your listing will then be posted on Prosper’s marketplace for up to 14 days where investors will look at your profile and decide whether to invest in your loan. Many listings do not stay up for the entire 14 days.

After your loan is funded, Prosper may ask you for some verification information, such as state ID, social security card, and income. You will sign documents electronically for the loan and then the funds will be sent to your bank. It could take a few days after funding for Prosper to deposit the money in your account.

Prosper Loan is Best for..

Prosper marketplace is a great place to start in your personal loan search. They offer personal loans for a wide variety of purposes and to a large market of borrowers. They do have a high origination fee while other providers do not have one. The process will take longer than with other platforms, so if you need funds quickly Prosper may not be the right place to start your search.

The post Prosper Personal Loan Review 2019 appeared first on The Smart Investor.

]]> Prosper Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect the Prosper Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect the The Smart Investor yes 7:08 OneMain Financial Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/onemain-financial-loan-review/ Thu, 27 Dec 2018 10:30:59 +0000 https://infoforinvestors.com/?p=6626 https://infoforinvestors.com/loans/loan-lender-reviews/onemain-financial-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/onemain-financial-loan-review/feed/ 0 <p>OneMain Financial Personal Loan Review 2019 Share: Rating: 3.8 stars out of 5 The Smart Investor reviews are unbiased, and</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/onemain-financial-loan-review/">OneMain Financial Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

OneMain Financial Personal Loan Review 2019

Share: Rating: 3.8 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

OneMain Financial – About The Lender

OneMain Financial is a publicly traded financial service company that offers personal and auto loans or loan with collateral. Established in Baltimore in 1912 and a commercial lender, OneMain has gone through many acquisitions and name changes to become what it is now.

OneMain is unique to other online personal loan providers in that they have over 1,600 physical locations or branches. This is helpful to borrowers who may have issues getting lending with traditional banks. This review will cover mostly OneMain Financial personal loan offerings, even though OneMain considers auto loans like personal loans.

Loan Specification

  • Loan amount range$1,000 -$30,000
  • Interest rate rage 16.05% – 35.99%
  • Terms24-60 months
  • Origination feeup to 5%, varies by state(
  • Prepayment feeNone
  • Minimum credit scoreNo Minimum
  • 1st payment As soon as same day
  • Personal information (including address, phone number, email, and SSN)
  • Proof of Monthly income
  • Employment Details

Pros

  • Application Options – You can apply with OneMain online, by phone, or at a local branch. Many personal loan providers do not have those options.

  • No or Poor Credit – OneMain helps borrowers that may have poor or no credit. If you have issues getting lending from traditional banks or other personal providers because of credit issues, OneMain may be willing to work with you.

  • Better Rates than Payday Lenders – If you have been using payday lenders to get by for credit, OneMain is a better option. They have lower rates than those types of lenders and a personal loan could help you catch up.

  • Quick Turnaround Times – OneMain Financial has a quick process and many borrowers are approved or rejected within 10 minutes. Many borrowers have their funds by the end of the day.

  • Rewards Program – OneMain Financial motivates borrowers by offering a reward program for those who pay their loans on time and do other activities including signing up for direct pay and using paperless statements.

  • Joint Applicants – OneMain allows loans with joint borrowers. This can help improve your chances of getting approved.

  • No Prepayment Penalty – The borrower can pay off the loan early without any fees.

  • Many Payment Options – OneMain Financial has over a dozen payment options for their borrowers including online, in person at a branch, over the phone, using the OneMain app, by mail, and at your local WalMart store.

  • 7 Day Satisfaction – If you no longer want your loan you can refund OneMain the funds and sign a cancellation agreement.

Cons

  • Higher interest rates –If you have good to excellent credit history and strong cash flows you can find better rates elsewhere. The lowest rate with OneMain is 16.05%.

  • No Soft Pull –Many personal loan providers do a soft pull inquiry on your credit to see what possible credit options they can offer you. OneMain only does a hard pull from the start, which will affect your credit.

  • Sign at Branch –OneMain requires borrowers to visit a branch to review the loan and sign loan documents. Many other personal loan providers use an application process that can all be done online.

  • Restrictions on Use –OneMain has more restrictions than other personal loan providers.

  • Fees –OneMain deducts a one-time origination fee amount directly from your loan funds. This should be considered in the pricing of your loan when you apply. OneMain also has other fees, such as late fees. Their fee schedule is not clear because it depends on what state you reside in. Take into consideration that there are other lenders who do not charge some of these fees.

  • Not Available in All States –OneMain is not available the following states: Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island, Vermont and Washington D.C.

What Can a OneMain Personal Loan Be Used For?

OneMain offers personal loans for many different reasons including debt consolidation, home improvements, life events, recreation and auto. OneMain Financial personal loans cannot be used for any post-secondary education expenses, to fund a startup or an existing business, to purchase securities, gambling or illegal activities

Debt Consolidation and Credit Card Consolidation

The OneMain Financial debt consolidation loan pays off one or more prior unsecured loans with the new loan. Instead of multiple payments to multiple lenders, you can create one payment to one lender. The idea is that you can take high revolving interest credit cards and save money by replacing them with a low rate fixed installment.

Home Improvement

The OneMain home improvement loan can be used for home repairs or renovations. The advantage of using a OneMain home improvement loan is that you do not have to use your home as collateral and you get funds much quicker with less documentation.Typically, it takes a month or more to get an equity line of credit on your home. OneMain has a very quick turnaround so if those repairs were unexpected you can use OneMain to get repairs started quickly.

Auto

OneMain offers auto loans that are both secured and unsecured. Unsecured loans can be used to cover auto repairs. The other offerings can be secured by your car. If you are interested, you can review the following links depending on what you are trying to do: auto refinancing, auto purchase and cash out refinance. The rate ranges on the secured loans are the same for the unsecured loans.

Life Events

OneMain’s life event personal loan can be used for wedding costs, medical costs, or funeral costs. Whether the events were expected or unexpected, OneMain turnaround is quick and easy to help you cover those costs.

Recreation

A OneMain personal loan can be used for a number of recreational activities including vacation, buying a boat, RV, or motorcycle. This type of loan also can be used with collateral.

OneMain Financial Application Process

OneMain Financial allows borrowers to apply online, over the phone, or in person. Most of the time an online applicant will need to go to the local branch to meet with a loan specialist. The online application process is simple and quick.

The borrower usually gets a yes or no answer within 10 minutes. The online application requires basic information about yourself and your finances. This includes the amount you want to borrow, loan use, name, address, email, date of birth, social security number, phone number, employment, and monthly income. Read and agree to some disclosures, and then OneMain will do a hard credit pull and let you know if you have been approved.

You then will have to make an appointment with a local branch to review loan options with a loan specialist. The specialist will verify information and ask for proof of ID, address, and employment or income. They will also review the value of your collateral, if you are using collateral.

Once loan documents have been signed, you can walk out of the branch with a check. You can also have the money transferred to your checking account or take a prepaid card.
If you live remotely and do not live close to a branch, OneMain will try to work with you. They may call you or you can call them at 1-800-961-5577 to move the loan forward.

OneMain Financial Loan is Best for..

OneMain Financial is best for borrowers with no or poor credit. OneMain could be a good fit for you if you have issues getting funding through traditional methods. OneMain does have high rates, but it is a much better deal than payday lenders.

There is also have a quick turnaround time, so if you are in a financial jam they might be a good choice. But eventually, you should take the time to find more favorable financing. If you have good to excellent credit, you should look at other providers first because they may have better rate offerings.

The post OneMain Financial Personal Loan Review 2019 appeared first on The Smart Investor.

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OneMain Financial Personal Loan Review 2019 Share: Rating: 3.8 stars out of 5 The Smart Investor reviews are unbiased, and OneMain Financial Personal Loan Review 2019 Share: Rating: 3.8 stars out of 5 The Smart Investor reviews are unbiased, and The Smart Investor yes 7:53
Lightstream Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/lightstream-loan-review/ Thu, 27 Dec 2018 09:03:12 +0000 https://infoforinvestors.com/?p=6611 https://infoforinvestors.com/loans/loan-lender-reviews/lightstream-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/lightstream-loan-review/feed/ 0 <p>Lightstream Personal Loan Review 2019 Share: Rating: 4.3 stars out of 5 The Smart Investor reviews are unbiased, and reflect</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/lightstream-loan-review/">Lightstream Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Lightstream Personal Loan Review 2019

Share: Rating: 4.3 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

Lightstream is the online consumer lending division of SunTrust Bank. SunTrust Bank is a bank holding company with $199 billion in assets, established in 1891 in Atlanta, GA.

SunTrust Bank is a regional bank while Lightstream products are available in all 50 states. Lightstream offers a wide range of personal loans for those with good to excellent credit.

Loan Specification

  • Loan amount range$5,000 -$100,000
  • Interest rate rage3.34% – 16.99% (with auto pay)
  • Terms24 to 84 months
  • Origination feeNone
  • Late payment fee None
  • Prepayment feeNone
  • Minimum credit score660
  • Debt to income ratio 50% or less
  • Discounts 0.50 for auto pay
  • FundingAs soon as same day, within 30 days of approval
  • Assets
  • Bank statements
  • Employment Details
  • Social security card/State ID
  • Income

Pros

  • No Fees – Lightstream has no origination, administration, or late fees. These fees should always be considered in the cost of your loan.

  • Flexible Term Options – Lightstream offers many different terms on each product. Many personal loan providers do not provide this flexibility.

  • Competitive Interest Rates – Interest rates are competitive and rates are not as high as those of many other lenders for personal loans. Lightstream states it will beat any competitor by 0.10%.

  • Many Loan Uses – Lightstream offers many different uses for their personal loans. They could help almost any borrower thinking of getting a personal loan.

  • High Maximum Loan Amount – Lightstream has one of the highest maximum loan amounts, up to $100,000.

  • Direct Lender – Lightstream is backed by a large bank that has been in business for over 100 years. They also do not have to deal with any third parties and therefore can provide funding fast.

  • Available in All States – Lightstream is licensed to do business in all 50 states.

  • Quick Turnaround Times – Lightstream has a quick process and many borrowers are approved or rejected within 24 hours. Many borrowers have money in their account by the end of the day.

  • Joint Applicants – Lightstream allows loans with joint borrowers. This can help improve your chances of getting approved.

  • $100 Customer Satisfaction Guarantee – “After receiving your loan from us, if you are not completely satisfied with your experience, please contact us. We will email you a questionnaire so we can improve our services. When we receive your completed questionnaire, we will send you $100. Our guarantee expires 30 days after you receive your loan.”

Cons

  • Not For Bad Credit Borrowers –If you do not have the best credit history you may not be able to get a loan through Lightstream. They cater to those with good to excellent credit histories.

  • No Soft Pull –Many personal loan providers do a soft pull inquiry on your credit to see what possible credit options they can offer you. Lightstream only does a hard pull from the start, which will affect your credit.

  • Stipulations –Lightstream requires you to use the loan funds for the purpose you stated in the application.

  • Restrictions for Business Use –Lightstream loans cannot be used to fund a startup or expand an existing business.

What Can a Lightstream Personal Loan Be Used For?

Lightstream allows for many loan purposes.They also post their best rates for each loan purpose. Their website breaks down the loans into 5 categories: auto, home improvement, recreation, family life and “almost anything else.”

Lightstream loans cannot be used for any post-secondary education expenses, to fund a startup or an existing business, or to pay off a current Lightstream loan.

Auto

Lightstream loans can be either secured or unsecured depending on the borrower’s credit profile. Once your loan is approved Lightstream will let you know if you need to secure the loan using your car.

The nice thing about not having the loan secured with your car is that there is less paperwork and you can get your money quickly. Also, you have more flexibility regarding what type of car you want to buy. Lightstream can be used for auto refinancing, classic car purchase, lease buyout, motorcycle financing, new, used, or as a private party purchase. The rates vary depending on what you are doing. Lightstream can give you the cash upfront and you can negotiate with cash in hand.

Home Improvement

Lightstream offers much longer terms for home improvement loans than other personal loan providers. The longest term for a Lightstream home improvement loan is up to 144 months. The advantages of using a personal unsecured loan instead of a home equity line of credit are that there are no fees, no appraisals, and a quicker turnaround time.

You can use Lightstream home improvement loans for basement renovations, hot tubs, kitchen remodels, landscaping, solar, or swimming pools.

Recreation

Lightstream allows their personal loans to be used for a wide range of recreation. This includes boat financing and refinancing, other marine products, timeshares, RV financing and refinancing.

Family Life

Lightstream offers loans for many of life’s expected and unexpected costs. Lightstream offers loans for adoption, pre-K-12 education, fertility treatments, medical costs, and wedding expenses.

Other

Lightstream offers loans for some unique circumstances. They have labeled this as “other,” but it covers a wide range of uses. You can use the loan to purchase an airplane, buy a horse or a horse trailer, buy jewelry, buy land, even finance a tiny house.

Lightstream also includes debt consolidation under other. They do not focus on consolidation as much as other lenders do. This could be because they focus on borrowers with good to excellent credit.

Lightstream Application Process

Lightstream does not disclose their minimum requirements for applying like other lenders do, but they have a few guidelines to consider: several years of credit, as well as a variety of credit, savings, liquid assets, and income to pay for a new loan.

Lightstream does not do an initial soft pull, so you will have to go through the whole application process to see if you are approved. Applying is a 4 step process that takes only a few minutes. You first pick the type of loan you want, how much and what term you would like. You also choose at the beginning if you want the .50% interest discount for autopay. You can apply for a joint or individual application.

They require that you provide basic information about yourself including name, contact information, social security number, date of birth, assets, employment, and income. You then will create a Lightstream account. The last step is reading over the application agreement and then submitting the application.

Lightstream will let you know within 24 hours whether your loan is approved or not. Many times they can fund your loan within the same day. If they need more documentation they will reach out to you for ID, banking information, citizenship, and proof of income.

Lightstream Loan is Best for..

Lightstream is best for those with good to excellent credit. Lightstream should be considered in any personal loan search. They offer longer terms, more loan uses, and higher amounts than other personal loan providers.

They do not have a “check your rate” or soft credit pull, but they have so many options it is definitely worth a look. They also have no fees, such as a high-cost origination fee. They are backed by a large regional bank and have very competitive rates.

The post Lightstream Personal Loan Review 2019 appeared first on The Smart Investor.

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Lightstream Personal Loan Review 2019 Share: Rating: 4.3 stars out of 5 The Smart Investor reviews are unbiased, and reflect Lightstream Personal Loan Review 2019 Share: Rating: 4.3 stars out of 5 The Smart Investor reviews are unbiased, and reflect The Smart Investor yes 7:33
Earnest Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/earnest-loan-review/ Wed, 26 Dec 2018 18:13:00 +0000 https://infoforinvestors.com/?p=6585 https://infoforinvestors.com/loans/loan-lender-reviews/earnest-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/earnest-loan-review/feed/ 0 <p>Earnest Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/earnest-loan-review/">Earnest Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Earnest Personal Loan Review 2019

Share: Rating: 4.1 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

Earnest – About The Lender

Earnest is a technology-enabled lender, launched in 2014 and headquartered in San Francisco, that offers personal loans and student loan refinancing. The parent company is Navient, which services about 25% of student loans in the US.

“The company (Earnest) uses software and algorithms to evaluate a person’s full education, employment, and financial profile, looking beyond a traditional credit score (also known as a FICO score) in order to obtain a complete financial profile of each applicant. This type of credit is referred to as “merit-based lending.”

Earnest is better known for student loan refinancing, but they also offer competitive personal loans.

Loan Specification

  • Loan amount range$5,000 – $75,000
  • Interest rate rage 6.99% – 18.24%
  • Terms36 to 60 months
  • Origination feeNone
  • Late payment fee None
  • Returned payment feeNone
  • Prepayment feeNone
  • Minimum credit score680
  • Funding5 to 10 days
  • Income
  • Employment history
  • Banking information
  • creditor information (debt consolidation)

Pros

  • Soft Pull Inquiry – Earnest allows for an initial soft pull inquiry so the borrower can get an idea of the options for which they may qualify, but because of Earnest requirements, often they cannot offer a rate unless you go through the whole application process and do a hard pull.

  • No Fees – Earnest has no origination, administration, or late fees. These fees should always be considered in the cost of your loan.

  • Flexible Payment Options – Earnest allows for adjustments to the monthly payment amount, and the borrower can pay higher, early, or extra payments. You can also change your payment due date.

  • Competitive Interest Rates – Interest rates are competitive and rates are not as high as those of many other lenders for personal loans.

  • Many Loan Uses – Earnest allows for many different uses for their loans, with a focus on borrowers who are early in their careers.

Cons

  • Not Available in All States –Earnest does not operate in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.

  • Longer Application Process –Earnest turnaround is longer than many other online personal loan providers. This is because Earnest looks at many different variables and requires more documentation.

  • Large Amounts on Short Terms –The terms are short and the payments on higher amounts can be too large for some borrowers.

  • Restrictions for Business Use –Earnest loans cannot be used to fund a startup or expand an existing business.

  • More Requirements –Earnest considers more information from the borrower and has more requirements than many other personal loan providers. They look at more than just credit history, see eligibility.

What Can a Earnest Personal Loan Be Used For?

Earnest personal loans can be used to pay for debt consolidation, vacations, medical expenses, engagement rings and wedding expenses, home improvements, or moving expenses. They cannot be used for any post-secondary education expenses, to fund a startup or an existing business, or purchase or invest in real estate.

Debt Consolidation

Earnest debt consolidation takes one or more loans or bills and pays them off with the new Earnest personal loan. Instead of multiple payments to multiple lenders you can create one payment to one lender. Earnest offers flexible repayment options.

Vacation

An Earnest vacation loan offers a way to get money for your vacation without having to deal with credit cards, or worry about every dime during your travel.

Engagement Ring and Wedding Expenses

Using Earnest for an engagement ring will reduce the overall cost of one of the biggest purchases in you lifetime. You can also use Earnest for wedding expenses to help pay for your dream wedding day.

Home Improvement

An Earnest home improvement loan is for home repairs or renovations. The advantage of using an Earnest home improvement loan is the promptness of receiving the funds. Typically, it takes a month or more to get an equity line of credit on your home.

Moving Expenses

An Earnest loan for moving expenses is a fast way to get the funds needed to move you and your items from point A to point B.

Medical Expenses

Earnest loans for medical expenses help borrowers manage large unexpected medical costs.

Earnest Application Process

Compared to other lenders, Earnest has a much more rigorous application process. Earnest looks beyond credit history, considering your saving patterns, employment history, career growth potential, and retirement savings. You will need all of this information for the application process.

Earnest offers a soft pull or “check my rate” option, but often cannot come up with a rate because of the many different items they evaluate. You will likely have to do a hard pull and fill out an application that includes personal information, education, and savings information. Many times you will need to show proof of those items by uploading them to their dashboard. This includes bank statements, identification, 401K or IRA statements, pay stubs and/or taxes.

Earnest has a longer turnaround time than other lenders with funding of the loan taking 5 to 10 days. Turnaround also depends on how quickly they obtain the information required to get your interest rate. Once the information has been verified you will need to sign loan documents if you decide to move forward.

Earnest Personal Loan is Best for..

Earnest is geared toward young professionals who may have many new and large expenses as they start out in life. They cater to borrowers who have good credit, consistent income, good saving patterns, and low debt. They have a more extensive application process and take much longer than other lenders to approve your loan.

The biggest advantage to Earnest is that they have no fees. Origination fees can greatly increase the cost of a loan, so Earnest should be seriously considered during any search for a personal loan.

The post Earnest Personal Loan Review 2019 appeared first on The Smart Investor.

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Earnest Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect Earnest Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect The Smart Investor yes 6:06
Best Egg Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/best-egg-loan-review/ Wed, 26 Dec 2018 16:52:57 +0000 https://infoforinvestors.com/?p=6567 https://infoforinvestors.com/loans/loan-lender-reviews/best-egg-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/best-egg-loan-review/feed/ 0 <p>Best Egg Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/best-egg-loan-review/">Best Egg Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Best Egg Personal Loan Review 2019

Rating: 4 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

Best Egg – About The Lender

Best Egg, established in 2014 out of Wilmington, DE, is a newer online lender but they boast lending over $6 billion to over 420,000 customers.

They focus on borrowers with good credit histories and pride themselves on the speed at which they can get customers their money. They have very high ratings with Consumer Affairs and the Better Business Bureau from many satisfied customers.

Loan Specification

  • Loan amount range$2,000 -$35,000
  • Interest rate rage 5.99% – 29.99%
  • Terms36-60 months
  • Origination fee0.99% – 5.99%
  • Late payment fee $15
  • Returned payment fee$15
  • Prepayment feeNone
  • Non Auto pay $7 a month
  • Minimum credit score640

Pros

  • Soft Pull Inquiry – Best Egg allows for an initial soft pull inquiry so the borrower can get an idea of the options for which they may qualify.

  • Quick Turnaround Times and Simple Application Process – Best Egg has a simple application process and one of the quickest turnaround times since the loan is usually funded in about 1 to 3 days.

  • Competitive Interest Rates – Interest rates are competitive for borrowers with good credit histories and strong cash flow. “You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.”

  • No Prepayment Penalty – The borrower can pay off their loan early without any fees.

  • More than One Loan – A borrower can get multiple loans at a time from Best Egg, but they do have stipulations

  • Have Many Loan Uses – Best Egg allows for many different uses for their loans.

Cons

  • Not Available in All States –Best Egg does not operate in Iowa, Vermont, or West Virginia.

  • Origination Fee –Best Egg deducts a one-time origination fee of .99% to 5.99% of your loan amount directly from your loan funds. This should be considered in the pricing of your loan when you apply. Take into consideration that there are other lenders who do not charge an origination fee.

  • Restrictions for Investments –Best Egg loans cannot be used for investments securities.

  • Large Amounts on Short Terms –The terms are short and the payments on higher amounts can be too large for some borrowers

  • No Joint Applicants –The application is based on the applicant alone. Best Egg does not allow for joint applicants

What Can a Best Egg Personal Loan Be Used For?

Best Egg can be used for consolidating debt, credit card refinancing, vacations, special occasions, baby-related costs and adoption fees, home improvements, moving expenses or large purchases. It cannot be used for any post-secondary education expenses, investments, or illegal activities of any kind.

Best Egg Debt Consolidation

Best Egg debt consolidation takes one or more loans or bills and pays them off with the new Best Egg loan. Instead of multiple payments to multiple lenders you can create one payment to one lender. The advantage of a debt consolidation loan with Best Egg is that the payment and term are fixed so you know your monthly payment.

Credit Card Refinancing

Best Egg credit card refinancing pays off one or more credit card bills. If you pay just the minimum required payment on your credit cards it could take years, if not decades, to pay off your balances. Best Egg credit card refinancing will make those many credit card payments into one fixed payment with an end date.

Vacations and Special Occasions

Best Egg vacation loans or special occasions loans offer a fast and easy way to get money for your events without having to deal with credit cards.

Baby-Related Costs and Adoption Fees

A Best Egg loan for baby and adoption can be used to help manage medical bills for a new baby or legal bills for adoption.

Best Egg Home Improvement

A Best Egg home improvement loan is for home repairs or renovations. The advantage of using a Best Egg home improvement loan is the promptness of receiving the funds. Typically, it takes a month or more to get an equity line of credit on your home. You can use a Best Egg loan to start your home improvement project immediately. Or you may need it for a major, urgent repair requiring immediate funding, such as a tree damaging your roof.

Moving Expenses

A Best Egg loan for moving expenses is a fast way to get the funds needed to move you and your items from point A to point B.

Large Purchases

You can use a Best Egg personal loan for large purchases such as appliances, automobiles, recreational vehicles, and medical bills.

Best Egg Application Process

The Best Egg application process only takes a few minutes. You will fill out a short form with some basic questions about yourself, including your full name, contact information, date of birth, and income. You will need to consent to Credit Profile Authorization, allowing Best Egg to check your credit.

Then Best Egg does a soft credit pull and you’ll be presented with loan options for which you are pre-qualified. You can get an idea of how much you’ll be paying before they do a hard pull inquiry on your credit. You may get a notification that the application has been declined. If you decide to move forward you will need to answer more verification questions, and allow a hard credit pull.

If Best Egg approves your credit application you will also need to provide verifiable banking information and possibly some documentation to verify your information. The process is relatively quick – the average turnaround time for Best Egg is 1 to 3 days. Once the information has been verified you will need to sign loan documents.

Best Egg Loan is Best for..

Best Egg is very competitive for borrowers with excellent credit and high income. If you don’t have those characteristics, or have average credit there is no real advantage to using Best Egg. You should take advantage of the soft pull to see what they can offer you. For those with average or bad credit, there may be more competitive rates available elsewhere. Take into consideration that Best Egg has high origination fees, which will increase your overall cost.

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Best Egg Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect Best Egg Personal Loan Review 2019 Rating: 4 stars out of 5 The Smart Investor reviews are unbiased, and reflect The Smart Investor yes 6:26
Avant Personal Loan Review 2019 https://infoforinvestors.com/loans/loan-lender-reviews/avant-loan-review/ Wed, 26 Dec 2018 15:59:25 +0000 https://infoforinvestors.com/?p=6556 https://infoforinvestors.com/loans/loan-lender-reviews/avant-loan-review/#respond https://infoforinvestors.com/loans/loan-lender-reviews/avant-loan-review/feed/ 0 <p>Avant Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-lender-reviews/avant-loan-review/">Avant Personal Loan Review 2019</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Avant Personal Loan Review 2019

Share: Rating: 4.1 stars out of 5

The Smart Investor reviews are unbiased, and reflect the views of our editorial staff. We’ve collected the information independently. Issuers did not provide the details, nor are they responsible for their accuracy. The review is not a recommendation, the actual rates/fees may be different.

Avant – About The Lender

Avant, LLC, established in 2012 out of Chicago, is an online mid prime lender that targets borrowers with less than perfect credit. They promote themselves as an alternative to payday loans, which on average cost about 400% in interest.They offer personal loans and credit cards through their platform to most of the United States.

They pride themselves on the speed at which they can get customers their money and the fact that they have customer service representatives who will help you 7 days a week, unlike a traditional bank. They have lent over 4 billion dollars to over 600,000 customers. Avant is one of the fastest online lending platforms today. e their goals.”

Loan Specification

  • Loan amount range$2,000 – $35,000
  • Interest rate rage 9.95%-35.99%
  • Terms24-60 months
  • Origination/Administration feeup to 4.75%
  • Late payment fee $25
  • Returned payment fee$15
  • Check Processing feeNone
  • Prepayment feeNone
  • Minimum credit score580
  • 1st payment 30 days from issued funds
  • Personal information (including address, phone number, email, and SSN)
  • Monthly net income
  • Monthly housing payments
  • Loan reason

Pros

  • Quick turnaround times – Avant has a quick process and many borrowers are approved with money in their account by the end of the next business day

  • Prime Credit Only – Avant targets borrowers who do not have perfect credit scores. They are a great alternative to payday loans, which are wildly expensive

  • Late Fee Forgiveness – Avant will refund your late fee if you make 3 on-time payments in a row

  • Easy to Use – Avant site is easy to use and the application process is quick

  • Talk to Someone 7 days a Week – Avant has customer service agents you can speak with 7 days a week

  • Job-Loss Support – Payoff states they will work with borrowers who lose their jobs by making adjustments to the payment

  • No Prepayment Penalty – The borrower can pay off their loan early without any fees

  • Soft Pull Inquiry – Avant allows for an initial soft pull inquiry so the borrower can get an idea of the options for which they may qualify

Cons

  • Higher Interest Rates –Avant services those with less-than-perfect credit, therefore the interest rates tend to be on the higher end. If your credit score and history are good, you may want to look elsewhere

  • Administration Fee –Avant administration fee is very high and should be considered in the pricing of your loan when you apply

  • Not Available in All States –Avant does not operate in Iowa, Colorado and West Virginia

  • One Loan at a Time –Avant does not allow borrowers to have multiple loans with them at a time

  • Unable to Use For Business Use –Business purpose loans cannot be funded through Avant

What Can a Personal Loan Be Used For?

Avant loans can be used for debt consolidation, home improvement, and emergencies causing unexpected costs. Avant loans are personal installment loans and cannot be used for business purposes.

Avant Debt Consolidation

Avant debt consolidation is to take one or more prior unsecured loans and pay them off with the new Avant loan. Instead of multiple payments to multiple lenders you can create one payment to one lender. The advantage of a debt consolidation loan with Avant is that the payment and term are fixed so you know exactly when you’ll be out of debt. They do not send payments directly to creditors.

Avant Home Improvement

Avant home improvement is for home repairs or projects. The advantage of using an Avant home improvement loan is the promptness of receiving the funds. Typically, it takes a month or more to get an equity line of credit on your home. You can use an Avant loan to start your home improvement project immediately. Another advantage over a home equity line of credit is that it’s based on the credit worthiness of the borrower, not the equity of a home.

Avant Emergencies

Avant emergency loans get you needed cash quickly for unexpected expenses. This can include car repairs, medical bills, or any urgent home repairs.

Avant Application Process

The Avant application process includes verification of information, such as identity, employment, income, and bank accounts. The application process takes about 15 minutes. Around 50% of loans issued from Avant do not require any human interaction. You fill out a short form with some basic questions about yourself.

Then Avant does a soft pull inquiry to see what options they have for you. You can get an idea of how much you’ll be paying before they do a hard pull inquiry on your credit. If you decide to move forward you will need to answer more verification questions, and allow a hard credit pull. Depending on the information you submit, you may need to speak with an Avant representative. You will need to sign loan documents. It is often possible for the loan to be closed and money sent to your account before the end of the next day.

Avant uses a knowledge-based authentication process to verify your identity. This is a series of questions that a borrower must answer to prove the loan is not being sought under fraudulent pretenses, or that you are not trying to use someone else’s identity.

Banking information for the verification process

Avant requires borrowers to have a personal or checking account on file. Avant uses banking information for the verification process. You may need to submit your bank account information to verify account information and income deposits. The bank account on file with Avant needs to receive the majority of your income.

Income is a must

Avant requires all applicants to provide information regarding their sources of income. They have an online verification tool you can use to verify your employment. Sometimes additional documentation is required.

For example, those who are self-employed or receive some type of supplemental income may be required to provide additional documentation. Avant can also use banking information to verify income. Avant may call your employer just to verify employment.

Loan Dashboard

Avant dashboard can be used to see what information is required and submit that information. If documentation is sufficient, Avant will send out confirmation information through dashboard. If there is additional information needed, Avant will reach out within 24 hours.

Avant Loan is Best for..

Avant services borrowers that many big banks would not. If you have trouble getting credit from other places, Avant may be the place for you. If you have used payday loans in the past, this may be an alternative for you. Take advantage of the soft pull inquiry and see what type of terms you could get through an Avant loan. You should also be open to shopping around for other personal loan providers.

The post Avant Personal Loan Review 2019 appeared first on The Smart Investor.

]]> Avant Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect Avant Personal Loan Review 2019 Share: Rating: 4.1 stars out of 5 The Smart Investor reviews are unbiased, and reflect The Smart Investor yes 6:40 Credit Builder Loan 101: How it Works, Types, Benefits and Alternatives https://infoforinvestors.com/loans/loan-guides/credit-builder-loan-101/ Sun, 23 Dec 2018 16:49:38 +0000 https://infoforinvestors.com/?p=6420 https://infoforinvestors.com/loans/loan-guides/credit-builder-loan-101/#respond https://infoforinvestors.com/loans/loan-guides/credit-builder-loan-101/feed/ 0 <p>You could say that a credit-builder loan is like manna from heaven for people who have poor credit or who</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/credit-builder-loan-101/">Credit Builder Loan 101: How it Works, Types, Benefits and Alternatives</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> You could say that a credit-builder loan is like manna from heaven for people who have poor credit or who have little or no credit history.  Why?

It’s because this loan will help them build credit.  Then, if they are able to get a good credit score later, it will be easier to get a credit card and they are more likely to be able to negotiate for a better interest rate.

What makes credit-builder loans unique is that they do not require good credit for approval, unlike credit cards or personal loans.

However, the lender will require you to have much income every month such that you can afford the monthly payments.

When you borrow money, the lender will hold the amount you borrowed in a bank account while you keep making regular payments.  They will report your on-time payments to the three major credit bureaus:  Equifax, Experian, and TransUnion.  Since they calculate credit scores from the data that come from your credit reports, making on-time payments will have a big positive impact on your score.

What is a Credit Builder Loan?

Perhaps, to many borrowers, the hardest element to build good credit, whether from the ground up or repairing a bad credit history, is patience.  You’ll need ample time to show lenders that you are a trustworthy borrower who makes on-time payments regularly.

A credit builder loan could be the best way to jump-start your journey to good credit history.

This is how it works:

A financial company such as a credit union that normally issues credit builder loans, will first deposit a small amount of money into secured savings account for the borrower.  Once the money is in the account, the borrower begins paying back the money in small monthly installments over an agreed period of time.  Of course, the monthly payment will have an interest component.

At the end of the loan’s term, which normally ranges from six months to two years, provided the borrower has paid off the loan, the bank releases the money to the borrower.  The borrower will receive the money in a lump sum, plus any interest earned (if the lender pays interest).

A significant benefit will accrue to borrowers who will be able to pay their monthly obligations on time.

Lenders will report the payments to credit reporting companies and this data will go into the borrowers’ respective credit histories.  Eventually, they will begin to build a solid credit report because of this information.

How Credit Builder Loan Works

How a Credit Builder Loan Boosts Your Credit

A credit builder loan helps individuals build their credit by providing them with an opportunity to show their creditworthiness through small monthly payments.  As they make their monthly payments on time, the lenders will report these regular loan payments to the credit reporting agencies.  By doing this, the borrowers’ credit history will show that they can make consistent, on-time loan payment until they’ve fully paid off the loan according to its terms.

Next, let’s see what it does to the credit scores.  After a borrower has started building a credit history and established trade lines in use, he begins to develop his credit scoreFICO and VantageScore are the two most popular measures and both range from 300 to 850.  Of course, any borrower would want to target a higher score because it shows a long and positive history of responsibly using credit facilities.

Naturally, when building your credit score, you will have to start from the low end.  But after a year or so of borrowing and patiently repaying your loans, your numbers will begin to rise quickly.  In terms of scoring, the two most critical scoring factors are your payment history and your debt utilization ratio (amount of actual debt over the amount of credit that you have).

Apply Only For Credit You Can Get

However, the length of credit, types of credit in use and pursuit of credit are also important factors that go into your score. There is no shortcut because you can’t speed up the terms of the loan but you could get several loans simultaneously to show that you can well manage multiple accounts. A word of caution:  apply only for credit that you’re somehow sure you can get because hard inquiries that will result from your loan application will pull your score down.

Credit builder loans are characteristically small and range from $500 to $2,000 so a borrower could easily afford the small monthly payments.

However, interest rates will still vary from lender to lender so it’s always good to do some scouting to get the most favorable rate.  You might find rates from as low as 5% per year all the way up to 16% p.a. at different banks.

Applying for a credit builder loan is quite easy.  A borrower can just simply go to a local lender’s branch to apply or file an application online.  Since the lender won’t release the actual funds to the borrower until he pays off the loan in full, most borrowers can qualify for a credit builder loan in a flash.

How a Credit Builder Loan Boosts Your Credit

Types of Credit Builder Loans

Basically, credit builder loans fall under two types: pure credit builder loans and share secured loans.

1. Pure Credit Builder Loans

Pure credit builder loans achieve two important objectives for the borrower.  It helps a borrower put up a savings account while building up credit at the same time.  The lender puts the entire loan proceeds in a savings account under the borrower’s name where it stays frozen until the borrower pays off the whole loan.

The borrower does not need to make an initial deposit to the bank but he has to make the monthly payments until the loan is paid off.

Afterward, the money goes to the borrower and he can use it as the deposit on a secured credit card.  More importantly, the loan history goes into his credit report and becomes a good entry to help improve his credit score.

This strategy has many other uses such as building savings for a down payment for a car.  Adding good entries into your credit history will improve your credit score over time and once you have a more ideal score, you could haggle for a lower interest rate on an auto loan.

2. Share Secured Loans

In a share secured loan, the lender uses a savings account as collateral for the loan.  The borrower has to deposit a sum of money into a savings account.  The bank will freeze the funds in the account and unfreezes them commensurately to the loan payments that the borrower makes.

Why would someone go through all this trouble?  Basically, this scheme is very good if a person wants to improve credit mix, which is one of the factors in determining a credit score.  Although it would result only in a modest increase of around 10 points, it is important for someone whose score only needs a few points to move from a “fair” to “good”.  For them, the slight difference between the interest on the deposit and interest on the loan is worth going through the process.

Credit bureaus pay attention to revolving credit (like credit cards) and installment credits (auto loans, mortgages and personal loans such as a share secured loan).

  If a borrower only has credit cards on his credit history, a share secured loan would help a little.  Take note that it will only be a small uptick because share secured loans are normally small short-term loans.

Creditors will now be more open to lending you money because you have shown that you can handle month-to-month payments.  They are ideal for consumers who want to start a credit history or someone who wants to repair damaged credit.

How Can You Get a Loan to Build Credit

Credit-builder loans could be an easy way to build or rebuild credit but they are not the most common.  It would take some effort on the borrower to find a lender that offers one.  But since they are a secure, safe means of improving a credit score, they’re worth going to great lengths to find one.

You may look for a credit-builder loan at the following:

Credit Unions

Credit unions offer the same line of products and services like a traditional bank but they are a nonprofit entity.  Plus, they offer other services – including credit-builder loans.  They will also keep the money they lend in an account until the borrower completes the term which is anywhere from 12 to 24 months.

Their interest rates are slightly lower than with other unsecured loans, and many credit unions put the funds in an interest-earning savings account, so that helps a little.

Local Banks

Most national banks do not offer credit-builder loans and will often suggest that you get a credit card instead.  You might have better luck with a local bank that can offer a personal loan that you secure by your funds until the end of your loan term.

At the proper time, you can choose to withdraw the total amount you’ve saved or keep them in the bank as a nest egg. It all depends on what you think will be of most financial benefit to you and your situation.

Online Lenders

The good thing about online lenders is that you can rebuild your credit without having to actually leave your house.  Businesses such as SelfLender work through banks and give out small loans that borrowers can repay over a year.

You need a certificate of deposit to secure your loan until it’s paid off while in the meantime, your lender reports your payment activities to the three major credit bureaus.

Alternatives to Credit builder loans

There are other ways to establish a good credit score aside from getting a credit-builder loan.  Here are some of them:

Apply For a Secured Credit Card

A secured credit card works the same way as a credit-builder loan in terms of trying to build or rebuild credit history.  The application process is practically the same except that issuers of a secured credit card will require a deposit of around $50 to $300 into a separate account.  The bank will issue the borrower a line of credit that’s usually equal to the amount in a deposit.  This way, the borrower can build a credit history without exposing the lender at risk.

Some credit card companies will allow their borrowers to “graduate” and level up to a traditional credit card after they’ve proven that they can meet their monthly payments religiously.  Lenders will report your payment history to credit reporting bureaus and, as an added service, will offer autopay, online payments and alert notifications to make sure you don’t forget to pay on time.

vThese types of card are not always free.  Some will require that cardholders pay an annual fee and agree to a high APR that can sometimes go as high as 25%.

Try to Get an Unsecured Personal Loan

There are unsecured personal loans that borrowers can easily qualify for to help them build credit.  These are small to big loans, ranging from $2,000 to $50,000 that lenders make available to borrowers with lower credit scores.

The lender will release the money to the borrower upfront and if the borrower has the proper financial discipline, he can use the same funds to repay the loan since his purpose is primarily to build credit and not to source for extra spending money.

This path to building credit is a little risky and a bit costly.  Many lenders of unsecured personal loans charge origination fees and interest rates that can run up to 36% per year.  Looking at it from that point of view, it’s an expensive way for an individual to build credit.

Joint Account Holder or Authorized User

Consider asking a family member to add you to their credit card account as a joint account holder / authorized user.

In a joint account arrangement, the responsibility for making payments would be on each account holder so that any late payments would negatively affect each account holder’s history.

Authorized users, on the other hand, are not responsible for making payments but they have access to use the credit card facility.  Although both options can be a way to build credit, not all card issuers report authorized user accounts to the credit reporting agencies.  Be sure to find out about this before you ask them to add you to their account.

As in any other type of credit, choosing any of these options means you have to pay back your debts on time through monthly or bimonthly repayments.  Remember that any late payments or missed payments will have a negative impact on your score.

One more important thing:  just be sure you can afford to take the extra debt before you borrow. Going into it without doing so could bury you in debt you must consolidate later, wreck your budget, and bring your credit to a worse situation than before.

Should You Try a Credit Builder Loan?

Yes, we can all agree that a credit-builder loan is a good way to build your credit – but it’s crucial that you are certain that financially, you can afford it.  Compute how the monthly payments will impact your budget, if at all.  It’s never wise to get any loan that would turn your budget upside-down because it would normally cause you to fall behind on your other bills and debts.  This would, in turn, hurt your credit score instead of making it better.

Remember that in many cases, you’ll be advancing your own money and you may not get it back for several months or even a couple of years.  And that would depend on the size of the loan and how much your monthly payment would be.

Remember too, that you will be paying interest that goes to the lender and does not go back to you at the end of the loan term.  Using this type of loan will cost you money.  It would be a bonus if you can find a lender that will refund the interest charges if you make all your payments within their due dates.

The post Credit Builder Loan 101: How it Works, Types, Benefits and Alternatives appeared first on The Smart Investor.

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You could say that a credit-builder loan is like manna from heaven for people who have poor credit or who You could say that a credit-builder loan is like manna from heaven for people who have poor credit or who The Smart Investor yes 13:15
7 Useful Tips to Increase Your Credit Card Cashback Rewards https://infoforinvestors.com/credit-cards/guides-credit-cards/increase-credit-card-rewards/ Tue, 18 Dec 2018 23:24:57 +0000 https://infoforinvestors.com/?p=6374 https://infoforinvestors.com/credit-cards/guides-credit-cards/increase-credit-card-rewards/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/increase-credit-card-rewards/feed/ 0 <p>You’re probably aware that many credit card companies offer cash back perk as part of their rewards program for some</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/increase-credit-card-rewards/">7 Useful Tips to Increase Your Credit Card Cashback Rewards</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

You’re probably aware that many credit card companies offer cash back perk as part of their rewards program for some of their cards.  In this scheme, a cardholder earns back a percentage of the amount he spends on his credit card purchases.  Some cards even add more opportunities to their cashback program to provide their cardholders additional cashback earnings.  They can sign-up in quarterly promotions or shop through partner virtual merchants to earn more benefits.

Just take note that there is a cap on how much cash you can earn back on your card purchases whether through strategic promotions or quarterly rewards programs.  For example, your card company can limit your cash back to 5% for gas purchases up to $1,500 only for the quarter and give you just 1% cash back on all other purchases.  It’s important that you read about and understand your card’s cash back rewards program so you can take full advantage of its benefits.

If you are really keen on the cashback reward of a card, you should be looking at the percentages that it offers and how much annual fee it charges.

  For example, Uber’s new Visa card pays back 4% on restaurant and bar purchases, 3% on hotels and airfare, 2% on online purchases, 2% on Uber booking and 1% for the rest.  At present, it does not collect an annual fee.

The percentages may look small, but over time, they add up to make a significant amount.  Look at this:  If your average monthly credit card bill is $3,000 and you pay it off in full then get just 1% back, you’ll have $30 every month.  That’s an extra $360 every year for practically doing nothing.

Redeeming Your Cash Back

There are several ways to redeem the cash back.  These are:

  • The card company can deposit it to your account. The cash back you have earned can go directly to your checking or savings account. Some cards will even let you cash out your balance without having to accumulate a certain cash back amount. Read your terms and conditions to know your redemption guidelines and thresholds.
  • The card company can give you a statement credit. In a statement credit, you’re effectively using your cash back to pay part of your credit card bill.  In this arrangement, the card company applies your cash back against your current balance.
  • You can get it through a gift card. Some card companies will offer your cash back in the form of a gift card or eCertificates acceptable in popular stores and merchants.
  • You can donate it to charity. You can donate some or all of your cash back to a charity of your choice. The card company will transfer the designated amount directly to the account of the charitable institution that you’ve selected.

How to Increase Your Credit Card Cash Back Rewards

Among the many rewards schemes by card companies, a cashback rewards program appears to be the most beneficial for most consumers and one of the simplest.  But it wouldn’t hurt to know the guidelines that can help you get the most from a cash back program.

On top of this is the caution to spend only up to what you can afford to pay off in full each month.  If you don’t pay your total card bill, you will be revolving the funds and will have to pay interest or finance charges.  These charges would most likely eat up any reward you’ll get.  If you can’t help but carry a balance, get a low-interest card instead.

1. Choose The Right Rewards Credit Card

Check if the credit card and rewards program you picked fit your financial lifestyle.  If you’re a frequent flyer, a hotel credit card or airline card may be the best for you. A gas rewards credit card might be the optimal choice if you’re always on the road.

If you want simplicity, you may prefer to have a cash-back credit card.

  Many cash back cards offer several ways to redeem your rewards such as checks, statement credits, gift cards or donation to your chosen charity.  Others will automatically credit your bank account for your rewards.

Remember that not all cards are equal even if they offer a similar type of rewards program.  Some will have higher divisors to compute your credits and others might have minimum spending limits to qualify so familiarize yourself with the terms and conditions first.

2. Watch Out For Bonus Opportunities and Take Advantage of Them

Card companies often offer promotions and opportunities to double or even triple your rewards earnings power so watch out for them.

Many would offer increased cash back return rate every quarter to boost sales of certain product categories.

An example would be when issuers would increase the rate to 5% on gas purchases during summer when families use their cars and campers to drive to vacation places.  Other companies will increase rewards during the winter holidays.

Some card issuers will ask you to enroll in their quarterly or seasonal cash-back specials so be in waiting.  Check your mailbox or inbox because they mail the materials or send them online or through your mobile phone.

Another convenient way to get more rewards is by shopping through the issuer’s online shopping portals.  For example, Discover offers cash back to cardholders who shop through the Discover Deals portal which features retailers such as Bloomingdale’s, Walmart, and Apple.  Other issuers have similar schemes and bonuses.

3. Have One or Two Back up Specialty Cards to Cover Special Categories

There are cards that give you special bonus points when you use your card at certain places such as supermarkets, gas stations or department stores.

Analyze your regular spending in these categories to check which cards will give the highest rewards to you.

For instance, if a card offers 3% cash back at supermarket purchases, compute for your annual grocery spend and get 3% of that to know your potential cash back every year.  Use that baseline figure to compare the card to other cards that offer fixed bonuses in other categories.

Or, you may want to get a card that can give you 5% back in categories that change every quarter.  Of course, you have to keep up with those categories but it may be worth the effort.  Just remember that usually with these card types, your spending in non-bonus categories will usually earn you only 1% cash back.

To maximize the rewards that you will earn, use your specialty card when making purchases in bonus categories (Such as Amazon, Walmart or Apple credit card) and use your ordinary card for all other credit card expenses.

4. Use Your Credit Card For All Regular And Recurring Expenses

Many cardholders have the wrong idea that to earn rewards, they need to start spending more.  As a result, many end up looking for the flimsiest reason to buy things in order to jack up the spending totals.

This is a very defective strategy not just because you’re setting yourself up for debt but you may be spending a lot more money unnecessarily.  If you’re like one of the average American consumers who make their day-to-day spending using their credit cards, there’s no need to spend more.  Simply making your regular purchases with your cash back credit card will increase your spending total without breaking the bank.

Practically for everything the average person pays for, whether they be groceries, gas, utilities, rent, clothes, etc. he can use a credit card.  You can simply consolidate all spending onto your credit card and when the card billing comes, just pay it off with cash.

5. Master The Rules

Credit cards may appear to be similar but each one has its own rules for their rewards system.  Each card issuer’s system is a little bit different and learning exactly how each one work can help you maximize your points and rewards.  You can redeem your points for different things – you can get a cash back, gift cards, plane tickets, items, etc.

A simple cash back probably has the least return for your points often having a 1:1 ratio – use it only when cash back is necessary.

Here’s an interesting fact:  when you use your points on purchases or exchanges through the travel portal, you’ll normally come out way ahead since many portals give back 1.5x to 2x when you exchange your points.  Choices are many too and can come in the form of gift cards to plane tickets for flights across the globe.  However, it will depend on the exchange, their current deals and promotions, and their company partners or tie-ups, etc.

Being aware of the categories and products that give you more for your points can save you more money aside from the points you’ve already accumulated. These portals usually partner with other reward portals such as hotels and airlines.  If you study the exchange values on transferring points from one system to another, you may be able to get a big discount on some options.

6. Make Large Purchases Instead of Cash or a Debit Card

Do you need a new large-screen smart television?  Looking at the latest laptop?  Want to overhaul your wardrobe?  All of these are great potentials for using your credit card.  Just one transaction will instantly bring up your total spending up to a few hundred or even a thousand dollars.  In the process, you will also increase your total points.

There are extra benefits you can get if you use your credit card to buy these items.  You can get better fraud protection and extended warranty services from the manufacturer or store.

The important thing here is that you will use the card for convenience and rewards instead of paying with cash.  This means that you already have the cash on hand to pay for these things and you really meant to buy them in the first place.

You are simply turning your planned spending into something more efficient and profitable for you.

  Do not fool yourself into thinking that you need to make major purchases that you don’t actually need or can’t afford just because of the big rewards that you will get.

7. Pay Your Total Balance Monthly as They Become Due

Even with all the sweeteners, always remember that a rewards credit card is still a debt facility.  Therefore, it is important to pay off your total balance every month.

Cardholders who revolve their balances are actually on the losing end:  they don’t benefit from the rewards and they pay a higher interest rate.

Experts say that most issuers get the funds to sustain their rewards program from the higher interest rates they charge on rewards cards.

Another thing you should not do is to miss a payment.  Some card issuers will forfeit your rewards if you miss a payment.  The same consequence applies for long periods of inactivity on your card.  You may lose whatever rewards or cash backs you’ve earned but have not yet redeemed.

We recommend that you cash in or redeem your rewards periodically instead of trying to amass a huge amount.  This way, you’ll get the full value of your rewards and you lessen the risk of losing them through the expiration of the points or issues with your use (or non-use) of the card..

7 Useful Tips to Increase Your Credit Card Cashback Rewards

The post 7 Useful Tips to Increase Your Credit Card Cashback Rewards appeared first on The Smart Investor.

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You’re probably aware that many credit card companies offer cash back perk as part of their rewards program for some You’re probably aware that many credit card companies offer cash back perk as part of their rewards program for some The Smart Investor yes 11:13
The Chargeback Process 101: How Does it Work? https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-101/ Fri, 16 Nov 2018 22:42:38 +0000 https://infoforinvestors.com/?p=6264 https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-101/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-101/feed/ 0 <p>If you’ve been buying things from brick-and-mortar or online stores using your credit card, chances are that you’ve experienced cases</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/chargeback-101/">The Chargeback Process 101: How Does it Work?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> If you’ve been buying things from brick-and-mortar or online stores using your credit card, chances are that you’ve experienced cases when you needed to resolve an issue or dispute a transaction with a merchant.

Maybe you’ve tried to return a product (rather unsuccessfully) or did not receive the goods or services that you paid for, or perhaps there are charges on your card that you did not make.  All of these cases may warrant a credit card chargeback.

A card chargeback is a remedy to get a refund for an amount in dispute that cardholders can resort to after directly talking with a merchant becomes fruitless.

This is a formal process but most card companies made the system consumer-friendly that there is hardly a need to get the help of a legal professional to do it.

What is a Chargeback?

In its most simple definition, it means a reversal of a credit card sales transaction.  The Visa card 2016 chargeback management guide describes that a chargeback “provides an issuer a way to return a disputed transaction.”

The system pushes the debt for the item you initially purchased back up the transaction line:  from you, then to your card issuer, to the merchant’s bank and finally back to the merchant.  All these steps will go through the transaction processor’s network.  It will delete the charge from your bill as the cardholder and, through the middleman, ‘charges back’ the amount to the original merchant.

It’s a powerful weapon for the consumer.  In a valid chargeback, the cardholder gets his money back while the merchant loses a sale and shoulders the cost of processing the chargeback.

You may also think of this as a financial ‘street justice’ because an unscrupulous merchant that has too many chargebacks will have to pay additional charges from credit card processing companies.

What Does Chargeback Cover?

You can use chargeback for any of the following situations:

  • The merchant company folds up. The store or merchant where you purchased your product closed down and there is an issue on your product.
  • You got an inferior item. The goods you received were not according to what the seller described or it is downright defective or faulty.
  • You did not get what you paid for. The merchant was not able to deliver the goods you purchased or services you paid for as they have promised and they refuse to refund your money.
  • Technical issues in the transaction. There was an error in the transaction or the store effected it even with an expired authorization.
  • Clerical or systems error on your statement. The card company has charged you or billed you several times for the same transaction or billed you for a higher/incorrect amount.
  • Fraudulent use of your card. Your account might have been a victim of fraud or there are purchases that you did not make nor authorize.

what does credit card chargeback covers

What’s The Timeframe to File a Chargeback Claim?

On the average, you can file for a chargeback claim between 60 and 120 days from the time you made the purchase with your card.  After filing, the merchants have about 45 days to respond should they wish to dispute the claim.  These are the general rules that the credit card processing company has set but they will differ according to the card you’ve used in the transaction.

So, expect Visa, Mastercard, American Express or Discover to have their own set of rules and timetables.  If a merchant submits a response, the merchant bank will do an investigation and come out with a decision.  In some cases, arbitration is necessary – in which case, the entire process will take much longer.

How The Chargeback Process Goes

As yo already know, the chargeback process can be tedious and long, so take it into account.

You may notice that this is not the usual process but we suggest that you try the following steps first:

1. Check the Merchant’s T&C Regarding Returns and Refunds

You might get a representative from the card company who may not be totally familiar with the company’s contracts, policies, or terms and conditions.

If you arm yourself with the knowledge about the merchant’s conditions, you can simply cite the specific provisions where you are basing your claim upon.

This would mean reading through the merchant’s contracts, receipts, and other related documentation to see if you are actually entitled to a refund based on your situation.  You should mention this fact to the merchant as you present your case.

2. Ask The Merchant For a Refund

The initial step to resolve your billing issue is to first try approaching the merchant directly.
>Many customer-oriented companies have policies that require them to refund a customer’s money if they are not satisfied with the service or product. Some of them will even give a refund if you’ve had a negative experience with their company.If it doesn’t work because the merchant is not able or not willing to give a refund, you may be able to get store credits instead.  You can use it to purchase other products or services from the store but you don’t have to agree if you don’t want to.

Let’s look at the normal process of a chargeback:

2.1. The cardholder files a chargeback – The chargeback process begins when a dissatisfied customer files a chargeback request with the card company.

2.2. The card company will then review the chargeback request – Every chargeback request should have a reason code.  The reason code specifies the very reason why a cardholder is disputing a transaction such as “Goods or services not as described.”  Every code has its own conditions such as filing time limits, supporting documents, etc. The card issuer will go over the chargeback claim to make sure that it meets all the regulations and requirements.

2.3. The issuer will take the appropriate action – If the issuer sees that the cardholder’s claim is valid, they will deduct the funds from the merchant’s bank account and credit them to the cardholder’s account.  They will then send a notice of the chargeback to the merchant’s bank (acquirer).  If the cardholder doesn’t have a legitimate claim, the issuer simply voids the request.

2.4. The acquirer will review the chargeback and then takes action – The two biggest card networks, namely Mastercard and Visa, have created many chargeback rights.  One of them is to give merchants the right to dispute an illegitimate chargeback. If someone makes an inaccurate chargeback claim, the merchant can attempt to regain their profits that the card company unjustly took from them. Also, If the acquirer has possession of compelling evidence to dispute the chargeback, the bank will favor the merchant.  If there’s none, the acquirer will pass the chargeback to the merchant.

2.5. The merchant will review the chargeback and then takes action – If the chargeback request has merit, the merchant might have no recourse but to accept the losses.  However, if the merchant has adequate and compelling evidence to show that the chargeback is not valid, the merchant can re-present the chargeback to the issuer for their review.

2.6. The acquirer will re-present the chargeback – The next step will involve the acquirer to dispute the chargeback on behalf of the merchant.  They call this process ‘representment’.

2.7. The issuer will review the evidence presented and then takes action – If the merchant was able to present compelling evidence to successfully refute the cardholder’s claim, the card company will post the transaction again to the cardholder’s account.  They will deposit the corresponding funds back to the merchant’s account. These are the funds that they originally deposited into the merchant’s account and subsequently removed with the chargeback.

However, if the merchant is not able to present a convincing case and fails to refute the cardholder’s claim, the chargeback will remain as it is.  They will permanently remove the transaction amount from the merchant’s bank account and reflect it in the consumer’s card statement.

Improper Instances of Chargebacks

Some cardholders resort to chargebacks for a varied range of illegitimate reasons.  In such cases, your chargeback won’t approve and you’ll have to deal with the consequences.

Here are a few:

Going through the bank seems to be easier and more efficient

Few people would want to go through a Customer Service Department of their merchants.  Many people try to file a chargeback because they think it is simpler, quicker and there’s no need to ‘confront’ salespeople.

The truth is, most merchants would want to keep doing business with you for a long time and they will try to do what they can to resolve your complaints quickly to make you a satisfied customer.

Buyer’s remorse gets the better of you

This happens when a buyer realizes she made an impulsive purchase but does not want to return the item or cancel the service.  If you keep the merchandise and also get a refund, technically, that is shoplifting or stealing.

A family member made the purchase without the cardholder’s knowledge

Even if you are ignorant of the transaction, the person who did the shopping gave his consent to it.  Therefore, you can’t call the bank to request a chargeback for the reason that you did not authorize the purchase.

You’re clueless about the merchant’s refund options and how to go about them

Some cardholders resort to chargebacks because they misunderstand merchant terms and conditions on some offers.  Banks would need a valid chargeback request to refund your money.  They can’t order the merchant to cancel your magazine subscription or give you a detailed specification of the product you bought.  You should ask the merchant directly if you have questions or want your money back.

You can’t recall having made the purchase

We can easily forget a particular transaction, especially if we buy a lot of things in a binge and don’t keep records.  So, if you have a doubt about a transaction, you should contact your merchant directly.  Most credit card statements will list the phone number or email address of the merchant.  It won’t take ten minutes to know everything about a particular transaction.

imroper use of credit card chargebacks

Chargeback Codes

Check out the list of official Visa and Mastercard chargeback codes for the most common issues that come up.  The card companies present these codes and the additional guidelines to the merchant during the processing of the chargeback claims.

The post The Chargeback Process 101: How Does it Work? appeared first on The Smart Investor.

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If you’ve been buying things from brick-and-mortar or online stores using your credit card, chances are that you’ve experienced cases If you’ve been buying things from brick-and-mortar or online stores using your credit card, chances are that you’ve experienced cases The Smart Investor yes 9:49
How To Negotiate For Better Mortgage Conditions https://infoforinvestors.com/home-buying/guides/negotiate-mortgage-conditions/ Sat, 13 Oct 2018 01:03:37 +0000 https://infoforinvestors.com/?p=3497 https://infoforinvestors.com/home-buying/guides/negotiate-mortgage-conditions/#respond https://infoforinvestors.com/home-buying/guides/negotiate-mortgage-conditions/feed/ 0 <p>There are thousands of financial institutions and companies all over the United States such that in your city alone, you may have hundreds of available choices.  These different companies offer a variety of mortgage loans with different terms and conditions – you would hardly find two that are identical.  You can expect that their offers would be very diverse and if you intend to get a mortgage or improve on your existing one, your options are far too many [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/negotiate-mortgage-conditions/">How To Negotiate For Better Mortgage Conditions</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Oddly enough, even if banks have set parameters on their mortgage terms and conditions, they are not cast in stone.  Many variables contributed to the standard terms and conditions of a mortgage loan but there is still some wiggle space left for a borrower to do some maneuvering and modify certain aspects.

How to Negotiate a Mortgage?

So, basically, negotiating a mortgage boils down to three main phases:  first is fully understand the current market situation, second would be establishing your goals and third will be the actual negotiation with the lender.

Phase 1:  Understand The Market

There are thousands of financial institutions and companies all over the United States such that in your city alone, you may have hundreds of available choices.  These different companies offer a variety of mortgage loans with different terms and conditions – you would hardly find two that are identical.

You can expect that their offers would be very diverse and if you intend to get a mortgage or improve on your existing one, your options are far too many.  So, what should your focus be as far as gathering the relevant information you need?

Interest rates

If you were to rank all the elements of the mortgage according to their importance, the interest rate would probably land in first place.  This is something that you should take into account ahead of the other aspects.  If you have a variable-rate mortgage, the interest rate will depend upon the FED rates and the margin that the bank will apply.

Therefore, your monthly installments will depend on how much interest the bank will charge. Each bank would normally specify the cost of its mortgages through the NIR (Nominal Interest Rate) and the APR (Annual Percentage Rate).

These two are the most common measures of the cost of a mortgage.  But if you want to compare two lenders side-by-side, you should zero the APR.  The APR paints a more accurate picture since this includes the various fees and other costs associated with your mortgage.

Fees

When it comes to mortgage loans, bank fees are inevitable.  However, banks do not charge the same types or amounts.  Here are the most common of them:

  • For opening – Banks charge this fee you first establish a mortgage loan.  It will cover the procedures required for its formalization and for sourcing the money to fund the loan.
  • For novation – If ever you want to modify the terms and conditions of your mortgage loan after you have signed it, the bank will have to spend to change them.  So, this fee will cover the specific administrative procedures and other related costs.
  • For switching lender –  Banks do not generally work with each other because they compete in the same business.  So, if you are transferring the mortgage from one bank to another, it will require a series of administrative procedures that will always entail extra costs.  Naturally, the bank will have to collect a fee for this.
  • For making early partial/total repayment –  Perhaps surprisingly, if you decide to pay back all or some of the outstanding amount of your mortgage loan early, the bank will charge you a fee.  This is because if you do so, the bank that financed the operation will no longer receive the interest they were supposed to get for the remainder of the contract.  This fee compensates for the lost income of the bank, although some banks do not collect it.
  • For interest rate risk compensation – Banks charge this fee for early repayment of variable-rate mortgages with a revision period of more than 12 months.  It will also apply for other mortgages when the market interest rate at the time of repayment dips below the interest rate of the fixed-rate mortgage contract.  Banks collect this to compensate for their loss in this scenario.  The usual range of this fee is from 1% to 5% of the outstanding amount of the loan.

Now get this:  when you search for your ideal mortgage, the Internet can be the best place to start.  Websites and websites of banks and other lenders await you with their offers – you can even do mortgage comparison online. There are also some specialized publications you can use as references for any uncertainties that you may have.  They can complement the websites of the banks to give you a better understanding of the mortgage.

Phase 2:  Define Your Goals

Once you’ve cracked the information side, it is time to decide what you want to accomplish when negotiating your mortgage.  Since you know what the various banks are offering, you can better plan out realistic objectives that would help you in the negotiation process.

Your objectives could vary.  You could negotiate a lower interest rate, lower fees, or if you have already contracted the mortgage, a modification of your contract.  Your contract may already be in place but if you stumble upon more favorable terms at another bank, you can negotiate to update your contract.

When you plan to sit down on the negotiating table for your contract, you must first settle the following:

  • How much financing do you need?
  • How long do you want the repayment period to be?
  • How much interest are you willing to pay?
  • What other associated products do you want to include in the contract?

With these items, you can define your own objectives, and then focus on them when you negotiate.  We recommend that you try to keep your monthly installments on your mortgage not to go beyond 35% of your disposable income.

Phase 3:  Negotiate

So let’s get to it:  you’ve got to negotiate most of the terms and conditions that will affect your mortgage so that they fit your needs.  On top of your agenda should be three important things.  The first of them, which is the most important of all, is the margin the bank will use to set your interest rate.

Of course, neither you nor the bank can control the Fed rate and it will remain an unpredictable number in a variable-interest mortgage.

However, the margin is something you can work with during your negotiation.  Think about it:  in the grand scheme of things, a small reduction in the margin can make a huge difference in your total loan payment.

The second most important aspect is the repayment period of the mortgage.  The reality is, choosing a longer repayment period lowers your monthly installment BUT it increases the overall cost of the loan.  On the other hand, a shorter repayment period will give you higher monthly installments but your total cost of the loan will be lower.

Finally, you should negotiate the various fees and charges that come with the mortgage.  Aside from lowering the absolute amounts or rates, you can negotiate to improve some of the terms and conditions.  So, there you have it:  the big three that you should consider – interest, repayment period, and fees.  Try to work together with the bank on these items so you can get a much fairer deal.

mortgage negotiatio phases

Tips For Negotiation

Use Leverage

You must admit: your negotiating advantage is proportionate to the size of your mortgage.  For example, if you have a $400,000 mortgage, you can bargain for a lot more favors because from the lender’s end, they stand to get a lot bigger profit from your loan.

Beyond that, if you are employing a mortgage broker, you can ask him to slash off a few hundred dollars from his commission when it’s a big mortgage that’s involved.  They will still earn a hefty amount and of course, they want your business.

Pay Attention to The Details

Here’s how ridiculously easy it is for some lenders to earn from your loan: fine prints.  You might fall into thinking that you are going to save money because of low interest but it’s the fine prints that will kill you.

Low rates often come with hidden charges you don’t notice on the parts of the agreement that you don’t read.  Since most lenders now post their rates on their websites and they know that most borrowers check out the rates first, they have already lowered their rates.

However, to make up for this, they’ve added some details to the contract. Therefore, don’t just look at the actual number but ask about the product terms and conditions.  What prepayment options will you have?  Is it possible to port your mortgage at all?  Will you have to pay penalties in case you need to move or break the mortgage contract?  And yes, do they charge transfer fees at all?

Shop Around

Setting those issues aside, there’s nothing better than actually shopping around for the best mortgage rate and terms.  Do not just stick to your local bank.  It may be unthinkable but a good number of Americans obtain just a single mortgage quote before they sign.  Would you follow the same practice if you were looking for a cheap plane ticket or buying a new car?  That would be next to foolish.  Without arming yourself with multiple offers, it will be much more difficult to negotiate for a lower rate.

This calls for talking with a few local banks and credit unions, one or two mortgage brokers who can canvass for your rates from multiple lenders.  Once you’ve got these rate quotes in hand, you can put closing costs and associated terms side by side and pit them against each other.  Pretty soon, someone’s bound to come to offer you a better rate.

Don’t forget to shop around for homeowner’s insurance and title insurance because banks and other lenders would usually recommend them. Remember:  don’t take anybody’s word for something to be the best deal for you – do some legwork and get proof.

Mortgage negotiation tips

Be Honest, Be Fair

Lying, as a negotiating strategy, will likely backfire on you.  Do not say that Mr. Smith down the street is giving you an insanely low rate (when he’s not) in an attempt to cause the agent to lower his quote.  In all likelihood, the mortgage specialist will know that you are fibbing and this will cause a crack in the relationship you are just beginning to build.

Look at it this way:  if your agent already offered to pay your legal and transfer fees, but their best rate is still 10 basis points higher than the lowest in the market, do you think they can still go lower?  Likewise, if you’ve just come out of bankruptcy or have bad credit, you don’t have much bargaining advantage and very little leverage.  But this shouldn’t stop you from trying to get a good deal!

You Can’t Get If You Don’t Ask

If you don’t fully understand some of the mortgage terminologies or if something causes confusion to you, don’t hesitate to ask.  In all probability, your agent has heard the question 100 times before and they’ll be more than willing to give you an easier explanation.

You should ask your agent about additional offers and bonuses.  You might find agents (but not all) who will be willing to pay your legal fees and appraisal fees to get your business.  If you put these small gains together, they can add up to hundreds of dollars in savings.

Decide on a Product You Want And Have a Strategy

This area is probably where the mortgage broker would prove really valuable.  To begin with, you have to remember that they get their salaries from the financial institutions and not from you.  Therefore, they will make sure that their employers get the longer end of the stick.  Educate yourself regarding the mortgage basics.

Read up and know how a fixed-rate mortgage compares with a variable-rate one or what’s the difference between a closed and open mortgage.  It may sound like a good idea at first, but don’t take a five-year-fixed mortgage automatically.  Look into the various terms that are available for you.

Don’t forget:  you have more leverage than you think

The bottom line is this:  the mortgage lending market is extremely competitive and lenders will fight tooth and nail for the business of first-time buyers. On top of that, the recent slowdown in home sales has put enormous pressure on lenders to reach their quotas of acquiring new business.

The post How To Negotiate For Better Mortgage Conditions appeared first on The Smart Investor.

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There are thousands of financial institutions and companies all over the United States such that in your city alone, you may have hundreds of available choices.  These different companies offer a variety of mortgage loans with different terms and condi... There are thousands of financial institutions and companies all over the United States such that in your city alone, you may have hundreds of available choices.  These different companies offer a variety of mortgage loans with different terms and conditions – you would hardly find two that are identical.  You can expect that their offers would be very diverse and if you intend to get a mortgage or improve on your existing one, your options are far too many [...] The Smart Investor yes 11:27
How To Get Your First Credit Card https://infoforinvestors.com/credit-cards/guides-credit-cards/first-credit-card/ Fri, 12 Oct 2018 22:06:55 +0000 https://infoforinvestors.com/?p=3833 https://infoforinvestors.com/credit-cards/guides-credit-cards/first-credit-card/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/first-credit-card/feed/ 0 <p>Getting your first credit card as a young adult is the first step toward financial independence. Having a credit is</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/first-credit-card/">How To Get Your First Credit Card</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Getting your first credit card as a young adult is the first step toward financial independence. Having a credit is beneficial for building your credit history, making large purchases, and emergencies.

On another note, it’s best to proceed with caution. Like many financial decisions, using a credit card involves risk as well as benefits. If you aren’t ignorant of the risks, you are a step ahead towards using a credit card the right way.

Before Applying for Your First Credit Card

There are a couple of steps you can take before applying for your first credit cards:

1. Identify Your Credit Score

The credit score range is from 350 to 850, which represents your creditworthiness. You have the option to check your score from the following bureaus: Equifax, Experian, and TransUnion.

If this is your first time applying for a credit card, you will have little to no credit history. If you do have a high credit score, you can be eligible for cards with low-interest rates and higher credit limits.

2. Build Your Credit History

Getting a credit card is important to build your credit history. On the other hand, if you don’t have enough credit history, it’s difficult to get a credit card. Even though it’s difficult to get a card with a credit history, there are other ways to get a credit card.

  • You can apply for a secured credit card. This type of card requires an initial deposit. Moreover, people with little to no credit history can easily obtain one.
  • Get a co-signer to sign with you on your credit card application. A person that co-signs gives a signal to the lender that you are able to pay your credit card off. If you don’t, you will not only damage your credit score but the co-signers too.

3. Understand The Risks

If you use a credit card wisely, you can benefit from it. On another note, people who use credit cards for the first time usually abuse them.

  • If you have a lot of debt, it’s hard to get a loan, own a home, and it causes financial hardship for you and your family.
  • When you obtain a credit card, it’s important to use it the right way, not accumulating debt. Having a budget and plan is a great start.

4. Set Your Budget

A major benefit of credit cards is that you can purchase items on credit instead of using money out of your own pocket. Moreover, it’s important to have a budget.

  • It’s important for you to know how much you can spend per month. It’s necessary to pay 2% of your balance each billing cycle.
  • Make sure to pay off your bill every month to avoid interest accruing.

Furthermore, understand the advantages of having a credit card. The advantage of having a card is that you can start building a credit history, get low insurance premiums, loan rates, and get an apartment.

Your First Credit Card

Not all credit cards are identical to one another. Every card has their benefits, rates, features, and fees that accompany it. If you desire to pay off your bill per month, getting a student rewards card is a great way to go.

Moreover, certain student reward cards offer cash back opportunities on your purchases. Keep in mind though that there may be caps on your rewards card. If you know for certain that you will carry a balance, it’s best to look for a credit card with low interest. Typically, most student credit cards offer a 0% intro APR which lasts 6-8 months.

You have the ability to pay off big purchases without interest accruing on those purchases during the introductory period. Always research the best credit card options that offer low-interest rates, cash back rewards, no annual fee, and a good credit limit.

Also, look into the billing cycle so you will have clarity on your payment cycle to avoid unknown charges. Student credit card lenders offer free tools online to help you budget and keep track of spending.

Where to Get Your First Credit Card

Major Credit Card Issuers

If you are attending university, you have a high chance of a reputable lender granting you a student credit card. It’s best not to think that every student credit card you see is a good one.

Lenders apply high-interest rates and annual fees on student credit cards which can make them not suitable to apply for.

Your Bank

If you have a bank account that’s in good standing, feel free to apply for a credit with them too. Since you have a relationship with that bank, you have a higher chance of them approving you for getting a credit card.

Especially if you don’t carry negative balances or have overdrafts. Even though you can apply online, going to a branch and meeting with a representative face-to-face gives you more headway to get approved.

A Secured Credit Card

If your low credit history is preventing you from getting a regular credit card, you can always apply for a secured credit card. By having this type of credit card, you make a deposit against the limit of the account. The lender holds your deposit just in case you don’t make payments consistently.

Moreover, you may have the opportunity to convert an unsecured credit card in the future. Getting a secured credit will not hurt your chances of getting a regular credit card. It all looks the same on your credit report.

where to get your first credit card

What to Look For in Credit Card Offer

Every credit card company say they have the best benefits; the question is which one is the right one for you?

Here are the terms to watch after to make the decision a lot easier for you:

APR

This is the rate that lenders charge you if you have an outstanding balance. For instance, if you don’t pay the balance off in full, you will owe interest on that balance.

It’s a good thing if you get a card with a low APR (Annual Percentage Rate). Even if you don’t carry a balance, it’s still wise to have a low APR. Also, research credit cards have 0% introductory rates. Also, keep in mind that the intro rate is only temporal; your APR will rise afterward.

It’s best to see if the APR after the intro is permanent or document the day the introductory period expires so you won’t be surprised later on.

Annual Fee

There are credit card companies out there that charge a fee by just having their card. The fee can range from $15 to hundreds of dollars. Most people try to these avid these cards and are ignorant of the fact that these cards carry great reward benefits that offset the annual price.

Just like with the APR, make sure that the number you see is permanent, and not an intro offer just to reel you in.

Credit Limit

The credit is the amount your lender loans you each month. Since the length of your credit history is not long when you decide to apply for your first credit card, lenders will only give you a small amount of credit such as $300.

Whatever the limit is, it’s best not to max it out every month. You will keep a good credit score if your card utilization (which is the percentage of how much you use your card) is low.

If you come to the conclusion that your credit limit is too low, after several months, give your lender a call to request a limit increase. Don’t get too excited because it’s not wise to run up a balance you can’t afford to pay back.

Minimum Payment

Even though we recommend that you pay off your balance each month, the lenders don’t require you to do so; they desire to charge you interest on your purchases instead. On another note, they do require you to pay a minimum amount on your balance each month.

That amount can be a flat fee or a percentage of the balance they require you to pay each month in order to avoid late fees, which impacts your credit score. Make sure that you pay at least the minimum each month. Here’s a great tip: set up auto pay to ensure that you pay the minimum each month.

Secured vs. Unsecured

Getting a credit card for the first time can be difficult.  The dilemma is that you need a credit card to build credit, but you need credit to get a credit card. You see the issue at hand here? If you are dealing with this problem, look into getting a secured credit card.

These types of cards require a cash deposit that’s equal to the limit on the card that’s used for collateral if you fail to make payments. It’s important for you to use this card like a regular credit card and make your payments on time. Your deposit is just simply a safety net. Moreover, you have the option to transition your secured credit card to an unsecured one. The lender will also give you back your deposit.

Other Fees

Other than the annual fee, card providers charge other fees as well. This is why is wise to read the fine print. One of the main fees you need to know is the late payment fee. For instance, if you miss a payment, what is the lender going to charge you for not paying your monthly payment?

what to look for in a credit card offer

Getting Approved For a Credit Card

You usually have to be 18 to apply for your first credit card. If you are under the age of 21, you have to show additional documentation such as proof of income or assets to convince the lender you are able to pay back what you owe.

On the other hand, you will need someone over the age of 21, such as your parents, to make you an authorized user on their account. If you land a part-time job, you may be able to qualify for a student credit card because you are generating income. Keep in mind that you are solely responsible for paying your credit card bill on time.

The post How To Get Your First Credit Card appeared first on The Smart Investor.

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Getting your first credit card as a young adult is the first step toward financial independence. Having a credit is Getting your first credit card as a young adult is the first step toward financial independence. Having a credit is The Smart Investor yes 9:37
How To Get a Personal Loan https://infoforinvestors.com/loans/loan-guides/get-personal-loan/ Fri, 12 Oct 2018 21:17:53 +0000 https://infoforinvestors.com/?p=3429 https://infoforinvestors.com/loans/loan-guides/get-personal-loan/#respond https://infoforinvestors.com/loans/loan-guides/get-personal-loan/feed/ 0 <p>In the recent past, lenders would simply check your credit score, examine your tax returns and get your employment details to be able to decide whether to give you a loan or not.  They will use the same factors to determine how much interest they will charge. Lately, a newer breed of lenders has invaded the market.  They are more modern, aggressive and technology-driven.  They use non-traditional factors to make their lending decisions.   Significantly, it is quite easier now to get a personal loan than during the time when the players were just credit unions and traditional conservative banks.</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/get-personal-loan/">How To Get a Personal Loan</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

If you’re wondering how you can get a personal loan, you’ve come to the right place.

Why anybody would want to get a personal loan could be due to many different reasons.  Perhaps you’ve set your eyes on that new car model that just came out of the dealership. Or perhaps there’s a big personal celebration that’s about to take place.  Whatever it is, a personal loan can be a fast and efficient way to help you realize your dreams sooner.

Allow us to share with you some of the secrets of getting one of these loans.

What is a Personal Loan?

A personal loan is an installment loan with a fixed rate and generally, you don’t need collateral or security to get one.  The principal usually ranges from $500 to $100,000 and most lenders would require a short payment period.

It comes with a set of monthly payments – you pay the same amount every month – and a date when you need to fully pay the loan.  Lenders will use their own computations and look at your creditworthiness to set your interest rate.

People use a personal loan for different purposes, the most common of them are for consolidating other debts such as multiple credit cards or to pay for a one-time, big-time expense like a funeral.

How Do Personal Loans Work?

In the recent past, lenders would simply check your credit score, examine your tax returns and get your employment details to be able to decide whether to give you a loan or not.  They will use the same factors to determine how much interest they will charge.

Lately, a newer breed of lenders has invaded the market.  They are more modern, aggressive and technology-driven.  They use non-traditional factors to make their lending decisions.  Now, they will even look at your SAT scores and your social media accounts.  Significantly, it is quite easier now to get a personal loan than during the time when the players were just credit unions and traditional conservative banks.

Personal loans vary in size (principal amount) and term (length of repayment period).  Believe it or not, there are personal loans that extend to years. In contrast, there are loans – such as payday loans –  that become due in just a couple of weeks after you have borrowed the money.

The catch is, if you pay back a payday loan within that small window of time, the lender won’t charge you interest.  But of course, they might charge you something different, like an origination fee, for them to make some money.
Be careful of some personal loans.  Some of them will start accruing interest at once.  This would include some installment loans so check very carefully.

The amount of your monthly payment will depend on the size of your loan and the lender’s interest rate for you.  Some lenders will let you get away with a slightly lowered interest rate when you sign for a longer term.

There’s a way for you to tell whether it’s better to choose the lower interest rate with a long-term or the higher interest with a shorter period.  Just find a good personal loan calculator and punch in the numbers – many of them are available online for free.  What’s the key point for all this?  Avoid borrowing anything beyond what you are capable of paying back.

Who Should Apply For a Personal Loan?

Here’s the thing:  a personal loan is not for everybody.  For starters, it is not the cheapest form of financing.  Secondly, the requirements are quite stiff such that people with credit problems would normally not qualify for it.  But, it is really an excellent option for certain borrowers, such as:

  • People who need money real fast. Yes, you might have home equity but in case of sudden need, you will not be able to tap it fast enough.  It would take weeks for the bank to appraise your property, process your home equity loan, go through an approval and finally fund the loan.  If there’s a once-in-a-lifetime investment opportunity that you need to grab right away, a personal loan could be the solution.  And think about this:  you can always use your home equity loan to pay off your personal loan once you are no longer under time pressure.
  • People who tied up their money in retirement accounts. You might have some money in your retirement fund but unless you’re old enough, touching it means paying a penalty.  A personal loan could be a lot cheaper as a source of funds.  Here’s the catch:  when you take money from your IRA or 401(k) too early, the IRS will consider the money as your income.  Therefore, you might have to pay around 10% to 39.5% income tax right away.  And did we mention there’s a 10% penalty that comes with it?  Look at this:  if you are in a 25% tax bracket, you will need to withdraw $15,000 just to net $10,000.  That’s a very, very steep price to pay.
  • People who don’t own homes or have enough home equity. Some people have really good credit and a healthy income – but they do not own a house.  Personal loans allow these good folks to get funds pretty fast when they need them.
  • People who prefer a loan with a fixed interest rate. You are dead right to say that credit cards come with a low fixed rate.  But that’s only for limited time because they skyrocket after a while.  That’s why they call them “teasers”.  If you want a true-blue fixed rate loan, a personal loan is the real thing.

How To Get a Personal Loan in 4 Easy Steps

1. Understand Your Credit Score

Let’s jump right in: the better your credit score is, the higher your chance for qualifying for a personal loan and a lower interest rate (Check our loan prequalification calculator).  So, evaluate your creditworthiness by checking your credit score (It’s free!).  In general, credit scores fall into these categories:

  • 720 and higher: Excellent credit
  • 690-719: Good credit
  • 630-689: Fair or average credit
  • 300-629: Bad credit

Here’s the trick: do what you can to build up your credit score before you apply for a loan.  The biggest factors that pull your credit score up or down are on-time payments and the total credit you’ve used relative to your total credit limit.  So, get your free credit report and dispute any errors it may have. If you fall in the bad credit category – you should look for personal loans for bad credit borrowers.

Credit score range

2. Shop Around And Short-List Lenders

Do not for a moment believe that all loans are expensive. As soon as it occurs to you that you “need a loan”, you should already be thinking about how to get the lowest interest rate available to you.  In many cases, there will still be enough time for you to do ample research and to shop around for offers.

The great thing is that even borrowers with below-average credit would be able to get reasonably-affordable loans from online lenders and peer-to-peer lending sites.  However, if you can survive without having to obtain a payday loan or an installment loan, you’ll be much better off.

One thing’s for sure: to get a traditional lender to lend you money, you need to have decent credit.

If you’re getting a personal loan from a bank or credit union, you may be able to swing for a lower rate if you go by way of a secured loan.

Of course, you’ll have to offer some form of security or collateral to back up your loan.  It could your savings account, the title to your car, or your home equity.

3. Compare The Lenders And Select Your Preferred Offer

How do you go about comparing lenders?  Here’s a list of items that can help you narrow down a personal loan lender that is appropriate for your need:

Loan Amount

Let’s face it:  because lenders have different criteria, different lenders may grant you different amounts of loans.  And just because one lender offers you more money than the rest doesn’t mean you should grab it without thinking.

What you need to remember is that it will cost you more to borrow money and spend what you’ve already set aside.  If you can combine your savings with the amount you’ve borrowed to finance your purchase or expense, that may just be your best option.

Fees And Charges

The fee and charge structure are different for each lender in terms of their composition and amount.  Needless to say, some will charge more than the others.  Be aware of what prospective lenders will be charging and how much, compare them and go for the lender that will give you the lowest fees in total.

Loan Terms And Conditions

The loan terms and conditions are also not standard among lenders – they tend to vary significantly.  Do they charge a fixed rate or is there an option for a variable rate?  Is there a fixed repayment term?  Is there an early payment penalty?  Find out every little detail of the loan you are planning to take out.

Legitimacy

Truth be told, you might encounter some fly-by-night scammers posing as online brokers or lenders.  Always investigate whether the entity you’ll be dealing with is legitimate. Do some research and read online reviews; some people might report of encountering problems or bad experiences with that specific lender.

4. Apply

It would be a good practice to read the terms of the loan offers and get answers to whatever questions you may have.  Specifically, watch out for the following:

  • Prepayment penalties – Most online lenders will allow you to pay off the loan early without charging you a prepayment penalty or exit fee.  So, make sure the lender spells this out in the terms.
  • Automatic withdrawals – Some lenders will require that your bank automatically withdraws your payment from your checking account.  In this case, it would a good idea to set up a low balance alert with your bank to avoid overdrawing your account and paying overdraft charges.
  • APR – You should know the total interests and charges you will have to pay.  Make sure that the lender gives full disclosure of the total cost of your loan including any origination fees and other charges that they figured into the annual percentage rate.

What’s More?

On top of these items, look for other consumer-friendly features:

The lender reports your payments to credit bureaus – If the lender makes on-time reports of your payments to credit reporting agencies, it will boost your credit score.  Tip:  All lenders that NerdWallet reviews do so.

Flexible payment features – There are lenders who will let you choose your payment due date or forgive an occasional late fee and even allow you to miss a payment in case of hardship.

Direct payment to your creditors – Some lenders will take the trouble of remitting the borrowed funds directly to your creditors.  This is a convenient service for borrowers who are consolidating debt.

Once the lender – the selection process is over, you’ll need to provide the following documents to formally apply for the loan:

  • Identification – passport, driver’s license, state ID or Social Security card
  • Verification of address – utility bills or a copy of a lease
  • Proof of income – W-2 forms, pay slips, bank statements or tax returns

Tips To Increase Your Chances of Approval

There are a few things you can do to improve your chances of getting an approval.  Do these things before you apply for a personal loan:

Determine The Type Of Personal Loan You Need

When people talk about personal loans, they usually refer to the unsecured, closed-end installment loans.  Strictly speaking, auto loans, mortgages, payday loans and credit cards also fall into the category, as opposed to business loans.  Make sure you are clear as to what type of loan you are applying for.

Quite simply, if a lender determines that your credit is not good enough for you to get prime interest rates or even qualify for a loan altogether, they may instead offer a secured loan.  Should you be okay to put up your vehicle or home as collateral, a title loan, mortgage or home equity loan may be an option to get better rates.

Just remember that in the case of a secured personal loan, you could lose your property if, for whatever reason, you are unable to pay the loan back. Anyway, taking a personal loan in order to invest the money can be a risky step.

Know Your Financial Boundaries

If you are seriously pursuing a loan, you should already be mindful of your credit history and current score.  The bank would normally tell you the range of credit scores that would merit their approval.  Have foresight and request a copy of your history and score weeks before you actually lodge in an application.

Check your credit history for accuracy and make sure you have enough time to rectify any errors in your history.  Most lenders will give weight to your past use of credit.  If your report has mistakes, you may end up with a lower score, therefore, hurting your chances of loan approval.  Consider your financial limitations if you want to borrow money.  Apply for a personal loan based on how much you can afford to repay on a monthly basis.

Make a Checklist

Using the information from the bank, it is helpful to create a checklist of the necessary documents you need for the loan application.  Remember that it may take time to get the necessary documents from their sources:  creditors, employers, other persons or entity.  Incomplete applications usually don’t pass approval.

Improve Your Credit Score

The good news is, your credit score is not permanent.  You can take steps to improve your credit score before you apply for a personal loan.  This is especially important when your credit score is about to breach the next classification bracket.

Let’s say your credit score is pushing 770 – that’s already in the excellent bracket.  Increasing it to 780 won’t really make a difference.  But, if your credit score is around 680, heaving it over the 700 mark would increase your chances of getting an approval.  What’s it all about?  You tend to save a lot of money when you qualify for lower interest rates.

You can improve your credit score by these simple step:  always pay your bills on time and reduce your debt-to-available-credit ratio.  If you have a record of late payment or any other negative item on your history, waiting for six months while making sure you update all your payments will help.

If you’ve developed a good relationship with the lender that reported the negative item, you can try writing them a nicely-worded request to blot out the negative item.

credit score factors

Stick to Reputable Online Lenders

Shopping for a personal loan lender online is the best way to go.  It will save you time and money and save you from all the hassle of running around offices and counters.  And since online lenders have lower overheads, they can offer lower rates that would be of huge benefit to you.

But first, a warning:  there are plenty of shady online ‘lenders’ out there.  They will guarantee loan approval but will try to skim you dry with advance fees – without giving you a loan.  Be sure that your online lender is a state-licensed financial institution that has no past or pending lawsuits.  Check with the Better Business Bureau to see their profile and find out their rating.

Don’t Be Afraid To Ask Questions

If you’ve made the choice for the loan package you want, contact the bank directly to know firsthand what are the requirements for loan eligibility.

It might need a face-to-face meeting with a bank representative to discuss the materials, documents, and timelines of the approval process.  Banks have different requirements so it is important to know what they are so you can prepare adequately.

Take One Bank At a Time

This is important:  don’t apply for a personal loan in many banks all at the same time.  You might be thinking that the more application you send, the bigger are your chances of getting an approval from two or more banks.

It’s not really a very wise move.  Doing this will reflect during your credit investigation and banks may conclude that you are financially desperate – which is not good at all.  You are actually increasing your likelihood of getting declined.

Pay Attention To Your Debt-To-Income Ratio

The trick is to apply for as little amount as possible and be certain to report your actual income.  Never under report nor overstate.  Loan officers sometimes overlook a borderline credit score or one or two occasional credit indiscretions if your income is high in relation to the amount you want to borrow.

Unless the bank requires otherwise, provide them with your pre-tax earnings and be sure to include all sources of income.  When the lender does not prohibit it, you may include your spouse’s income as well.

What we really want to say is, do not fall into the temptation of inflating your income or lying on a loan application.  If a lender does not ask for a particular document to prove your income level, there is a tendency to get a bit creative.  Just make sure that for whatever you indicate about your income, you can easily justify and provide evidence.  If you lie about your income, you open yourself to criminal charges especially if you are unable to pay back the loan that you obtained with a bit of deception involved.

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In the recent past, lenders would simply check your credit score, examine your tax returns and get your employment details to be able to decide whether to give you a loan or not.  They will use the same factors to determine how much interest they will ... In the recent past, lenders would simply check your credit score, examine your tax returns and get your employment details to be able to decide whether to give you a loan or not.  They will use the same factors to determine how much interest they will charge. Lately, a newer breed of lenders has invaded the market.  They are more modern, aggressive and technology-driven.  They use non-traditional factors to make their lending decisions.   Significantly, it is quite easier now to get a personal loan than during the time when the players were just credit unions and traditional conservative banks. The Smart Investor yes 16:28
ARM vs. Fixed Rate Mortgage – Differences, Pros And Cons https://infoforinvestors.com/home-buying/guides/arm-vs-fixed-rate-mortgage/ Fri, 12 Oct 2018 21:05:41 +0000 https://infoforinvestors.com/?p=3779 https://infoforinvestors.com/home-buying/guides/arm-vs-fixed-rate-mortgage/#respond https://infoforinvestors.com/home-buying/guides/arm-vs-fixed-rate-mortgage/feed/ 0 <p>So, you’re ready to invest in your new home. Let me guess:  you’re weighing the merits of an adjustable-rate mortgage</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/arm-vs-fixed-rate-mortgage/">ARM vs. Fixed Rate Mortgage – Differences, Pros And Cons</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

So, you’re ready to invest in your new home.

Let me guess:  you’re weighing the merits of an adjustable-rate mortgage (ARM) and a fixed-rate mortgage.  How are they different from each other and more importantly, which one is best for you?

The Interest Rates Difference

When you choose a fixed-rate loan, it is obvious that the interest rate will not change.  An adjustable-rate mortgage, as its name implies, resets and repackages its interest rate at specific intervals.  Nevertheless, it can be advantageous for homebuyers with specific goals.

With an ARM, you start off with a set interest for a specified period of time.  Then, the lender will periodically adjust the rate after that period.  Sometimes, you will see the notation “5/1” in your ARM; this means that the rate will be constant for five years and then the lender will adjust it annually afterward.  Currently, some lenders are extending the initial rate lock period from the traditional 5 years to 7, 10 or even 15 years.  This makes the ARM even more attractive than other types of mortgages.

Index plus Margin

When the initial fixed-rate period is over, the lender will use the formula ‘index plus margin’ to set your interest rate.  For the index, they can use a published interest rate as LIBOR (London Inter-Bank Offer Rate) or a private interest rate from the lender.  The margin is usually a small markup on the rate which the lender will determine.

In many cases, the ARM interest rates are initially lower than a 30-year fixed-rate loan (often by as much as one percentage point), but you should remember that an ARM rate may reset higher several times over the life of the loan.

Why Pick an ARM?

If you’re the kind of the first-time homebuyer who is dynamic and wants to keep your options open, an ARM may work better for you.  As long as you’re prepared to move on before the introductory period ends, you’ll probably maximize the advantage of making lower payments for your house.  Here’s a bonus:  since your lender will qualify you based on your lower monthly payment, you could qualify for a higher-priced house than you would with a fixed-rate mortgage.

Here’s how it will go:  after you’ve completed your initial period, the lender will determine your new rate.  They will base it on an index, which will act as the new benchmark interest rate, plus their set margin amount to calculate the new rate.

Now, the new rate will either increase or decrease your monthly payments – which may appear to be a bit risky if you are a conservative borrower.  The good news is, most ARMs have limits on how much the lender can change the interest rate (therefore the monthly payment) at the end of each adjustment period or over the term of the loan.  On top of that, should market conditions push the rates down, it will be to the advantage of the ARM borrowers.  So, before you sign on the dotted line, give careful consideration to the initial rate, initial rate period, and the adjustment periods when assessing an ARM.

Advantages of ARMs

There are a few reasons that sway homebuyers to opt for an adjustable-rate mortgage.  Here are some of them:

Lower Initial Interest Rate

ARMs typically carry a lower initial interest rate when compared to a 30-year fixed mortgage.  With an ARM, you pay the same interest rate for the initial three, five, seven or ten years.  After that period, lenders change it semi-annually or annually for the rest of the 30-year loan period.

Take note that the interest rate during the initial period for an ARM is lower than the rate on a fixed-rate or interest-only mortgage.  This is why many finance experts call this a starter or teaser rate because it entices borrowers to sign up for a loan.

The low initial interest rate for an ARM helps in getting a mortgage and acquiring a home more cost-effectively than with other loan or mortgage products.

Flexibility

An ARM would be more suitable for you if you are strongly anticipating a major life change in the next few years, like moving or selling your house.  You can take advantage of ARMs fixed-rate period and sell the house before it expires and the unpredictable interest rate phase begins.

Lower Initial Monthly Payment

It’s simple:  if you get a lower initial interest rate with an ARM, you’ll pay less initial monthly mortgage payments.  Lower monthly payments will save you money on your total monthly housing expense.  More savings means more financial flexibility when you buy a home or refinance your mortgage.

Of course, the rate can increase during the life of the loan (and so will your monthly payments) – that’s a fact.  The bottom line is this:  a lower initial payment can give you additional financial breathing room when you need it the most.

Rate and Payment Caps

Here’s another good thing about ARMs:  it might have several types of caps that limit the spikes on your mortgage rate and the size of your payment.  These would include interest-rate caps or limits on how much the rate can change each time it adjusts and on the number of rate change over the loan’s term.

There’s also the cap on how much the payment can grow each time the lender adjusts the rate.  You can ask your lender for an explanation of the risks and a sample computation of how much would your maximum payment be.

Mortgage Rate May Drop

While we’re on the subject, here’s another benefit of an ARM:  your mortgage rate may actually go down.  This is a good probability if the interest rates decrease.  When your mortgage enters the adjustable rate period, the rate changes on an annual or semi-annual basis.

During this period, you will have the fully-indexed rate, a rate that will fluctuate according to the movement of an index. This index could be the LIBOR or the treasury rate, two rates that move up or down according to the economic situation.  If the index goes up, your mortgage rate rises accordingly.  If the index goes down, your rate follows suit.  A lower mortgage rate brings down your monthly payment and saves you money.

Realistically, it is very difficult to predict how interest rates will behave several years in the future.  The nice thing is, when the rates eventually go down, an ARM will help you take advantage of it by giving you lower monthly interest and payment.

Advantages of adjustable rate mortgage

Why Choose A Fixed-Rate Mortgage?

Here’s a home buyer who has a stable career, lives and/or works in an area he truly loves and has decided to establish roots in that community.  Does that sound like you?  If it does, then a fixed-rate mortgage might interest you.  This kind of loan is also best suited for people who are near retirement.  Why?  Because fixed payments make it easier for them to forecast their expenses.

Like any other product, a fixed-rate mortgage has its own pros and cons – especially when you place it head-to-head with an ARM or interest only mortgage.  On the plus side, you have the assurance that your interest rate and the monthly payment will stay constant, flexible mortgage length options, and peace of mind.  On the minus side, it has a higher interest rate and monthly payment, and you lock yourself into the mortgage if you cannot refinance it.

Anyway, there are a few reasons that move homebuyers to opt for a fixed-rate mortgage.  Here are some of them:

Payments Remain Constant

In a fixed-rate mortgage, the lender amortizes the payment on that mortgage. Basically, the lender is computing for the total amount of the loan plus interest over the course of the loan. They then spread the total amount over the course of the loan or more specifically, divide it by the number of monthly payments you should make.

And because the interest rate will not change, this monthly payment amount will not change too.  Here’s the kicker:  your monthly mortgage payment on a fixed-rate mortgage will remain the same over the life of the loan but you might have to pay other expenses too.

You might have to shell out some cash for homeowner’s insurance premiums and property taxes, for instance.

Interest Rate Will Not Increase

You know that in an ARM, the interest rate can change every year.  This exposes the borrower for potentially unpleasant surprises that he may have to bear for an entire year.  Needless to say, your loan has the potential to become more and more expensive over time.

In a fixed-rate mortgage, you do away with that uncertainty.  Your advantage is that the interest rate will stay ‘as is’ for as long as you keep the loan active.  So, don’t expect any unpleasant surprises down the road.  Whatever rate the lender give you up front will be the same one you’ll have for the full 30-year term.

Comparing Loan Options is Easier

If you like things simple even when shopping for your loan, a fixed-rate mortgage should be your bet.  There’s hardly anything different between what various lenders offer – you just need to compare interest rates and closing costs.

With the ARM, you have to consider too many moving parts aside from closing costs:  introductory interest rate, length of the introductory period, how much the rate can change each period, and how much the rate can change over the entire loan term.

You could also opt for a graduated payment mortgage where you start with a lower payment and gradually pay more over time.

Flexible Mortgage Term Options

One thing that puts a fixed-rate mortgage over other mortgage programs is that it offers more flexible term options.  Lenders are making available for borrowers a range of terms including 10, 15, 20, 25 and 30 years.  You might even stumble upon a lender who will be willing to offer a 40-year term, albeit rarely.

With a fixed-rate mortgage, you will find that the interest somewhat follows the term:  shorter terms mean lower rates and longer terms mean higher rates. This is how it works:  a mortgage with a shorter term and lower rates lower your total interest expense over the life of your loan.

However, you will be, in effect, paying a higher monthly payment because you are paying back the entire loan over a shorter repayment period.  The good news is because you now have a range of terms to choose from, it will be easier to select one that closely meets your financial objectives.

Choose the Right Mortgage

As you compare an ARM against a fixed-rate mortgage, you have to decide according to your situation.  If you like stable monthly payments and knowing exactly how your total interest would add up for the entire term of the loan, it’s a fixed-rate mortgage for you. It could also be your choice if you intend to stay in the house even after the fixed introductory period is over.

But if you are planning to be in the home only for a few years, you could take advantage of an ARM’s lower introductory rate.  And if you foresee the interest rates to go down, getting an ARM will help your secure lower rates in the future, saving you the costs of refinancing.

Here’s the main point:  whether you determine a fixed-rate mortgage or an ARM is the best one for you, you need to understand all the details of the product.  Many times, what’s in the fine print will spell out what’s best for your home financing situation.

benefits of fixed rate mortgage

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So, you’re ready to invest in your new home. Let me guess:  you’re weighing the merits of an adjustable-rate mortgage So, you’re ready to invest in your new home. Let me guess:  you’re weighing the merits of an adjustable-rate mortgage The Smart Investor yes 11:25
Corporate Bonds Basics – How Do They Work? https://infoforinvestors.com/academy/bonds/corporate-bonds-basics/ Fri, 12 Oct 2018 20:55:31 +0000 https://infoforinvestors.com/?p=3887 https://infoforinvestors.com/academy/bonds/corporate-bonds-basics/#respond https://infoforinvestors.com/academy/bonds/corporate-bonds-basics/feed/ 0 <p>What are Corporate Bonds? Companies have many ways to raise funds aside from their normal income streams.  Over the years,</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/bonds/corporate-bonds-basics/">Corporate Bonds Basics – How Do They Work?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> What are Corporate Bonds?

Companies have many ways to raise funds aside from their normal income streams.  Over the years, the need for companies to come up with cash to fund their projects, expansions or new ventures has created many financial products that are now common in the market.

Similarly, these products are tools that allow these companies to borrow money from people.  One such popular product is the corporate bond.  When the company already knows how much it needs, it can issue a bond offering equivalent to that amount.  When you buy their bond, you are in effect, lending your money to them.  You will find the specific terms and conditions in their bond offer or prospectus.

Sounds simple enough, right?

There’s a lot more to these bonds than meets the eye.  For starters, buying a company’s bond does not make you a part owner of that company.  Equities will have that effect, bonds will not. Since the company is technically borrowing from you, they will pay you interest over a period of time and repay you the principal at the maturity date.  This date has been pre-determined by the bond’s issuer when they issue the bond.

Most bonds will fall under these three simple categories according to their maturity ranges:

  • Short-term notes are bonds with maturity dates of up to five years after their issue date.
  • Medium-term notes are bonds with maturity dates ranging between 5 and 12 years after their date of issue.
  • Long-term bonds are bonds with maturities greater than 12 years.

Note that some corporate bonds might have redemption or call features that can influence the maturity date.

Aside from their maturity date, you can classify bonds according to their credit quality.  There are reliable and independent credit rating agencies that analyze and rate these corporate bonds.

Moody’s Investors Service and Standard & Poor provide a rating of the corporate bond issuers, giving them certain grades with respect to their creditworthiness.  You might find that the companies with the lower credit ratings normally offer higher interest rates on their bonds to counter any unpopularity their low rating might create.

Bond Face Value

You might encounter the term face value when inquiring about bonds.  It simply represents that amount that the issuer will pay the bondholder when the bond reaches its maturity date.  Sometimes, bankers call it the par value.

Normally, bond issuers issue their bonds in $1,000 denominations which means that if you are a bond investor, you should expect to receive $1,000 on your bond’s maturity date.  Some issuers issue baby bonds with a face value of $500.  We’ll tell you what though:  the bond’s face value is often not the market price of the bond – sometimes, you have to pay more for them upon purchase.

Bond Payments

You should take note of the normal practice when it comes to bond payments.  You have to wait until the bond’s maturity date to be able to receive your money back from the issuer.  However, you will receive a specific amount representing the bond’s interest regularly – most often on a semiannual basis.

Now, in case you are able to buy a serial bond, there will be specific principal amounts that will become due on specified dates.  When you buy a bond, it will already specify the interest rate (or coupon rate) as a percentage of its face value.  The issuer normally quotes this on an annual basis and it does not change or fluctuate for the entire life of the bond.

Bond Payments

Corporate Bonds – Example

For instance, let’s say you buy a bond with a 6% coupon rate from Company AAA with a face value of $1,000.  This will prospectively make you receive $60 in interest payment every year (or 6% of $1,000).

However, most issuers pay interest in 6-month installments so that if they pay the first $30 in January, the next $30 would be payable in June.  You just have to look at the bond’s prospectus, indenture agreement, or the bond certificate itself to see the payment schedule.

Secured Vs Unsecured Bonds

A bond is a debt instrument by a corporation and like any other corporate debt, it can be Secured or Unsecured.

Secured Bonds

Simply put, they are secured bonds because the issuing corporation is using their own assets to back the bonds as a guarantee.  In case the corporation becomes bankrupt, a trustee will take possession of the company’s assets and liquidate them.  The trustee will then make sure that the bondholders get their principal accordingly.

If the corporation somehow fails to pay its bondholders, the bondholders will get their payment out of the proceeds of the sale of the company assets.  This is because the company used its assets to secure the company’s obligation to the bondholders.

Unsecured Bonds

Unsecured bonds do not have the issuer’s specific tangible assets as their back up but rather by the corporation’s good faith and credit.  They also go by the term debenture bonds.  Should the issuing company defaults on its bond obligations, the bondholders would have the same claim and priority on the company’s assets as any other general creditor.

In the hierarchy of settling its obligations, the company would pay the secured bondholders ahead.  The good news is, the debenture bondholders will receive their money ahead of the stockholders.

Corporate Bonds Secured Vs unsecured Bonds

What’s Happen in Case of Bankruptcy?

A bond is a debt of the company that issued it, it’s that simple.  Therefore, the company has an obligation to repay it and, in this case, with interest as agreed upon.  Now, just in case the company goes under and files for federal bankruptcy protection, the liquidators will pay the creditors ahead of the owners.

So, in this case, the bondholders have more chance of getting their money than the stockholders.  Of course, the process will follow the bankruptcy laws when it comes to repayment priorities but the stockholders, being the owner of the company, will have the last shot on the assets.

When a company files for a ‘Chapter 7’ bankruptcy, bondholders would receive a portion of the value of their bonds from the company.

Once they receive notice of the bankruptcy filing, bondholders must file a claim against the company.  This will allow them to receive a payment from the company if there are still funds on hand after the administrators have settled the other expenses.  You can go to the website of the Administrative Office US Courts to download a proof of claim form.

Default happens when a company or a corporation is not able to pay the principal and interest on their loans when they become due.  Following a corporate bankruptcy or liquidation, secured creditors, bondholders, and holders of senior debt issues get a higher priority in repayment.

However, in many cases, these entities do not get sufficient repayment to get all their money back.  Another bad thing is that the bonds of companies in default are most likely to trade at very low prices and realistically, there is hardly any party who would show interest to trade them.  In such case, liquidity will most certainly disappear.

Corporate Bonds: What will happen to my bonds in case of bankruptcy

Chapter 11 Vs Chapter 7

A company may file for a Chapter 11 bankruptcy and, unlike in Chapter 7, it can get a second chance at life.  The company will continue to operate and will have to undertake drastic measures to save it from totally sinking.

As a result, its bonds may continue to trade but the bondholders will not receive the interests and principal.

In other words, the company will default on the bonds.  As an effect, the value of the securities would likely fall steeply and trading would most likely be extremely constrained.

It could also happen that part of the court-approved reorganization plan, the company might issue new stock, new bonds, or a combination of new stocks and bonds in exchange for their bonds.

Just remember to note that the new securities could not be worth the same as the bonds – they would probably be worth less.

How are Corporate Bonds Rated?

Two lines set bonds apart from each other – investment-grade and speculative-grade.

When we talk about credit perspective, there are two major classifications that distinguish bonds from each other.  These are whether they are investment-grade or speculative-grade.  Speculative-grade bonds come from companies that get a lower level of credit quality.  Investment-grade bonds originate from companies that are highly-rated, credit-wise.  There are four rating grades for investment-grade category and six rating grades for the speculative-grade bonds.

Originally, there were three types of companies whose bonds fell under the description of ‘speculative-grade’.  These were new companies, or those in a highly competitive or volatile industry, or had unstable fundamentals.  But today, many businesses choose to operate with a degree of leverage that somehow defines them in the same league as speculative-grade companies.

Here’s the deal:  speculative-grade credit rating normally accompanies corporations with a higher default tendency.  Normally, these higher risk companies offer higher interest rates or yields.  The good thing is, credit ratings are not set in stone.  A company’s credit rating can go up if their fundamentals improve.  On the other hand, they can also downgrade the ratings if the credit quality of the issuer deteriorates.

Corporate Bonds Investment Options

Valuing Corporate Bonds

Is there a magic formula that investors use to evaluate corporate bonds?  Basically, they just look at their yield advantage (otherwise known as “yield spread”) when placed side-by-side with U.S. Treasuries.  They use Treasuries as the benchmark because investors consider them as ‘completely free of default risk’ among all the other instruments in the market.

This is why when you find highly-rated companies such as Microsoft, Exxon, Apple, etc. who have enormous cash balances on their financial statements, they would often offer lower interest.  However, investors confidently buy them because they know that these companies will not likely default on their obligations and will pay interest and principal on time.

On the other side, companies with higher debt, low liquidity or unreliable income streams usually get a lower rating.  These companies often need to jack up their interest offers a little bit for their bonds to make them more attractive to investors.

You see, if you are an investor, the picture is pretty clear and simple.  It’s your choice between a bond that has lower risk but lower yield or one that has higher risk but higher yield.  But here’s an interesting fact:  from the period 1996 through 2012, investment-grade corporate bonds yielded an average 1.67 percentage points higher than U.S. Treasuries.

What are the options when it comes to bond maturity?

In their most simple category, you can have your pick between short-term, intermediate-term and long-term corporate bonds.

Aside from the fact that they mature much earlier, short-term bonds usually have lower yields.  This rides on the idea that the risk is lower than the issuer would fold up or default in a three-year period.  Obviously, a 30-year bond exposes the investor to a longer period of uncertainty because a lot more things could happen to the issuer within that time frame.  Naturally, long-term bonds offer higher yield but one should not overlook the reality that they tend to be more volatile.

If you are getting the services of an investment manager, make sure that he is familiar with this aspect of investing.  A good one will add value to your portfolio by combining bonds of varying maturities, yields, and credit ratings so that your investment can achieve the best mix of risk and of course, return.

How to Invest in Corporate Bonds

If you are seriously considering investing in corporate bonds, there are basically two ways to do it.

The first way is by purchasing individual corporate bonds through your broker.  If you want to go through this route, you should at least do some research beforehand.  Try to get all the information you can get about the issuing company particularly their financials and underlying fundamentals.  Just make sure that the company that issues the bonds are not at risk for default.  Another thing to remember is that you should diversify your portfolio by purchasing bonds of different companies representing different industry sectors and varying maturities.

The second route is by investing in mutual funds or exchange-traded funds (ETFs) that specialize in corporate bonds.  Of course, funds have another set of risks apart from the bonds themselves but they do have the benefit of high diversification and access to professional managers.  You may use tools such as Morningstar or xtf.com if you want to compare funds and mutual funds, respectively.  You may also choose to invest in funds that focus exclusively on corporate bonds whose issuers are in the developed international markets and the emerging markets.

A word of caution though:  they have higher risks that their U.S. counterparts but yield-wise, they have the potential to provide you with much higher returns in the long term.

The post Corporate Bonds Basics – How Do They Work? appeared first on The Smart Investor.

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What are Corporate Bonds? Companies have many ways to raise funds aside from their normal income streams.  Over the years, What are Corporate Bonds? Companies have many ways to raise funds aside from their normal income streams.  Over the years, The Smart Investor yes 13:39
8 Useful Tips for First-Time Home Buyers https://infoforinvestors.com/home-buying/guides/tips-first-time-homebuyers/ Fri, 12 Oct 2018 20:53:37 +0000 https://infoforinvestors.com/?p=3883 https://infoforinvestors.com/home-buying/guides/tips-first-time-homebuyers/#respond https://infoforinvestors.com/home-buying/guides/tips-first-time-homebuyers/feed/ 0 <p>If you are a first-time homebuyer, you might have realized that it’s not very easy to get into the real</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/tips-first-time-homebuyers/">8 Useful Tips for First-Time Home Buyers</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

If you are a first-time homebuyer, you might have realized that it’s not very easy to get into the real estate market.  It has always been difficult and recent events show us that this is an accurate assessment. Available data show that from July 2009 to June 2010, first time homebuyers flooded the market, accounting for about half of all the purchased homes in the entire United States.

By 2016, this figure is down to 35% which is a very big decline.  Figures reveal that in the immediate past three years they have had a smaller share over the last 35 years.

We know the excitement that abounds when you’re ready to buy your first home – after all, it is one of the major milestones of your life.  You will finally have your own real estate property and more significantly, a place that signifies your true independence and personal freedom.

However, you should not get caught up in the thrill but rather look at the reality you should face.  There is a learning curve in this and it’s rather steep for a first-timer.  The good news is, you can avoid many mistakes (and heartaches) in the process by doing some simple financial homework.

So, if you want the road to your first home to be smoother and less bumpy, we offer some tips to guide you through the process and hopefully spare you some headaches and pain on your pocket.

first time homebuyers tips

1. How Much Can You Afford?

Sit down and seriously write down your game plan

Some things can end up well even if they happen by accident. This is not one of them.  You need to make a plan.  Do not let your imagination get the better of you or worse, just copy what other people did to buy their home.  Your situation is not the same as theirs.

Pin down what you can afford

First things first: determine how much home you can actually afford to pay for realistically. You can use any online home affordability calculator to help you determine how much you can spend for your home without breaking the bank.

Prepare a working budget

Many homebuyers do not take this seriously and end up in trouble. Make a list of all your monthly expenses and we mean ALL.

So, if you’re paying for gym membership or subscribing to online TV/Movies, they go in along with the groceries and gas and card amortizations. This way, you can see where you can cut your spending to save money or add to the home purchase fund.

Stick to your debt limit

You might have heard some financial advisors tell you that you should not spend more than 30% of your before tax income for housing. A more conservative approach would be to keep all your debts below the 30% limit – house amortization, student loan repayment, car loan payments, and all other debts included.
If you use up all or most of your money to pay for your house, you might neglect other important matters like saving up for your retirement.

Keep calm and take it easy

The market is so competitive that many lenders liberally pre-approve buyers to get customers. Getting a pre-approved loan may lead you to think that you’ve got it made financially and drive you to be reckless with the rest of your finances.

If a bank pre-approves you for an amount higher than your original budget, think first before you take out all of it.  It’s better to just stick to your original personal price limit.

2. Check Your Credit Score

A wise home buyer will factor in his credit score in the decision-making process. Lenders will always use this 3-digit number in their risk assessment and pricing decision.  So, a higher credit score will work better for you in terms of more chances of getting an approval and securing a lower interest rate.

You can check your credit scores from the three popular reporting agencies – TransUnion, Equifax, and Experian.  Note that you might need to pay a small fee for their services, usually around $20 per score.  Your credit score can help you assess what kind of borrower you will appear to your lender so you can prepare accordingly.

If you have a score of 600 or higher, you’re in good shape and have a high chance of getting a favorable deal.  More so if you have a score of 700 which they consider as excellent.

 However, if you have a score that’s below 600, you might have a harder time getting approval.  Here’s the good news:  that’s just the general rule and some lenders can work out a compromise for you.  Just remember that keeping a good credit score is very, very important.

3.  When You Don’t Know The Market -Use Realtor

A good realtor can make your home buying experience delightful and a bad realtor can make it a nightmare. As soon as you’ve made up your mind on where you want to live, find and get a referral for a good realtor.

According to the National Association of Realtors, buyers largely found their realtor thru personal referrals or from previous dealings with them.  You can ask your friends, family or acquaintances who live in or near your area of interest for their recommendations.  If that doesn’t work out, there’s always the Internet.  Websites like Streeteasy, Naked Apartments, Trulia, and Zillow publish lists of local realtors with appropriate reviews and ratings.

If you can get a realtor who has great knowledge of the area you’re looking at, we assure you, you’ll save a lot of time.

And if your realtor has the heart and ability to really listen and try to understand what you want, he or she will be able to execute your desires to your satisfaction.  A good realtor also follows through up to the closing – though there are exceptional ones who still take care of you even beyond that point.

One other valuable advantage of a good realtor is their network of loan officers, real-estate attorneys and even people from government agencies.  He can offer you tips and some tricks-of-the-trade that you won’t find in textbooks.  So, do some legwork and look for the best realtor you can get – it will be worth all the trouble.

4.  Don’t Forget to Buffer

We understand that it is tempting to go all the way to stay competitive especially if you receive a nice offer. We recommend that you try to keep some good amount of money after closing on your home.

Sounds easy enough?  You be the judge.  If buying your house will leave you with just $1,000 in the bank or will force you to just pay the minimum amount on your credit cards, your house is probably too expensive for you.

A good figure is at least three to six months in savings on the day you close – and this amount should already be on hand.

Remember that having a house is like having an additional family member so you need to build up more emergency funds than before.

Let’s face it:  when your cash level is near the bottom of the barrel, even a minor crisis can turn your financial situation upside down.  When you’re already maintaining your own house, the probability of having a crisis escalates.  A leak in the basement, a broken window or a faulty wall outlet – these things can become major expenses.

When you see that purchasing your dream home will spread you too thinly, why not consider waiting?  You may want to build up more cash savings or simply settle for a cheaper house.

5.  Stick to Your Budget

Supposing the house you’re really interested in is over your price range, what would be your probable reaction? If you say you will definitely struggle inside, that’s normal.  You need to have self-discipline in this area even before you start looking at houses.

Settle the important issues first such as your ideal price range and how much is the maximum amount that you can spend without sacrificing your financial future.  Use the online calculator to determine the maximum monthly payment you can make based on the actual down payment you will be able to put up.  Have the will power to stick to your budget.

6.  Consider Future Expenses

You may say that your present financial situation would enable you to come up with the down payment and closing cost as well as pay for other fees. However, you must consider the financial impact of paying for the house and maintaining it.  These are real and unavoidable expenses that will take most of your monthly income.

So, you may find the house of your dreams but if you see that the monthly payment, maintenance costs plus your other fixed expenses will put you in the red, it’s better to move on.

You are no expert in this area so it’s better to let the other people with experience and knowledge to help you. For example, your bank’s loan officer might be able to prepare some calculations for you to arrive at a realistic figure for your budget.

He or she will also be in a better position to tell you how much interest rate you’re likely to get for your loan.  This way, you’ll have a better idea of what you are going to face in your quest for that dream house

7.  Make Your List of Negotiables and Non-Negotiables

Deciding on a house is not just about how it looks from the other side of the street – there are a lot more important things to consider. So, sit down and start thinking about what kind of house would fit your lifestyles and values.

For example, what features do you want in your house that would basically let you enjoy staying there?  What kind of neighborhood would you want to live in?  On which part of the street would you want it to be?  How big should it be?  Do you need an attic or a basement? Or both?  Do you want a patch of ground where you can do some gardening? Your list would be of great help to your realtor.

You are extremely fortunate if you will be able to find a property that matches your list to a T.

The simple truth is, it’s very difficult to find everything you want or need in one property.

 Our advise is for you to visit open houses in the area and get a feel of the local market.  Check out apartments that are both a little over and below your price range to see how values differ depending on features and location.

As you go through the different properties, you can review your list and reevaluate what you want so you can somehow align it with what is really out in the market.

8.  Prepare For The True Cost of Home Ownership

Many home buyers focus too much on the down payment because it could be the biggest obstacle to owning a home. And a good many of them also neglect to prepare for the other costs that accompany the whole process:  appraisal, origination, credit report, inspection, and notary fees.  When you take all these together, they constitute a substantial amount that buyers must pay out of their own pockets.

Significantly, the expenses won’t stop when you get the keys to your house.  In fact, the moment you open the door, you likewise open a whole range of new expenses for your household.  You spend for the moving expenses, new furniture to fill up the house, new appliances and maybe even a new lawn mower.

It’s normal that as you begin to live in the house, you’ll notice additional needs – and these are additional costs.  Maybe the wall needs a nice wall clock or the corner would look better with an antique jar or the hallway might use a few more lights.  Most people fail to take this into account so it is better to prepare yourself.

tips for first time home buyers

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If you are a first-time homebuyer, you might have realized that it’s not very easy to get into the real If you are a first-time homebuyer, you might have realized that it’s not very easy to get into the real The Smart Investor yes 10:51
How To Refinance a Personal Loan https://infoforinvestors.com/loans/loan-guides/refinance-personal-loan/ Fri, 12 Oct 2018 20:06:33 +0000 https://infoforinvestors.com/?p=3837 https://infoforinvestors.com/loans/loan-guides/refinance-personal-loan/#respond https://infoforinvestors.com/loans/loan-guides/refinance-personal-loan/feed/ 0 <p>Typically, a lot of people get a personal loan to invest in a new car, wedding, or even to consolidate</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/refinance-personal-loan/">How To Refinance a Personal Loan</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Typically, a lot of people get a personal loan to invest in a new car, wedding, or even to consolidate their debt. It important to get all of the information you can get about a loan before applying. There are different loans out there for an individual’s specific agenda and circumstance.

Moreover, it’s very important for you to understand how loans work and how to borrow responsibly. This is why we put this guide together to go over things you need to know about loans.

What is a Personal Loan?

In a nutshell, a loan is an agreement between the lenders, which gives to the other party such as the borrower, a lump sum of money. The borrower has to pay back that amount over a period of time that the lender determines. A loan consists of interest payments as well as other charges for the administration of the loan.

In addition, your loan-term will be different from lender to lender, but it is written in the agreement. The lender requires the borrowers to comply with the repayment term that’s in the contract; they place an emphasis for you to know the due date and interest rate.

Even though there are plenty of loans to choose from, the two main types are secured and unsecured loans. Secured loans require an asset, such as your home, for collateral. Unsecured loans are widely available for people who have a good credit score and good employment.

How Do Personal Loans Work?

Obtaining a personal loan nowadays is not how it used to be. Back in the day, lenders would want to see your credit score, tax returns, and your details of employment to decide whether or not to give you a loan and how much to charge you.

In the times we’re living in today, we have a new breed of lenders. Lenders today factor in things such as your SAT scores and your social media accounts to determine who to lend to and the amount of interest they want to charge. Moreover, it’s easier to obtain a personal loan now than it was years ago when traditional banks and credit unions had dominance over the personal loan industry.

Personal loans have different sixes and term lengths. There are loan terms that last for years and there are others that are due for repayment in a couple of weeks such as a payday loan. If you repay a payday loan in full in that small window of time, you won’t have to pay interest. On the other hand, you will have to pay the origination fee of that loan.

An installment loan is a type of loan that requires interest immediately. The amount of interest you pay is contingent on the size of the loan and the interest rate. Also, keep in mind that there are lenders out there that offer low-interest rates that have lower terms.

A personal loan calculator can compute whether or not it’s cheaper to choose a loan with a lower interest rate in comparison to a loan with a higher interest rate. Do you want to know an important guideline? Don’t borrow an amount you aren’t able to pay back in full.

What Does it Mean to Refinance a Personal Loan?

In simple terms, refinancing is trading one debt for another, at a bank that’s different from the other one, with new terms and conditions.

Refinancing a loan also gives you the ability to place your old debt into a new one that has better terms and conditions.

The term refinance is also in reference to changing the mortgage on your home. Some people call it remortgaging. Moreover, this type of loan is subjected to refinancing because of its extended tenure and how much it changes from when you initially get the loan to the time it takes for you to repay the loan in its entirety.

Overall, you can refinance any loan that’s in your favor. You can do this for credit cards too; it’s known as a balance transfer because of the type of debt.

Now that you have a good grasp of what it means to refinance, let’s talk about how you can take advantage of refinancing.

Refinancing Vs Debt Consolidation?

It’s not exactly the same thing.

Even though they function in the same way, you can pay off more than one loan by consolidating and only one loan by refinancing. You may come across people using these two terms interchangeably.

Can You Refinance Your Personal Loan?

In order to refinance a personal loan, you have to do the same steps as you would for applying for a personal loan. Things, like building your credit, choosing the right lender, and searching for the right loans, are examples of what you have to do.

If the lender gives you the right to refinance, you’ll get the new loan. Afterward, you have to close out the old one and begin making payments on the new one.

Below are the steps you need to do in order to refinance your personal loan:

 1.  Improve Your Credit

Before you choose to refinance, think twice if you really need to or not. If you have a strong credit history, then it’s a good move to refinance.

Before you apply, do what you need to do to increase your score. The main factors that impact your credit score are your ability to make on-time payments amount of credit you available that’s based on your credit limit. Moreover, it’s wise to get your free credit report and dispute errors that you find.

If you pay your monthly payments on time and your credit score continues to increase, you are in a better position to request a loan refinancing.

 2.  Compare Offers From Lenders

After you are done reviewing your finances and increasing your credit score, you are ready to contact you lenders of choice and compare their offers. Also, let the lender know upfront that you are willing to go with a different lender if you don’t like what the new interest rate is going to be.

Refinance Loan Amount

The amount of money the lender will loan you is going to be different across all boards. If one lender offers you more money than the other, that doesn’t mean that’s the best loan to choose. Remember that it costs more to borrow the money than it does to spend it. If you are able to finance a part of the investment yourself and borrow the other amount you need, this is a good option for you.

Fees and Charges

Every lender has their own way of charging fees and other charges. Research the competition to see what they are charging, and then choose the lender with the lowest fees.

Loan Terms and Conditions

Lenders also differ from one another regarding their terms and conditions. For instance, one lender may offer a loan with a fixed rate while the other may offer a variable rate. Could there be a fixed term as well? Moreover, find out everything you can about the loan before applying.

 3.  Review Your Loan

As with any other loan, it takes a lot of time and hard work to refinance a personal loan. The process consists of tons of paperwork. You also have to review over everything before you finalize the loan. This process will be even longer if you decide to go with a new lender instead of sticking with the old one.

Furthermore, you’ll have to hand over information such as your credit report, proof of income, debt, and other financial information. It would be best if you ask your lender of choice a lot of questions to ensure that you are well-informed.

Remember to always get your questions answered and read the fine print.

Here are some things to watch out for:

  • Prepayment penalties. Most lenders usually don’t charge anything if you pay off the loan early, which is known as an exit fee as well.
  • Automatic withdrawals. If your lender requires automatic payments from your bank account, we recommend that you set up a low balance to prevent overdrafts.
  • APR surprises. The annual percentage rate consists of the whole cost of refinancing a loan, along with the origination fees, which are things that should be clearly addressed.
  • Payments are reported to credit bureaus. When lenders report on-time payments, it’s positive on your credit report. Lenders reported by NerdWallet report to credit bureaus.
  • Flexible payment features. Lenders will also give you the option to choose your payment due date. Some will even waive late fees on occasions or won’t require a payment from you in times of hardship.
  • Direct payment for creditors. There are also lenders out there that will send borrowed finds straight to the creditors. This is really good for individuals who are consolidating debt.

 4.  Close Out Your Original Loan

After your lender approves you for a refinance, they require you to write your signature on the loan documents. It’s important to note that you need to close out your former loan first. If your loan refinance is with the same lender, they will close out your former loan for you.

If your loan-refinance is with a new lender, it is your responsibility to close out your former loan. No matter what your loan refinancing process looks like, closing your former loan is a crucial step. If you don’t, you will suffer serious consequences.

4 steps to refinancing your personal loan

When to Refinance a Personal Loan?

There are many reasons why people will look into refinancing his or her personal loan. For instance, they may want more flexibility with their money, consolidate debt, or simply to get better term options.

Moreover, whatever the reason why you a loan refinance is, it’s important for you to make the best decision possible.

You Cannot Afford the Repayments

At times, financial hardship can arise. For instance, you may have suffered a salary decrease or you have another bill that takes a lot of your money.

In other words, you are not able to pay the amount you normally paid without complications. Since you can’t just wash debt away, you have the option to get another loan with a longer term or lower your interest rate which results in you having lower, monthly payments.

Accessing More Funds

It’s possible that you need to borrow an additional amount than what you previously thought when you took out your first loan. Under this circumstance, you may not have to refinance your personal loan. All you have to do is request a personal loan amount increase instead. Please be aware that in doing so may increase your repayments and loan term.

Changing Your Loan

Figuring out what area of your loan you want to modify is a great start when you’re wondering whether or not refinancing is the best choice.

So, does refinancing make sense?

Using our refinance breakeven calculator will help you to determine whether or not you should refinance your personal loan.

Moreover, input any closing costs, such as a loan origination fee, into the “other closing costs” section. Even though it’s not fancy, it’s a great starting point.

The post How To Refinance a Personal Loan appeared first on The Smart Investor.

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Typically, a lot of people get a personal loan to invest in a new car, wedding, or even to consolidate Typically, a lot of people get a personal loan to invest in a new car, wedding, or even to consolidate The Smart Investor yes 10:10
Credit Card Cashback, Points Rewards or Miles? https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-benefits/ Fri, 12 Oct 2018 19:52:23 +0000 https://infoforinvestors.com/?p=3853 https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-benefits/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-benefits/feed/ 0 <p>Is it better for you to have a cash-back credit card or a travel rewards credit card? The truth is</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-card-benefits/">Credit Card Cashback, Points Rewards or Miles?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Is it better for you to have a cash-back credit card or a travel rewards credit card? The truth is that this question is as old as reward cards themselves. The answer you’ll hear quite often is, “it depends”.  Let’s now dive into the many avenues of reward cards. You will then have clarity on the type of rewards card that’s going to be beneficial to you.

Keep in mind that you only benefit from reward cards when you pay the balance off in full each month. If you don’t, the interest you accrue will be more than the rewards you actually gain. Let’s now go over everything thing you need to know since you may be taking interest in getting a rewards credit card.

Overview of the Different Card Types

Miles: This type of credit card usually offers great benefits and sign up bonuses. The downside is that only people who travel a lot can truly benefit from the card. In the past 3 months, there has been an uptick of specials between 30,000 and 120,000 frequent flyer miles for new cardholders. Amazing, right?!

An individual can make a couple of domestic round trips with those miles. The downside is that you have to pay a redemption fee of $100 per ticket when you attempt to transfer your miles into flights. Government fees and taxes also accompany this. Reward cards such as United MileagePlus Explorer and Southwest Airlines Rapid Rewards have some great benefits for those who are willing to book with a single airline.

Cash: A cash-back card is one of the easiest rewards cards to utilize. This type of card has the ability to give you a percentage of the money you spend using the card.

The purpose of cash-back reward cards is to reward customers as a result of using their card for everyday use. It also encourages merchants to accept smaller transactions with credit cards. Chase have cash-back cards offer up to 6 percent cash-back that has an emphasis on quarterly enrollment and up to $2,000 in combined purchases.

Points: This type of card reward their cardholders via points. Banks such as Chase and Citi offer points (for merchandise purchase) that’s more than what’ you’d receive in cash. Moreover, you can always check to see if a lender offer deals for the stores you like to purchase from.

Credit Card Cashback, Points Rewards or Miles?

Cash vs. Miles: Match You Spending Pattern

It’s important to pick the rewards card that meets your expectations. You can choose a card with no annual or fee or a card that has one. If you choose a card with an annual fee, make sure that the rewards offset the price.

Furthermore, you have more freedom when you choose to get a cash-back rewards card. For instance, you have the ability to spend your money on travel or anything else you may prefer.

Regarding a miles card, they have more limitations. They are only beneficial for those who live a lifestyle of travel. People who desire to travel more in the future can benefit from this card as well. Planning a trip to Spain could be the motivation that you need to start traveling. For the most part, reward miles have the same value as cash-back. 0.75% to – 2.5% is usually the range to be exact.

The good thing is that there’s always an incentive for signing up. Keep in mind that the bonuses are typically some of the incentives you’ll receive. It’s important to take advantage of them. Certain miles cards allow you to use your rewards for other travel needs such as hotel rooms or rental cars.

Credit Card Points vs Miles: What’s the Difference?

Miles and points reward cards typically operate the same way. You will earn miles or points depending on the program for your card of choice. Also, they’re redeemable for various eligible terms and services.

Take a look at this distinction: Mile rewards cards are normally in affiliation with one specific airline. Moreover, they have no set value and you can only redeem your rewards with that specific airline and its partners. As a result, you’ll have to complete additional legal matters to maximize the use of your miles card.

One thing to note is that you have the opportunity to receive gift cards and merchandise with the points you rack up. Since you now have the knowledge you need to decipher between the two, let’s look into what mile and points reward cards are truly worth.

Cash Back vs Points vs Miles: How to Compare Them?

In order to identify the different types of credit cards, you first have to know their rewards rates. The rate (which is a percentage) the reflection of a card’s worth. Moreover, this is the value the card gives back when you purchase with it.

For instance, if you had the choice to purchase groceries with a credit card that rewards you 1.5% in comparison to one that rewards you 0.75%, I would choose the former. The rewards are apparent with a cash-back rewards card because the lenders let you know upfront what the reward will be when you use it. Regarding miles and points cards, it’s not that simple. As a result, you’ll have to calculate the rewards rate.

To determine the rewards rate, you first need to know how the miles or points are worth. You do this by figuring out how many points/miles you need to get the special reward. Next, you have to divide the dollar value of that specific reward by the number of points you need for its redemption. This will give you the value of dollars per point. Afterward, you need to multiply that specific value by the number of points you get per dollar spent and multiply that particular number by 100. The answer you see is the percentage rewards rate. Let’s take a look at an example together:

Let’s take for instance the card you have takes about 30,000 miles to book a flight from LA to Boston. In the back of your mind, you already know that the flight usually cost $300. This means that each mile approximately $300/30,000 = $0.01. If your credit card rewards you with 5 miles for every $1 you spend, your rewards come out to $0.01x5x100=5%.

One thing to keep in mind is that reward credit cards will sort out the points in various ways. For instance, your reward for spending a certain dollar amount at the grocery store could be 4 miles and 2 miles for dollar purchases at the movie theater. To clarify, the amount of rewards you receive is contingent upon where you do your shopping.

We use the same calculation for every credit card we look over in order to create the criteria of how we compare the credit cards.

For instance, if a cash-back credit card rewards you with 1% cash-back on travel purchases and the points credit card offers a 2% rewards rate, we will recommend the latter to those who desire to receive travel rewards.

When You Should Choose Cash Back

Now check this out: For most credit card users (and those who have the travel bug) cash-back cards are the most appealing. One of the main benefits is that you can use the rewards to help cover your rent, mortgage, or other bills. You aren’t able to do this with an airline miles card or hotel points.

On top of that, you have the opportunity to allow your cash-back to accrue over time. The downside of a miles and points card is that they can lose value over time if a company changes their rules and policies. Moreover, if you don’t use your travel rewards over a span of time, you could potentially lose those rewards.

When You Should Choose Travel Rewards

Earning and receiving travel rewards is more complex than you probably think. This type of rewards credit card caters to people who are confident in knowing their favorite airline hotel programs.

One thing to note is that a lot of people deal with frustration trying to figure out how to use their travel rewards.

When You Should Choose Points Rewards

While travelers with experience can go from point A to point B from three to five cents per point, cash-back points typically just have a 1 cent per point value.

Even though the cash-back (points rewards) value is lower, plenty of people still prefer this type of card because it’s easier to understand what they are receiving without them having to think twice about it. Travelcard users that lack experience run the risk of not using their cards effectively. As a result, they lose the value of what they accrued.

Undecided

Keep in mind that you have to pay off the balance in order to benefit from any rewards program. The banks tend to subsidize the cost of your rewards. They do this by spiking up finance charges and annual fees than those no-frills cards.

We recommend using cards such as these to cover reimbursed company expenses or normal household bills that you’d usually pay with cash to cover. That way, you won’t be spending the bulk of your money on service charges than what you receive in rebates.

If you are indecisive between miles, cash, and points, it’s best to look into getting a miles per dollar rewards card. You’ll be able to redeem the miles on flights for the airline you choose. When you use your card while you’re traveling rather than just going to grocery store, the rewards you’ll receive will add up substantially.

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Is it better for you to have a cash-back credit card or a travel rewards credit card? The truth is Is it better for you to have a cash-back credit card or a travel rewards credit card? The truth is The Smart Investor yes 9:11
8 Tips to Increase Your Personal Loan Eligibility https://infoforinvestors.com/loans/loan-guides/increase-loan-eligibility/ Fri, 12 Oct 2018 19:46:38 +0000 https://infoforinvestors.com/?p=3844 https://infoforinvestors.com/loans/loan-guides/increase-loan-eligibility/#respond https://infoforinvestors.com/loans/loan-guides/increase-loan-eligibility/feed/ 0 <p>Getting a personal loan it’s not an easy task, especially if your credit is not high. You might not have</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/increase-loan-eligibility/">8 Tips to Increase Your Personal Loan Eligibility</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Getting a personal loan it’s not an easy task, especially if your credit is not high. You might not have to give collateral if you apply for a personal loan – but since lenders don’t require collateral for personal loans, the interest rate is higher.

There are several things you have to take into account when you qualify for a personal loan.

What Are The Factors I Should Focus on?

  • Income: This is one of the most important factors lenders look at when you apply for a loan. From the lender’s perspective, the higher your income, the more likely he will approve your application with an amount you desire. The lender also considers the income you have left over after taking care of other financial commitments.
  • Credit History: This is the next most important factor, which consists of your past and current relationships with lenders. For instance, if you are late paying your credit card bill, a lender considers it a negative remark when you are applying for a home loan. If you paid off your previous loans, to the lender, it makes you look more credible as you go through the loan application process. This is why it’s important for you to pay your bills on time.
  • Employment: This factor varies amongst lenders. If a lender does have an employment requirement, it’s possible that they want you to have a full-time job. If you have a part-time job or if you are self-employed, there are other loan opportunities available. Keep in mind that these loans options are fewer in number than ones available for people with traditional forms of employment. Moreover, there are options available for those who are unemployed and those who receive benefits from the government. Keep in mind that you still have to prove how you can pay the loan back.
  • Applicant’s age: This is another factor that’s taken into account by the lender to determine your loan term. The younger you are, the higher the probability of you qualifying for a loan. Since lenders place a cap on loans prior to people applying, the younger you are the better.
  • Source of Income: Lenders also consider your source of income when deciding whether or not they will grant you a loan. If you have a salary with a company that has a good reputation, it looks very appealing to the lender. Those who are employed by the government and PSUs are considered top priority because lenders consider these stable jobs. Moreover, people who are architects and doctors have high regards as well. Those who are self-employed have to show additional documents such as bank statements and ITR that supports their income.
  • Existing Relationship with the Bank: Banks like it when you already have an existing relationship with them as you’re going through the loan application process. Furthermore, making on-time payments on a previous loan from the same back adds a lot of value. Lenders deem you as a trustworthy borrower.

What is The Required Income For a Personal Loan?

Lenders differ regarding income requirements. There are lenders out there that require set minimums. You can find out what the requirements are by looking on their website or by calling their customer service line. Moreover, lenders also weigh your income against your debt and expenses instead of having a cutoff number for eligibility. Now that you know the factors regarding loan eligibility, let’s take a look at ways to increase the probability of you getting a loan.

1. Determine What Type of Personal Loan You Need

As you hear people talking about personal loans, they are talking about unsecured, closed-end installment loans. From a technical perspective, lenders consider mortgages, auto loans, payday loans, and credit cards personal, which is contrary to business loans. Moreover, it’s wise for you to know what type of loan you’re applying for.

Lenders typically offer secured loans for individuals who do not qualify for loans with prime interest rates.

For instance, if you give your home or vehicle up for collateral, you can qualify for mortgage, title, or home equity loan. Moreover, keep in mind that since these are secured personal loans, your home and/or car is at risk of being taken if you fail to pay back the loan.

2. Know Your Limitations

If you want a loan, you should already be aware of your credit history and score. Your bank of choice should be able to tell you the credit requirements of the loan you’re applying for. It’s best to be proactive in obtaining your credit score report and score multiple weeks before applying. Moreover, look over your credit report and review it to ensure there aren’t any inaccuracies.

Lenders heavily take your credit report into account. If there are errors on your credit report, it could cost you your loan approval. Remember to always take into account your financial status while preparing to apply for a loan. Moreover, apply for a loan that you know you can afford to pay back effortlessly.

3. Create a Checklist

It’s crucial for you to craft a checklist of the information you need, which is based on the information from the bank.

In addition, it can take some time for you to obtain the documents you need from creditors, your employer, and other financial resources. If you don’t have all of the information you need, the lender can deny you easily.

4. Improve Your Credit Score

Your credit score doesn’t always stay the same. Moreover, it’s important for you to take actions that will improve your credit score; especially if your credit score is near the next bracket.

  • Excellent Credit 760+
  • Good Credit 700+
  • Fair Credit 640+

If you have a credit score of 770, improving it to 780 is not worth your time. On the contrary, if your credit score is 680, increasing it 770 is a significant improvement which will increase your chance of getting approved. You will also save a lot of money because you’ll have better interest rate options.

The best way to improve your odds of getting approved is to always pay your bills on time and reduce your debt-to-available-credit ratio.

If you have negative remarks or late payments on your credit report, it’s best to wait for six months and not miss payments to improve your odds of getting a loan. Moreover, having a good relationship with your lender is an advantage if you have a negative item on your credit report. Write the lender a nice letter asking him to remove the negative remark.

5. Apply in One Bank At A Time

We advise you to not apply for multiple loans all at the same time. It’s best to see if one or two lenders will approve of you getting a loan. Whether you know it or not, applying for multiple loans shows up negatively on your credit report. Lenders don’t like that at all because they consider you a risky borrower. More than likely, the lender will not approve your loan application.

6. Ask questions

When you find a loan that interests you, contact the bank personally to find out the eligibility requirements.

Also, it may be necessary for you to make an appointment with the loan officer so he can go over the required materials, documents, and timelines in order for you to continue with the loan approval process. Every bank has its own requirements. This is why it’s important for you to know them upfront for preparation purposes.

7. Be Honest

Honesty is a vital attribute you have to have in order to get approved for a loan. If you are dishonest during the application process, lenders will deny your application as they evaluate your credit score and history.

It’s very important for you to be upfront and honest throughout the loan application process.

For instance, if you are honest with us but not successful with getting a loan, you are in a good position for us to help you in your financial situation so you can apply again in the future. It also positions you to be seen as a responsible and respectful borrower.

Furthermore, if you are not honest throughout the application process, lenders will not approve your loan application. This will also prevent you from getting credit from other lenders in the future.

8. Add Spouse/Parents as Co-Applicants

A lot of people do this to add more weight to their loan application.

Adding a family member to your application not only adds fuel to the fire, but it also gives the lender an extra sense of security that you will repay the loan. As a result, you’ll get the amount you desire to have.

What if I’m Not eligible?

Here are some things that you can do if you discover that you don’t meet minimum income requirements:

Apply For A Lower Amount

If you are not able to show the lender you can meet the income requirements, consider borrowing less. Moreover, it’s lower payments for you and less risk for the lender.

Choose A More Affordable Loan

The lender may also feel that the loan fee(s) and the interest rate is too expensive for you. Lenders consider this risky. There are other loans you can get that have lower interest rates and fees. As a result, you’ll be ion a better position to manage your repayments.

Try Your Current Bank

If you have a good relationship with your bank, you will be in a better position to get loan approval. The information regarding the loan product that interests you is on your bank’s website.

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Getting a personal loan it’s not an easy task, especially if your credit is not high. You might not have Getting a personal loan it’s not an easy task, especially if your credit is not high. You might not have The Smart Investor yes 9:13
How to Wisely Choose a Life Insurance Company https://infoforinvestors.com/personal-finance/life-insurance/choose-life-insurance-company/ Fri, 12 Oct 2018 19:43:54 +0000 https://infoforinvestors.com/?p=3468 https://infoforinvestors.com/personal-finance/life-insurance/choose-life-insurance-company/#respond https://infoforinvestors.com/personal-finance/life-insurance/choose-life-insurance-company/feed/ 0 <p>ow does one wisely choose an insurance company? This is probably the first question a person asks when looking for an insurance company to serve his needs.  After all, there are thousands of insurance companies in the market ranging from the small players to the established giants. Insurance is an intangible product so it is imperative to be careful from where you should buy it.  Many people have had bad experiences with many insurance firms [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/personal-finance/life-insurance/choose-life-insurance-company/">How to Wisely Choose a Life Insurance Company</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> How does one wisely choose an insurance company?

This is probably the first question a person asks when looking for an insurance company to serve his needs.  After all, there are thousands of insurance companies in the market ranging from the small players to the established giants.

Insurance is an intangible product so it is imperative to be careful from where you should buy it.  Many people have had bad experiences with many insurance firms in the past because they dealt with the wrong companies.  To be safe, take your time and do some digging for information before making your choice.

A common mistake of many buyers is relying exclusively on the advice of their insurance brokers. It’s not entirely a bad thing but keep in mind that brokers work to get commissions.  It is possible that they would likely recommend a company that would give them the highest commission but not the best product.

Factors To Consider When Choosing Life Insurance Company

Here are some other factors to look into as you do your research into these companies:

1. The Company’s Reputation

Don’t get taken in by flashy advertising or expensive marketing campaigns.  Check out how long the company has been in the insurance business. A good track record should be your primary consideration when looking for an insurance company.  Look them up on the Internet and do some research about how they do business.  The Internet could be a good source of information about them especially customers’ reviews that describe their service and reliability.

You may not find one that has 100% positive reviews – in fact; you should look at the negative feedback.  Find out the nature of the problems brought out by the dissatisfied customers. If you find reports about non-compensation of its policyholders, then that is a big red flag for you.  You’ve better not do business with these people.

Being in the business for some time and having many policyholders may be some good signs but financial strength is key.  Look at the financial reviews to help you answer that one important question.

2. Financial Stability

Each state regulates the insurers in their jurisdiction.  Their respective insurance departments monitor the financial health of licensed insurers so they can do business in the area.

States promulgate many regulations to prevent insurer insolvencies.  Just the same, some insurance companies still fail.  So before you buy a policy, make your own evaluation about the insurer’s financial health.

The good news is, evaluating an insurer’s financial health does not require you to be a business or math expert.  Rating firms have done the hard part for you. Some of these firms are A.M. Best, Standard and Poor’s, Moody’s and Fitch.  Each of these agencies follows their own rating criteria.  Because of this, one company can get a high rating from one agency and get a low rating from another.  So consider looking at multiple ratings when evaluating an insurance company.

Factors To Consider When Choosing Life Insurance Company

3. Premium and Cost

A premium is an amount that you pay the life insurance company. Even for the same amount of death benefit and insurance type (i.e., term life insurance) the premium can differ widely among companies.  This is because some companies have product features that others don’t have or maybe, they just simply charge higher.  So the first step in comparing policies is to compare similar plans based on:

Remember this:  the cost of the premium is not always proportionate to the amount of protection of the policy.  One policy might have a higher premium but might have additional benefits (like policy dividends) than others.  Maybe two companies might promise policy dividends but for different amounts and different times.  In some cases, the higher premium may give a lower coverage or protection.

So how can you tell what a policy’s cost is

Your company should tell you the policy’s net payment cost index (the number of death benefits provided in the policy).  They should also tell you the surrender cost index (amount you’ll get if you surrender the policy in the future for its cash value).

Use the surrender cost index if you are planning to keep the insurance only for a specific period of time.  Use the payment cost index if you are planning to keep the policy indefinitely.  The rule is, the lower the cost index, the better.

4. Service Quality

This is important when choosing an insurance company.  Find out their employee’s attitude towards potential customers like yourself.  Are they available to respond to inquiries whether by phone or in person? Do they patiently listen to your needs or are they eager to make a sale?  These are some questions you need to answer before you make a choice.

5. Locality

The trend today is buying insurance online.  Although it is convenient and easy, you still have to be careful about buying insurance products through the net.  It is advisable to buy insurance from a company that has a physical presence in your locality.

This way, in case serious problems arise, you have an office to run to.  Also, buy from a company that has a specific license to sell in your state. This will avoid all the hassle should you need to file a lawsuit for claims against them.

6. Full Disclosure

No surprises, please!  Choose a company that has a full disclosure policy.  Know all the terms and conditions of the product you are buying as well as the many do’s and don’ts.  An ideal company should be clear and open about its clauses and conditions.  But some companies hide clauses inside the fine lines and use these clauses later to avoid paying their policyholders.

Many policyholders are equally guilty because they do not try to understand the policy.  Some just sign and agree on the forms without even reading the entire contents.  It is important to read and know all the provisions of the policy before you sign it.  It would even be better if your lawyer can read it before you sign.

Summary

Choosing an insurance company for your needs is not an easy thing, considering the financial meltdown in 2008 and 2009.  Several financial institutions and insurance companies have folded up, merged with bigger companies or sold some of their divisions. Don’t worry too much:  state guaranty funds will pay up to a certain amount per policy in the event that your company sinks.  Lots of luck to you!

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions .

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ow does one wisely choose an insurance company? This is probably the first question a person asks when looking for an insurance company to serve his needs.  After all, there are thousands of insurance companies in the market ranging from the small play... ow does one wisely choose an insurance company? This is probably the first question a person asks when looking for an insurance company to serve his needs.  After all, there are thousands of insurance companies in the market ranging from the small players to the established giants. Insurance is an intangible product so it is imperative to be careful from where you should buy it.  Many people have had bad experiences with many insurance firms [...] The Smart Investor yes 6:35
How To Pay Off Your Credit Card Debt – Strategies And Tips https://infoforinvestors.com/credit-cards/guides-credit-cards/pay-off-credit-card-debt/ Fri, 12 Oct 2018 19:36:05 +0000 https://infoforinvestors.com/?p=3501 https://infoforinvestors.com/credit-cards/guides-credit-cards/pay-off-credit-card-debt/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/pay-off-credit-card-debt/feed/ 0 <p>The first step to paying off your credit card debt is to figure out how much exactly you owe.  A</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/pay-off-credit-card-debt/">How To Pay Off Your Credit Card Debt – Strategies And Tips</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

The first step to paying off your credit card debt is to figure out how much exactly you owe.  A lot of times, you tend to underestimate your total debt when you just rely on memory.

List down all your credit card balances and loans together with the minimum monthly payment and APR of each one.  In the event that you have so many cards, you can’t remember exactly what they are, check your free credit report to be sure.  Your credit report will contain a list of your credit card accounts and will state the latest reported balances plus the contact information for those accounts.  For more updated information, you can check directly with your bank or credit card company.

Once you’ve got it taped, make a list of all the non-credit card bills you have to pay each month, like your rent or mortgage, auto or student loans, utilities, groceries, gas, child care, etc.  Add the two lists together (your credit card debts and your monthly living expenses) to get your minimum monthly costs.

Next, compare your total with your monthly net income or take-home pay.  Obviously, your income should be more than your monthly expenses.  Now, for whatever money is left over, you have to decide how much of it you are willing to put aside to pay off your debt.

First step:  Set a Goal

The trick is to set for yourself a realistic goal of paying off your high-interest credit cards and eventually other types of consumer debt (overdraft, a line of credit, car loans).

The reality is this: it’s very easy to run up a long list of debts (you can also use a credit card debt calculator) in a short time but it takes time and much self-discipline to pay them off.  Keep track of your progress regularly to help you remain focused and motivated to achieve your goals.

Consider The Following Strategies

In all probability, you carry a balance on more than one card.  The least that you can do in this case is pay at least the minimum on each card.  Subsequently, focus on paying off the total balance on one card at a time.  How do you pay down the card you will prioritize?  Here are two ways:

1. The Snowball Method

In this technique, you pay off the card with the smallest balance first. After that, use the money that you were paying for that debt and use it to retire the card with the next smallest balance.

It is quite tempting to try to retire the card with the biggest balance right away but realistically, your funds may not allow you to do that.  Small victories can provide momentum because it will give you a sense of achievement.  If you have several credit cards with different balances, tacking the smallest balance might be the better choice for you.

Here’s how to do it.  First, take the account with the smallest balance and then make double or triple monthly payments, or whatever you can afford each month.  While you are doing this, do not neglect to pay the minimum for the other cards.  If you miss the payment on another card, that would lead to major complications on your plan.

As soon as you knock down the smallest balance to zero, take care of the card with the next smallest balance.  By now it should be the card with the smallest balance.  This payment strategy brings you the satisfaction of wiping out a credit card balance early on in your payoff timeline.  Hopefully, this sense of victory will keep you motivated to battle each credit card debt until you reduce them all to zero.

2. The Avalanche Approach

Select the card with the highest interest rate and concentrate on paying that debt off first.

Perhaps the most burdensome part of what you pay to a credit card company is the finance charges.  They can quickly eat away at your funds.  To keep your debts at bay, you can focus on first paying off the credit card that gives you the highest interest rate.

You should pay double or triple your minimum payments on the card with the highest interest rate and most onerous monthly finance charges.  All the while, you should keep paying the minimum payments on your other credit cards.  This approach is the most efficient way to tackle your obligations, but have the self-discipline to follow through.  Keep at it especially, if the card you are paying off has a hefty balance.

As soon as you’ve paid off the first card with the highest interest rate, move on to the card with the next highest interest rate and so on.

The important thing is to choose a strategy that works for you and stick with it. If you can manage it, you can try a combination approach.  It might come as a pleasant surprise to find that the card with the highest interest rate carries the lowest balance.

debt snowball method vs debt avalanche method

Try a Combination of Additional Strategies:

Use a Balance Transfer Feature of a Credit Card

You can find many credit card issuers who offer 0% introductory APRs to customers who want to transfer their balance over to their new card from another.  However, the 0% APR will soon expire – usually around 12 to 15 months.  You may be in luck and find some cards that extend their offers as long as 18 to 21 months. And one more thing:  most offers will involve the payment of a balance transfer fee (around 2% to 5% of the balance you are transferring), so factor that in your computation.

Make no mistake about it – if you are saddled with a high-interest credit card, the appropriate balance transfer card could be a life preserver.

Make sure you read the fine print carefully of any balance transfer offer you are considering.  Also, avoid adding new debts to your new card.  After all, you got the card to help you get out of debt – not to rack up new ones.  Your intermediate goal should be to pay off the balance before the introductory APR period ends.

When evaluating balance transfer credit cards, note the following:

  • How long is the 0% APR offer?
  • Does the 0% APR apply to new purchases as well or just for the balance transfer?
  • What would be the effective APR of the card when the introductory offer rate ends?
  • What are the fees that come with the balance transfer facility?

You can go to any credit card website and use their credit card finder to help you find the right credit card for you.  The finder will allow you to sort offers according to various features like low APR or no annual membership fee.  Or, you may want to sort the cards according to credit scores to see which ones your credit score can qualify you for.

Lastly, the best balance transfer credit cards do not charge retroactive interest but there are specific ones that do.  For example, those that promote deferred-interest financing, commonly store credit cards, will compute for retroactive interest.  They will require that you pay interest on the full balance that you transferred if you will not be able to pay everything before the 0% introductory APR offer lapses.

So, take note:  you have to shop around for the best offers by reading their terms and conditions closely.  You also have to be realistic about how long you think it will take for you to pay off your credit card.

Consolidate Your Debts to a Single Card or Loan

Here’s a strategy that would simplify things for you. Why not consolidate your credit card debt to a single card or a debt consolidation loan? This way, you’ll only need to make a single payment every month instead of your usual four, five or even more.  You can even ask your bank to automate your payments so you don’t run the risk of missing your due date.

But here’s a warning: just because all your debts are now in one place doesn’t mean that they disappeared.  It is important that you concentrate on paying this debt off – it might be good for you to pay more than the minimum amount each month.

Apply For a Debt Consolidation Loan

What if your cash flow situation is not enough to impact your debt as required for the previous methods, what option is left?

Don’t worry.  There’s a solution.  A debt consolidation loan could help you pay off the credit card through an installment loan that has a fixed monthly payment amount.  The idea is to get a new loan that would pay off multiple other debts including your credit cards.  Depending on your credit, you could get a lower interest rate than what you currently pay on your credit cards.

So basically, it will reduce the amount of interest you are paying and therefore help you repay your debt faster. Similar to the idea of a balance transfer, a debt consolidation loan can also simplify your monthly payments by aggregating multiple payments and deadlines into just one.

If your credit is fair or poor, you would very much get a very high interest and your chances of qualifying for a personal loan would be low.  If you are in a serious debt situation with poor credit, this may not be the option for you.  You might want to look for a good debt management plan.

As you analyze the best strategy for you to pay off your credit card debt, you always have to consider the interest rate and period of the loan.

Would a lower interest rate be more of the priority to reduce your total debt?  Or are you more focused on paying it off quickly?  And here’s one small catch:  the kind of debt consolidation loan that you get and how you manage it would impact your credit.  So our advice is that you cover all the bases to ensure that you understand how things will roll out through the lender that you’ll eventually be working with.

Strategies to Pay Off Your Credit Card Debt

The Top Tips For Paying Off Credit Card Debt

Quite simply, there is no one true “best” way to eliminate credit card debt because each individual situation is different. You can do any or a combination of the things we’ve talked about: pay off each card in succession, transfer your balances to one card, negotiate for a lower interest rate, or get a loan to pay off the balances.

Whether you have a simple or grand financial goal and dream, paying off your credit card debt is a concrete step in the right direction.  The following pay down tips and strategies will help you find out how to pay off your credit card balances:

Realign Your Budget

Begin by sorting through your monthly spending.  For example, list down how much you spend on groceries, transportation, housing, entertainment, etc.  Your credit card statement will be of help – many card companies already do this for you by categorizing your spending.

Next, look for the expenses that you can cut back and reduce your spending on them.  You can then use the money you’ve saved to pay off some of your debt.

Stick to a budget to stay out of debt in the future.  Make sure you build up an emergency fund so you have a fallback in case a job loss or a health crisis ensues.  Review your budget each month and see if you are spending within the set limits.

Cut or Reduce Specific Expenses For a Period of Time

While you’ve been trying to pay off debt for a couple of years or so, you might lose sight of what other expenses you can cut.  So rather than searching for what expenses you can cut permanently, look for temporary quick fixes such as memberships, subscriptions, and bundled services where you don’t actually need all the products.

Get in touch with utility and phone companies to see if your services are available for a better deal, or maybe you can downgrade to the basic package for the time being.  If you haven’t done so for some time, tracking down your expenses again might give you some new and fresh perspectives.

Negotiate For a Lower Interest Rate

Try this:  call your credit card company and ask them if they can cut down your interest rate.  Who knows? They might offer you a balance transfer to a new credit card instead.  Consider going through that option.  However, while you might be paying less interest, you might end up lowering your credit rating.

Carefully weigh the pros and cons of this step.  If you’re not about to apply for a new credit in the next year or two, the balance transfer will be advantageous.  Have a good grasp of the terms and conditions and understanding of how credit card interest rate works so that you know when your lower/zero interest period ends and so that you can use the offer to your utmost benefit.

Pay More Than The Minimum

This is obvious:  if you will just pay the minimum amount on your credit card bills it will take you an awfully long time to pay it off.  Most card companies use 2% to 5% as your minimum amount due – which means that it will take you 20 to 50 months to pay for each charge on your card.

So, the opposite is true:  if you pay more than the minimum, you’ll pay less interest overall and you’ll be paying off your card a lot quicker.  Your card company usually will chart this out for you on your statement so you can see how it applies to your charges.

The simple solution?  Pay a bit more every month.  Any dollar over the minimum that you pay goes toward your balance.  The more you keep reducing your total balance, the more you reduce the amount of interest you have to pay.

Use Your Savings to Pay Debt Down Faster

You might be one of those who regularly contribute to a savings plan.  While this is good, you can also look at the angle that this money could help you pay your debts.  If you already have an emergency fund and are currently saving for irregular expenses, you may want to think about this regular cash outlay.

You can consider suspending extra payments to US Savings Bonds or other savings accounts until such time that you’ve paid off your card debts.  Use this strategy if you are not saving for anything specific such as kitchen repairs.

Think of it this way:  the money you will save by paying your debts faster will be considerably higher than whatever interest you can earn in a savings account.  And if ever you get your hands on an income tax refund, pay increases, or other unexpected funds, use them to pay down your debts.

For even more ideas of where you can find money to help you pay off your debt, check this out.  This showcases all the places you can find money to save.  Then, use the money that you save to pay down debt.

Pay Attention How You’re Affecting Your Credit

Having high balances on your credit cards isn’t going to help you get good credit scores.  As you may recall, payment history remains to be the biggest factor in your scores but the second biggest item is your debt usage.  In simple terms, it means the amount of debt you are carrying in relation to your total credit limit.

This credit utilization ratio is going to change your credit scores.  Finance experts suggest that you keep it at a maximum of 30% or if you are able, to an ideal 10% of your credit limit to push your scores upward.  The point is this:  if you are maxing out your credit cards, that would certainly bring your scores down.

Pay off credit card debt tips

The Bottom Line

Challenge yourself to be honest and remain on track – which is a good motivation and an essential part of your plan.  Set realistic goals and prepare a budget accordingly.  You know that your debt did not happen overnight, therefore it will also take time to get out of it.  I exhort you to keep on supporting each other even after you’ve paid off all your debt.

After you’ve retired your debts, you can continue on with your savings plan.  Redirecting money which you usually spent on debt repayment to a savings goal will give you the financial freedom you’ve been aspiring for.  Then, you can live your life as you like sooner than you’ve anticipated.

The post How To Pay Off Your Credit Card Debt – Strategies And Tips appeared first on The Smart Investor.

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The first step to paying off your credit card debt is to figure out how much exactly you owe.  A The first step to paying off your credit card debt is to figure out how much exactly you owe.  A The Smart Investor yes 14:33
The Pros And Cons Of a Personal Loan https://infoforinvestors.com/loans/loan-guides/personal-loan-pros-cons/ Fri, 12 Oct 2018 18:58:17 +0000 https://infoforinvestors.com/?p=3464 https://infoforinvestors.com/loans/loan-guides/personal-loan-pros-cons/#respond https://infoforinvestors.com/loans/loan-guides/personal-loan-pros-cons/feed/ 0 <p>Should I apply for a personal loan? If you’re wondering whether it’s the right thing to do,  you’ve come to</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/personal-loan-pros-cons/">The Pros And Cons Of a Personal Loan</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Should I apply for a personal loan?

If you’re wondering whether it’s the right thing to do,  you’ve come to the right place.

There are many reasons why you might want to take out a personal loan.  Perhaps you’d like to get your hands on those new set of wheels or maybe you’re expecting your first baby. Whatever the reason, a personal loan can be the most efficient means to make your dreams come true faster.

Let us walk you through the nitty-gritty of getting one of these loans.

What Is a Personal loan?

A personal loan is a fixed-rate installment loan, normally ranging from $500 to $100,000 and they are usually unsecured, so there is no collateral that covers them.

The loan always has a fixed monthly payment amount and an end date when the loan would be fully paid off.  Interest rates will differ from lender to lender and your creditworthiness.

Borrowers commonly use a personal loan to consolidate credit card debt or pay for a big, one-time expense like a surgery, wedding or a funeral.

How Do They Work?

If we were in the 80’s and you were applying for a loan, lenders would first want to know your credit score and you must show them your tax returns and employment details.  Only then would they decide whether to give you a personal loan or not and if so, how much interest to charge you.

But now, in our technology-driven time, a whole new type of lenders has emerged.  These lenders utilize non-traditional factors such as your SAT scores and social media accounts to make decisions on your loan application.  Comparatively, it’s a lot easier to get a personal loan now than it was years ago when the only options were credit unions and traditional banks.

Personal loans come in many sizes and lengths.  You have loan terms that can go for a full year or more.  You have short loans such as payday loans that become due in just a couple of weeks after they lend you the money.

The usual practice is, if you are able to repay a payday loan within the small window of time they give, you won’t have to pay interest at all.  However, the lender will still require you to pay the origination fee for the loan.

Some other forms of personal loans start accumulating interest right at the start such as installment loans.  The amount of interest you have to pay will depend on how much your loan is and the interest rate you agreed to pay.  Some lenders adjust the interest rate downward if you get a loan with a longer term.

Let’s go through the pros and cons of a personal loan.

Personal Loans Advantages

Unsecured Loans

We’ve mentioned before that personal loans are unsecured loans.  This means that the lenders will not require a mortgage of assets or a guarantee for them.  This is where personal loans have an edge over other types of loans because even if you don’t have any fixed assets to offer, you can still get a personal loan to get you out of a bind, or even for other purposes such as investment.

In effect, you do not have to worry about losing your home or any of your other assets in case you encounter a financial setback and fail to make on-time payments.

Easy Application Process

These loans are available in almost all banks or financial institutions.  They need minimal paperwork and the time they need to verify the documents make the process of application quick, easy and simple.

The whole loaning process – from application to documentation and then release – takes less time compared to other kinds of loans.

So, when the need for funds is quite urgent, a personal loan is probably the best option.

Available For Any Purpose

Lenders will not obligate their borrowers to specify the purpose or reason for applying for a personal loan.  Unlike housing loans where they restrict the use of the funds only for construction or purchase of a house, or an auto loan that you can only use for purchasing a vehicle, personal loans are multi-purpose.

Fixed Terms

With a personal loan, you’ll pay a specific amount of interest for a specified number of years.

Consider it this way:  shorter terms means lower interest over the years but higher monthly payments.  So, while it is an advantage, it could also be a disadvantage depending on where you sit.

Single Payment Option

Here’s how it goes:  by consolidating multiple credit cards with a personal loan you will only have to keep track on one bill due instead of many.  It would dramatically simplify a lot of things.

You can then focus your time, attention and resources on making that single payment, ticking off the months until you completely wipe out your debts.

Personal Loans Disadvantages

Higher Rates and Payments

Since unsecured personal loans are riskier than those secured by property, lenders mitigate the risk by charging higher interest rates.  Take note that your rate will depend greatly on your credit score and the principal of your loan.  The secret is this:  some lenders may hide a significant portion of the interest in upfront fees such as loan origination and processing fees.

It keeps you in debt (and it’s getting bigger). Many banks and financial institutions will not allow partial repayment of a loan. Needless to say, this will result in your debt getting bigger and bigger due to the accrued interest.

So, if you take out a personal loan for $10,000 and want to repay $1,000, you won’t be able to.  The lender will not allow such partial payment unlike in the case of housing and other types of loans.  With other loans, you can reduce the amount of your loan through the repayment feature which also lowers overall interest.

Stiff Repayment Rules

Yes, you can choose your repayment period but first a warning: you can’t change it once it’s chosen.  Most lenders do not want to go through the hassle of modifying your terms.  This means that you can not prepay the loan or make part-payment.

Basically, you have to pay the required amount for the entire duration.  Plus, if you fail to pay the EMIs on time, you may already be courting legal action which could lead to more complications.

Strict Eligibility Criteria

Lenders obviously need to follow strict guidelines with respect to eligibility criteria for personal loans.  Most banks and NBFCs will insist that borrowers meet a certain income level before even considering applying for a loan.

Aside from the income, they will scrutinize the credit score of an applicant and you’d be right to think that they can reject a loan due to a poor or average credit score.

personal loans pros cons

The Bottom Line

To sum up, a personal loan is ideal when there is a short-term cash requirement but the borrower does not have any available collateral and needs the money fast.  However, before taking this loan, a borrower should remember that this loan carries a higher interest rate.  Financially, it can lead to more problems if he is not able to pay the loan.

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Should I apply for a personal loan? If you’re wondering whether it’s the right thing to do,  you’ve come to Should I apply for a personal loan? If you’re wondering whether it’s the right thing to do,  you’ve come to The Smart Investor yes 7:01
10 First-Time Homebuyer Mistakes You Must Avoid https://infoforinvestors.com/home-buying/guides/first-time-homebuyer-mistakes/ Fri, 12 Oct 2018 18:24:21 +0000 https://infoforinvestors.com/?p=3797 https://infoforinvestors.com/home-buying/guides/first-time-homebuyer-mistakes/#respond https://infoforinvestors.com/home-buying/guides/first-time-homebuyer-mistakes/feed/ 0 <p>This is the cold truth:  you will make a lot of life-changing decisions throughout your life and believe it or</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/first-time-homebuyer-mistakes/">10 First-Time Homebuyer Mistakes You Must Avoid</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

This is the cold truth:  you will make a lot of life-changing decisions throughout your life and believe it or not, buying a house ranks among them. This is why many first-time buyers find this as a source of stress –  doubly so, when home financing comes into the equation.

Unless you’ve done your homework and armed yourself with volumes of research, getting a mortgage may confuse you and lead you to make wrong choices.  But you’re in luck:  you can have a smoother and less stressful experience by avoiding these common mistakes of first-time homebuyers:

  1.  Failing to Understand The Full Cost of Homeownership

You’ve probably grown accustomed to renting and budgeting for the monthly cost of renting which normally includes your rent, a few utilities, internet, and cable bills.  As a homeowner, your responsibilities will grow because you now have to take care of things that previously your landlord took care of.  This will include water, sewer and garbage bills, monthly HOAs (if you’re purchasing a condo unit), and the cost of lawn care.

Oh, let’s not forget the property taxes and homeowner’s insurance.  Did we mention maintenance cost already?  That will also be part of your out-of-pocket expenses.

We suggest that you set aside 1%-3% of the purchase price of your home every year for your repairs and maintenance budget.

  2.  Searching For Your Dream Home Before Prequalifying For a Loan.

Many homebuyers have set themselves up for disappointment by doing this.  Spare yourself the heartache of not being able to afford the house you dream of by letting the bank prequalify you before you start house hunting.  Don’t go around picking a house price range and searching listing until you’ve talked to a lender.

Take time to find out first what’s the house you can realistically afford and what the monthly payment will be.

  Of course, you should include all the taxes and other fees of the bank.  When you know the amount that the bank will preapprove for you, you can make a realistic budget for your home search.

  3.  Setting Aside Professional Help

Admit it:  if you’re new to the homebuying game, there are a thousand things you have no idea of in the process.  You’ll really need a reputable real estate agent, a good loan officer, a veteran broker, and in some cases, a lawyer familiar with real estate laws.

Venturing into this process on your own, without a professional to guide you, is a very risky move.

Here’s a simple rule to remember:  if you’re a first-time homebuyer, don’t try to deal directly with the listing agent.

Consider this:  if you are getting a divorce, would you go to your spouse’s attorney for help?  The principle is the same here.  If you go directly to a listing agent, they are only going to offer to you their listings.  A buyer’s agent would be of more help because he will show you more listings.

If you are hiring an agent from out of an ad or a website and without a referral from friends and family, ask him to provide you with references from previous buyers.  Do the same for loan officers or mortgage brokers.

It’s quite hard for first-time homebuyers because basically, they have no idea who they are dealing with.  They can’t just rely on first impressions.

It’s important to find a professional who will give you unbiased and independent advice.  Sometimes, this would mean getting the services of a lawyer.

  4.  Overlooking Hidden Costs

Yes, you have that monthly mortgage payment down pat but have you considered the cost of home maintenance, utilities, and property taxes?  If you are purchasing an older home, you should remember that you might be needing money for repairs and renovations.  While the total selling price will give you a fair idea of what you will pay for your house, you must look at all of the extra costs necessary to maintain your home and pay property taxes.

Your lender or realtor may not be able to give you accurate information about this matter so it is better to do your own research.  You may ask a home inspector for a list of existing or potential problems you may encounter in the near future.  Ask for quotes from renovation specialists or builders in the area to have an idea of potential updates and home improvement projects.  Also, don’t ignore moving costs and cost of extra furniture you might need to buy to fill up a larger living space.

  5.  Making Assumptions About The Down Payment

Many homebuyers think they need more money for a down payment that what is really necessary.  People often ask: “Can I get away with less than a 20% down payment?”.

The answer, surprisingly to some, is “Yes!.”

Sometimes, lenders will ask homebuyers to put in as little as 3% or 4% down payment. And here’s something you should remember:  as the market appreciates and the rates follow suit, your down payment money could depreciate with it.  In short, “Waiting for costs money.”

  6.  Spending Your Entire Budget

When a lender sends you a pre-approval or pre-qualification letter, they will normally indicate the maximum amount you can borrow.  Now, just because you have this maximum amount they can lend you doesn’t mean you have to max it out.

Lenders follow certain guidelines to determine what you can borrow, such as the 28/36 rule.

This rule says that the homeowner should spend no more than 28% of their gross monthly income on housing expenses, and no more than 36% on overall debt.  Keep in mind that buying a home also comes with material upfront costs, such as the down payment and closing costs. You’ll want to make sure that you have some money left for emergencies and other unexpected expenses after you close on your new house.

  7.  Thinking Short Term

It’s easy to lose yourself in the excitement of searching for a new home that you overlook some crucial bits of information about the neighborhood you would move to. For example, the kind of area where the neighborhood is, future developments in the area and the resale value of your home.  As a first-time homebuyer, the thought of selling your home in the near future might not occur to you.  But you should take that into account.  Buy your house with the possibility of reselling it with some ease should your plans change in five years.

One more thing:  don’t become obsessed with buying that charming or quirky house until you have some sort of financial stability and can comfortably afford the charm.

It is important to think about the long-term effects of your decision to buy that home. For example, if the neighborhood is undergoing some redevelopment, then your property could appreciate in the near future.  However, if you buy an older home in the hope that it will appreciate in value, you have to realize that your investment could be a risky move.

  8.  Letting Your Emotions Control Your Decisions

Unmistakably, buying a home can be a long and frustrating process.  These days, starter homes move fast and it’s common for first-time homebuyers to experience rejection on the first offers they send out.  During this situation, the tendency is to fall in love with a house that’s over your budget, or compete in a bidding war and end up paying more than what you’ve set as your limit.

It is normal to feel some excitement when you think you’ve found your house – but don’t put yourself in a compromising situation.

  9.  Not Researching Mortgage Lenders

Sure, you’d rather do something else than spend your time looking for a great mortgage lender but this is something you must do.  More so if you are a first-time homebuyer who has no idea how to go about it.  A seasoned mortgage lender will be able to help you set your goals and get a loan that’s within your budget.  What’s more, if you find someone you can trust, you can feel more confident in their rates and their advise to protect your finances.

For a decision as life-changing as this, it is important that you deal with someone you can really trust.  So, it really helps if you can get referrals from friends and family – and ask the right questions.  For example, find out if the lender has the habit of surprising borrowers with hidden fees.

Is he easy to work with and responsive to the needs of his customers?  Honesty is also important, so check if they made good with the locked rate that they promised.  These questions will help you get a sense of whether you can bet your time and money with a particular lender.

  10.  Assuming You Won’t Qualify

Many borrowers lose heart when they realize that they can’t come up with the 20% down payment for their dream house.  What they don’t know is, you could get a really nice house with the kind of money you are putting down in rent every month.  Try punching in some numbers on an affordability calculator to get a better sense of what you need – and how much you can afford.  Better yet, talk directly to a lender to find out exactly what you can qualify for.

For the majority, a 20% down payment is ideal but you don’t necessarily need to put in that big a down payment to buy a house.  You can look for loan programs that cater to first-time homebuyers such as the FHA loan.

Here, you can get purchase a house for as little as 3.5% down payment.  If you look really hard, you might find some conventional lenders that will allow only 3% down payment.  And some special programs, such as VA loans for US veterans and military members and the USDA loans for rural areas, do not require a down payment at all.

First-Time Homebuyer Mistakes You Must Avoid

The Bottom Line

Buying your first home can give you stress and overwhelm you – plus it exposes you to a lot of potential pitfalls.  If you become aware of those issues ahead of time, you can avoid the mistakes and go about with some level of confidence.  For many people, a home is probably the biggest purchase they will ever make in their life.  But if you have adequately prepared for the task, it need not be the most difficult one.

The post 10 First-Time Homebuyer Mistakes You Must Avoid appeared first on The Smart Investor.

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This is the cold truth:  you will make a lot of life-changing decisions throughout your life and believe it or This is the cold truth:  you will make a lot of life-changing decisions throughout your life and believe it or The Smart Investor yes 10:03
The Pros And Cons of Investing in Physical Gold https://infoforinvestors.com/investing/alternative-investments/physical-gold-pros-cons/ Fri, 12 Oct 2018 15:08:14 +0000 https://infoforinvestors.com/?p=3510 https://infoforinvestors.com/investing/alternative-investments/physical-gold-pros-cons/#respond https://infoforinvestors.com/investing/alternative-investments/physical-gold-pros-cons/feed/ 0 <p>Ever noticed how gold is back in the limelight again – especially physical gold?  So, whether you’re into gold coins, or investing in a gold account and receiving a record of numbered gold bars in your name, read on.  It is important that you recognize the challenges that can come when investing in physical gold [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/alternative-investments/physical-gold-pros-cons/">The Pros And Cons of Investing in Physical Gold</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Ever noticed how gold is back in the limelight again – especially physical gold?  So, whether you’re into gold coins, or investing in a gold account and receiving a record of numbered gold bars in your name, read on.  It is important that you recognize the challenges that can come when investing in physical gold.

Physical gold can be a way to diversify and can provide you with a valuable tangible asset that you can sell when times get tough.

If you believe some doomsayers, the US dollars would become utterly worthless soon so having actual gold in hand might be an advantage. Whatever you believe in, it makes sense to know all about investing in physical gold before you jump right into it.

How to Buy Physical Gold

Here’s the rub: once you’ve decided to make gold part of your investment portfolio, you have to be familiar with what gold products are available to purchase.  Equally important is knowing how and where to purchase them from.

Gold may be gold but there are actually a variety of choices available for investors. If you are buying gold through a cash purchase and are intending to store it for yourself, there are unlimited options.

But, if you are buying gold for your IRA, then you are stuck to IRA-permissible gold.  Buying gold is not similar to buying gold mining stocks or investing in gold ETFs .  Gold is a physical product and sellers ship it to your address or to an IRS-approved depository for storage in case of IRA gold.  Here are a few options if you are shopping for gold:

Each type of gold comes with its own advantages and disadvantages when you purchase them.  You can talk to your gold broker to discuss your needs and how to pick the type of gold products that would be most appropriate.  Normally, you can just do this via a phone call.

Here’s a summary of the main pros & cons (click to see explanation or scroll down):

Pros Cons
Inflation Hedge Storage of the Physical Gold
Security of Value Not A Passive Income Asset
Portfolio Diversification Premiums and Taxes
Simplicity Gold Has A Terrible Historical Return
Hedge Against a Disaster

Advantages Of Investing in Physical Gold

Any investor worth his dollar would know that he must consider all the pros and cons associated in his investment choices, gold included.  Let’s kick off with the advantages:

Inflation Hedge

Inflation often instills fear in the hearts of investor because it will almost always affect the value of the money they have in the bank.  As time goes on, the purchasing power of the dollar predictably declines. If you happen to get your hands on an old magazine, it may come as a shock to see how ‘cheap’ the prices are in the advertisements or the cost of the magazine itself.

For example, in 1990, the average price of a house in the US was $150,000.  Fast forward 20 years later, the average cost has gone up to $220,000 in 2010.  Did the house actually appreciate or did the value of the dollar fall?

But let’s look at the same house using gold as the currency.  In 1990, gold was selling on an average price of $383 per troy ounce.  Should you want to purchase a house then, it would have taken 392 ounces of gold.  Jump to 2010 where the average price of gold has risen to $1118 per troy ounce.  The house worth $220,000 in 2010 would only set you back by 197 ounces of gold.  Gold’s purchasing power remained stable over that twenty-year period but the value of the dollar took a downturn.

In January 2005, the price of gold was pegged at roughly $435 per ounce.  In December 2014, the price had gone up to as high as $1,180 per ounce.  If you compare that to the 24% inflation rate over the ten-year period in question, you can see that the ascent of gold prices is far greater than inflation rates.

Security of Value

One of the primary attractions of gold as an investment option is the security of knowing that the price is going to rise steadily over time. Of course, historically, the price does dip from time to time – but it always goes back up.  If we look at the historical charts for reference, we can safely conclude that the price of gold is almost certainly going to be higher ten or twenty years from now.

Unlike stocks, bonds or mutual funds, you won’t have to worry whether a particular industry or corporation is performing when you check the value of your gold investment.  Although the current state of the economy has some effect on gold prices, a slumping economy does not automatically pull the gold prices down.  Just the opposite, economic uncertainty drives more people to invest their money in gold, which in turn pushes the price upward.

Portfolio Diversification

Probably, the biggest benefit of investing in gold is portfolio diversification.  As we have mentioned, the price of gold performs very well in times of uncertainty.  Therefore, a splendid way to balance the volatility and returns within your investment portfolio is to include gold in your line up.

Specifically, the inclusion of gold as part of a diversified portfolio protects you against a “wealth wipeout” in extraordinary situations such as severe economic depression or stock market crash.

Simplicity

Let me say this straight: investing in gold is surprisingly elementary and newbies can learn how to do it quite fast even without much experience in money investment.  If you talk to a broker or financial analyst, chances are, you will hear more about the inconveniences of investing in gold.  They are not likely to tell you how easy it is to buy gold for investment purposes.  The truth of the matter is, there is no shortage of gold dealers around the United States, all happy to sell whether in the form of jewelry, coins, or bullion bars.

And when it comes to storing your gold, you need not worry nor fear.  A simple deposit box at your bank is sufficient to store your gold safely, securely, and conveniently.  As you acquire more gold over the years, all you have to do is get more safe deposit boxes.  Then your investment stays safe in the best way possible.

Hedge Against a Disaster

Let’s face it.  Any investor would have a fear about how their investment would turn out but it seems this fear becomes less when it comes to gold investing.  For instance, should the market crash that happened in 2008 recur, it would wipe out your investment portfolio if it was made up of only stocks, bonds, and mutual funds.

But if someone put in a substantial portion of their long-term investment money in physical gold, he would probably be at peace.  His investment will not really be adversely affected by a financial crisis or global markets meltdown.  In fact, the price of gold usually goes up during such situations because more people shift to physical investments as their faith in the financial markets deteriorates.

Disadvantages Of Investing in Physical Gold

Although we are a staunch advocate of gold and silver investing, some of our views on this investment technique have been swayed largely because of the cons below.

Storage of the Physical Gold

The very first problem with investing in physical gold is where you are going to store the precious metal.  Do you have a big and sturdy safe at home where you can just safely keep your collection of gold?  Or maybe you’re keeping all the gold in a safe deposit bank your bank?  In either case, it is not 100% theft-free.

Of course, you might not have the capacity to store the gold yourself.  Some investors would often use pooled accounts to help them store their physical gold.  All the gold is in a vault and each investor has numbered bars or coins specifically allocated to them.  Some have a record of a sum of gold (unallocated) assigned to them.

In the case of an allocated account, investors have to pay a storage fee and an insurance fee.  With an unallocated account, the fees don’t add up much but the gold might remain in the name of the company.  This puts the investor at risk should the company goes belly up and creditors get the gold.

Storing the gold onsite gives you a quick access to it, but it is prone to disasters and theft.  If your store it offsite, you might not get easy access to it when in case you want to.

Not A Passive Income Asset

Many financial experts, including Warren Buffet, believe that investments should produce income.  Gold does not really meet this condition because it produces nothing when you own it. If you want to become wealthy, then you should choose an asset that will make you wealthier.  Warren Buffet started doing this when even as a boy he bought a piece of land. He knew that the value of the land would increase but more than that, he realized he could earn from it.

A local farmer wanted to rent his land and pay him an annual rent.  After a few years of receiving rental income, Warren could reinvest his money by buying more land.  And he could do that repeatedly!  This system allowed him to buy assets that gained in value, but also gave him income while owning them.

Premiums and Taxes

Another thing about physical gold is that you always have to consider the premiums and taxes issue.  Normally, you pay a premium when you buy the metal – it is always marked up from the current market price. Annoying, isn’t it?

Premiums are usually less with pooled accounts but sellers never remove them.  This means that in the event that gold loses its value, albeit unlikely, you incur a loss equal to the current value of the gold.  On top of that, you increase your loss because of the additional premium you have paid to buy it in the first place.

There’s also the double whammy.  The IRS taxes gold as a collectible.  Therefore, when you sell your gold for a profit, you must pay capital gains tax, which currently stands at a maximum of 28%.  On the other hand, if you purchase gold stocks, you will pay the “regular” capital gains rate; you won’t have to pay the collectible rate but you have to if you invest in a gold ETF.

Gold Has A Terrible Historical Return

Here’s another problem with gold.  Let’s suppose you went back 200 years and put $10,000 in gold, $10,000 in bonds, and $10,000 in stocks.  Now, which of these investments would come out ahead?  Well, if you are smart, gold would be your last choice among the three options because amazingly, it performs very poorly compared to the other two.

So, after 200 years…

  • The gold will have a value of $26,000.
  • The stocks will be worth $5,600,000,000.
  • The bonds will be worth $8,000,000.

Believe it or not, based on historical returns, gold is a lousy investment choice.

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Ever noticed how gold is back in the limelight again – especially physical gold?  So, whether you’re into gold coins, or investing in a gold account and receiving a record of numbered gold bars in your name, read on. Ever noticed how gold is back in the limelight again – especially physical gold?  So, whether you’re into gold coins, or investing in a gold account and receiving a record of numbered gold bars in your name, read on.  It is important that you recognize the challenges that can come when investing in physical gold [...] The Smart Investor yes 10:37
Understanding The Different Types Of U.S. Treasury Securities – How It Works https://infoforinvestors.com/academy/bonds/us-treasury-securities-basics/ Fri, 12 Oct 2018 11:52:13 +0000 https://infoforinvestors.com/?p=3507 https://infoforinvestors.com/academy/bonds/us-treasury-securities-basics/#respond https://infoforinvestors.com/academy/bonds/us-treasury-securities-basics/feed/ 0 <p>You’ve probably heard about U.S. Treasury securities before but have no idea up to today what they are and how they can benefit you.  U.S. Treasury securities are instruments of debt – more specifically, debts of the U.S. Federal Government.  So, the simple truth is, if you buy any Treasury security, you are in essence lending money to the government for a specific period of time.  They come in different forms.  You have Treasury Bills, Treasury Notes, Treasury Bonds, Floating Rate Notes (FRNs), and Treasury Inflation Protected Securities (TIPS).  Collectively, investors and finance experts call these securities as “Treasuries.”</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/bonds/us-treasury-securities-basics/">Understanding The Different Types Of U.S. Treasury Securities – How It Works</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> What are U.S. Treasury Securities?

You’ve probably heard about U.S. Treasury securities before but have no idea up to today what they are and how they can benefit you.  U.S. Treasury securities are instruments of debt – more specifically, debts of the U.S. Federal Government.  So, the simple truth is, if you buy any Treasury security, you are in essence lending money to the government for a specific period of time.  T

They come in different forms.  You have Treasury Bills, Treasury Notes, Treasury Bonds, Floating Rate Notes (FRNs), and Treasury Inflation Protected Securities (TIPS).  Collectively, investors and finance experts call these securities as “Treasuries.”

Here’s the thing:  federal debt obligations enjoy the “full faith and credit” backing of the government.  And because of the government’s ability to print money and generate tax revenues, investors consider Treasury securities as the safest of all investment.  Bankers view them as having zero “credit risk”– meaning it’s highly likely that you will get your full interest and principal on time.  After all, the government would probably be the last entity in the country to become bankrupt – if that is at all possible.

In general, Treasuries offer lower interest rates compared to other widely-traded but riskier debt securities such as corporate bonds.  Perhaps unsurprisingly, safer investments offer lower returns.  Needless to say, investments with higher risks dangle a higher potential return but also exposes investors to a greater possibility of losses.

As of April 2018, the total amount of marketable U.S. Treasury securities run to almost $16 trillion.  This massive amount is made up of outstanding bills, notes, bonds FRNs and TIPS.  At this point, you may realize that we are talking about a massive amount of money. Amazingly, the Treasury market is one of the world’s most liquid markets.  Despite the volume of transactions and amounts involved, pricing, executing, and settling a trade remains highly efficient.

Understanding Bond Characteristics

Now hang on – before you buy US Treasury Bonds, it is important to recognize that several factors directly affect the market value of a bond.  Consider these bond characteristics before you decide whether buying US Treasury Bonds is a well-founded financial decision:

Face/Par Value

This refers to the amount of money a bondholder will expect to receive on the bond’s maturity date.  In case of newly-issued bonds, they are available at face value. By default, US Treasury bonds have a $1,000 par value.

Let’s get this straight:  face value is not synonymous with bond price. Face value remains constant but the bond price goes up and down due to a host of reasons.  Therefore, there will be occasions when bonds will sell at discount (below face value) and times when they will sell at a premium (above face value).

Interest

You may hear the term ‘coupon’ in bond investment lingo; this also means ‘interest’.  This is the fixed percentage of the bond’s face value and the government pays it to the bondholders semi-annually.

Maturity

This is the future date when the issuer will repay the investor’s capital. US Treasury Bonds normally have a maturity date of more than 10 years; therefore, they pay higher interest rate than other instruments such as T-Notes.  This is because long-term bonds are more susceptible to price fluctuations than short-term bonds.

Yield

This is the amount of return that an investor is supposed to get from a bond.  If you were able to buy US Treasury Bonds at their face value, the yield will be equal to the interest.  Here’s the kicker:  if the bond’s price fluctuates, so will the yield.  For example, if you were able to buy a US Treasury bond with a 10% interest rate ($100 coupon for $1,000 bond) at face/par value, the yield is exactly 10%.

Assuming that after a year, the bond trades at $1,200 because perhaps the newer bonds have lower interest rates, the yield goes down to 8.33% [$100 (coupon price)/$1,200 (bond price)].  Conversely, when the bond trades at a discount, the yield goes up.

So it all adds up to this:  bond price and percent yield are inversely proportional to each other.

The Main Types of U.S. Treasury Securities and How They Work

Treasury Bills (“T-Bills”)

Treasury bills (commonly called T-bills) are short-term bonds that mature within one year or less from their date of issuance.  Authorized sellers sell T-bills with maturities of 4, 13, 26 and 52 weeks.  Bankers call them as the one, three, six, and twelve-month T-bills, respectively.

The first three kinds become available through auction once a week.  They auction the 52-week bills every four weeks.  Now, listen to this:  since the maturities on Treasury bills are shorter, they offer lower yields than Treasury notes or bonds.

Treasury Notes (“T-Notes”)

Treasury notes are also known as T-Notes, for short.  They are intermediate-term bonds from the U.S. Treasury.  They commonly mature in two, three, five or ten years.  Holders of T-Notes can expect to receive semi-annual interest payments at fixed coupon rates.

Before 1984, the U.S. Treasury was issuing callable T-Notes which means that the Treasury can repurchase the notes under certain circumstances.  T-Notes usually have a $1,000 face value but those with two or three-year maturities have $5,000 face values.

Treasury Bonds (“T-Bonds”)

Treasury bonds are the long-term bonds from the U.S. Treasury.  Traders commonly refer to them as T-Bonds.  They normally have a face value of $1,000 and interest payment comes semi-annually.  The government issues them to help fund shortfalls in the federal budget, regulate the nation’s money supply, and carry out U.S. monetary policy.

As a typical bond issuer, the U.S. Treasury looks at market risks and return requirements to prudently and effectively raise capital.  This is the reason why over the years, the Treasury been coming out with several types of Treasury securities such as T-bills, T-notes, T-bonds, STRIPS, and TIPS, to name some of them.

U.S. Savings Bonds

Savings bonds come in the traditional paper or the modern electronic form. However, beginning in 2012, financial institutions stopped selling the paper form.  Investors may purchase them from most financial institutions or through www.treasurydirect.gov. U.S. citizens, U.S. residents, and U.S. government employees (regardless of citizenship) may be able to buy and own savings bonds.  The good thing here is, even minors can own savings bonds.

Let’s dig a little deeper.  Authorized sellers offer the paper EE bonds at 50% of face value which means that a purchaser will only pay $50 to get a $100 bond.  The bond only becomes worth its face value of $100 when it matures.  On the other hand, sellers sell electronic EE bonds at face value.  So, if you want to buy a $50 bond, you have to pay $50 for it.  You can purchase electronic EE bonds in any amount as long its over $25.

Now, let’s go to I bonds.  If you want to purchase I bonds, you need to understand that you have to pay its face value so, if you want a $100 bond, you have to pay $100.  Similar to the EE bonds, the minimum you can invest is $25 and you can buy any amount over $25.

When it comes to paper savings bonds, investors can only purchase in $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000 increments.  They may buy up to $30,000 worth of savings bond per year.

This is how it works:  when a bond matures, the holder will receive the face value of the bond plus the accrued interest.  Holders cannot redeem them for the first 12 months they are outstanding.  If a holder redeems it within the first five years, they will forfeit the last three months of interest as a penalty.

Treasury Inflation-Protected Securities (TIPS)

In 1997, the U.S. Treasury came out with notes and bonds in a new form that would protect the holders from the effects of inflation.  They called these inflation-indexed securities as Treasury Inflation-Protected Securities or TIPS.

Basically, the Treasury Department uses the Consumer Price Index (CPI) as a guide to adjust the value of the principal to reflect the effects of inflation.  This instrument gets a fixed rate of interest payment two times a year based on the adjusted principal.  The final adjustment comes at maturity.

If inflation has increased the value of the principal, the investor would receive the higher, adjusted amount back.  However, in a case when inflation has decreased the value, the investor will receive the original face amount of the security.

Let’s look at an example of how inflation-indexed securities work.  Please note that this simplified example is for illustration only and does not necessarily reflect current market conditions.

  • At the beginning of January, you invest $2,000 in a new 10-year inflation-indexed note. The note states a 3% annualized interest and it is payable semi-annually.
  • In the middle of the year, the CPI indicates an inflation rate of 2% for the first six months. What happens then is that they will adjust your principal upward to $2,040 ($2,000 x 102%) and your resulting interest payment would be $30.60 ($2,040 x 3.0% x 6/12) for the interest earned for the first 6 months.
  • At year-end, the index indicates that inflation has risen to 3%. This will bring the value of your principal to $2,060.  Under this amount, your second interest payment would be $30.90 ($2,060 x 3.0% x 6/12).

Since these instruments already help cushion inflationary impacts, they offer lower interest rates compared to other U.S. Securities of similar maturities but without the inflation protection.

Separate Trading of Registered Interest And Principal Securities (STRIPS)

I know the feeling: any product with that long a name would have to be a complicated one.  Well, STRIPS are fairly simple as an instrument.  They are basically the same traditional bonds but banks just sell the bond principal and bond coupon separately.  The U.S. Government does not issue the STRIPS directly to investors the way they sell treasury securities or savings bonds.  Instead, it is the financial institutions such as investment banks who create the STRIPS.

They purchase conventional treasury securities then strip the interest payments away from the principal.  They then sell the principal and interest to investors as separate securities with separate CUSIP numbers.

Nevertheless, the U.S. Government still backs the STRIPS with its full faith and credit notwithstanding they have disassembled the original security. Banks sell the principal part at a discount so the investor can earn the face value when the bond matures later.  Many other countries also sell, issue and back STRIPS.

Floating Rate Notes (FRNS)

The U.S. Treasury started issuing Floating Rate Note (FRNs) in January 2014.  They are basically debt securities that pay interest rates quarterly until they mature.  They normally have a term of two years.  The reason for the name is that interest payment of FRNs change or “float” depending on discount rates in auctions of 13-week T-bills.

The U.S. Treasury holds an auction for FRN so the results of the auction will determine the price of the instrument.  It could be greater than, less than or the same as its face value.

However, when the notes mature, the holder gets paid the face value of the FRN.  Its interest rate varies, however, because it depends on the highest accepted discount rate of the most recent 13-week Treasury bill so it changes each week.  On the other hand, the spread is the highest accepted discount margin in the auction where they first offered it.  It will remain the same for the entire life of the note.

Should an investor want to bid for an FRN, he could do it in two categories: non-competitive and competitive.  Non-competitive investors have to bid online through an account on the website TreasuryDirect.  Investors can also use an intermediary such as a bank or a broker.

The U.S. Treasury holds the FRN auction every month but they issue original FRNS in January, April, July, and October.  There are also reopenings – when additional amounts of previously-issued security become available.  This happens in the other months.

the Main Types of U.S. Treasury securities

How Can You Buy U.S. Treasury Securities?

You can buy U.S. Treasury securities in any of the three ways.  The first one is through a non-competitive bid auction.  This is for an investor who really wants the note and is agreeable to accept any yield.  This is the most common method for individuals.  All they need to do is go online to complete their purchase.  An individual may only buy up to $5 million worth of Treasuries through this method.

The second one is through a competitive bidding auction.  Some investors will buy a Treasury only if they will be able to get their desired yield.  This method is for them.  The catch is, they must go through a bank or a broker.  An investor can buy as much as 35% of the Treasury Department’s initial offering amount with this method provided they have the funds to do it.

The third method is buying them in the secondary market.  A secondary market is the trading system where Treasury owners sell their securities before they mature.  The banks or brokers act as middlemen to facilitate the transactions.

If an investor does not want to directly invest in individual Treasuries, he may instead invest in a mutual fund or exchange-traded fund (ETF) specializing in Treasuries.  Some funds hold other fixed-income securities or derivatives aside from Treasuries – so investors must make sure they understand the investment mixes as well as any fees or other charges.

And about the savings bonds we’ve discussed earlier?  Unlike other marketable U.S. Treasury securities discussed in this guide, banks and traders do not trade them.  An owner of a savings bond cannot resell them or give them away to another person.  When you intend to purchase a U.S. savings bond as a gift, you have to register the recipient who will be the sole owner of the bond.  Therefore, it will not count towards the purchaser’s annual purchase limit.

The post Understanding The Different Types Of U.S. Treasury Securities – How It Works appeared first on The Smart Investor.

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You’ve probably heard about U.S. Treasury securities before but have no idea up to today what they are and how they can benefit you.  U.S. Treasury securities are instruments of debt – more specifically, debts of the U.S. Federal Government.  So, You’ve probably heard about U.S. Treasury securities before but have no idea up to today what they are and how they can benefit you.  U.S. Treasury securities are instruments of debt – more specifically, debts of the U.S. Federal Government.  So, the simple truth is, if you buy any Treasury security, you are in essence lending money to the government for a specific period of time.  They come in different forms.  You have Treasury Bills, Treasury Notes, Treasury Bonds, Floating Rate Notes (FRNs), and Treasury Inflation Protected Securities (TIPS).  Collectively, investors and finance experts call these securities as “Treasuries.” The Smart Investor yes 15:41
How To Get A Personal Loan With Bad Credit https://infoforinvestors.com/loans/loan-guides/bad-credit-personal-loan/ Fri, 12 Oct 2018 11:50:48 +0000 https://infoforinvestors.com/?p=3828 https://infoforinvestors.com/loans/loan-guides/bad-credit-personal-loan/#respond https://infoforinvestors.com/loans/loan-guides/bad-credit-personal-loan/feed/ 0 <p>You have the opportunity to get a loan with bad credit. Keep in mind that you will have to do</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/bad-credit-personal-loan/">How To Get A Personal Loan With Bad Credit</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

You have the opportunity to get a loan with bad credit. Keep in mind that you will have to do more research to find a lender to grant you one. Moreover, you need a lender that doesn’t focus on your credit history but is transparent about rates and fees. Even though having flexible terms isn’t a bad thing, it’s wise to stress diligence.

For instance, having bad credit doesn’t give you the excuse to settle for payday and title loans. It’s best to avoid those measures whether you have bad credit or not. Lenders in that arena have the ability to keep you in a cycle of debt. Moreover, if you want to know the different scams out there, check out our list and comparison tool!

About Bad Credit Loans

Even though bad credit loans are identical to secure loans, lenders won’t require your assets. In addition, these loans are for those with bad credit. There are financial institutions out there that give individuals repayment plans to help them rebuild their credit over time.

Furthermore, before you decide to apply for a loan, make sure you understand the costs, terms, and fine print before applying. In order to prevent heartache, only borrow what you know you can pay back, and make paying back the loan your main priority.

Can I Get a Personal Loan With Bad Credit?

Even though it’s difficult, it’s possible for you to get a loan with bad credit. Certain situations are more difficult than others. For instance, the reason why most people have bad credit is that they are in debt. Consolidating and/or refinancing that debt is a smart move, but their bad credit score makes them disqualified.

The good thing about is that there are lenders out there who are considerate of those who don’t have the best credit.

Even though you may get a high-interest rate, lenders won’t disqualify you for your credit score being low. They consider other things such as your income level and the credit level of a potential co-signer, and you can always check it out under loan prequalification calculator.

Getting a personal loan is one of the mains ways to get the money you need. They are unsecured, installment loans that grant you a large sum upfront that you have to pay back over a set period of time. Since the loan is unsecured, there’s no need for collateral.

How Does a Bad Credit Score Affect My Loan?

Having a bad credit score tells lenders that you are not trustworthy with borrowing. For whatever the reason, it was difficult for you to make payments on-time, or you have too much debt for your income to handle.

Since you appear to be risky, lenders find it difficult to loan you money. If a lender does grant you a loan, more than likely it will be of a small amount with a high-interest rate.

Ways to Get a Loan with Bad Credit

Having little to no or bad credit altogether is a roadblock when you are trying to get a loan. It’s because lenders view you as being risky and they’re afraid you won’t pay it back. The reality of it is that you need to raise your credit score in order for major banks to lend you money.

Ways to Get a Loan with Bad Credit

If you can’t afford to be turned down or paying high-interest rates, here are some alternatives you can consider:

Get a Co-Signer

If you want to get a loan approval while having bad credit, you more than likely need a co-signer. The person that co-signs with you is making the promise of paying the loan for you if you fail to do so. Also, keep in mind that your co-signer has to have good credit and adequate income to [ay off the loan.

Even though having a co-signer is a good move, the co-signer is taking a huge risk.

They don’t have the privilege of borrowing for themselves much once the co-sign because they are fully responsible for paying back the loan even if you fail to do so.

For instance, if your co-signer decides to buy a house, they may have to wait until the loan is paid off. He or she is responsible if you don’t have the ability to repay your loan. If you come across a bad financial situation such as becoming unemployed, the lender will go after the co-signer to obtain repayment. If the co-signer can’t pay back the loan either, his or her credit score will suffer.

Get a Peer to Peer Loan

This type of lender has been around since 2005. P2P is an online platform that allows you to borrow from other people instead of from banks. P2P lending is very popular because borrowers pay low-interest rates and investors earn high-interest rates. This is a win-win for both parties. As of right now, you have the ability to borrow for as little as 6% to receive a return in the double digits.

To get a P2P loan, people post a listing online with the amount they want to borrow and why they need it. On the other hand, an investor reviews the listings to choose which one to invest in.

P2P lenders evaluate the applicant and check their credit score, which then merges into the loan listing. Even though investors look at your credit score, they have the potential to show more empathy than the banks.

Find out more about peer-to-peer lending for borrowing and investing below:

  • Prosper
  • Lending Club
  • SoFi

Get a Secured Loan

You have the ability to apply for a home loan or HELOC (home equity line of credit) if you have equity in your home. What your home can be sold for and your overall mortgage makes up the equity. Moreover, lenders don’t require your credit information because your house as collateral to receive an equity loan. Since your home is the collateral, you will receive a low-interest rate. In addition, the interest you have to pay is tax-deductible.

A HELOC acts as a line of credit rather than an equity loan which gives you cash up front.  Even though you have access to a line of credit by having a HELOC, you have to pay it back in accordance with your pre-determined schedule. Whether you have a HELOC or an equity loan, you are at risk of losing your home if you don’t pay it back. On the other hand, if you have good, financial health, it’s a cheaper route if you have bad credit.

The main benefit of having a HELOC or home equity loan is the extended term of the loan (15 or 30 years). Even though having a loan term lowers your payment, you pay more in interest over time.

Improve Your Credit Score

Your credit score never stays the same. It’s best to improve your score, if need be, before applying for a loan. This is especially important for those who are very close to the next credit bracket.

  • Excellent Credit: 760+
  • Good Credit: 700+
  • Fair Credit: 640+

A major way to improve your credit score is to make sure that you pay your bills on time and reducing your credit card utilization. Moreover, if you have negative things on your credit report such as a late payment, it’s best to wait for six months and make sure that you’re not late for payments again. If you know that you have a good relationship with your lender, feel free to write them a letter to remove negative remarks.

 credit score factors

Credit Union

The difference between credit unions and commercial banks is that they are owned by their members rather than profit-seeking shareholders. Since credit unions are non-profit, they give their earnings back to their members in the form of lower fees & borrowing costs, as well as better customer service.

A credit union that associates itself with your employer or one that is community-based has the potential to be merciful and look past your bad credit. Moreover, they may even consider giving you a loan based on your merit and ability to repay whether or not you have bad credit. Credit unions are like small community banks you would have found many years ago.

If you are considering getting a loan with a credit union, find one that you share common interests with. For instance, if you are a veteran of the army, it’s good to apply for one at the Navy Federal Credit Union. If you are a teacher, there are credit unions catered to people like you as well.

Regardless of your credit score, if you join a credit union, you have the ability to get better terms than you would at a bank.

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You have the opportunity to get a loan with bad credit. Keep in mind that you will have to do You have the opportunity to get a loan with bad credit. Keep in mind that you will have to do The Smart Investor yes 8:03
Common Personal Loan Mistakes to Avoid https://infoforinvestors.com/loans/loan-guides/personal-loan-mistakes/ Fri, 12 Oct 2018 11:16:33 +0000 https://infoforinvestors.com/?p=3820 https://infoforinvestors.com/loans/loan-guides/personal-loan-mistakes/#respond https://infoforinvestors.com/loans/loan-guides/personal-loan-mistakes/feed/ 0 <p>Personal loans are appealing to people for various reasons. This type of loan empowers people to start home projects, pay</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/personal-loan-mistakes/">Common Personal Loan Mistakes to Avoid</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Personal loans are appealing to people for various reasons. This type of loan empowers people to start home projects, pay for a large event, or even consolidate their debt.

Even though it’s easy to involve yourself with personal loans, it’s important for you to know the terms and conditions. Trust me… you do this to avoid any issues down the road.The first thing to understand about loans is to know what mistakes to avoid concerning them.

Below are the most common mistakes people make with personal loans.

Mistake 1: Not Shopping Around

It’s an easy thing to shop around for a loan that looks appealing on impulse and apply on the spot. You may even feel accomplished for doing so. As you might buy a pair of sneakers, and ten minutes later you see an even better-looking pair and regret your prior purchase, it’s important to shop around for a loan so you won’t regret later.

During the process of looking around for a loan, it’s common for people to solely focus on the interest rate and the amount they have to pay back. Moreover, it is a good thing though to take both of these into account.

Here are important rules to follow while looking for personal loans:

  • Don’t just take the interest rate and the amount you have to pay back into account when choosing a personal loan. Your loan service provider could be a difficult person to relate or communicate to.
  • Make sure to check out penalties and charges for early or late payment fees.
  • Be sure to research credit card companies’ reviews online. If they are popular, there will be reviews about them for you to view. Hearing what people have to say about them is very important.
  • It’s important not to apply for multiple loan accounts in a short span of time. Doing so damages your credit score. Shopping around doesn’t mean that you apply for every single loan that passes you by. Your credit score would suffer a terrible blow.
  • Also, keep in mind that comparison sites don’t show every single loan provider. Even though it’s good to look on comparison sites, they are not the all in end all. Some loan providers, that are good, may not have their information on those sites.
  • Remember to take the process at a slow pace no matter what situation you feel like you’re in right now. Rushing into things causes more regret than thinking everything through.

Overall, being patient while you’re shopping for a loan and not rushing into things will save you a lot of trouble in the long run.

Mistake 2: Not Considering Other Options

Even though you have the potential to be an excellent candidate for a personal loan, it’s best not to apply for it in haste. For instance, a small loan can have interest and fees accrue just like, and even more than a larger loan. If you miss payments with a smaller loan, it still damages your financial stability. This is why it is important for you to think everything through before signing your signature on the loan.

The overall aspect of making this decision is to ask yourself is why you need the money. Getting a personal loan isn’t the only option to consolidate your debt. Moreover, there are various credit cards that allow you to consolidate your debt through you utilizing a balance transfer. Most lenders offer 0% intro APRs on balance transfers too. Obtaining a balance transfer is a cheaper route because you don’t have to pay interest if you pay the balance off in full during the 0% introductory period.

If you choose to get a personal loan instead, the lender requires you to pay interest from the begging. Even though this is true, there are still some things you need to consider.

Consider the Balance Transfer Fee

You still have to pay a balance transfer fee that’s usually 3% or 5% of the balance you’re transferring (you can even reduce it a bit by negotiation). In addition, you won’t have much time to pay off the balance.

If you’re confident that you can pay the balance off in full before the 0% introductory period ends, getting a balance transfer is the better option.

You can visit our balance transfer credit card reviews to get the latest news on the top credit cards that have good balance transfer terms.

Furthermore, if you want to make a large purchase, getting a card that offers a 0% intro APR on purchases is a great option. The reason why is that you have the chance to spend using your card without being interest accruing on your purchases. If you qualify for a rewards card, you will also earn rewards as you continue to make purchases; it’s a win all day long!

For instance, if you have a Chase Freedom Unlimited, you have 15 months to pay the purchase off to earn 1.5% cash back on your purchase. On top of that, you get a $150 bonus if you spend $500 on purchases within the first 3 months. You can see which cards offer both cash back and 0% APRs on our cash back credit card reviews.

Mistake 3: Accepting Irresponsible Repayment Terms

Even though most lenders have strong guidelines they follow, there are some that still have irresponsible repayment terms.  This can range from lenders requesting a lot of money upfront to implement a very high-interest rate. Even though repayment terms that are irresponsible are connected with the payday loans industry, you can still come across rates and terms that are questionable while searching out traditional loans.

Here are the following things to look out for:

  • If the interest rates are too high; especially in the case of a lender offering you a short lending term.
  • Repayment amount that is too high. Typically, you will see this at the beginning of your loan term in order paying the interest quickly.
  • Expensive admin fees and services, especially if you are paying them on a regular basis in accompany with your interest rate. It’s also good to ask what portions is the actual interest and what part are the fees, especially loan origination fee.
  • Loans with no interest. Even though these may look attractive, they have very high admin fees that add up to a large amount with an equivalent interest rate.

Mistake 4: Not Checking Your Credit File

The fact that you have the right to obtain your credit report for free by law, it’s strange to apply for a personal loan or any other loan product without checking it to make sure that your information on it is correct.

Getting a personal loan is a huge decision because you are committing to sign a contract for something to be paid back for at least six months. You’re not only committing to making your payments, but also agreeing to all of the loan terms.

Moreover, it’s very important for you to read the terms and conditions before signing because you may have to pay additional fees such as an organization or payment processing fee that you are not expecting to pay. By doing so, there won’t be any sudden surprises down the road. If you notice anything you’re not sure about, feel free to ask your lender for clarification.

common personal loan mistakes to avoid

Back To Mistake 1 – Do Your Research

If you are unhappy with what the lender is informing you, you can always opt out and look for another lender. Furthermore, it’s possible that you may have an inquiry from the previous lender that your new lender may not like. The main way to avoid a credit inquiry is for you to do your own research prior to applying. It’s important to know the loan terms, read the terms and conditions, and reach out to the lender if you have any unanswered questions. When you know your lender of choice and you have checked your prequalification chances, then you can apply for the loan.

Even when you don’t know for sure that you will qualify for a personal loan or another loan product, having a good credit report gives you the boost to apply with confidence. If there are any discrepancies on your credit report that’s causing your score to be lower than it should, it’s a good thing to get that sorted out before applying.

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Personal loans are appealing to people for various reasons. This type of loan empowers people to start home projects, pay Personal loans are appealing to people for various reasons. This type of loan empowers people to start home projects, pay The Smart Investor yes 7:42
Common Credit Cards Mistakes to Avoid https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-cards-mistakes/ Fri, 12 Oct 2018 11:08:12 +0000 https://infoforinvestors.com/?p=3818 https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-cards-mistakes/#respond https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-cards-mistakes/feed/ 0 <p>Obtaining a credit card for the first time without supervision is equivalent to a person trying to swim up the</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/credit-cards/guides-credit-cards/credit-cards-mistakes/">Common Credit Cards Mistakes to Avoid</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Obtaining a credit card for the first time without supervision is equivalent to a person trying to swim up the creek without a paddle. Whether you make it on the other side or not, your finances are at risk.

Even though the importance of credit and credit history is prominent in American society, most people aren’t aware of how to manage them. Let’s now take a look at some of the things to stay away from regarding credit cards.

Mistake 1: Paying Interest on Credit Card Debt

Even though credit card debt isn’t your only debt, it’s the most common for most people. Moreover, when you have to take care of bigger debts, credit card debt may seem the least of your worries.

An important thing to note is that credit cards have higher interest rates than other forms of debt. The longer you wait to pay off this debt, the more interest you accrue over time.

Student loans interest rates are normally 5% to 10%. Credit card interest rates range between 13% and 20%.

Most banks anticipate that you will rack up credit card debt so you can pay a large amount in interest. They lure people in through 0% APR introduction periods. Avoid paying interest on credit cards at all costs. It is an expense that gives you nothing in return. With getting a student loan, you at least have the opportunity to obtain a degree. The way interest works on credit cards is that you pay to finance what you spend.

Avoiding paying interest is no different than avoiding late payments. The only thing to keep in mind is that you have to pay your balance off in full in order to avoid interest. In other words, pay your balance off in full before the due date to have the advantage.

A good way to ensure you pay your balance in full is to pay it off every time you receive a paycheck. Making payments in accordance with when you receive payments empowers you to keep your balance low.

Mistake 2: Maxing out Your Credit Card Limits

Maxing out your credit cards is dangerous in many ways. Moreover, it solidifies the fact that the more you charge, the more difficult it is to pay off the balance. If you nearly max out your credit card, you don’t have enough support to use it in case you have an expense you didn’t plan for.

In addition, if you max out your credit card, your credit utilization ratio increases as well. Your credit utilization is the speed that you accrue your credit card debt. This damages your credit score. Lenders typically say that a utilization ratio above 30% is risky. For instance, if you max out all of your credit cards, you are more than likely over the 30% threshold.

Mistake 3: Not Setting a Budget

If you don’t monitor your finances, you won’t know whether not you are accruing more debt than you can handle. Do you have the desire to establish an emergency fund, save up for a purchase, or get out of debt?

If so, it’s very important to track where your finances are going. One way to keep consistent is to write down goals. Below are some ways to do this:

  • Use an instrument to track your spending patterns to be more aware of your spending. Use an app, notebook, or an excel spreadsheet to keep a record of your spending.
  • Whenever you receive cash, deposit the funds into your bank account.
  • Pay your bills as soon as you receive them.
  • Have only one credit card as you learn how to build credit.

If you follow these rules, you position yourself to pay off your debt easily.

Mistake 4: Taking Out too Many Credit Cards to Cash in on Rewards

Credit card companies have the talent of pumping up their rewards program. Getting hotel deals, discounts, free travel, shopping, rental car deals, and cash back rewards all sounds appealing while signing up.

Keep in mind that having multiple credit cards makes it difficult for you to keep track of how much you spend.

Another thing to note is that credit card companies also persuade people to spend by telling them to spend a certain amount within 90 days in order to get better rewards. On the surface, this seems like a good deal, but if you only pay off a small portion, don’t waste your time.

Mistake 5: Not Asking For Better Terms

Credit card terms are not always concrete; you’d be amazed at how better they can be if you make your voice known. 80% of credit card consumers managed to change their credit card terms in their favor by reaching out to their lenders according to the CreditCards.com survey.

Moreover, you might even have the opportunity to lower your interest rate or annual fee. Lenders can even increase your line of credit; this will help your overall utilization ratio.

Mistake 6: Bungling Balance Transfers

Moving debt from a card that is high interest to one that has a low introductory rate is a smart move only if you read the fine print. If you are ignorant about how balance transfers work, it can do you more harm than good.

The first thing to consider is how long the introductory period lasts. Moreover, you now have to ask yourself whether or not you can pay off the balance before the APR increases. If you don’t consider these two steps, more than likely you will pay an even higher interest rate.

The next thing you want to research is whether or not the credit card company requires a transfer fee. You will seldom find a credit card company that offer transfers for free. You can also negotiate your transfer fee  with your credit card company. If there is a fee (that’s uncapped), it usually ranges between 2% and 6% of the amount you are transferring.

Nevertheless, transferring your balance can still be a good thing to do even if there is a fee.

Take into account if you transfer $5000 from a credit card charging 14% interest to a card that has a 0% APR for 12 months and a 4% fee. $200 is the balance you have to pay to transfer your balance. On the contrary, if you are paying a fixed rate of $120 per month on your previous card, it will cost you about $650 in interest over the same 12 months.

Moreover, transferring your balance has the potential to be a wise choice even though a fee may be involved. Consider if you transfer $10000 from a credit card charging 10% interest to a card that has a 0% APR for 12 months and a 5% fee. $500 is the balance you have to pay to transfer your balance. On the contrary, if you are paying a fixed rate of $83 per month on your previous card, it will cost you about $1000 in interest over the same 12 months.

Mistake 7: Not Understanding How APR Works

The information that entails credit cards is more complex than what you are taught in most colleges. This is a subject many college students don’t understand.

Here’s a brief tutorial:

If you don’t pay off your credit card balance in full by the due date, interest will accrue. On the contrary, if you do pay your balance off in full before the due date, an interest amount isn’t applied.

Most credit card companies offer a grace period on new things you purchase. Furthermore, the grace period is between your payment due date and the end of your billing cycle. Most credit card companies won’t apply interest on purchases during the grace period if your balance is paid in full and you don’t have outstanding cash advances.

Another thing to consider is if you pay only the minimum every month, you potentially are welcoming debt to your doorsteps.

It’s important to know these details on your card:

  • Your balance
  • The payment due date
  • The purchase and penalty APR
  • Your introductory APR end date (if applicable)

Mistake 8: Ignoring Monthly Statements

This is by far the easiest problem to avoid. When you receive your credit card statement for the month, review it. Mistakes are a part of being human; this is why it’s important to see whether or not you have any abnormal charges. If there is an unusual charge, this could be a sign of identity theft. In this case, you need to let your lender know on the spot.

Looking over your monthly statement gives clarification about the duration of how long it will take you to pay the balance in full. As stated before, the minimum balance is the amount you have to pay for 3 years to see your balance at 0. This is why it’s important to pay more than just minimum balance.

Moreover, take a look at the amount of interest (that various) on your purchases, cash advances, etc. Compare changes from the previous month. Credit card companies are now required to give you a 45 day’s notice before increasing the interest rate. Another thing to note is that there’s no harm in double-checking the due date on your bill to avoid late fees.

Mistake 9: Missed Rewards

If you commit to paying off your balance in full, you are a great candidate for rewards cards. Some of the best credit cards will pay you up to 5% in cash back on eligible purchases or travel rewards that can be worth a lot. If you are going to use a credit card, you might as well benefit from it.

If you travel a lot, you can get a more out of a cash back credit card than others. Premium travel reward cards such as Chase Sapphire Preferred and the Amex Platinum card gives you the ability to earn in the form of points to use for travel, or even transfer your points to your airline of choice or hotel partner to receive free and discounted bookings.

common credit card mistakes to avoid

The post Common Credit Cards Mistakes to Avoid appeared first on The Smart Investor.

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Obtaining a credit card for the first time without supervision is equivalent to a person trying to swim up the Obtaining a credit card for the first time without supervision is equivalent to a person trying to swim up the The Smart Investor yes 9:27
Short Selling 101 – What is it, Examples and Alternatives https://infoforinvestors.com/investing/stock-market/short-selling-101/ Fri, 12 Oct 2018 10:26:22 +0000 https://infoforinvestors.com/?p=3785 https://infoforinvestors.com/investing/stock-market/short-selling-101/#respond https://infoforinvestors.com/investing/stock-market/short-selling-101/feed/ 0 <p>The Smart Investor content is intended to be used and must be used for informational purposes only. We are not</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/stock-market/short-selling-101/">Short Selling 101 – What is it, Examples and Alternatives</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions.

Have you heard of short selling and short sellers? Maybe you have read on the media that they are speculators and manipulators and they “distort” the market. This is not entirely true since all players influence the market as well as each other’s performance.

What is short selling, however? How does it happen and what is the mechanism of it? Is it appropriate for you or not? Are there any alternatives to it? I will answer all these questions in this article.

What is Short Selling?

Of course, short selling is not an easy job. Simply put, short selling is the process of selling securities which an investor doesn’t own. Sounds strange?

The logic behind it is not, though. Short sellers sell something at a high price because they believe that in the future they can buy it back at a lower price, thus making some profit. How do you sell something you don’t have?

Well, loans, remember? You actually borrow a security from a person or a company that owns it. Just like in loans, you need to pay interest because you use someone else’s stocks. Short sellers pay fees to the owners. What will happen if the price goes up when a short seller sells the stock instead of going down as planned?

In such a case, you will have to pay additional money to buy the stocks at a higher price than you borrowed it. Therefore, the amount of profit a short seller can make is the difference between the two prices: the sale price and the purchase price.

Keep in mind – short selling is riskier than the normal way of investing in stocks.

If an investor purchases some stocks all they can lose is the value of these stocks. But when you borrow something and you pay fees and eventually the value of the stocks plummets, you can be a big time loser.

Example of Short Selling

Still cannot get the idea? Well, let me give you one easy to understand example.

John wants to try short selling. He goes to Adam and wants to borrow from his stocks which currently trade at 50$ apiece. Adam agrees to lend him 1000 shares at 50$. For that, John has to pay a fee because he uses someone else’s assets.

Why does John want so eagerly to short sell? Let’s imagine he has been doing research for 6 months and he’s estimated that the mentioned stock will lose its value in the next month. In his trading account, John has 1000 stocks each at 50$. He sells them and receives $50,000. Part of this money will be kept as collateral (protection against losses). After the sale, there are two possible scenarios:

1) The price of this stock does indeed fall in the next month to 35$ per share. John, therefore, buys back all the 1000 shares and pays for that 35,000$. His gross profit is the difference between the prices – 15,000$. Gross is not net, you know. He has to pay fees and other costs.

2) The price of the stock goes up to 60$ per share. The amount you have to pay for buying these stocks is 60,000$ meaning that John has generated 10,000$ of losses.

Scenario Revenue Profit
35$ per share 35,000$ -15,000$
60$ per share 60,000$ +10,000$

The amounts of profit or losses in the example are gross. Keep in mind, anyone dealing with buying or selling stocks will have to pay various fees, costs and commissions along the way.

How Do You Sell a Stock You Don’t Possess?

You already know the short answer to this question: you have to borrow these stocks from someone who’s willing to do so. The process is actually not so difficult. Once an investor agrees to lend you their stocks, they will relocate their shares to your account. But why would anyone agree to do that?

It’s all about business. If you are trustworthy, an investor will lend you their shares because you will pay them an interest on the “loan”.

Number of Short Positions As an Indicator

Knowing is essential and you have to be ready to check out info on stocks and short-selling positions every day if you want to make it big. Where can you find this? The simplest way to do it is to use a reliable source of information – Yahoo Finance. Choose a stock and under the “Share Statistics” section you can find the following info:

1. The number of shorted shares – it shows the number of the shares which were shorted and should be the same as the number on Nasdaq.

2. Short ratio – we also call this ratio “days to cover” and we calculate it by dividing the number shorted shares by the average trading volume.
3. Short positions related to the float – this indicator is a percentage, and it shows how the number of shorted shares relates to the float. The float is the actual number of stocks which investors can trade. This indicator is very important. If this indicator shows 100%, it means that all the stocks belonging to a company have been sold.

4. Number of shorted shares in the previous month

What is a Short Squeeze?

Simply said, this is a situation in which a short seller would never want to be. Sometimes, due to various reasons and factors, a stock’s price starts rising. As you already know, this is very bad news for short sellers. They, of course, start closing their short positions hoping to mitigate losses.

By doing so, they add up extra pressure and the price goes ever so higher. This is what we call a short squeeze. Overall, this is one of the main risks associated with short selling.

Can short sellers manipulate the market?

This is a question that has many answers. Yes, no, a little bit. Of course, many companies and investors claim that short sellers actually manipulate the market so that they can make huge profits. But isn’t that the market itself? Anyone is trying to “manipulate” something so that they can earn more. Didn’t Volskwagen some two-three years ago try to lie to the public about their diesel cars and the emissions they release? They did and they admitted to doing so.

All countries have laws and authorities which determine what is legal and what illegal. They will be after anyone who violates the rules, whether it’s a normal investor, a short seller or a big player like Volskwagen.

Short selling is for experienced traders.

There are two main types of accounts: cash and margin accounts. The former are accounts where the broker wants the investor to pay for the securities. The latter are accounts in which the broker lends the securities to the borrower. Having said that, if you want to short sell you need to have a margin account. Cash accounts do not allow their owners to short sell.

I’d recommend everyone who wants to become a trader first to open a demo cash account and get to know the basics of day trading. If you are a rookie and jump into the deep waters of short selling, it’s possible that you will lose a lot of money since the potential for that is limitless. Definitely, short selling is for experienced pros who know the ups and downs of this process.

What are The Alternatives to Short Selling?

Maybe short selling is not the thing for you? Are there any other ways an investor can benefit from the falling prices of a stock? Let’s look at some of the alternatives to shorting:

  1.    Stock Futures

Stock futures are futures contracts and work in a similar fashion. A future is a contract between a buyer and a seller in which one of them should buy or sell an asset at a predetermined price at a specific moment in the future. These financial instruments are usually used by experienced traders.

  2.   Put options

Put options, just like futures, are contracts between a buyer and a seller in which you can sell the shares at a preliminary agreed priced at a specified time. This is not obligatory, only if the seller wants to do so. All you need to pay is a premium. If the price of the stock is below the agreed price on the day the contract expires, you can make a good profit. If it is higher, then you will lose only the premium

  3.   Inverse ETFs

These are exchange-traded funds which track a sector index in reverse. If the underlying index goes down, the ETF will go in the opposite direction – up. Here you don’t trade on margin. ETFs track whole sectors through the respective index, which means that you cannot trade single stocks.

Bottom Line

All in all, short selling is a great financial tool. I’d recommend it to people who have advanced knowledge of the market as well as experience in trading. This will not only guarantee successful and profitable trading but also help you mitigate the potential losses (which are unlimited).

If you want to capitalize on falling prices and you don’t feel like short selling is your game, you can always try other things, such as inverse ETFs, put options and futures.

The post Short Selling 101 – What is it, Examples and Alternatives appeared first on The Smart Investor.

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The Smart Investor content is intended to be used and must be used for informational purposes only. We are not The Smart Investor content is intended to be used and must be used for informational purposes only. We are not The Smart Investor yes 9:09
The Best Ways To Buy Physical Gold https://infoforinvestors.com/investing/alternative-investments/ways-buy-physical-gold/ Fri, 12 Oct 2018 06:25:56 +0000 https://infoforinvestors.com/?p=3803 https://infoforinvestors.com/investing/alternative-investments/ways-buy-physical-gold/#respond https://infoforinvestors.com/investing/alternative-investments/ways-buy-physical-gold/feed/ 0 <p>Contrary to what you might have heard or imagined, buying physical gold is not that complicated.  In fact, you should</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/alternative-investments/ways-buy-physical-gold/">The Best Ways To Buy Physical Gold</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Contrary to what you might have heard or imagined, buying physical gold is not that complicated.  In fact, you should seriously consider gold and other precious metals to be part of your investment portfolio so you should try to purchase physical gold at least once.

Yes, you should arm yourself with knowledge about the general guidelines as you venture into it.  But we’ll let you in on a little secret:  buying precious metals is mostly a matter of seeking which options best suits your needs.

Should You Go For Coins or Bars?

The good thing is you can buy gold in two main forms – coins or ingots (bars).  Coins have a distinct advantage over gold bars in that they allow for more flexibility.  Look at it this way:  If you own 10 gold coins, it would be easier to sell 3 coins if that’s all you need to do.  Now, try and imagine how you’d be able to do that if your whole investment were in one gold bar.

Accordingly, because of this flexibility, you’ll soon realize that coins are a bit more liquid (or easier to sell) than big bars.  Having said that, if you really want to buy a sizeable amount of gold, then bars would appear more practical to you.

Option 1: Buy Gold From Your Local Dealer

You might be thinking it’s so old-school it might be obsolete.  But I tell you, there’s a lot of merit in buying gold from a local coin shop.  For one, you can see, check and examine the merchandise before you actually hand over any money.  Second, you can bring home your purchase with you immediately and not have to wait for delivery.  You spare yourself from paying any shipping fees and insurance and you can transact face-to-face with the person you are buying from.

Building up a relationship with the shop owner can provide you with some benefits.  First, you will have the opportunity to negotiate and bargain – especially for things such as buyback fees.  Most dealers (not just in gold) will give repeat customers a better (if not the best) deal over ordinary customers.

But do keep in mind that local dealers aren’t always the cheapest place to buy gold.  These businesses have to spend on overhead (rent, utilities, insurance, etc.) and that will often translate into higher premiums on the gold products they sell locally than those you can buy online (even after adding the shipping and insurance costs).

The Pros and Cons of Buying Gold Locally:

Pros

  • See and examine the product you are buying.
  • Save on delivery or shipping charges because there isn’t any.
  • Build a business relationship with the dealer.

Cons

  • You have to pay higher for the product and lessen your buyback income.
  • The dealer might have limited liquidity to accommodate a large buyback.
  • The dealer might have limited inventory.

Option 2:  Shop Online

There are two main things why online dealers stand out when buying gold:  convenience and cost-effectiveness.

When you invest online, you get access to 24/7 trading and professional account management.  An online dealer would be able to give you the ability to buy, sell, store, and request delivery of precious metals right from the comfort of your home, with just a few clicks on the keyboard or mouse.

When you buy from online dealers, it’s often a lot cheaper because they can offer lower premiums over the spot prices of gold and silver.  One reason for this is that they spend less overhead than with a physical store.  Another advantage is that if institutional investors also share on your trading platform, you may be able to ride on volume pricing.

As you browse for online dealers, always look for transparency.  Do they display their prices clearly on the product pages?  Do they lust shipping and insurance fees?  Do they give a description of their delivery process?  Do they advise customers of the delivery timeframe before you place your order?  You should be able to find these and other important information on their websites.

How To Choose a Reputable Online Gold Dealer

The Internet is awash with hundreds of precious metals dealers ready to do business with you.  But how do you know which one to pick?  The best dealer for you will stand out after you do the following due diligence:

They Have a Strong Trustpilot Rating

You should choose one with plenty of experience in the industry.  Check for repeat customers – obviously, customers won’t return if they get a bad service or a negative experience.

A word of caution though:  if the website displays the Trustpilot logo, don’t just assume that the logo is legit.  Go to Trustpilot’s website and search for the company.  Remember, unscrupulous dealers can just copy or imitate any logo.

They Educate Their Customers

Do not fall for those who just want to make a quick and big sale.  These are the ones who will only push for the most expensive products and discourage you from trying other less costly investments.

For example, they would try to ram rare coins down your throat when you are interested in gold bars.  A good rule to follow is:  trust your gut.  Remember, if a dealer is a bit off, he’s not the only dealer around – there are hundreds of good dealers out there.

They’re Big

Dealers who have built their business over the years are more reliable.  They will normally have strong volumes and can offer you greater flexibility.

Small dealers have some distinct disadvantages:  limited product selection and may be unable to fill a large order fast enough.  Delivery time is also a good indicator.  The bigger dealers would be able to ship within 2-4 days after your payment has cleared. The small dealers take longer.

They Have a Buyback Policy

There might come a time when you want to sell your gold and what easier way to do it than through the dealer that sold them to you?  Does the dealer have a buyback policy?  If they don’t have this kind of service available for you, then don’t bother dealing with them.  You’d want your dealer to be around when you need to sell and you want the assurance that you won’t be left waiting for a buyer in case you need one.

Well, of course, there are a lot of gold dealers who would be willing to buy gold any time but you can never tell.  A big plus with dealers that have a buyback policy is that they tend to give their buyers the best resale price.

They Will Accept Multiple Forms of Payment

There are many ways to make your payment and your dealer should be able to accept any of them.  From the traditional cash (like in your local shop) to checks and money orders.  They should also accept bank transfers and credit cards which are very convenient even if they sometimes come with additional fees.  Many dealers now use PayPal, Bitcoin, and other digital currencies.  Keep in mind though, that those online dealers would still wait until they get the funds before they send you the merchandise.

They Have an Online Store

As soon as you’ve made a short list of dealers you’d want to trade with, check if they have an online store service.  Between a virtual store and a brick-and-mortar shop, you may find the online store more to your advantage.  Dealing with them is faster and more convenient; you have access to it 24/7, and you can lock in your market price at the exact time you want to buy.

Here’s the kicker:  online stores’ prices are generally cheaper than your local shop even if you have to pay for shipping because their overhead is lower.

If you’re new to the game, get at least three dealers and make a comparison chart.  Match them up side-by-side in terms of commission, credit card or bank transfer fees, shipping cost, handling fees, and insurance.  After the cost-related items, go down to service:  customer contact, ease of ordering, delivery time, tracking, and buyback policies.

You should put all these items together when determining the best dealer for you.

How To Choose a Reputable Online Gold Dealer

The Pros And Cons of Buying Gold Online:

Pros

  • It’s fairly easy to do – like you’re just buying shoes or bags from an online retailer.
  • You benefit from their low overhead cost and you might even get a volume discount.
  • You have 24/7 access to their store, customer service and account management

Cons

  • You are at the mercy of the dealer when it comes to getting what you paid for – he may not deliver
  • Pay the extra cost in the form of shipping and insurance fees
  • Have to wait until your payment clears before they ship your order

Option 3:  Shop For Gold on eBay

You read it right: eBay.  Admittedly, it’s rather unusual and eBay may not be the best place to buy gold for a neophyte in the precious metals playing field.  But here’s the interesting thing:  many old-timers in the industry have had great experiences whey they bought from the site.

You’re probably familiar with how the website works and navigating through it should be easy.  But here are two tips to help you check if something is a good deal and make sure you will spend your money well when you eventually want to make a purchase:

First:  use the “Advanced Search” feature to search for recently closed listings for whatever it is you want to buy.  Knowing how much the product has sold for in the past will narrow your parameters so that you can have an intelligent idea of other seller’s asking prices.  By comparing their prices with your benchmark, you can immediately determine if the gold they are selling carries a relevant and competitive price.

Second:  Vet the seller before you actually buy by checking the seller’s approval rating.  If you don’t see a 100% rating (or extremely close to it), you may want to look for another dealer.  And, even if the seller has great ratings, take time to read buyer reviews just to make sure that there is no serious bad experience from previous buyers.

That may sound like a good precaution but why do we believe that eBay’s not the paradise for gold trading?

Well, since this is in cyberspace, some dishonest sellers find it too convenient to misrepresent their products.  Most of the time, inexperienced buyers end up receiving something completely different than the product they thought they had purchased, gold not exempted.

The website also teems with counterfeit or substandard products of which majority come from China.  Many victim buyers have lost thousands upon thousands of dollars after buying ‘gold’ from eBay.  A good majority of them only realize they have been duped when they bring their fake gold to an expert for appraisal.

And let’s not forget that it’s a convenient place for a dishonest seller to artificially inflate his prices by rigging his own listing with his own bids.  You should purchase products on the spot or use the “Buy Now” option rather than go through the traditional auction.  Even with these safeguards, we are not totally convinced that you can use this as your primary option.

The Pros and Cons of Buying Gold From eBay:

Pros

  • It’s very convenient and most dealers offer free shipping.
  • You won’t have to pay state sales tax.
  • If you know how to navigate the site, it’s easy and faster to look for what you want and the best price

Cons

  • It’s more suited for veteran investors and not for inexperienced buyers.
  • It is swarming with counterfeits, imitations and substandard items.
  • Dishonest sellers can manipulate prices to their advantage.

How Do You Store Your Gold?

If you somehow believe that the doomsayers who predict an imminent complete financial or societal collapse any time soon are correct, you’d want to have your physical gold with you.  We’ve always said that gold is like insurance in the case where all financial assets become worthless so it is a must for a gold owner to have quick access to his precious metal.

So what are your options when it comes to storing your gold?  Here are some:

A Buy-And-Store Program

This is perhaps one of the best features an online dealer can offer a gold buyer.

Many large dealers have entered into an arrangement with private (non-bank) vaults for safekeeping of precious metals.  When you purchase any metal with them, they will transport them straight to this third-party depository.  If you are an investor in gold bars, this service is ultimately important not just because of the safekeeping issue.  When you want to sell your gold, authenticating the metal will be a lot easier because the physical chain of custody for the items remained secure and unbroken.

A buy-and-store program will take the hassle out of storing your gold by making it easy, convenient and safe.  And here’s another bonus:  some big online dealers will let you keep your gold in different vaults around the world – that is if you want to diversify your holdings.

Supposing your dealer doesn’t have a buy-and-store program, don’t dismiss your ambition to be a gold investor.  You can find other dealers or other solutions.  However, if you’re thinking of storing it at home or in a bank, let us give you our thoughts on it.  You’d have to go through the hassle of sourcing for a storage space or container and then coordinating the delivery of the items yourself.  Here are some other shortcomings:

Home Storage

If you have a full understanding of the risks in keeping your gold in a home safe, you may proceed but with caution.  You have to bolt your safe to the floor or firmly install it in a wall – otherwise, thieves can just haul it off.  But you can’t also discount some desperate home invaders who might try to force open or cut the safe to take your gold.

When you keep gold at home, you would have to pay higher insurance and you would always have to factor in the security & safety angle not just for the gold but more for the people who live in the home.  Weighing the benefits and the disadvantages, going for home storage is not an option we would vote for.  Maybe you could stash a handful of coins for emergencies but keep the entire loot? A big no-no.

Bank Safe Deposit Box 

If there is a neighborhood bank that is near your house and offers a safe deposit box facility, you might consider stowing the gold there.  It’s convenient, accessible and quite secure.  It’s an effective solution especially if you can get a big enough box to store all your precious metals.

The disadvantage is that you don’t get any insurance against fire, theft or natural disasters such as earthquakes, hurricanes or tornadoes.  You will not be able to access your gold when the bank has closed for the day.  And worse, when the bank runs into some problems that it folds or declares a “bank holiday”, it’s going to prevent you from getting your hands on your gold for an extended time.

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions .

The post The Best Ways To Buy Physical Gold appeared first on The Smart Investor.

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Contrary to what you might have heard or imagined, buying physical gold is not that complicated.  In fact, you should Contrary to what you might have heard or imagined, buying physical gold is not that complicated.  In fact, you should The Smart Investor yes 14:18
Things to Consider Before Taking a Personal Loan https://infoforinvestors.com/loans/loan-guides/personal-loan-considerations/ Mon, 08 Oct 2018 14:16:08 +0000 https://infoforinvestors.com/?p=3323 https://infoforinvestors.com/loans/loan-guides/personal-loan-considerations/#respond https://infoforinvestors.com/loans/loan-guides/personal-loan-considerations/feed/ 0 <p>At some point in time, you may find yourself considering getting a personal loan.  It may be because you need money for a new car, a wedding, a family vacation or simply to pay off some debts.  It is of utmost importance that you get your hands on the essential information about personal loans before you decide. The fact is, when you search for a personal loan, you may find hundreds of different loans on the market from different lenders [..]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/personal-loan-considerations/">Things to Consider Before Taking a Personal Loan</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

What is a Personal Loan?

At some point in time, you may find yourself considering getting a personal loan.  It may be because you need money for a new car, a wedding, a family vacation or simply to pay off some debts.  It is of utmost importance that you get your hands on the essential information about personal loans before you decide.

The fact is, when you search for a personal loan, you may find hundreds of different loans on the market from different lenders.

That is because lenders package personal loans to address different needs of different borrowers.   So, in order to optimize your loan, you have to understand how a particular personal loan product will solve your need.  This guide aims to provide you with many important loan facts so you can make a better choice.

More Than Financial Contract

Technically, a loan is a financial contract involving two parties called the lender and the borrower.  Under this contract, the lender will agree to give the borrower a specific amount of money with the understanding that the borrower will pay back the money over an agreed period of time.  It is usually, a fixed amount every month together with a pre-determined interest and occasionally, extra charges for loan administration.  The other details will vary from each lender but the loan contract will spell them out – most particularly the repayment dates and interest charges.

You may encounter many different personal loan names and products from different lenders.  However, you can classify personal loans into just two main types:  secured and unsecured loans.  The obvious difference is whether the lender will require a security for the loan.  In a secured loan, the borrower must provide an asset such as his house, as a collateral for the loan.  In an unsecured loan, the lender will not ask for such a requirement as long as they have satisfactory credit and are currently employed or have a regular source of income.

Things You Should Know Before Taking a Personal Loan

Times have changed even in the way people get a personal loan.  In the past, lenders will just focus on your credit scores (See how your credit score is calculated), examine your tax returns and check your employment details before they grant you a loan and if so, at what interest rate.

Today, we are seeing a breed of new lenders who are veering away from tradition in their decision-making processes.  Most often, they will look at non-traditional indicators like your SAT scores and your social media accounts.  They will use this information to help them decide whether to give you a loan and how much interest rate to charge your loan.  Consequently, this has helped to get a loan much easier than when people used to apply for loans from credit unions and traditional banks – the two institutions that hugged the personal loan arena.

Personal Loan Basics

Personal loans can be as dynamic as their borrower’s purpose in terms of their principal amount and length of their term.  Some personal loans can run for years while other loans, like payday loans, become due in just a couple of weeks after the lender releases the money.  In a payday loan, if the borrower repays the entire loan during that short period, he wouldn’t have to pay interest but will most like pay an origination fee for it.

There are some forms of personal loans that begin to accrue interest immediately – such as an installment loan.  The size of the loan and the interest rate of the loan will dictate the borrower’s monthly payment.  In some cases, when a borrower opts for a longer term, the lender may give him a lower interest rate.

If you have trouble making computations, you can use a good loan calculator.  You can check whether it will be more advantageous for you to choose a longer term with a lower rate or a shorter term but with a higher rate.  Just keep in mind this piece of advice:  borrow within your means and never borrow more than you can afford to pay.

Here are 9 Things You Should Know Before Taking a Personal Loan:

1. Consider Your Needs – NOT Your Eligibility

Don’t take out a personal loan just because you want to and are able to. If your intention is to invest the money in stocks or commodities, borrowing is not the way to go.  Personal loans are for real needs like marriage or college.  It will also be more difficult to get one if you are not very clear on what to do with it.

A personal loan ranks in the higher end of the list of most expensive debts.  Would you really want to pay interest on money that you don’t actually need?  Don’t fall for the flowery words of the loan agents when they try to convince you that you’d be better off borrowing more.  Remember to borrow only as much as you need and not a dollar more.

2. Have All Your Information Ready

Personal loans are simple – they are not nearly as rigorous as mortgage applications.  You won’t need tons of paperwork, appraisals, and other meticulous documentation but you still need to make sure that you have the right information on hand.  This will make your application and approval a lot easier.

Online lenders allow borrowers to apply for loans in as short as 15 minutes and then receive an approval within minutes.  Some companies, such as Discover,  will even let customers pre-check whether they can get a loan and know their rates before formally lodging an application.

Now, it doesn’t matter where you will apply for your loan, but the standard requirements are your Social Security System, proof of income and tax return information.  All lender want to make perfectly sure that you’ll be able to pay your loan so they want to see how you make a living and that you do not owe any money to the government.  Have this information ready before you apply.

Once your financial documents are in order, the lender can decide quickly so expect the decision a few days after you have filed your application.  And since you already know what to do before applying, the process won’t have to be too troublesome for you and hopefully, you will be successful.

3. Interest Rates are Rising

At the end of 2017, the Federal Reserve finally initiated what many considered a long-overdue increase in the federal funds rate.  For borrowers, this means that being in debt is going to be more expensive henceforth.

In terms of real numbers, the personal loan rates we been used to seeing (although it has already increased during the past 2 years) could go up even higher six or nine months from now.  If you have plans of borrowing money, it might be a good idea to hasten it rather than pushing it further backward.

4. The Potential Risks of a Personal Loan

If you take a credit card debt, you can pay it off over an undetermined period of time.  If you take a personal loan, you must pay it back within a predetermined period.  Although you will be paying off the debt faster, it can become a problem if you will not be able to finish paying within the allotted time.  Since your loan has no property that acts as its security, in case of default, the lender might resort to hauling you to court to recover their money.

On the other hand, if you pay off your loan too early, you may also end up paying some extra fees.   Some fine prints in the loan agreement pertain to prepayment penalties if you pay off your loan before a certain date.

Be extra careful about scammers who take advantage of people looking to get a loan.  Some will make you sign an ‘advanced fee’ loan, which is actually a fake loan agreement.  It will require you to pay an advance fee for a loan you will never receive.  Once you give them the money, it’s gone – together with whatever personal information you may have given to the scammers.

5. Your Credit Score Determines The Affordability of a Personal Loan

Whether the lender will decide to grant you a loan and at what rates, depend somehow, on your credit score.  If you have an average to above-average credit score, you may be more likely to get an approval and even possibly an interest rate on the lower bracket of the lender’s chart.  The point is, go through the application process knowing your true credit score.

There are actually several ways to get your credit score for free.  It is mandatory for credit reporting companies like Transunion and Equifax to provide one report at no cost to you every year.  Banks and personal loan lenders also offer free reports to their applicants.

As soon as you get hold of a copy of your credit score report, read through it carefully item by item.  The report could have erroneous entries such as incorrect personal information or worse, a fully-paid bill or loan that is still carried as outstanding.  Should you discover a mistake, file a dispute with the credit bureau and aim that they correct the entry immediately.  You can improve your credit score by cleaning up any inaccuracies on your record.

A credit report can also show you some actual outstanding payments.  Maybe you have an old credit card bill that you have forgotten to settle.  You can and you should address it before you apply for a loan.

6. Compare The Cost, Consider The Fees

Your loan will have an annual percentage rate or APR (e.g. 15% APR) – this is the standard way of comparing the cost of a loan for each year.  However, any numerically-savvy lender can manipulate the APR so the best way to realistically compare a loan is to look at the total amount repayable. This is the total cost (including interest and charges) that a borrower has to pay from the first payment to the last installment.  Of course, the first rule is to make sure that the monthly payment is within your budget – you can simulate it with our APR calculator.

When it comes to loan payment, it is the total cost, that is most important.  However, it would be good to know if the total amount repayable already includes charges aside from interest, such as an origination fee.  When you are comparing loans, make sure you include the origination fees (and all other fees) that all the lenders you are considering will pass on to their borrowers.

7. Be Aware of Penalty Charges

In practically all types of loan, there is a penalty if you fail to make your regular payment.  This penalty becomes part of your loan account and you would have to pay it.  So make sure that you know the exact details of the penalties you may incur in case of circumstances that can arise in the future.

Affordability of the loan is key so make sure you can pay it before you even consider filling out a loan application form.

8. You Are Likely to Find The Best Loan Deals Online

The online lending marketplace has risen to prominence in the recent past.  Online lenders do not have too big of an overhead cost so they can grant loans with lesser fees and lower rates.

A lower interest rate means less expense for you and more money in your wallet in the long run.  Lending Club, for example, claims that their rates are 33% lower on average for customers who consolidated their debt or paid off their credit cards using their personal loan.

9. Check The Fine Prints First

There are as many kinds of loans as there are as many lenders; some companies appear more stable and trustworthy than others.  So it is indispensable that you have a good idea of the company you’re dealing with before you apply for a loan.

How long have they been in operation?  Do you have access to customer reviews on their website?  Do they have a good reputation in the business circle? In case you are drawing a blank, you can contact the Better Business Bureau to see if the outfit is legit or if there have been any complaints against them.

Another item to scrutinize in the fine print is additional fees.  Make sure that the lender isn’t going to slap you with a penalty if you pay off early.  Some companies make it a practice to charge pre-payment penalties but there are those who don’t.  The lender could also charge an origination fee or the cost of administering the loan.  To be certain, visit the lender’s website and look into what you may have to pay.  The good news is, it is possible to find a company that doesn’t charge either of these fees;

The post Things to Consider Before Taking a Personal Loan appeared first on The Smart Investor.

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At some point in time, you may find yourself considering getting a personal loan.  It may be because you need money for a new car, a wedding, a family vacation or simply to pay off some debts.  It is of utmost importance that you get your hands on the ... At some point in time, you may find yourself considering getting a personal loan.  It may be because you need money for a new car, a wedding, a family vacation or simply to pay off some debts.  It is of utmost importance that you get your hands on the essential information about personal loans before you decide. The fact is, when you search for a personal loan, you may find hundreds of different loans on the market from different lenders [..] The Smart Investor yes 10:36
 Beginner’s Guide To Real Estate Investing https://infoforinvestors.com/investing/real-estate/real-estate-investing-guide/ Sat, 29 Sep 2018 09:50:56 +0000 https://infoforinvestors.com/?p=3304 https://infoforinvestors.com/investing/real-estate/real-estate-investing-guide/#respond https://infoforinvestors.com/investing/real-estate/real-estate-investing-guide/feed/ 0 <p>Here is what’s appealing about real estate investing:  you can do it with minimal or no formal training at all.</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/real-estate/real-estate-investing-guide/"> Beginner’s Guide To Real Estate Investing</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Here is what’s appealing about real estate investing:  you can do it with minimal or no formal training at all. You don’t have to have an advanced real estate degree to begin your career.  You don’t need to finish some special seminars and workshops or attend conferences to get into it.  In fact, you can find a lot of helpful resources online.

Real Estate Investing for Beginners – How to Start The Business

1. Decide what type of investment strategy you want to follow. Would you want to go traditional or would you want to go with the Airbnb craze?

2. Determine the amount of money and time you are willing to spend on your preferred investment strategy and rental strategy.

3. Create a working budget. For fund investors, it’s normally at around $1,000-$5,000 but for a direct real estate investor, it’s a minimum of $50,000.

4. Choose the investment strategy that fits your schedule and financial resources. REIT investing requires less time and money compared to direct real estate investing.

5. Set aside funds for other investment-related expenses because they are unavoidable.

How to Start Real Estate Business

The Best Ways to Invest in Real Estate

Although there are plenty of ways to make money in real estate, rental properties qualify as the best example of ‘real estate investing’.  Wholesaling properties and flipping houses can give you a lot of income but they demand too much, they’re almost like a regular job.

Rental properties can keep you earning for years, while wholesale and flipping stop giving you income once you’ve sold the property.

Keep reading for more detailed descriptions and links to more information.

1. Rental Properties

The basic concept of rental property investment is that it provides you an income through monthly cash flow and the eventual value appreciation.  Cash flow refers to the money you make from rent after deducting all the related expenses.  The expenses are usually taxes, insurance, maintenance fees, allowances for vacancies, HOA dues, and mortgage payments.  If you are able to acquire a rental property below its market value, that is a huge advantage in real estate.  They say that in a case like this, you’ve already made money when you bought it.

You can also look for properties that need work or those are poorly managed.  You buy and improve them and you can make more money.  Also, you should not really count on appreciation as a source of income but it is a nice bonus if market values go up significantly.  The downside about rentals is that the market is very selective – it is not always a good fit for every area.  Generally, the more expensive the area, the harder it is to find good rentals.

What are the different types of real estate property can you invest in?

  • Single-family homes
  • Condominium units
  • Townhouses
  • Multi-family homes
  • College rentals
  • Vacation homes
  • Commercial real estate

2. Flipping Houses

If you go to its most basic concept, flipping houses are really simple because it takes just three major activities.  You buy a house, fix it up and sell it with enough margin to give you a profit.  The question, however, is in the execution where things get a bit arduous.  For one, there are many expenses to consider:  financing costs, carrying costs (utilities, insurance, taxes, HOA dues), acquisition costs and of course, selling costs.

Many new investors wrongly provide funds for the repairs but that is only part of the total cost of flipping a house.  The mere act of finding a cheap enough house to buy for flipping is hard enough.  You also have a lot of competition for flips but you can search for deals through MLS, auctions, wholesalers, houses for sale by owners, and through direct marketing.

3. Wholesaling Real Estate

Wholesaling is also pretty simple conceptually.  You get a house either through direct purchase or under contract, but instead of keeping it or fixing it up, you sell it to another investor.  One unique feature here is that it is entirely possible to wholesale properties without using your own money to buy it.  One way is to get the house under contract and subsequently assign that contract to another investor who will be the one to buy the house.

Another way of wholesaling a house is by using a double close.  You buy the house on the same day that you sell it to another investor.  Some title companies will even let you use the money they paid to purchase the property to pay the original seller when you buy the same property.  Many people have the common perception that wholesaling is an easy way to make money in real estate without using your own money.  However, it is easier said than done because convincing buyers is difficult and often, you will need some money up front.

4. Real estate investment trusts (REITs)

As you begin your career in real estate investing, we strongly suggest that you don’t take on high risk.If you are allergic to business risk, consider investing instead in real estate investment trusts or REITs.

Simply described, REITs will allow anyone to invest in large real estate investment portfolios by purchasing stocks.  In turn, shareholders get a share of the profits that the real estate investments generate without actually having to buy an investment property.

5. Real Estate Investing Companies

So far, we’ve discussed all real estate investing by individuals but in reality, real estate investment companies actually own and control a huge chunk of all real estate.  These are companies whose origins are traditional businesses – corporations, LLCs, LLPs, etc.

Let me explain how real estate investment companies work. It starts with a group of investors who raise capital by pooling their money and then use the capital to buy real estate.  They hold the properties either for their long-term cash flow and value appreciation or for short-term turnaround and quick profit.

These companies invest in real estate basically the same way as individual investors do.  However, the bigger and more advanced companies normally set their sights on larger and more complex deals.  Individual investors wouldn’t normally have the capacity nor capability to manage these investments or deals.  Many larger real estate investment companies even purchase land and develop it themselves by building apartment buildings, condominiums, shopping centers, etc.

However, putting up a real estate investment company (for legal and taxation consideration), finding capital and then finding the right real estate deals are quite elaborate activities.  The company, with its network of employees and agents, can do a better job at this.  An individual investor wouldn’t be as effective by himself.

6. Real Estate Crowdfunding

Crowdfunding (also known as peer-to-peer lending service), as a platform, has become popular on many fronts including in the real estate industry.  It’s a service that connects individuals who want to invest in real estate with real estate businesses and property owners who need to raise capital for their ventures.

Normally, these real estate businesses that are in need of capital can present their investment opportunities as either debt or equity financing.  So, if you are an investor checking out real estate crowdfunding opportunities, you can find different offers.  It could be a debt-based investment where you can get repayment with interest in fixed installments or at the end of a predetermined time.  It could also be an equity investment where you can participate in the profit on the real estate deal.

7. Short Term Rentals/Home Rentals

If you already have your own property, you can already make money off it without selling it.  You can use your own home and become a landlord.  Short term rental websites like Airbnb give you the opportunity to earn by renting out your home anytime you want.

You can earn extra cash and you get to meet people from all walks of life and you might have visitors from other countries as well.  If you are not yet ready to dive into the traditional real estate businesses, consider Airbnb to learn about the business.  Who knows, you might be launching a stellar real estate career right from your own home?

The Special Benefits of Real Estate Investing

It is true that no type of investment can offer a guarantee of a profit or even retention of the capital. Historically, however, real estate has proven to be one of the safest asset classes for investors while averaging consistent gains over the years.

Real estate investing is unique in the sense that it offers other benefits that you may not find in other types of investments.

Here are some of them:

The Power to Leverage

One of the most distinctive features of real estate investing is its ability to allow investors to leverage their capital many times over.  Real estate investors will have the power to use borrowed funds to invest in a parcel of real estate they are not in a position to purchase outright.  But even so, they still can realize all of the potential profit from the property inherent to its owner.  A word of caution to investors:  with increased leverage comes additional risks too, so be prudent.

Tax Benefits

Remarkably, an investment in real estate opens several types of tax benefits to the investor.  For one, the IRS treats real estate profits as capital gains which carry a lower tax percentage than employment income.  Accordingly, as years pass, the tax basis of your investment properties can go down due to depreciation.

The tax code allows investors to claim for an annual depreciation expense as a reduction in income. And, if you are generating cash flow from a rental property, you can potentially claim the profits without paying self-employment taxes.

 Control Your Investment

Another valuable aspect of real estate investing that appeals to many is that they enjoy increased control over their investments.  In stocks or mutual funds investing, you purchase and then you wait passively for the assets to (hopefully) increase in value.  If you are just one of the minor shareholders of the company, you will not have much say in the business operations. From the point of view of an investor, there is nothing you can do to increase the value of the stocks or shares that you have.

On the other hand, if you invest in real estate, you have some authority over your investment.  You can improve your knowledge of the business, negotiating skills

Aside from these things that we mentioned, there are still a lot of possible benefits of real estate investing.  We have not discussed protecting your capital against inflation, tax write-offs against your other income, etc.  If you want more information on this, visit our Resource Center.

The Keys to Real Estate Success For Beginner Investors

Real estate has great potential for an investor – it can be your passport to enormous wealth, early but comfortable retirement or financial independence for the rest of your life.

New investors are usually fearful and very careful but you can also be confident and decisive.  At the end of the day, none of that matters.  It will still boil down to goals, abilities, and resources of each individual investor. These major aspects can complete what’s missing, even up the shortcomings and further enhance the strengths of any real estate transaction.

Beginner Investors - Keys to Real Estate Success

There are many important tips we’ve already published  – let’s focus on the most important ones.

Here’s how to make them work to your advantage:

1. Set Your Goals

Don’t even begin to look at properties without setting specific goals for yourself as an investor.  Forget about being an expert in the terminologies, practices, computations, analysis, negotiation or any other specifics at this point.  Simply resolve what you really want to accomplish.  Ask yourself what you want to see happening as a result of your investment.  It’s not just about making some or a lot of money because that is obvious.  What we mean is: do you want to be an active, hands-on investor who is very much involved in the daily operations?  Or would you rather have a real estate investing on the side while you continue on with another career that’s closer to your heart?

Blindly jumping in without really knowing why has brought many investors to disaster.  Some eager beavers put too much on their plates all at once and end up having to hire out other people to manage, make repairs and maintain the property.  As a result, his cash flow goes to pay for these people and pretty soon, he’s forced to sell out his property to get himself out of the messy situation.

2. Think Long-Term

Here’s a nugget of truth:  income-producing properties provide long-term wealth. Knowing that it is therefore practical to purchase only properties that you deem will appreciate in value.  The next step would be to hire a property management company.  Just keep the property and check its value every year.  It will just be a matter of time before the increase in the property value will give you immense returns.

Don’t hold your punches on a good deal:  when you chance upon an opportunity, grab it by the collar!  Once you have secured the contract, there are many ways to terminate the agreement (if you need to) and get your earnest money back.  This period will give you extra time to size up the property.  Missing out on a good property because you waited too long could be a huge opportunity lost because another investor may come and take it.

3. Improve Your Abilities

After you’ve set your goals, you need to take stock of your abilities or the useful skills, talents, and traits that you have. In case your list turns out short, do not be discouraged from implementing your plan. The process actually transitions you from the goal-setting stage to the actual act of investing.  You won’t be able to determine what additional help you’ll need unless you know the things that you can do yourself.  Here is a list of important activities that will demand the applicable skills:

  • Gathering and analyzing data on market trends and information
  • Locating properties, including those that are not currently offered “on the market”
  • Evaluating properties based on their condition and possible repair or renovation
  • Estimating the costs of repair or renovation
  • Valuation of the property with all the relevant ROI and analytical tools
  • Negotiating with sellers or their agents
  • Supervising repairs, renovations and maintenance works
  • Management of the property including maintenance, rent collection, eviction, etc.

An honest-to-goodness personal assessment is integral to success.  Don’t overrate yourself but don’t put yourself down either.  It is better to err on the side of conservatism when it comes to evaluating your abilities.  You can always hire or partner with other people to handle anything you can’t (or don’t want to) take care of.

Additional Resources

You now have a clear goal and a realistic assessment of your abilities.  You are definite about what you want to accomplish.  Also, you know what you can and cannot do on your own.  The next step is to make provisions on how to fill in the gaps.  This is basically a question of resources – what you need, where to find them and how to use them. Veteran real estate investors know that for things like market knowledge, area demographics, and local and national market trends, it meant a trip to the library.

Nowadays, whenever the word ‘research’ surfaces, the Internet usually comes to mind. Sure, you can still go to the library and hit the books but the latest and freshest information will still be on the Worldwide Web.  Learn how search engines can make the work easier for you, bookmark useful sites and build your own database of information.

The post  Beginner’s Guide To Real Estate Investing appeared first on The Smart Investor.

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Here is what’s appealing about real estate investing:  you can do it with minimal or no formal training at all. Here is what’s appealing about real estate investing:  you can do it with minimal or no formal training at all. The Smart Investor yes 15:19
What Are Market Sentiment Indicators And How To Use It In Your Trading? https://infoforinvestors.com/academy/technical-analysis/market-sentiment-indicators/ Wed, 05 Sep 2018 17:59:43 +0000 https://infoforinvestors.com/?p=1997 https://infoforinvestors.com/academy/technical-analysis/market-sentiment-indicators/#respond https://infoforinvestors.com/academy/technical-analysis/market-sentiment-indicators/feed/ 0 <p>When are you analyzing an investment (stock/option/currency) – Where do you put your focus on? One of the first things</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/technical-analysis/market-sentiment-indicators/">What Are Market Sentiment Indicators And How To Use It In Your Trading?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> When are you analyzing an investment (stock/option/currency) – Where do you put your focus on?

One of the first things a trader has to think about when investing is what kind of analysis is most suitable for his/her trading goals.

Among the most common types of analyses are Technical Analysis and Fundamental Analysis. The first type of analysis uses price action to decide when to invest. The second analysis type looks at a given company’s performances or global economic health and compares them to the intrinsic value of a financial asset, in order to decide whether the asset is under or over-valued.

However, investors often forget that there is another type of analysis at their disposal: Sentiment Analysis.

Sentiment Analysis allows you to evaluate market sentiment, which will help you get potential directional signals about where the asset/market you are evaluating may be heading.

Most of the time, you will see that positive information about a given asset or the health of the global economy leads to long positions. Negative information, on the other hand, will usually lead to short positions.

But..

Note that this isn’t set in stone, however – you may have heard the phrase “good news is bad news” in reference to traditionally “bad” financial events that actually lead to price increases. It’s all about market participants’ interpretation of the available data and its impact on the markets.

Identify Market Indicators

In many financial institutions, quants are more and more frequently using sentiment analysis to develop trading models. This helps them to better understand market participants’ psychology. These trading models will also produce more accurate predictions and better results.

If you use Google Trends to check the popularity of sentiment analysis, you can see that sentiment analysis has been attracting more and more attention over the last few years. Retail traders also understand the importance of market sentiment in their trading decision process and want to know more about it.

Market Sentiment Formation

Markets could be seen as a network with individuals who are reacting to the news. Each trader has thoughts and opinions on a given asset that will be reflected in its position (long or short). Together, these positions will form the overall market sentiment, given the available information. If you are the only one to see a bubble ready to burst on a given market, you wouldn’t be able to make the market move in your favor.

As a trader, you need to take all this into consideration. You can then use sentiment analysis to assess and understand:

  • How investors think
  • What the consensus about a given financial asset is
  • What the expectations of the market participants are
  • What news they follow the most
  • Etc..

How To Use It?

Only then can you decide how you will incorporate the perception of the market you have in your trading strategy. Taking into account sentiment analysis, you will be able to:

  • Get an indication of how weak or strong a movement could become
  • Identify market sentiment with a strong upwards or downwards movement
  • Know how nervous investors are by looking at volatility and trading volume
  • Etc..

Many trading platforms will allow you to use sentiment market indicators to gauge the market’s mood. You can expect a reversal when these indicators are going too far in either direction. Let’s have a look at some of the most important sentiment market indicators.

Put/Call Volume Ratio

If you think that an asset will decrease in value, you could buy a put option. Conversely, you will buy a call option if you expect that the price of an underlying asset will increase. The Put/Call ratio is the ratio of the total number of puts to the total number of calls. You can use it to know when the buying/selling pressure of the stock market is at an extreme.

A very high Put/Call ratio usually indicates that traders might be too bearish.

You can then conclude that if all the sellers are already in positions, then prices cannot be pushed any further down. Conversely, a high number indicates that the buying pressure might be too strong. If all buyers are already in positions, then prices cannot be pushed further up. When these kinds of situations occur, you can reasonably expect a reversal to happen soon thereafter.

Advance/Decline Ratio

The Advance/Decline ratio divides the advancing issues by the declining issues. You can then use this oscillator to know more about the strength of a market. This indicator is also often used to highlight markets’ breadth. Traders often apply a moving average to the A/D ratio to know about the direction of the indicator.

You can then get clues about whether the market is oversold or overbought. Usually, a low ratio indicates an oversold market, while a high ratio indicates an overbought market.

example of Advance/Decline ratio as market sentiment indicator

New High/New Low Ratio

This technical indicator is very simple. It is the number of issues reaching 52-week highs divided by the number of issues reaching 52-week lows. You can use this indicator to gauge market sentiment. For example, the higher the number of issues reaching a new 52-week high, the more bullish markets will tend to be.

In the same way, when you observe that the number of new high issues declines while markets are still going up, you can, therefore, conclude that only a few shares are pushing the index higher. When an indicator and an asset do not evolve in the same direction, it’s called divergence. In our example, this divergence means that you can expect an upcoming decline in the index.

Accumulation/Distribution Line

Accumulation refers to how much of an asset is bought by investors. Distribution, on the other hand, refers to the amount of the asset that is sold by market participants.

This line was thus created to measure the cumulative money inflows and outflows into an underlying asset. You can use it to measure the buying/selling pressure on an asset, as well as to confirm a trend.

example of Distribution line as market sentiment indicator

In order to identify a trend confirmation signal, you should have a look at the direction of the asset and the direction of the Accumulation/Distribution line. A bullish A/D line trend confirmation occurs when the line increases with higher volumes.

Conversely, a bearish A/D line trend confirmation happens when the line decreases with higher volumes. When divergences happen, you can expect a potential reversal.

CBOE Volatility – The VIX Index

As explained in our article on Bollinger Bands, volatility represents the velocity or price changes of a market”. To measure volatility, you can either use historical volatility or implied volatility. Historical volatility looks at the past, while implied volatility describes what the market sentiment suggests may happen. Implied volatility is often used to price options.

The VIX, often called the fear index, is based on options prices and is a volatility index. The Chicago Board Options Exchange gives the following definition of the VIX:“The CBOE Volatility Index is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, the VIX Index has been considered by many to be the world’s premier barometer of investor sentiment and market volatility”.

High VIX/Low VIX – What does it mean?

A rising VIX indicates that many traders want to hedge their portfolio against losses – so they will, therefore, buy put options.

A high VIX thus suggests that there are many uncertainties about the direction of the markets. The red rectangles on the below chart shows volatility spikes that correspond with important international events such as the financial crisis of 2007, the European debt crisis in 2010/2011, the Chinese Yuan devaluation in 2015, etc.

A low VIX will usually reflect investor complacency. Note that the VIX and the S&P 500 index often have a negative correlation, meaning that they tend to evolve in opposite directions.

example of CBOE Volatility as market sentiment indicator

Remember – It’s best to use market sentiment indicators as a part of your trading plan with other forms of analyses, such as technical analysis. Most traders first use sentiment analysis to know about the general direction of the market.

Then, they use technical analysis (mathematical indicators or chart patterns) to identify entry/exit points. All of this can help you to increase your success and your overall trading performances.

Useful Tools To Spot Indicators

Candlestick patterns are very useful tools to get a complete overview of market psychology. The opening and closing prices create the body of a candle. The wicks, or shadows, show the highest and lowest levels reached. The size of the candle and the shadow thus reflects market psychology and the intensity of the movement. Therefore, a longer body suggests that the buying or the selling pressure is intense.

Be sure to have a look at our Technical Analysis section to get some further insights into the most powerful trading strategies. What are your favourite investment strategies? Which other market sentiment indicators do you use? Share your trading experience and leave a comment!

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions.

The post What Are Market Sentiment Indicators And How To Use It In Your Trading? appeared first on The Smart Investor.

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When are you analyzing an investment (stock/option/currency) – Where do you put your focus on? One of the first things When are you analyzing an investment (stock/option/currency) – Where do you put your focus on? One of the first things The Smart Investor yes 8:35
How to Use Gaps in Your Trading https://infoforinvestors.com/academy/technical-analysis/use-gaps-trading/ Sun, 02 Sep 2018 09:14:48 +0000 https://infoforinvestors.com/?p=3132 https://infoforinvestors.com/academy/technical-analysis/use-gaps-trading/#respond https://infoforinvestors.com/academy/technical-analysis/use-gaps-trading/feed/ 0 <p>Don’t you just hate it when you hold a bullish trading position overnight, but the market opens down, turning your profits into losses? We’ve all been there. The good news is that there are successful gap-trading strategies for entering and exiting the markets. They will help you take advantage of price behaviour, and improve your trading success. Keep reading and you’ll find out everything there is to know about gaps[...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/technical-analysis/use-gaps-trading/">How to Use Gaps in Your Trading</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Don’t you just hate it when you hold a bullish trading position overnight, but the market opens down, turning your profits into losses?

We’ve all been there.

This phenomenon is called a gap, it happens when there is a difference between the closing and the opening price.

The good news is that there are successful gap-trading strategies for entering and exiting the markets. They will help you take advantage of price behavior, and improve your trading success. Keep reading and you’ll find out everything there is to know about gaps.

Can you see gaps in every market?

Because the Forex market is open around-the-clock, gaps often only appear on Sunday evenings when the market opens. On the other days of the week, the FX market trades continuously.

Gaps are more common on the stock market and usually appear in the morning. Because European, American, Japanese, and other exchanges have a different fixed opening and closing times, gaps occur on indices and stocks when there are a large number of accumulated orders during these times.

Which kind of charts should you use to better spot gaps? There are several different types of charts provided by your broker, such as:

  • Point & Figure (P&F) charts
  • Renko charts
  • Heikin Ashi charts
  • Kagi charts

Traders mostly use line charts, bar charts, and candlestick charts. As a gap is a price difference between two trading days, it’s essential to use bar charts, or candlesticks charts – as line charts only display closing price connected by a straight line.

In this article, we will use candlestick charts, as they help present the function of the gaps by adding qualitative information about the underlying movement, as well as its future evolution.

Let’s say that a bullish gap appears while exiting a range with a long candle with no shadow (marubozu candle). This will be a stronger trading signal than if the gap appears with a doji, which is an indecision pattern.

The Different Types of Gaps

As a technical analyst, you are looking either for signs of change in market dynamics, or for signs of current trend confirmation. If a market is going up, you could look at signs to enter the market to follow the main direction.

But you could also look at signs showing that the trend is about to reverse. The same applies to a bearish market.

When a market is rangy, then you are looking for a change in the current market participants’ behavior, which could lead to a breakout to the upside, or the downside. If you spot these changes, you will make more profitable trades by entering the trend early, riding it, and exiting it once it’s over.

And the best part?

Gaps are a good tool to spot these changes.

Bullish vs Bearish Gaps

A bullish gap happens when the close of the previous day is lower than the opening of the following day. A bearish gap happens when the close of the previous day is higher than the opening of the following day.

Breakaway Gaps

These gaps usually show a change in the psychology of the market, so they appear after a consolidation phase. It means that they are gaps in price over a significant level, such as support or resistance lines, which triggers a new trend.

For this reason, when there is a gap at the beginning of a trend, you can consider it to be a breakaway gap.

In the example above, we can see that after a lateral consolidation, where prices had trouble reaching the lower part of the range for many days, the DAX index exited the range with a bullish breakaway gap.

This gap confirmed the upcoming bullish movement.

Runaway Gap

These gaps usually show confirmation of the current market trend, even though you can see minor corrections. It’s for this reason that this kind of gap is often called a continuation gap. If the market is up, then the runaway gap will be a bullish one. On the other hand, of the market is down, then the runaway gap will be a bearish one.

Runway gaps usually appear in the middle a trend, which helps traders to anticipate the growth potential of a position. You won’t be surprised then if I tell you that another name for the runaway gaps are measuring gaps.

The above chart shows a runaway gap within a bearish movement. The 1st black arrow displays the distance from the beginning of the movement to the runaway gap. This distance has been projected above the gap to get a target price – this is the 2nd black arrow. You can see at the bottom of the chart that there was a high amount of trading volume at the same time, which confirms the strength of the gap.

Exhaustion gaps

As this name suggests, these kinds of gaps appear at the end of a trend. However, they do not give any information about another trend starting.

It’s often difficult to distinguish between a runaway gap and an exhaustion gap, as prices could reverse immediately, or enter into a congestion zone for a while. However, the exhaustion gap shows usually the last movement in the direction of a current trend before finally reversing.

If prices reverse, then it means that this gap is filled. Filling a gap means that prices have come back to the same level before the gap. An exhaustion gap is the kind of gap that is filled faster.

Why Do Gaps Appear?

A gap is like an “emotional moment” on the markets where there are no transactions. It occurs when markets conditions at market close aren’t the same as when they open. Gaps represent a change in market participants’ psychology, and often reflect future support and resistance zones that prices come to test several times.

There are many potential causes for gaps:

  • A lack of market interest with lower liquidity and volume,
  • A great interest from market participants with high liquidity and volume,
  • An important piece of political, or economic news,
  • M&A news,
  • Earnings reports,
  • Central banks’ decisions,
  • Natural disaster,
  • Terrorist attacks,

The most important thing isn’t to understand why a gap appears, but how markets are going to react to it. You can study the price movement, the volume and the size of the gap in order to determine better entry and exit points.

By now you will have realized that the size of the gap provides information about the strength behind this movement. A big gap with a large trading volume will be stronger than a smaller one with low volume.

Which kind of trading style works best with gap trading?

Using a price gap suits swing trading and day trading styles best. Scalpers target profits made in a very short-term time frame within a single trading day, so it is not optimal with gap trading, which is better for trend traders.

Let’s now have a look at strategies you can use when a gap appears.

Gap Trading Strategies Can You Use

The most interesting type of gap to use while trading gaps is the breakaway one, as it announces a new trend.

This trend reversal signal should be used to enter the market in the direction of the gap, which is very rarely filled. Using this gap is a great swing trading opportunity. If you missed the breakaway gap, you can also enter the market with the runaway gap that confirms the strength of the trend.

Short-term traders can also use common gaps to get an idea of the daily market’s psychology and take advantage of it. Intraday gap trading can work for these traders and will minimize risks, as there are no overnight positions.

Morning Gap

When the day starts with a bullish gap followed by another price increase, like on the above 5 min chart, you can enter the market with a long position. You also need to be sure that the trading volume is high when the gap occurs.

The same applies when it’s a bearish gap.

Gap Pullback

When the day starts with a bearish gap, prices bounce back. They end up filling the price until a reversal pattern occurs, where you can enter the market with short positions.

The same applies when it’s a bullish gap.

Gap analysis should always be used in conjunction with sound money management rules

Trailing stop-loss orders could easily be placed below the lowest level of the last candle of the previous day in case of a bullish gap, or above the highest level of the last candle in case of a bearish gap. Regarding take profit orders, you can use simple technical analysis tools and candlesticks chart pattern to decide where to place them.

There are many ways to take advantage of gaps. Traders who can correctly identify a different kind of gaps will have an edge over those who can’t. You should remember that trades must be in the overall direction of prices and that volume should be higher than usual when gaps happen.

So, are you ready to use gaps in your trading?

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions.

The post How to Use Gaps in Your Trading appeared first on The Smart Investor.

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Don’t you just hate it when you hold a bullish trading position overnight, but the market opens down, turning your profits into losses? We’ve all been there. The good news is that there are successful gap-trading strategies for entering and exiting the... Don’t you just hate it when you hold a bullish trading position overnight, but the market opens down, turning your profits into losses? We’ve all been there. The good news is that there are successful gap-trading strategies for entering and exiting the markets. They will help you take advantage of price behaviour, and improve your trading success. Keep reading and you’ll find out everything there is to know about gaps[...] The Smart Investor yes 8:34
The Most Important Steps For Locating A Lost Life Insurance Policy https://infoforinvestors.com/personal-finance/life-insurance/locating-lost-policy/ Fri, 17 Aug 2018 11:31:32 +0000 https://infoforinvestors.com/?p=3055 https://infoforinvestors.com/personal-finance/life-insurance/locating-lost-policy/#respond https://infoforinvestors.com/personal-finance/life-insurance/locating-lost-policy/feed/ 0 <p>What if your dad named you as a beneficiary of his life insurance policy but did not give you the</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/personal-finance/life-insurance/locating-lost-policy/">The Most Important Steps For Locating A Lost Life Insurance Policy</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> What if your dad named you as a beneficiary of his life insurance policy but did not give you the details before he died?

It is not an uncommon problem for many people.  Regulators revealed that an estimated $3 billion in benefits have gone unclaimed from lost or forgotten life insurance policies.  Whether it’s just $2,000 or $50,000, you can take steps to locate a lost life insurance policy.

In fact, recent changes in the insurance industry may make the search much easier.

In recent years, many states have started investigations into the insurance companies’ lack of effort to locate policy beneficiaries. Now, the big insurance companies are taking greater steps to locate beneficiaries.  State regulators found that life insurers were checking the U.S. Social Security Administration’s Death  Master File, an up-to-date list of recent deaths.

They use it to stop annuity payments once a contract holder dies but they do not check whether benefits were due to the deceased persons’ beneficiaries. Audits revealed that companies would draw down the cash values of forgotten policies to pay for the insurance premiums.  The bad thing was, they did this even after the insured people have died.

Locating A Lost Life Insurance Policy

Unfortunately, there isn’t a national database that holds specific information for these policies.  Under a compromise agreement with different states, several insurers agreed to use Death Master and other databases to look for life insurance policyholders.  They also agreed to make a concerted effort to locate the named beneficiaries.  Investigations are still on-going.  In 2013, California State Controller John Chiang reported that 18 insurers have made numerous settlements.  They released some $2.4 billion to beneficiaries across the United States.

If you think you are a ‘lost’ beneficiary, you don’t have to wait for a life insurance company to look for you.  All you need to know is the name of the insurance company that issued the policy.  You can already start to make a claim; you don’t even have to know the policy number.

There are several strategies plus some new resources that can help you with your search.  Here are several of them:

Search Personal Records

Search among files, safe deposit boxes, cabinets and other areas where your loved ones might have kept important documents and insurance policies. If you can’t find the policy, try to find the name of the life insurance company that issued the policy.

How?

For clues, go through bank and credit card statements for records of premium payments made to an insurance company. Since life insurance is used also as an investment, you can also review recent tax returns or financial statements for any withdrawals or dividends related to a life insurance policy.

Go through address books and get in touch with financial advisers or brokers who might have dealt with life insurance.

Check With Employers And Groups

Check with your loved one’s former employer – the employee benefits administrators might have information about any group life insurance in effect. Or maybe your loved one took out additional insurance while employed.

Fraternal organizations, worker’s unions, professional associations and other groups also get life insurance to their members.

Contact Insurance Companies

You can get in touch with insurance companies where your relative had other types of policies and check if he had a life insurance policy there.

Some insurers like New York Life and MetLife have installed lost-policy finders on their websites for policies they sold. The tools will just ask you to submit information about your deceased loved one. The company will then search their files for any policies on which your loved one was the insured.  If the search turns out positive and you are the named beneficiary, the company will contact you.

Keep in mind:

If the search is positive but you are not the beneficiary, the company will only give you limited information.  Federal and state privacy laws restrict the amount and type of information they can give out.

It may be a tedious task but you can also contact each insurance company in the state where the insured most likely bought the policy.  It’s a daunting legwork because we may be talking about hundreds of companies.  The state’s insurance department can provide a list of licensed insurance companies for the area.

Just look for your state insurance department’s contact information.  More information means less difficulty in tracking down companies.  Here is the contact information of some big companies:  Prudential 1-800-556-8527; MetLife AIG 1-800-638-5433; Nationwide 1-877-669-6877 and John Hancock 1-800-732-5543.

Use a Free Life Insurance Locator Service

The National Association of Insurance Commissioners offers a free policy locator service program. You can access it here.  Prior to this service, some states offered free locator services. These included Alabama, California, Kansas, Louisiana, Maine, Missouri, North Carolina, New Hampshire, New York, Ohio, Oklahoma, Oregon, Texas and Vermont.  This service by NAIC is the first effort to put together a national database. You may visit the American Council of Life Insurers website and look under “State Resources”.

Should the search turn up positive and you are the named beneficiary, the insurer will get in touch with you directly.  If they find a policy but with a different beneficiary, the company will try to locate and contact the beneficiary.

Term Life Insurance Policies

If the policy was for a term life insurance, remember that the treatment would be slightly different.  The beneficiary can collect the death benefits only if the insured person died within the term.

If your loved one died after the term has expired, the insurance company does not have to pay.  Only permanent life policies, such as whole or universal life, will pay a death benefit regardless of when a person dies.  This is assuming that all premiums were paid.

Search Unclaimed Property

If it so happened that you are searching a few years after your loved one has died, the insurer might have declared the benefits ‘unclaimed’.  If that is the case, they might have remitted the benefit to the unclaimed property office of the state where the insured bought the policy.

You can to the website of the National Association of Unclaimed Property Administrators.  They will search the records from 40 states, Puerto Rico and the District of Columbia.  Just click on the ‘Links’ button to connect to a map and addresses for unclaimed property agencies. If you want to find links to each state’s unclaimed property division, just go to www.unclaimed.org.

If your relative’s name or a potential benefactor’s name produces a hit, you’ll need to prove your claim.  You would most likely have to present the death certificate and other documents detailed in the claim forms.  These would vary from state to state.  If you need to get a copy of the death certificate, contact the vital records office in the state where insured died.  You can also go to www.vitalcheck.com.
Steps For Locating A Lost Life Insurance Policy

Other Life Insurance Locator Services

If your loved one applied for life insurance in the last 20 years, there is an outfit that has the list of the insurers during that span of time.

MIB Solutions Inc. has a database of the records of insurance inquiries made to virtually every US and Canadian insurer since January 1, 1996.  However, the company charges $75 to do a search for you.  The service is limited to:

  • An executor or administrator of the deceased’s estate or a surviving spouse,
  • A child if there is no spouse or estate representative,
  • The closest living relative in the absence of the former individuals.

Another website, www.findyourpolicy.com, will have information about the policy – but only if the insured registered his policy with the service.  Registration is free but to search for it, the company charges $19.95.

You may also pay $108.50 to a company called The Lost Life Insurance Finder Expert to search for the policy.  They claim that in 10 days or less, they will contact each and every insurance company’s headquarters to search for a policy.

While we’re on the subject, this is a good reminder to you to get your own insurance affairs in order.  Talk to loved ones about your life insurance, and provide your beneficiaries with the names of the insurers and the policy numbers while you’re still alive.

Frequently Asked Questions On Finding Lost Life Insurance Policies

What happens to the death benefits if no one claims the money?

The insurance company will normally turn any unclaimed death benefits to the state’s unclaimed property office after some time.

How do you search to see if you are entitled to money from an unclaimed life insurance policy?

First, remember that your deceased loved one may have left behind a life insurance policy so it’s good to search. Second, there is always the possibility that while he was alive, he bought more than one insurance policy (See the different types of life insurance).  The best way to know is to check on some places for clues that may tell you if the deceased had a life insurance policy and other information about them.

What if you know for sure that there is a life insurance policy but do not know which insurance company?

Go to the National Association of Insurance Commissioners for help. Contact the state’s insurance commissioner office of the state where the insured bought the policy – they can help you.  Read more on how you can start the search process for the insurance company that issued the life insurance policy of your loved one.

How do you know if you’re listed as a beneficiary of the policy?

When the insured bought the policy, he could have written anybody as the beneficiary. He need not get their prior consent so you wouldn’t know unless he told you.  This means that you may be a beneficiary of an insurance policy you have not even heard of.  When you search using the different tools and resources, you will know if you’re the beneficiary should the search turn up positive.

What information do you need to make a claim for a life insurance policy?

If you are the beneficiary or executor of the estate or a close family member such as a spouse, domestic partner, child or grandchild, sibling, parent or grandparent, you should provide:

  • proof of your identity and relationship with the deceased
  • a copy of the death certificate
  • the deceased person’s social security number

Depending on the situation and the terms of the policy, this may help you start the process of the claim.  Each insurance company has its own guidelines and they will help you how to proceed.

What if the Life Insurance Company has changed, how do I find the right one?

If a life insurance company that held the insurance policy has changed and you no longer know who the insurer is, you can go to your state commissioner’s office.  They will be able to provide you with information and records of the life insurance company’s current name.  They can provide a summary if there have been mergers of insurance companies and who to contact regarding a new policy or a claim or payments.

The post The Most Important Steps For Locating A Lost Life Insurance Policy appeared first on The Smart Investor.

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What if your dad named you as a beneficiary of his life insurance policy but did not give you the What if your dad named you as a beneficiary of his life insurance policy but did not give you the The Smart Investor yes 11:10
The Best Ways To Get The Lowest HELOC Rate https://infoforinvestors.com/loans/loan-guides/lowest-heloc-rate/ Tue, 14 Aug 2018 14:34:04 +0000 https://infoforinvestors.com/?p=3041 https://infoforinvestors.com/loans/loan-guides/lowest-heloc-rate/#respond https://infoforinvestors.com/loans/loan-guides/lowest-heloc-rate/feed/ 0 <p>Many people asking us the same question:</p> <p>"With the ongoing rise of the interest rate, what is the best way to get a home loan right now"? Well, our answer is pretty clear:It looks like 2018 is a popular year for people who want to get a home equity line of credit or HELOC.HELOC rates remain very reasonable and property values in the US are appreciating all over.  Significantly, homeowners realize that they have access to many financial benefits such as tax deductions and flexible low-interest home equity credit lines.</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/loans/loan-guides/lowest-heloc-rate/">The Best Ways To Get The Lowest HELOC Rate</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> HELOC rates remain very reasonable and property values in the US are appreciating all over.  Significantly, homeowners realize that they have access to many financial benefits such as tax deductions and flexible low-interest home equity credit lines.  People who do not own a home do not enjoy these privileges.

This year, experts are projecting HELOC’s interest rates starts to increase.  Therefore, it makes sense to shop with the best HELOC lenders online while the rates are still low historically.

How HELOC Rates Work

Unlike many mortgages, HELOCs are a kind of adjustable rate mortgages.  HELOC rates have two components: a set base rate (“margin”) and a fluctuating rate (“index”).  Each month the HELOC lender will calculate your payment based on your current balance and the combination of these two components to determine your rate.

The lender will use your credit score and the amount of equity you have in your home as the basis of the margin for your HELOC.

As soon as you have your HELOC lender, they will run a single report from all three major credit bureaus, namely:  Equifax, TransUnion and Experian.  Basically, they will merge your credit history that they have extracted from the three sources.  This report will incorporate all your past credit history and your credit scores from each bureau.

High Credit Score = Lower HELOC Margin

Most lenders usually pick the average of the three scores although the conservative ones might use the lowest of the three scores.  The rule is, the higher your credit score, the lower your HELOC margin will be.  Negative information such as late payments or credit problems can cause you to have a higher margin.  In some cases, applicants lose their eligibility for a HELOC because of the severity of their derogatory credit history.

You can compute your home equity by dividing the total outstanding loans by your home’s value.  Take note that most lenders would want to see that your total loans do not exceed 90% of your home’s value.  The lower this percentage is, the lower your HELOC margin will be – and vice versa.

So, looking at this principle, your margin can practically be as low as zero. But, it can also be as high as a few percentage points if you had credit issues and very low equity.

Here are other things you might want to know about getting the best HELOC rates:

Shop Around

If you want to get a good interest rate, repayment plan and low closing costs, you have to do some ‘legwork’ with your hands.  This means you need to compare offers by as many different companies as you can.  You can do this now via the Internet.  Many borrowers automatically choose the company they’ve worked with previously – but they may not always get the best deal.

Most HELOCs use the prime rate as a basis; it’s now easy to compare companies.  In fact, you might not even need to use a mortgage broker.  Do not give in to the temptation of settling for the first few offers because a small detail can make a big difference in the long run.  A tiny increase in the APR, for example, can mean thousands of additional dollars over the life of the HELOC.

Once you’ve short-listed your HELOC lenders, you’ll want to compare their offers on the following:

  • Margin.  Some lenders add higher margins more than others based on your credit profile and home equity.  This is the most significant factor in determining your HELOC rate.
  • Rates on fixed-rate advance options. This is the second most important factor for your HELOC rate and this can be as varied as the number of lenders.
  • Maximum lifetime rate.  HELOCs will have a restriction to ensure that Prime plus Margin cannot go over a certain amount at any time.  This is your protection should Prime were to rise dramatically over the life of the HELOC.
  • Interest only against fully amortized payment.  HELOC payment terms will vary.  Some will allow you to pay just the interest due on the outstanding balance while others will ask for principal plus interest payments.  The lender that follows the latter can sometimes amortize the payment over 10 or 20 years.  This will make the payment materially higher overall.
  • Draw period.  A draw period is the length of time you can draw on your HELOC and it can vary among lenders.  A longer draw period is advantageous if you plan to keep the home and the HELOC for a longer term.  These period runs for about 10 years and don’t differ drastically from lender to lender, but it’s still good to ask.
  • Repayment period.  This sets how long you have to pay back whatever funds you drew from the HELOC.  Similar to draw periods, this is usually standard at 20 years but again, you should check.  You have to get the longest possible time or at least enough time according to your planned time in the home.
  • Annual fees.  HELOCs work in the same way as credit cards in that you can use and pay off the funds anytime.  However, for the lender, this will require more overhead than traditional mortgages so they often charge an annual fee like credit cards.  The fee may be insignificant but do compare because you might choose one that happens to charge the highest among all.
  • Early termination fee.  Many HELOC lenders charge this fee if the borrower close the HELOC within a certain number of years.  Not only will the actual fee matter to you, but find out how many years you need to hold the HELOC before they waive this fee.

Solidify Your Finances

While HELOC lenders primarily base their decisions on your home equity level, they also look at your overall financial picture.  These elements are important considerations to them in deciding to approve or disapprove your application.  Your credit score and debt level vis-à-vis your income will affect your rate and even your approval.

Raising your credit scores and lowering your debt by paying some of them off can make a big difference (debt consolidation will probably not make any difference).  Even reducing your overhead can turn to huge savings in the long run.

It’s a good idea to check your credit reports from the three major credit bureaus we mentioned earlier before you apply for your HELOC.  Sometimes, there are erroneous postings or old “zombie” debts on your credit record that may be pulling your scores downward.

Be careful:

Don’t get a new credit card or take on new debt before applying for a HELOC.  They would lower your credit scores and cause your rates to go even higher.

Build up Enough Equity

Your equity in your home has a direct impact on your HELOC.  The higher your equity, the bigger the home equity line and also influences the rate they will give you.

The more equity you build up, the more it will appear that you have less debt against your home.  This will make you look better in the eyes of your lenders.

If you do not have an idea of how much equity you have, try a simple method.  Find an online estimate of the worth of your home and then subtract the balance you owe on your mortgage.

Most HELOC lenders won’t want the home equity line and your outstanding mortgage debt to go past 80% of your home’s value.

Consider a Conversion Clause

Some HELOCs will allow borrowers to convert from a variable interest rate to a fixed one during the draw period.  This will work to your advantage during periods of rising interest rates because you can convert and lock into a lower one.  Conversely, some lenders will also allow you to revert back to a variable rate if the interest rates fall again.

Generally, your APR on the fixed-rate portion of your credit line will be higher than the variable APR on the non-fixed portion.  The payments on the fixed part will be higher because you will pay for both the interest and principal – just as you would on a fixed-rate loan.

The post The Best Ways To Get The Lowest HELOC Rate appeared first on The Smart Investor.

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Many people asking us the same question: - "With the ongoing rise of the interest rate, what is the best way to get a home loan right now"? Well, our answer is pretty clear:It looks like 2018 is a popular year for people who want to get a home equity ... Many people asking us the same question:<br /> <br /> "With the ongoing rise of the interest rate, what is the best way to get a home loan right now"? Well, our answer is pretty clear:It looks like 2018 is a popular year for people who want to get a home equity line of credit or HELOC.HELOC rates remain very reasonable and property values in the US are appreciating all over.  Significantly, homeowners realize that they have access to many financial benefits such as tax deductions and flexible low-interest home equity credit lines. The Smart Investor yes 8:02
How Much Mortgage Can You Afford? https://infoforinvestors.com/home-buying/guides/how-much-mortgage-can-you-afford/ Wed, 08 Aug 2018 17:35:46 +0000 https://infoforinvestors.com/?p=3008 https://infoforinvestors.com/home-buying/guides/how-much-mortgage-can-you-afford/#respond https://infoforinvestors.com/home-buying/guides/how-much-mortgage-can-you-afford/feed/ 0 <p>For a serious home buyer, this is a most fundamental question: How much mortgage can you afford? Generally, most prospective homebuyers can afford a mortgage that costs between 2 to 2.5 times of their gross income.  Using this rule, a person who earns $100,000 per year can afford to borrow $200,000 to $250,000.  But this is just a basic guideline – if you want a more definite figure, you have to consider many things.</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/how-much-mortgage-can-you-afford/">How Much Mortgage Can You Afford?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Generally, most prospective homebuyers can afford a mortgage that costs between 2 to 2.5 times of their gross income.  Using this rule, a person who earns $100,000 per year can afford to borrow $200,000 to $250,000.  But this is just a basic guideline – if you want a more definite figure, you have to consider many things.

Or, try to look at it this way.  Put together the current interest rates plus strict underwriting rules plus the down payment you can come up with, then your income, debt and credit scores. Taking all of that, how much mortgage would a lender be willing to approve for you?

Calculator is good, but not perfect

Many prospective homebuyers try to do a shortcut by using an online mortgage calculator.  Plugging in your monthly income, expenses and what you think your credit score is would get you an amount.  But it may not be exactly what an actual lender would lend to you.  You will also miss out on the insights you can get with an actual evaluation of your case.  There are a lot of flexible, case-to-case factors that many lenders use in the approval process.

Eventually, when buying a property, there are still many more factors you should consider.

First, it’s good to understand what your lender thinks you can afford and how they computed for that amount.  Next, you need to find the non-financial criteria for evaluating your account such as your preferences and priorities.

What Is The Maximum Amount I Can Borrow?

Each bank would usually have its own criteria for lending and many of them consider many things.  So, the amount and terms of the loan they can give a borrower would depend on different factors.

Here is an overview of what most of them look for so you can quite accurately predict whether you qualify for a loan or not and the forecast the amount you’ll be able to borrow:

Gross Income

Gross income is that income a person makes before he or she pays income taxes.

It is made up of the total salary plus bonuses, any part-time income or self-employed earnings, Social Security benefits, alimony and child support.  The gross income is integral in the determination of the next item.

Front-End Ratio

The front-end ratio is the percentage of the monthly gross income that you can earmark to pay your mortgage every month.

Front-end Ratio

A mortgage payment has four components (commonly known as PITI) or specifically:  principal, interest, taxes and insurance.

The insurance part actually refers to your property insurance and private mortgage insurance (PMI). A basic rule to follow is that the PITI should not exceed 28% of the gross income.

However, many lenders allow borrowers to exceed 30% and a few of them even go as high as 40% (See how to avoid paying mortgage insurance).

Back-End Ratio

Also called the debt-to-income ratio (DTI), it measures the percentage of your gross income that is required to cover your debts. Debts would include credit cards, loans (auto, student, etc.), child support, etc.

For example, if you make $5,000 a month but pay off $2,500 each month for your outstanding debts, your ratio is 50%.  This means that half of your monthly income goes to debt repayment.

Back-End Ratio

The bad news is, a 50% debt-to-income ratio is probably not going to make your dream home a reality.  Most lenders would like to see a debt-to-income ratio of not more than 36% of your gross income.

Here is a simple formula to calculate your maximum monthly debt based on this ratio.  Just multiply your gross income by 0.36 and then divide it by 12. So, if you earn $100,000 a year, then your monthly debt payment should not exceed $3,000.  The lower your DTI, the higher your chance for loan to be approved.

dent to income ratio

Credit Rating

If the head side of the affordability coin is income, the tail side is a risk.

Most lenders have their own formula to determine the risk level of each prospective homebuyer. The formulas tend to vary among lenders but all of them would likely make use of the borrower’s credit score (See how to calculate your credit score).

The lower an applicant’s credit score is, the higher the interest he would most likely pay. Lenders also call this as the Annual Percentage Rate (APR) on a loan.

One helpful advice:

As you think of the kind of house you want in the future, work on your credit score now. And monitor your credit reports too. If there happen to be erroneous entries, it may take time to correct them.  You don’t want lenders to disqualify you for your dream house because of something that’s no fault of yours.  Here’s another thing that can offset negative entries in your credit report: it has to do with…

Down Payment

The down payment is the upfront amount that a homebuyer pays for the residence, in cash or other liquid assets.

For example:

If the homebuyer is purchasing a $100,000 home and can afford a down payment of 10%, he must put up $10,000.  The lender will finance the remaining $90,000.  Lenders will typically ask for a 20% down (this will exempt buyers from the private mortgage insurance) but some will settle for a lower down payment.

However, the more you can put down, the less financing you’ll need and you’ll paint a better credit image to the bank.

Closing Costs

Do not forget to include the closing costs in your computations. It can be anywhere from 2 to 5 percent of the total purchase price depending on the location.

The good news:

Fannie Mae and Freddie Mac allow the builder or seller to shoulder up to 3 percent of the house price to lower your closing cost. For FHA, it’s even higher at 3 to 6 percent.

Aside from the amount of the loan, the lender would also want to see how long would be the repayment term.  Although a short-term mortgage may require a higher monthly payment, it may be less expensive overall.

how much mortgage can you afford

Types Of Mortgages:

For many new buyers, the type of mortgage they choose will significantly affect their budget. There are four major types of mortgages:

  • Conventional. These are loans intended for sale to Fannie Mae or Freddie Mac, the giant mortgage investment companies.  These loans usually require higher down payments and a more stringent underwriting standard than government agency-backed mortgages.
  • The Federal Housing Administration-insured loans are really for first-time buyers and those with less-than-perfect credit histories.
  • VA. These are loans provided by the U.S. Department of Veterans Affairs, mainly for military personnel in active duty. Retired military personnel can also avail.
  • USDA. This is also called a Rural Development Loan.  It serves homebuyers in rural and small towns where credit facilities may be scarce.

FHA loans allow a minimum down payment of 3.5% for applicants with FICO credit scores above 580.  If the score is below 580, they will require a 10% minimum down payment.  FHA rules are softer than the rules of conventional lenders like Fannie Mae and Freddie Mac.  Sometimes, they will allow a 50% DTI or even higher if there are other compensating factors.  Among them are having a lengthy stable employment record, a high credit score, some savings in the bank or other owned assets.

On the downside, FHA has materially raised its mortgage insurance fees so it may be more expensive than conventional loans month-on-month.  This is assuming you have ready cash for a higher down payment.

For the qualified homebuyer, the VA and USDA loans offer the biggest loan with the lowest down payment. Down payment may be as low as zero and the underwriting guidelines are much easier to comply with, especially with the VA loan.

The Automated Underwriting

What most homebuyers are unaware of is that the success of their mortgage applications rests with two national computers. These computers flash tens of thousand of “yes”, “no” or “maybe” answers to lender inquiries daily.  The first one is Loan Prospector (LP), which Freddie Mac owns and operates.  The other is Desktop Underwriter (DU), which Fannie Mae runs.

When putting together, these two giant agencies supply the majority of the mortgage money in the U.S.  Practically all banks use their online underwriting programs to make preliminary assessments of the feasibility of mortgage applications.  This also includes loans intended for insurance backing by FHA, VA or USDA.

How It Works

Your loan officer feeds your basic information into an LP or a DU. The underwriting software uses advanced statistical algorithms to determine if the proposed package deserves approval or rejection.  It will take into consideration the credit reports, scores, income, assets, reserves, loan vs. property value, debt ratio, past mortgage vs. current application.

Automated underwriting actually increases your ability to acquire a home because it highlights bright spots in the application.  These bright spots can counteract or outweigh the negative items in your application.  For this reason, the underwriting process becomes more flexible than the customary strict set of rules.  This explains why they sometimes approve 45% to 50% DTI.

Veteran loan officers have a way of getting your application approved through the DU or LP by adjusting the application “mix”.  They can raise your credit score by asking you to reclassify some debt balances or finding ways to increase your eligible income.

One note of warningDo not commit to a loan that will strain your monthly budget.  This got many borrowers into trouble during the housing burst of 2007-2009.

Summary

Now you have an idea of how the lender can determine how much mortgage you can afford.  While having that amount is useful, do not exceed it.  It is a good practice to apply your own standards.  Just because a bank says you can borrow this much does it mean you should automatically borrow the maximum.

You are responsible for your own income and debt so use some common sense.  For example, you may be thinking of your children’s college education or wedding in the future. The underwriting computers will not consider them in their computations but you should factor that on your own worksheet.

The post How Much Mortgage Can You Afford? appeared first on The Smart Investor.

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For a serious home buyer, this is a most fundamental question: How much mortgage can you afford? Generally, most prospective homebuyers can afford a mortgage that costs between 2 to 2.5 times of their gross income.  Using this rule, For a serious home buyer, this is a most fundamental question: How much mortgage can you afford? Generally, most prospective homebuyers can afford a mortgage that costs between 2 to 2.5 times of their gross income.  Using this rule, a person who earns $100,000 per year can afford to borrow $200,000 to $250,000.  But this is just a basic guideline – if you want a more definite figure, you have to consider many things. The Smart Investor yes 10:17
Biggest 8 Mortgage Mistakes To Avoid When Buying A Home https://infoforinvestors.com/home-buying/guides/biggest-mortgage-mistakes/ Sun, 05 Aug 2018 08:47:38 +0000 https://infoforinvestors.com/?p=3018 https://infoforinvestors.com/home-buying/guides/biggest-mortgage-mistakes/#respond https://infoforinvestors.com/home-buying/guides/biggest-mortgage-mistakes/feed/ 0 <p>Buying a new home is always an exciting step, but also very stressful - it's probably the biggest amount you have ever spent in your life. So how should you deal with it? In this article, I will be showing the main mistakes people make when choosing and managing a home loan. Also, you will find some advice on how you can maneuver through…</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/biggest-mortgage-mistakes/">Biggest 8 Mortgage Mistakes To Avoid When Buying A Home</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

A mortgage is the most serious debt you can possibly owe. Because of their large amounts and long terms, something can go wrong at any time. And the potential losses might be catastrophic, even losing your home.

Therefore, and due to the stress during the process – we may get some unrealistic decisions.

In this article, I will be showing the main mistakes people make when choosing and managing a home loan. Also, you will find some advice on how you can maneuver through…

Keep in mind:

It’s extremely important to locate the best possible offer since this will be a loan you’ll be repaying for almost three decades. Having the best interest rate and low fees is crucial; this will determine the overall cost of the loan.

Mistake 1: Lack of Research

Before you even close the mortgage, you need to shop around. Many people don’t do research and compare different offers but rather pick up the first one on board.

When you buy a product, you always try to find the best deal – quality, price, brand, etc. This is exactly what you have to do before choosing a bank and accepting an offer.

In January 2015, the Consumer Financial Protection Bureau (CFPB) released some interesting data. According to a report, 50% of the whole population consider only one bank prior to their application. Approximately 75%, apply for a mortgage using only one bank.

First of all, what if there are offers that beat the one you have chosen? If you don’t compare, you never know. Let’s not forget, that mortgages are very, very long.

Is it the same to you if you pay $600 or $800 each month?

There are some online platforms which allow you to compare different rates and fees. In addition, you can go through our credible mortgage reviews and get an idea. You should never forget that the credibility and reliability of your lender are also key.

Mistake 2: Buying a Home You Can’t Afford

This mistake is, in my opinion, the biggest one.

Don’t purchase a home you won’t be able to afford. In some cases, banks approved their borrowers for large amounts of money – for example, $500,000. Of course they will, after all, they will charge you handsomely for using their money.

Not only a larger loan will increase significantly the monthly payment but also will incur all sorts of nasty expenses. What about the taxes you have to pay for the property?

The higher its value, the more you need to pay.

If you push yourselves to your financial limit, you won’t be able to maneuver easily. And should an extra expense occur, you will be overburdened by your mortgage payment. Perhaps, you will have some health issues, or your income will decrease. You can use a maximum mortgage calculator to get an initial estimation – but my advice is not taking the maximum you can, but a  bit smaller amount.

Maybe you are single and planning to start a family? These all some room for improvisation.

Mistake 3: Lack of Basic Knowledge

I know, I know. No one teaches us those things. No one cares how we actually cope with real life. Life, people say, is also the best teacher. And if you don’t know simple things and terms, then the problem is yours. Many people have no idea what an FHA loan is and how it actually works.

Zillow research has shown that 42% of potential home buyers don’t know that it’s not necessary to be a first-time buyer to take out an FHA loan.

If you have done some research and chose a specific lender, don’t hesitate to ask the right questions. Most probably a third-party will participate in the process. It could be an attorney or a real estate agent. They should also be well-versed in loans and mortgages.

Mistake 4: Focus Only The Interest Rate

This is closely related to the previous tremendous mistake. When people don’t have basic knowledge, they tend to focus only on one part of the problem.

Most borrowers are only fixated on the interest rate their mortgage will have. Well, that’s totally alright, but don’t waste your time waiting for rates to drop to 0%. This is not happening anytime soon. Most probably, in the meantime, you will miss on some good offers and deals.

Don’t be focused on the interest rate that much. Most probably 0.3% will not have such an impact on the monthly payment. Ask yourself a question.

If 0.3% bother you and you feel like it’s too costly, do you think you can handle a long-term loan such as a mortgage?

You can instead lock in your rate before closing. Follow the next paragraph and find out why.

Mistake 5: Forget to Lock in the Interest Rate

In the previous mistake, we mentioned locking the rate. What is this and why is it important?

Before you sign all the documents and the property is yours, you can choose whether to lock in your rate or no. This is entirely your decision! This is something you have to specifically agree on with your bank before closing.

My advice is: don’t forget to lock in the rate!

All in all, this is an agreement in which the lender agrees to keep interest rate unchanged for a specific period – from several days up to three months before the closing date. If you forget to do so, or deliberately skip this part, the chances are high rates will go up.

For instance , at the time you fill in your mortgage application, the rate is 5.5%, but you don’t lock it in. Then, a few weeks later, the rate rises to 6.5%. This means that your mortgage will have a 6.5% rate during the whole term.

Sometimes, borrowers have the option to extend the rate lock period should it end. Keep in mind that usually, banks charge buyers for that.

Mistake 6: Higher Costs Than Initially Expected

Take a deep breath and be ready for the next portion of warnings.

When you purchase a home, it means you become an owner. That being said, your property will generate expenses. First of all, you have to pay property taxes. The amount you owe depends on various factors: type of property, value, location, etc. In spite of you can enjoy significant tax breaks, taxes are something you simply cannot avoid.

Another cost which may surprise you is the maintenance cost. The biggest the house, the more you can expect. As time passes by, you will most probably need to make some repairs. This will also come from your pocket.

Mistake 7: Not Saving Enough For Down Payment

Down payment usually sends shivers down the spine. This is the so-called upfront fee and most lenders want at least 20%. This means that you are a reliable person. What’s more, larger down payment means better terms and vice versa.

One of the most annoying things is Private Mortgage Insurance. If you don’t have the desired 20%, the lender protects themselves by imposing a mandatory insurance on the property (But still there are some great ways to avoid the PMI). This amount will be part of the monthly payment.

However, you should know that this insurance protects the lender not you. If you stop paying or go bankrupt, this insurance will help your bank restore some of their money.

How much is PMI?

Well, it depends a lot, but the main factors are of course your credit score (See how your score is calculated) and the down payment. The lower the score and down payment, the riskier you are as a client. Therefore, you will have to pay higher insurance. On average, it’s approximately 1% of the loan.

Mistake 8: Not Check Credit Reports

As a borrower, you have the right to receive annually a free credit report. There are three major credit bureaus and they are Equifax, Experian and TransUnion.

What do they contain?

Credit reports contain lots of information you can use. Of course, you can find some personal details. There you will also see your employer’s details as well as information regarding revolving accounts, loans, account history. In there, you’ will also be able to see your recent applications and any public records (bankruptcy, etc.)

Occasionally people find mistakes in their reports. You have the right to contact your lender and dispute the errors.

I recommend you check your reports before applying for a mortgage. Even small mistakes can lead to a lower credit score. This, on the other hand, might lead to a rejection of your application.

If you do that several months in advance, you will be able to fix those mistakes and also improve your credit score. The higher, the better for you.

Bottom Line

These 8 mistakes are very common among first-time buyers due to their lack of experience.

They are not ordered from the most important to the least. Each and every one of them is crucial and avoiding them will do you good. In fact, this might decide whether your bank approves or declines your application.

The post Biggest 8 Mortgage Mistakes To Avoid When Buying A Home appeared first on The Smart Investor.

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Buying a new home is always an exciting step, but also very stressful - it's probably the biggest amount you have ever spent in your life. So how should you deal with it? In this article, I will be showing the main mistakes people make when choosing an... Buying a new home is always an exciting step, but also very stressful - it's probably the biggest amount you have ever spent in your life. So how should you deal with it? In this article, I will be showing the main mistakes people make when choosing and managing a home loan. Also, you will find some advice on how you can maneuver through… The Smart Investor yes 8:48
Money Market Accounts As An Investment – How It Works, Pros And Cons https://infoforinvestors.com/personal-finance/saving/money-market-accounts/ Mon, 30 Jul 2018 21:33:51 +0000 https://infoforinvestors.com/?p=2973 https://infoforinvestors.com/personal-finance/saving/money-market-accounts/#respond https://infoforinvestors.com/personal-finance/saving/money-market-accounts/feed/ 0 <p>Money market account are offered by banks and credit unions and are very similar to deposits and savings accounts. However, they provide investors with higher interest rates, therefore you can generate higher yields.This article will show you how these accounts work, what their pros and cons are, how to manage them as well as some other important things to know. Let’s get straight to business.</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/personal-finance/saving/money-market-accounts/">Money Market Accounts As An Investment – How It Works, Pros And Cons</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Many people wonder what to do with the money they have put aside:

Invest it or keep on saving it?

However – we can always do both by putting the extra cash into a money market account (MMA).

These accounts are offered by banks and credit unions and are very similar to deposits and savings accounts. However, they provide investors with higher interest rates, therefore you can generate higher yields.

This article will show you how these accounts work, what their pros and cons are, how to manage them as well as some other important things to know. Let’s get straight to business.

How Do They Work

As mentioned in the intro, their mechanism is very similar to one of savings accounts.

MMAs tend to offer higher interest rates than savings accounts. This means that the more money you put, the more you will earn. Money market accounts work as the following:

  • First, you set up an account at a bank or another financial institution
  • The bank will pay you interest because you have put your money into their account; they are paying you for using your cash. The bank, consequently, will lend this money to people at an interest rate.
  • You can withdraw your money whenever you want (check the section “How to manage an MMA” for more details on that)
  • The bank pays you a compound interest (more details in the section “How is interest calculated)

The Pros and Cons of Money Market Accounts

Advantages of Money Market Accounts

Let’s begin with the benefits MMAs offer:

Higher Interest Rates,  Higher Yields

Money market accounts tend to pay higher interest rates than other similar accounts.

In addition, the rate they offer is compound, which means that the more your balance grows, the more money the bank will pay you.

Safe Investments

These accounts are considered safe and low-risk investments since they are protected by the US government.

  • If you have a bank account, it will be insured by the Federal Deposit Insurance Corporation (FDIC), which means that even if the bank goes bankrupt, your money will be restored to you. There is a limit, though– $250,000. If you exceed this limit, the money above the mark will not be insured.
  • If you have a credit union account, it will be insured by the National Credit Union Administration (NCUA), which just like the FDIC is a government agency.

Accessible

For many people, easy access to their money is very important, understandably. You can easily withdraw money from cash machines or write checks and make transactions.

Keep in mind that there is a limit on these operations.

Disadvantages of Money Market Accounts

Everything has its drawback including money market accounts.

Higher Minimum Balance Requirement

MMAs usually have higher minimum balance requirements. This is the minimum amount of money your bank wants you to have in the account. They usually range between $1000 and $2,500.

For instance, Bank of America requires $2,500. If you fail to meet that requirement, you will be fined. In comparison, most savings accounts are free of charge with regard to this requirement.

Limited Number Of Withdrawals

The number of withdrawals you can make is fixed. If you exceed this number, you will have to pay a fee. Sometimes the fees are higher than the interest you have generated on your money.

Relatively Low-Interest Rate

Compared to savings accounts, the interest is higher but compared to other investments, say bonds, the interest rate is significantly lower.

For instance, the average return from investments in the stock market is 10%. A money market account can generate approximately 6% a year. In the long run, this difference can be crucial.

Inflation Risk

Inflation always poses a serious risk to investments that generate lower interest rates.

Basically, inflation decreases the value of money in the future. In 1999 $2,000 was different than $2,000 now. For instance, your MMA has an annual interest rate of 2.5%, but at the same time inflation in the country is $3.4.

Transaction Limits

Even though you can access your money in the account, there will be a limit. By law, you cannot make more than 6 payments a month using your MMA. Bear in mind that this number might be even lower depending on your bank (union). Definitely, you will not have the flexibility you can have using a checkbook or a debit card.

How is the Interest Calculated in MMAs

As I explained earlier, the interest an MMA pays is compound. Your bank will compute it every day and distribute monthly.

Compound interest is the money a bank (credit union) will pay you on the original amount of money as well as on the interest you have earned. For instance, if you put $5000 in a money market account at 6% annual interest rate, for the first month, the interest you earn will be $25. 5000×6%=25.

For the next month, however, the interest will be calculated on $5,025. You can see how your money grows exponentially, and the amount of interest grows by the day. This is particularly lucrative if you put large amounts of money into the account.

Example

If you put $100,000 in a money market account for ten years at 5%, the whole value which you will receive at the end of the term will be $164,000. This is quite impressive, isn’t it?

money market account pros cons

How To Manage Money Market Account

As you already know, as most savings accounts, you can withdraw money at all times. However, if you exceed the number of “free” withdrawals, you will have to pay a fee. So, be careful and know how many times you can withdraw money. Usually, for each withdrawal above the permitted number, you will pay a fee of $10 (depends on the bank, though).

In addition, there are some fees you owe in case you don’t have the minim required balance in your account. Again, depending on the issuer, you will have to pay a fee of between $5 and $10.

Before you purchase a money market account, compare different banks and offers for the best terms for you and read the fine print.

When you set up an MMA, the bank will give you a register. This is something like a diary, where you will record all your transactions, withdrawal, balances, pretty much everything. You can use your register to track your money and know what’s happening.

In addition to that, your bank will send you monthly a statement of your account. This statement will show you your balance during the month, the transactions you have made and the interest you have earned.

If you want to make sure everything runs smoothly (yes, banks make mistakes!), you have to “reconcile”. This is a process of comparing the data in your register with the data on your monthly statement. If there is a mistake, try to correct. Either you or your bank has made a mistake.

Money Market Account vs Money Market Funds

These two things are commonly mistaken and confuse people. Let me compare them.

To begin with, an MMA is a savings account as you already know while a money market fund is a type of mutual fund. The latter is an investment in a fund, not an account at a bank. Therefore, you will not have an FDIC or NCUA protection.

It’s good to mention that MMFs (just like other mutual funds) might invest in a variety of assets, including government bonds. Having said that, including the fact the government doesn’t protect them, MMFs carry greater risks. Money market funds offer a greater variety than MMAs, and also can have some tax benefits.

Both MMFs and MMAs depend on various factors, including inflation or recession. The latter affected both negatively. The recession did not hit money market accounts as badly as it did money market funds.

Who Can Benefit From an MMA?

Having discussed all the pros and cons as well as the way MMAs function, let’s mention who these investments are most suitable for:

  • Investors who have spare money and want to play it safe and secure
  • People who want to have easy access to their savings
  • Investors who can afford to keep the minimum required balance
  • You are a person who doesn’t need to write too many checks from their MMA
  • You have a money market account in the same bank where you keep other accounts. This will make the process of making transactions very fast and very easy.

Bottom Line

Money market accounts are very simple and easy to handle investment opportunity. Even though they have some drawbacks, it’s safe to say that the offer some great perks.

The post Money Market Accounts As An Investment – How It Works, Pros And Cons appeared first on The Smart Investor.

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Money market account are offered by banks and credit unions and are very similar to deposits and savings accounts. However, they provide investors with higher interest rates, therefore you can generate higher yields. Money market account are offered by banks and credit unions and are very similar to deposits and savings accounts. However, they provide investors with higher interest rates, therefore you can generate higher yields.This article will show you how these accounts work, what their pros and cons are, how to manage them as well as some other important things to know. Let’s get straight to business. The Smart Investor yes 9:11
8 Top Financial Ratios Every Investor Should Understand And Start Using Them https://infoforinvestors.com/academy/beginners/financial-ratios/ Fri, 27 Jul 2018 17:41:41 +0000 https://infoforinvestors.com/?p=2960 https://infoforinvestors.com/academy/beginners/financial-ratios/#respond https://infoforinvestors.com/academy/beginners/financial-ratios/feed/ 0 <p>Here we are not talking about math, we are talking about practical tools that will help you understand the broader picture. Moreover, they will help you make sense of the information that comes with investing as well as make informed and justified choices. Consequently, this will improve your performance and results. This article will be dealing with the main investment ratios, and it will provide the most useful information about them. </p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/beginners/financial-ratios/">8 Top Financial Ratios Every Investor Should Understand And Start Using Them</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

If you are here, then most probably you want to become a better investor.

That’s almost impossible if you don’t start using ratios and other financial indicators in your business. I agree that mathematics is a tough nut to crack and most people don’t like the endless and insoluble equations.

Here we are not talking about math, we are talking about practical tools that will help you understand the broader picture. Moreover, they will help you make sense of the information that comes with investing as well as make informed and justified choices. Consequently, this will improve your performance and results.

This article will be dealing with the main investment ratios, and it will provide the most useful information about them. You will also learn how and when these ratios should be implemented. Let’s get started, shall we?

Why Are Financial Ratios So Important?

If you are an investor, you know how important analysis is. Analysis cannot be conducted without the necessary tools, in our case ratios. By using them, you will be able to pick out the best assets to invest in, measure their profitability, efficiency and effectiveness.

Furthermore, they will help you evaluate the company whose assets you want to purchase. They will indicate how much the potential profit is as well as determine your risk strategy.

The Most Important Investment Ratios

There are a large number of indicators used in trading and investing. In this article, I will only discuss the most important ones and the easiest to understand. They are Earnings Per Share, Price-Earnings Ratio, Dividend Yield, Debt-To-Equity Ratio, Return On Equity, Current Ratio, Profit Margin and Price-To-Book Ratio.

1. Earnings Per Share (EPS)

I start with this one since it will be hard for you to understand the following one and calculate it. Simply said, this ratio shows how much money earns a single share of a given company.

Now, let’s be more precise. EPS shows the net income that a company’s common stock has generated over the past one year. Please note that preferred shares are not included. Also, the number of common stock may and will change during the year. However, the official website of the company will give you very accurate and precise information.

Formula: EPS=Net income/Average Outstanding Shares

For example, a company has generated net earnings of $1000 and has 50 shares. The EPS is 20 (1000/50).

2. Price-Earnings Ratio (P/E)

Price to Earnings Ratio is one of the most commonly used tools in financial matters. In a nutshell, this number shows you how the price of a stock compares to its earnings. Or in other words, we can assume that this ratio shows how much the market will pay for the company’s earnings. We calculate it by dividing the price of a stock by its earnings per share:

Formula: Price per share/Earnings per share=P/E Ratio

For example, you are considering an investment in a company whose shares are $20 and the EPS is 5. We divide $20 by five and the result is 4. The P/E ratio is 4.

There is no rule of a thumb, but according to most experts, the lower the P/E ratio, the better. A high P/E ratio might indicate that a company is overpriced. In order to use it successfully, you always need to understand the broader economic picture.

If you want to buy individual stocks, compare the current P/E with the average P/E over a period of time. Also, use in your comparison other stocks. If the P/E is lower than the average, then most probably this stock is underpriced and has a potential for growth.

3. Dividend Yield

If a company has generated some profit, it distributes part of it to its shareholders in the form of dividends. If the board of directors decides to give $3 per each share, and you have 1000 shares, then you will receive $3000 dividend.

People use this ratio to compare different stocks that pay a dividend. You can also use it to compare stocks to bonds as well as other financial instruments, such as money market accounts, certificate of deposits and others.

The dividend yield is expressed as an annual percentage.

In order to calculate it, you need to know a company’s annual cash dividend per share as well as the current price of the stock. You have to take the dividend per share and divide it by the price per share.

Formula: Dividend Yield= Dividend Per Share/Price Per Share

For instance, company X has annual dividend per share of $3 and the price of this share is $10. The result is 0,3 (3/10), which means 30% Dividend Yield.

4. Debt-to-Equity Ratio (D/E Ratio)

This is yet another very important measure.

Simply put, this ratio shows the total debt of a company compared to its net worth. Therefore, you need to know two things when computing this ratio: total debt of the company and total shareholder equity. It will show the percentage of “leverage” a company has used. You can find the above-mentioned information on the balance sheet.

Formula: D/E Ratio = Total Debt/Total Shareholder Equity

For example, a company has listed for 2017 total liabilities of $45 million and shareholder equity of $11 million. The result it 45/11=4.09 which is 409%.

The lower the ratio, the better. Investors should consider carefully companies with a D/E Ratio above 50%.

5. Return On Equity (ROE)

This ratio shows how efficient a company is when it comes to making a profit. The efficiency is measured by the invested funds. For this tool, we take the net income of a company and divide it by the average shareholder equity.

Formula: ROE= Net Profit/ Average Shareholder Equity

For instance, a company has generated $3 million net income for 2015 and has $5 million in shareholder equity. The result is 0.6 (3 million/5 million), therefore 60% return on equity. The basic rule is – the higher the percentage, the better.

Keep in mind:

You have to use this ratio only for companies that produce profits. This tool is not relevant for comparing companies which do not generate income. If you compare individual stocks using the ROE ratio, the general rule is the higher, the better. Higher ROE might be a sign that a stock can generate more profit in the future.

6. Current Ratio

Yet another financial tool that proves how strong and sound financially a company is. If we have to be precise, this ratio assesses a company’s liquidity. In order to calculate this measure, you need to know two things. The first one is the company’s current assets, and the second is the company’s current liabilities.

Formula: Current Ratio = Current Assets/Current Liabilities.

For instance, a company has $300 million in total current assets while its total liabilities are worth $100 million. The result is 3 (300 million/100 million), which is your Current Ratio.

The idea of using this tool is to make sure a company’s current assets would be able to pay off its debt. Most experts think that a ratio above 1 is a good sign – a company’s assets can pay off its liabilities. On the other hand, a Current Ratio below 1 might mean the company is not financially sound.

7. Profit Margin

Profit Margin is a ratio that shows how a company’s profit compares to its revenues. As most of the other ratios, we express this one as a percentage. Simply said, it might be indicative of how the company spends its profit. How do you calculate it? You have to take a company’s net income and divide it by its revenue (or sales).

Formula: Profit Margin= Net Profit/ Revenue

There are two types of Profit Margin in which you have to choose two different numbers. The first one is Gross Profit Margin, which uses the gross profit (revenue minus costs of revenue). The second one is the Operating Profit Margin, which uses the gross profit minus overhead items.

As a rule, the higher the profit margin, the better the company spends its income. Keep in mind that this measure can vary a lot from sector to sector. When you use it in your analysis, it’s better to compare companies within the same industry.

8. Price-To-Book Ratio (P/B ratio)

Also known as a market-to-book ratio, this financial measure compares a company’s current market price to its book value.

A book value is the value of an asset that is entered in a company’s books. You can find the P/B ratio by knowing two things: market capitalization and book value.

Formula: P/B Ratio = Market Cap/ Book Value

Most people use this tool to find investments which the market has overlooked but have huge potential in the long run.

However, this is not always the case. Indeed, a P/B less than one is a sign that the price is lower than the book value. This can mean also that a company’s performance is very poor and the market reacts adequately to this.

Final Words

In my opinion, using ratios and financial tools in your job as an investor is crucial.

Knowing the basic ratios can help you analyze better and make long-term investments. The above-listed 8 ratios are perhaps the most common and important. Take a look at them, understand their mechanism and make wiser financial decisions.

The post 8 Top Financial Ratios Every Investor Should Understand And Start Using Them appeared first on The Smart Investor.

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Here we are not talking about math, we are talking about practical tools that will help you understand the broader picture. Moreover, they will help you make sense of the information that comes with investing as well as make informed and justified choi... Here we are not talking about math, we are talking about practical tools that will help you understand the broader picture. Moreover, they will help you make sense of the information that comes with investing as well as make informed and justified choices. Consequently, this will improve your performance and results. This article will be dealing with the main investment ratios, and it will provide the most useful information about them. The Smart Investor yes 9:47
How to Build a Successful Trading Strategy https://infoforinvestors.com/academy/beginners/build-a-trading-strategy/ Tue, 24 Jul 2018 20:23:50 +0000 https://infoforinvestors.com/?p=1987 https://infoforinvestors.com/academy/beginners/build-a-trading-strategy/#respond https://infoforinvestors.com/academy/beginners/build-a-trading-strategy/feed/ 0 <p>There are many components that compose a good trading strategy; however, there are two key steps that any successful trading plan needs to follow. It’s absolutely critical when it comes to creating your own trading strategy to first make sure your winners are larger than your losers [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/beginners/build-a-trading-strategy/">How to Build a Successful Trading Strategy</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Trading is a risky business.

Even before you begin your adventure into the world of stock trading, you need to have a trading strategy, which is essential for your long-term survival in this space.

There are many components that compose a good trading strategy; however, there are two key steps that any successful trading plan needs to follow. It’s absolutely critical when it comes to creating your own trading strategy to first make sure your winners are larger than your losers and secondly to implement sound risk management strategies.

Moving forward, we’re going to explore what ingredients are needed to build your step-by-step trading strategy.

Why Have a Trading Strategy?

First and foremost, it helps you monitor your trades. If you don’t have a system behind your trade it will become very difficult to find new trading opportunities and respond to the new market conditions once you have the trade on.

Developing a successful trading strategy will also introduce consistency because if you already know systematically what you’re looking for, it will improve your ability to spot trading opportunities.

Essentials of a Trading Strategy

The essential components of a good trading strategy are comprised of four basic elements:

  • Developing directional bias, qualify the entry
  • Determining stop-loss and take-profit targets
  • Define your preferred time frame
  • Utilize risk management

Establishing a directional bias is simply a matter of deciding whether you think the stock is going up or if you think the stock is going down.

Basically, developing a directional bias will assist you in determining the trend direction and whether you’re going to buy or you’re going to sell.

The process of establishing a directional bias can be broken down into two components:

  • Predicting where the stock price is more likely to go: up or down
  • Trading rules that validate your directional bias

establishing a directional bias for Apple stock

To qualify your entry you have two alternatives:

  • Fundamental analysis
  • Technical analysis.

When trading stocks, it’s also recommended to understand the actual fundamentals of the trade that you’re doing even if you’re trading solely based on technical. You only need to know what fundamentals are currently affecting your stock.

For example, you need to know the dividend dates because it can really affect the stock in a big way and you can take advantage of it by using your technical skills.

As far as technical analysis goes you need to establish your key technical levels and then you look for price to either break them or bounce. There are many technical patterns we have already reviewed such as MACD, RSI, Bollinger bands, Fibonacci, moving averages and more – all of them can be relevant and determine whether you’re going to go long or short.

1. Determining Stop Loss and Take Profit Targets

Determining your stop loss and potential profit target is one of those things you need to establish, right before you ever place a trade. This is going to be absolutely critical to establish if the trade is making sense from a risk-reward perspective.

By having a protective stop loss established you’re going to minimize your losses. You’re going to know in advance how much you’re going to lose if you’re wrong on the trade.

You also have to set realistic profit targets and your price actin reading skills can be very handy in helping you pick pragmatic profit levels.

2. Define your Preferred Time Frame

There is no right or wrong time frame to trade as it really depends on your personality. If you need to be in control of your trades and can’t endure any drawdowns when in a trade or you want to cash in quick profits then the lower intraday charts can work best for your situation.

If you have a day job it will be quite hard to focus on the intraday time frames like the 5 minutes, 15-minutes or the 1 hour time chart. However, the good news is that stock trading is most suitable for long-term investing having a time horizon from 1 to 3 years.

There are no magic techniques or secrets picking the perfect time frame; this is something that you’ll have to decide for yourself.

3. Risk Management Strategy

Risk management is by far the most important aspect of your stock trading strategy. You’ll have to stick to very strict money management parameters if you want to be a successful trader and develop a winning stock trading strategy.

Make sure your risk is at least half the reward or in other words your potential profit is twice as big as your potential loss. The higher the risk to reward ratio you have, the better. You’ll still be profitable even if your strategy only generates winners less than 50% of the time.

The 2% money management rule is a well-known strategy. It states that you should never risk more than 2% of your account balance on a single trade. The 2% rule not only that will make your losses more manageable, but it can also remove the chances of losing your entire account balance.

For example:

Let’s assume you have $25,000 in your trading account. If you only bet 2% of your equity on a particular trade that has a risk to reward ratio of 1:3 then your potential loss on this trade is only $500 while your potential profit is $1,500.

The goal of trading is to make money and a sound risk management strategy can help you achieve that goal.

Conclusion

It is absolutely critical when determining your trading strategy to understand your own personality. Why? because your personality is going to be intimately tied to your strategy. No two traders are the same. One person can be more successful as an active stock trader and others are a lot more successful as a long-term trader.

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions.

The post How to Build a Successful Trading Strategy appeared first on The Smart Investor.

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There are many components that compose a good trading strategy; however, there are two key steps that any successful trading plan needs to follow. It’s absolutely critical when it comes to creating your own trading strategy to first make sure your winn... There are many components that compose a good trading strategy; however, there are two key steps that any successful trading plan needs to follow. It’s absolutely critical when it comes to creating your own trading strategy to first make sure your winners are larger than your losers [...] The Smart Investor yes 5:42
The Pros And Cons Of FHA Loans https://infoforinvestors.com/home-buying/guides/pros-cons-fha-loans/ Sun, 08 Jul 2018 16:13:28 +0000 https://www.infoforinvestors.com/?p=2709 https://infoforinvestors.com/home-buying/guides/pros-cons-fha-loans/#respond https://infoforinvestors.com/home-buying/guides/pros-cons-fha-loans/feed/ 0 <p>One of the benefits that the Federal Housing Administration offers is a special loan for low-income earners or the moderate families.  Borrowers who may have too many outstanding debts can try applying for an FHA loan. The Federal Housing Administration is an agency that aims to help people with low-income or moderate families get their own homes.  Any borrower should compare an FHA loan[...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/home-buying/guides/pros-cons-fha-loans/">The Pros And Cons Of FHA Loans</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Considering FHA loan?

Actually, one of the benefits that the Federal Housing Administration offers is a special loan for low-income earners or moderate families.

Borrowers who may have too many outstanding debts can try applying for an FHA loan. The Federal Housing Administration is an agency that aims to help people with low-income or moderate families get their own homes.  Any borrower should compare an FHA loan to any other type of mortgage to see which one is better for his needs.  Offhand, FHA loans are affordable and easy to qualify for.  These, plus some other factors, make them a favorite first option for many borrowers.

Not Only For Low Income

Although low-income families are the target market of these loans, those outside the bracket may still take advantage of this opportunity.

It is important to note that FHA loans are not the most superior or perfect loan packages out there.  However, as we go along, you may realize that they are exactly what will fit some of your requirements. And if you set aside other factors, ultimately, you will realize that it makes it a lot easier for you to acquire a property.

What Is The FHA?

The Federal Housing Administration is a government agency within the U.S. Department of Housing and Urban Development (HUD).

In reality, it does not give out loans – it only mediates between the buyer and the lender.  To be more precise, the FHA is an insurer for the entire process.  It protects the lenders against future defaults of the borrowers on their mortgages.  Therefore, FHA is very strict when it comes to approving lenders.  Since its creation in 1934, it has gained steady popularity among young families who are aspiring to buy their first home.  Compared with conventional loans, they find that the conditions of their mortgages are not as burdensome and much lighter.

If a borrower wants to take out an FHA loan, he can only borrow from a list of FHA-accredited lenders.

However, it doesn’t mean that all the lenders on the list charge the same fees or require the same conditions.  They still vary from lender-to-lender, so borrowers must do their own comparison.

How Do FHA Loans Work?

The FHA guarantees to pay the lenders in case the original borrower defaults on his FHA loan. To be able to have funds to service this obligation, the FHA collects fees from borrowers. Homebuyers who avail of an FHA loan must pay upfront a Mortgage Insurance Premium of 1.75%.  They must also pay a modest monthly ongoing fee as they make their regular payment.

Should a borrower defaults on an FHA loan, the agency uses these accumulated premiums to pay off the lender.
how FHA loans work

Advantages Of FHA Loans

FHA loans are not the perfect loans but they are the best fit for some situations.  The main benefit is the ease it provides in getting a new property – but as we have mentioned, there are also trade-offs.

Here are some of its most enticing features:

Lower Down Payment

Most traditional loans will require a borrower to put up around 5 to 20 percent down payments.

while FHA loans allow for as low as 3.5%.  Other loan programs would require a large down payment, making it too difficult for an ordinary borrower.  However, if you have the money, it is generally better in the long run to make a large down payment.

Low down payments enable people to get their homes faster so they can start building their equity earlier.

Better Interest Rates

FHA loans carry a uniform interest rate for all borrowers so it doesn’t discriminate against borrowers with credit issues.

Any borrower who qualifies for a loan will get the current interest rate – which is actually very competitive.  It’s normally within 0.5 percent of conventional rates applied to well-qualified borrowers.  They benefit credit-challenged buyers who will not get the same rates from conventional loans, more so if there is an upward rate adjustment for risk.

Higher Debt Ratios

Even with a high total monthly debt, you can still qualify for an FHA loan.

This may not be true for conventional loans. Most conventional loans only allow up to 28% of your monthly gross for house payments – FHA allows up to 31%.  For other loans, the total fixed debt payment must be below 36% of the monthly income.

For FHA, you can have a ratio of 43% and still qualify.  These ratios are as of January 2018 which you can find from the agency’s website at www.fha.com.

Liberal Credit History

FHA does not require a minimum credit score.

Borrowers can qualify with little or no credit history as long as there is no negative credit history on their report.

For those with credit, they only need to show one year of clean credit history to qualify.  Borrowers can qualify for an FHA loan in as short as after two years of bankruptcy or three years after a foreclosure.  Of course, they should show clean credit within those periods.

Conventional loans require clean credit for two years and a minimum of four years after foreclosure or bankruptcy.

Higher Seller Contributions

Compared to conventional loans, there is a higher seller contribution to FHA loans.

It’s 6 percent versus 3 percent – or double the requirement.  This means that the borrower can negotiate with the seller to pay a big chunk of the closing cost. They may not cover the entire amount, but that is a good reduction to a borrower’s out-of-pocket expenses.  A borrower may even ask the seller to buy down the interest rate of the loan.  This will enable the borrower to pay a percentage of the loan amount upfront to ‘buy down’ the interest rate to a lower one.

Disadvantages Of An FHA Loan For Home Buyers

We’ve talked about the upside.  Now let’s look at three disadvantages of an FHA loan.  Here they are:

Mortgage Insurance Premium (MIP)

Easily, this is the biggest downside of the FHA program. A borrower from this type of home loan has to have mortgage insurance.  The Department of Housing and Urban Development (HUD) have set this as a requirement to protect lenders in case of borrower’s default.  The HUD technically acts as the manager of the FHA housing loan program.

FHA Loan borrowers must pay these two mortgage insurance premiums:

  • First is an upfront mortgage insurance premium (MIP).  This is equal to 1.75% of the base amount of the loan.
  • Second is the annual premium, which can vary from loan to loan.  Most FHA borrowers pay around 0.85% of the base amount.

The borrower can roll these premiums into the loan.  It reduces their out-of-pocket costs but inflates the monthly payment and the total loan over time.

There is really no escaping for an FHA loan borrower from this first disadvantage.  Conventional loan borrowers can put up at least 20% down payment and avoid paying for mortgage insurance.

Borrowers May Encounter Some Property Restrictions

HUD manages the program and it has some specific rules on what types of property a borrower can purchase.

For example, purchasing a vacation home via an FHA loan is out of the picture because the guidelines do not allow it.  The appraisal process is also very strict.  An HUD-approved appraiser actually visits the property to ensure it meets all the program requirements, particularly on safety issues.

HUD also has some distinct guidelines about condominiums.  In fact, not very many condominiums precisely meet the FHA approval standards.  For borrowers who are planning to purchase a condominium unit with an FHA loan, they must choose a project on the HUD’s approved condo list.  This list is available on the FHA website.  We will discuss more about condominium purchases in a different article.

Some Seller Keeps Away From FHA Loans

Another disadvantage is that many sellers so not want to deal with borrowers who will use an FHA loan.

This is particularly common in hot real estate markets because sellers prefer more competing offers, which are abundant.  This could be the result of poor advice – or more accurately, bad advice – from real estate listing agents (See how to find a good real estate agent).

Some agents drive their clients away from FHA borrowers in favor of conventional mortgages.  The main reason would be the appraisal process we mentioned earlier.  They think (although inaccurately), that the seller will undergo a strict and inconvenient appraisal process when they work with an FHA buyer.

In the past, it was the practice of borrowers to require sellers to pay some of the closing costs, in case of FHA loans.  Times have changed though, and this rule has gone through some revisions.  Today, buyers can cover their own closing costs, especially when the seller successfully negotiates it that way.

personal loans pros cons

Summary

FHA loans are perhaps the easiest to qualify for.  However, are they the best ones in the market?

The answer would depend on the borrower’s personal situation.  FHA loans are good for new homeowners and those who cannot afford the large down payment for conventional loans.  They are also suitable for people with no credit history or with low credit scores.  For those who have the capacity to make a larger down payment, we suggest they go for conventional loans.  They will pay less interest and less mortgage insurance (if at all).  Eventually, this will result to more savings in the long run.

The post The Pros And Cons Of FHA Loans appeared first on The Smart Investor.

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One of the benefits that the Federal Housing Administration offers is a special loan for low-income earners or the moderate families.  Borrowers who may have too many outstanding debts can try applying for an FHA loan. One of the benefits that the Federal Housing Administration offers is a special loan for low-income earners or the moderate families.  Borrowers who may have too many outstanding debts can try applying for an FHA loan. The Federal Housing Administration is an agency that aims to help people with low-income or moderate families get their own homes.  Any borrower should compare an FHA loan[...] The Smart Investor yes 9:10
The Factors You Must Consider When You Buy A Life Insurance https://infoforinvestors.com/personal-finance/life-insurance/factors-to-consider-life-insurance/ Mon, 02 Jul 2018 15:22:22 +0000 https://www.infoforinvestors.com/?p=2704 https://infoforinvestors.com/personal-finance/life-insurance/factors-to-consider-life-insurance/#respond https://infoforinvestors.com/personal-finance/life-insurance/factors-to-consider-life-insurance/feed/ 0 <p>The available choices for life insurance can be overwhelming and may seem daunting for a layman to even begin to</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/personal-finance/life-insurance/factors-to-consider-life-insurance/">The Factors You Must Consider When You Buy A Life Insurance</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> The available choices for life insurance can be overwhelming and may seem daunting for a layman to even begin to understand.  It’s difficult to know exactly where to start.

You should start with a basic but far-reaching question:  “Do you need life insurance at all?”  Your intelligent answer to this question will help you decide what type of life insurance to buy.  That is, assuming you do need one.

So, in case you decide you really need a life insurance, the next step is to learn about the different types of policies. This is important because you want to buy the right kind and type of insurance policy that will suit your needs.  In the United States, there are hundreds of insurers that provide a life insurance.

Do You Really Need Life Insurance?

Your life insurance needs vary according to your personal situation and the situation of the people who depend on you.

If you’re alone and have no dependents, you probably don’t need a life insurance. Also, if you don’t generate a substantial part of your family income, you may or may not need life insurance.

If your salary contributes significantly to support the family, pay off a mortgage or other recurring bills, you should consider getting a life insurance.  It could be a way to cover big financial obligations – like sending the kids to college – in the event of your death.

Here are the important factors you should consider when buying a life insurance:

How Much Life Insurance Do You Need?

Honestly, there’s no exact rule of thumb to follow to determine how much insurance you need.  It would depend on a lot of factors such as your income, the number of your dependents, your debts and your general lifestyle.

However, there’s a conservative guideline that may prove helpful to help you decide.  Consider getting a policy equal to five to ten times your annual salary at the end of your estimated life expectancy.  An insurance agent would be able to compute your general life expectancy based on your lifestyle and health habits and answer any other questions.

Better yet, sit down with a financial planning professional to determine how much life insurance you actually need.

Individual vs. Group Life insurance

Many people can get group life insurance through their employer.  A group life insurance is a single policy covering all employees that meet certain criteria, regardless of their health condition.

It has two main advantages over individual insurance. First, it is generally cheaper because of the rule of economies of scale. Second, there is no need for a medical examination, which is great for those with pre-existing medical condition.  For people with poor health, this may be the best way to get insurance at a reasonable cost.

However, there are two main disadvantages to group life insurance.

1. The insurer would often set a limit to the maximum amount of insurance you can get. For some, the amount of insurance may not be enough to cover their expected needs. (Read:  How much life insurance do you need?)

2. It’s only in effect as long the employer offers the benefit AND the insured continues to work there. If any of the two changes, the insurance coverage would likely cease.  Some companies will allow you to continue your coverage at your own expense but the premiums would tend to increase.  Ultimately, you are not really in control of your coverage.

These two issues are absent in an individual life insurance policy. This is a simple policy that you can personally buy in the market; it’s not dependent on any employment factor. So whether you’re employed or not, it remains in effect as long as you pay the premiums.

For me, individual life insurance is better for most young parents.  The company insurance could just be a supplement to your own individual policy since there is no prohibition on that.

In some instances, the group life insurance could be sufficient for you OR it may be the only insurance you can get.  In general, the individual policy will provide the best protection because nobody can take it away from you.

Types Of Life Insurance Policies

Life insurance policies are not always the same.

Some policies build up cash values over a long period while others cover you only for a short while. Insurance companies offer two general policies:  cash value life insurance and term life insurance. Term life insurance rates usually start out quite low.  Cash value life insurance rates start higher in the beginning of the policy.  However, a cash value life insurance offers additional benefits, such as:

  • You can borrow against your policy, that is, take out a loan. However, you must repay the loan or the company will deduct all unpaid balances and interests from the death benefits.
  • You can use the cash value to buy more insurance.
  • You can increase your retirement income with the cash value.

Cash Value Vs Term Life Insurance

Within these two basic types of life insurance reside different policy options.  Some of them are:

  • Term life insurance has limited time coverage such as 10, 15 or 20 years.  During that time, your premiums stay the same.  After the set time, the insurance may terminate or may continue.  If it does go on, the insured person usually must pay a higher rate.
  • Universal life insurance is a permanent insurance that offers flexibility to the insured.  It allows you to lower or increase your coverage and/or your insurance premiums over time.
  • Whole life insurance is another permanent insurance and provides you with lifetime coverage.  It has a fixed premium and it builds cash value.  The cash value acts like a savings account and it has a tax-deferred feature. This type of insurance is usually expensive because the companies claim their huge commissions and fees in the early years.  As a result, there’ s very little excess funds left to build up the cash value.  The companies worked these fees into the complicated investment formulas such that buyers do not see them at all.  Chunks of money from their fees actually go into the pockets of the insurance agents, unit managers and agencies.
  • Variable life policies are another form of permanent insurance you can look into.  They build up a cash reserve that you can invest in any of the choices that the insurance company offers.  The value of the cash reserves will depend on the performance of these investments – the better they do, the higher the cash reserves.

In universal life insurance, you can vary the amount of your our-of-pocket insurance premiums.  You do this by using part of your accumulated earnings to cover a portion of the insurance premiums.  You can also modify the amount of death benefit to your beneficiary.  However, this kind of flexibility is not at all without cost – you have to pay higher administrative fees.

Cash Value Vs Term Life Insurance policies

How To Choose A Life Insurance Company

When it comes to choosing an insurance company, the primary consideration is whether you trust them enough with your money.  Especially in the US where there is no social security blanket, the insurance company you choose is extremely important. After all, it will play a significant role in securing your (and your family’s) financial future and wellbeing.

So, you have to make sure that when picking an insurer, you are making the correct, informed, well-researched and prudent choice.

Here are some things to help you hunt for the most suitable company for your insurance needs:

Company Reputation as a criteria for choosing a life insurance companyCompany Reputation

Don’t get caught up in a company’s expensive and flashy marketing campaigns and advertising – be discerning.

Often, newer insurance companies spend millions to make their presence known in the market but you should check track records.  An established company that has been in business for a time is the better choice than aggressive new companies.

Financial Stability as a criteria for choosing a life insurance companyFinancial Stability

Each state has an insurance department that regulates and monitors the licensed insurance companies for financial health and compliance.  They try to prevent insurer insolvencies or the inability of the company to pay off the benefits to their customers.

Still, many insurance companies fail from time to time. So, before you buy from a company, make sure that you do an evaluation of the insurer’s financial condition.

Premium And Cost as a criteria for choosing a life insurance companyPremium And Cost

The premium is the amount you regularly pay to your insurance company for the cost of your insurance policy. You will notice that for the same death benefit and type of insurance (ex. term life), the premium will vary among different companies.  This is because some policies have features that others do not carry or because some companies just charge higher rates.

 Service Quality as a criteria for choosing a life insurance companyService Quality

Do not take this factor lightly because it is very important when it comes to insurance policies. Observe the attitude they have towards potential clients like you and how good is their customer service system.

Are they easy to contact and able to attend to your queries whether in person, over the phone or online?  Do they patiently listen to understand your financial needs or do they just seem too eager to make a sale?  Since you will have to deal with your insurer for many years, it is important to get one that treats their customers well.

The Bottom Line

The Internet is your best friend when it comes to choosing a life insurance company. You can learn the basics of insurance, find a good broker and have a professional insurance advisor evaluate the policy offers.  You can do all these with just a few clicks on your computer.

Suze Orman, a world-renown financial advisor advises that if you want insurance, buy term, if you want an investment – buy an investment. Do not buy insurance and don’t ever mix the two (See Life Insurance as an Investment).  Unless you’re a financial whiz and understands all the complexities of the various types of life insurance policies, you should stick with term life insurance.

The post The Factors You Must Consider When You Buy A Life Insurance appeared first on The Smart Investor.

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The available choices for life insurance can be overwhelming and may seem daunting for a layman to even begin to The available choices for life insurance can be overwhelming and may seem daunting for a layman to even begin to The Smart Investor yes 9:31
What Should You Do When Bear Market Starts? https://infoforinvestors.com/investing/stock-market/bear-market-reaction/ Wed, 20 Jun 2018 14:46:05 +0000 https://infoforinvestors.com/?p=1682 https://infoforinvestors.com/investing/stock-market/bear-market-reaction/#respond https://infoforinvestors.com/investing/stock-market/bear-market-reaction/feed/ 0 <p>History proves that the stock market and the economy move in continuous cycles repeatedly.  A good investor understands the different stages of the economy to guide his investment decisions. The stock market also has its own unique seasons that are popularly called the bull and the bear market [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/investing/stock-market/bear-market-reaction/">What Should You Do When Bear Market Starts?</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions.

It seems like the bear market close. Very close.

History proves that the stock market and the economy move in continuous cycles repeatedly.  A smart investor understands the different stages of the economy to guide his investment decisions. The stock market also has its own unique seasons that are popularly called the bull and the bear market.  Both of them have their own set of overtones.

A bull market is a situation in the financial market where prices of stocks are rising or are expected to rise.  This is a period when investors show huge confidence.  Strictly, a bull market happens when the rise is at least 20% as when Nasdaq climbed during the tech boom. Popularly, most investors have a much looser condition to consider it a bull market.

A bear market is quite the opposite.  It is a condition in which security prices fall and widespread pessimism fuels the market downward.  Investors normally anticipate losses and most are forced to sell off.

What Effect Has A Bear Market On My Investments?

A bear market will cause a drop in prices of the securities you already have, sometimes to a sizeable degree. The decline may be extended over a period of time or it may be abrupt.  However it decreases, the end result will be obvious – the stated value of your holdings will be lower.

Two basic principles will now come into play:

  • A bear market works against you if you plan to sell your stocks or if you need money urgently;
  • Falling stock prices and depressed markets work in favor of the long-term, value investor.

In other words, if your intention were to hold your investments for years, it would be great to buy during a bear market.  I am aghast at experts who advocate selling after the stocks have lost their value.  The best time to sell in this situation was before the prices began going down.  A true expert would have warned investors that the crash was about to happen before it actually did.

Is It Wise To Buy Now?

Bear markets actually defy logic in a sense that it accelerates investor returns over the long run.  A Wharton research supported this fact and the behavior of shares of some major oil companies.

Fundamentally, if you have a diversified basket of equities, reinvesting your dividends speeds up your returns.  It acts as a ‘total return accelerator’ and ‘bear protector’ – two descriptions coined by Wharton Professor Jeremy Siegel.  Doing this drags down the cost basis of your portfolio as a whole.  In order to reach the original cost of the investment, the quoted market value needs to increase gradually.

Let’s look at the Great Depression as an example.  If you take the stock prices as a whole, it might appear that it took 25 years to recover.  However, for an investor who held his shares, reinvested his dividends and then sat tight, results came shortly. In such case, breakeven could have happened in a few short years.

What Should You Do When Bear Market Starts?

Do And Don’t Do When Bear Market Starts

A bear market appears dreadful to many investors.  Many naturally expect that they would lose money.  However, it also creates many opportunities.  We suggest that you don’t run away from a bear market and remember the following:

Stay Calm And Avoid Panic Selling

During a bear market, many investment ‘prophets of doom’ will emerge. They will predict a stock market doomsday or a ‘financial Armageddon’.  Some will wildly advise for you to “sell everything now.”

The last thing you want to do is panic.

As in anything, panicking causes you to make ill-advised moves that could lead to catastrophic consequences.  Financial markets have no pity to those who sell early or late.  Take note that bear market losses are only ‘on paper’ unless you do actually sell.  My advice is to use your head and not your heart.  Do not sell out of fear.  In fact, to survive a real grizzly bear attack, one is supposed to play dead and lie very still.  Running away or fighting back can be very dangerous if not outright fatal.

I and other seasoned investors have the benefit of seeing it all before.  Do not panic and do not sell.  Yes, you may continue to see your holdings lose their value but panicking will never give good returns.

Stay Level Headed

Keep your emotions in check at all times.  Do not be jittery whenever stocks sell off.  Fear is your worst enemy when the bear appears while greed is your most ferocious foe in a bull market.

Think back why you invested in stocks in the first place.  If you just wanted to make a quick buck, you have most probably chosen the wrong investment channel.  If you are set on a five, ten or twenty-year term, you are okay.  You know fully well that stocks go up over time and it would be senseless to rush it.

You may also encounter a flash sale on the market. Remember that a flash sale is just a sale and there’s nothing complicated about it.  If you were buying a year ago, all you need to ask is: what has fundamentally changed about the companies in your portfolio?  If the only real change is that their prices are down, then there’s no real basis not to buy more of those stocks.  Anyway, you paid more for these same stocks twelve months before.

Make An Accounting Of Your Situation

Review your overall financial situation before making any move in or out of the market.  Make certain that your money and financial standing are as stable as possible.  See to it that you have an emergency fund of anywhere from three to six months of monthly living expenses.

Manage your debts and keep them reasonably low.  Review everything that directly impacts your finances:  your work, business, insurance, mortgages, etc.  Go through a financial check-up with your financial adviser.

Forget Being A Midas

I know people will give me flak because of this, but if you think you are a gold bug, wake up.  If gold is your protection of choice, you better rethink your strategy.

Yes, for a long time, gold has been a reliable hedge against equities. Unfortunately, it has been losing its status as the go-to sanctuary for investors when stocks start plummeting.

Let me just clear this up.  I’m not saying you should not allocate some of your portfolio to gold or gold extractors – you should, actually and we have already summarized the best ways to invest in gold.  But if you’re depending on them as a hedge against securities, you might end up disappointed.  If you really want to hedge, check out the next point.

Hedge Intelligently

The best way to protect yourself against falling stock prices is by directly hedging your positions.  I’m not talking about buying an ETF that tracks the inverse of the S&P 500.  I’m saying use option contracts for their real purpose.

Although they may sound intimidating at first, options are relatively simple.  Options are also investment vehicles and investors should take advantage of them.  They grant the right to buy or sell specific shares at a set price on or before a certain date.  The good thing is, there is no obligation to buy or sell.  The right to buy is called a call option while the right to sell is a put option.

How To Hedge Smartly

Obviously, you can hedge your position using any of the 3 options: buying puts, selling calls or by short sell a specific stock or index.

When you buy a put contract, you purchase the right to sell a specified number of shares at a set price. For instance, you have 100 shares of MSFT purchased at $75 apiece.  Purchasing a block of 100 put contracts at a $65 strike price will limit your losses for the duration of the contract. In this case, you can still sell your shares at $65 apiece even if the stock is trading for $50.  You will effectively cap your losses to only 13% plus the cost of the contract, of course.

If you sell a call contract, you sell someone the right to buy shares from you at a set price.  Here, selling translates to the possibility of immediate income.

Sticking with the scenario above, you can hedge your position by selling a call contract.  You can sell a block of 100 shares at a $90/share strike price. This way, you cap your gains to 20% but in a bear market, this will be worthless and expire.  However, when your stocks fall in price, you can still get paid.

Ask Experts

When falling markets become overwhelming, it’s time to give your Financial Advisor a call.  Your Advisor can put things into a reasonable perspective. I will say that most of these experts have “been there, done that” many times before.

Since during these times you can be emotional, I will advise you to talk to more than one expert, and even considering to use Robo advisors that neutralize any human feelings (but not sure they would be able to deal with extreme cases).  They will expectedly have a better understanding of how to deal with bears than the amateurs.

Quit Watching In Charts

Checking your trading account and watching stock charts on an hourly basis is a bad habit.  Although it is good practice to keep abreast of the developments in the companies that you own, be reasonable.  Frantically checking your balance moment-by-moment will likely confuse you more.

We all want to log in and see our bottom lines rise every day but in reality, it takes time.  Panic watching does nothing to influence your holdings and does everything to play with your emotions.

In a bear market, it is torture to obsess about your balance.  It’s the kind of behavior that magnifies the situation and leads to wrong decisions.  When you keep seeing red, it could be enough for you to just sell even when you shouldn’t.

At times, the best thing to do is a pause.  Take a breath of outside fresh air.  Enjoy your day. Smell the flowers.  Believe that the storm will pass (it always does) and then the sun will shine again.

Remember: Cash Is The King

When the bear is approaching and behind it are the dark economic clouds, look at your cash assets.  Keep them in safe, interest-bearing instruments such as bank investments, US Treasury Bills and money market funds.  Do this to safeguard your money and also earn a good return.  When stocks are falling by 10, 20 percent or more, you’re more likely to come out ahead with these vehicles.

Many ‘would be’ investors take the words of Warren Buffet, Howard Marks and the like, out of context.  They think that investing in a bear market is as simple as aggressively buying cheap stocks.  Going long in everything and anything that screens low is not the way to do it

To believe that a bear market makes investments cheap is to believe in a myth.  What a bear market actually does is to make investments mispriced.

Choose Distinctively

Let me put it this way:

In many instances, a bear market causes some good stocks to go really down.  In fact, some of the best opportunities arise from stocks that the market has unwittingly viewed negatively.  However, it is hard to identify these opportunities for the reason that it also goes the other way.  There are also many mispriced stocks whose prices have gone up due to market (mis) perception.

Nevertheless, the market is generally intelligent. For the vast majority of stocks that fell 90%, there is indeed a valid reason why they fell.  A lot of these stocks are in reality, worth nothing.

As an investor, your job is pretty straightforward:  to distinguish between mispriced stocks.

I somehow like a bear market.  It is not because it gives me the opportunity for a shotgun approach to buying everything that looks cheap.  Most of the time, this approach will have a disastrous ending.

A stock that fell 90% still has the probability of falling yet another 90%, and so on.  I like it because irrationality abounds in a bear market and the entire market becomes inefficient.  In a normal condition, I consider myself lucky if I find 1 or 2 compelling options in a year.  In a bear market, these distortions become more bountiful.

The post What Should You Do When Bear Market Starts? appeared first on The Smart Investor.

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History proves that the stock market and the economy move in continuous cycles repeatedly.  A good investor understands the different stages of the economy to guide his investment decisions. The stock market also has its own unique seasons that are pop... History proves that the stock market and the economy move in continuous cycles repeatedly.  A good investor understands the different stages of the economy to guide his investment decisions. The stock market also has its own unique seasons that are popularly called the bull and the bear market [...] The Smart Investor yes 12:10
4 Chart Patterns Every Trader Should Know https://infoforinvestors.com/academy/technical-analysis/chart-patterns-for-traders/ Mon, 11 Jun 2018 11:36:54 +0000 https://infoforinvestors.com/?p=2046 https://infoforinvestors.com/academy/technical-analysis/chart-patterns-for-traders/#respond https://infoforinvestors.com/academy/technical-analysis/chart-patterns-for-traders/feed/ 0 <p>Chart patterns are effective tools for traders to find profitable opportunities in the market.  Although several patterns exist, some patterns are more popular and tend to carry a higher probability of success than other patterns [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/technical-analysis/chart-patterns-for-traders/">4 Chart Patterns Every Trader Should Know</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> It’s not a secret:

Chart patterns are effective tools for traders to find profitable opportunities in the market.

Although several patterns exist, some patterns are more popular and tend to carry a higher probability of success than other patterns.  The following four patterns fall into this category as they are widely known among experienced traders.

1. The Head and Shoulders Pattern

The head and shoulders pattern signals a reversal of trend.  There are two variations of the pattern, offering trading opportunities both to the long and short side.  The bearish version is referred to as a head and shoulders pattern while the bullish version is called an inverted head and shoulders pattern.

Trading: The Head and Shoulders Pattern

In the example of VMWare (VMW), an inverted head and shoulders pattern took place on a daily chart in late 2015 to early 2016.

There are four key points to note in identifying the pattern. The left shoulder, head, rights shoulder and neckline.  Symmetry is important in this particular pattern and a general rule of thumb is that the better the symmetry, the higher the probability of the pattern playing out.

Let’s explain:

In assessing symmetry, the low of the left shoulder should be similar or very close in price to the low of the right shoulder.  The neckline should be a fairly straight horizontal line but a slight slant is acceptable.  There are some examples where the neckline carries an angle or the two shoulders don’t align perfectly, but the theory behind the pattern is that the better the symmetry the more traders are likely to have spotted it, increasing the probability of the pattern playing out.

Trade With Head and Shoulders Pattern

In trading the head and shoulders or inverted head and shoulders pattern, traders wait for a sustained break of the neckline.

Where do we see it?

In the example of VMW, a break of the neckline came in the form of a gap up after the company reported better than expected earnings in July 2016.  Often price will retest the neckline to offer a good entry point, however, with VMW the momentum created by the earnings report triggered a steady flow of buying that caused the stock to move straight to the target without retesting the neckline.

The target for a head and shoulders pattern is derived by taking a measurement from the head of the pattern to the neckline and then looking for an equal distance measured move starting from the neckline.  A simple method in making this calculation is by drawing a line on a stock chart from the head to the neckline and then cloning that line and moving it to the neckline at the point of breakout, as illustrated in the above chart.  The VMW head and shoulders pattern called for a target of roughly $84 which was reached in early 2017.

It is important for price to stay above the neckline once the pattern is activated.  A sustained break back below it would invalidate the pattern.

2. The Flag Pattern

The flag pattern also comes in two varieties, a bullish and bearish variant named appropriately as a bull flag and bear flag.  Unlike the head and shoulders pattern, however, this pattern looks for a continuation of trend.

The flag pattern is straightforward and easy to verify.  It requires two lines with the same angle to be drawn around price action.  There should be at least two points of contact for the highs and the low.

The example below shows a flag pattern that started in early August 2017 and took about a month to play out:

trading: Flag Pattern Example 2

 

The Goldman Sachs flag pattern was drawn by connecting the high posted in early August with a high posted at the start of September.  That line can then be cloned and pasted at the lows to create a channel.   Actually, most charting platforms will have a channel tool, eliminating the need to clone trendlines.

Target For a Flag Pattern

The trading signal from the pattern comes following a sustained break of the upper bound of the channel in the example of the bullish variant.

In this case, there was a retest of the upper line which offers a good entry.  Like all chart patterns, a retest is common but does necessarily always occur.

trading: Bull flag with measured move targets Example

 

The target for a flag pattern is derived at by measuring the length of the bullish leg that proceeds the pattern and calculating an equal length from the point where the upper line of the pattern was breached.  In the above example, similar to how a target was derived with the prior head and shoulders pattern, the method of cloning trendline was used.

Once an upside break occurs in a bullish flag pattern, price should remain above the upper line on a sustained basis.  Traders will often enter with a stop below the last swing low, indicated by the red line in the above example.  A sustained break back within the channel warrants closing the trade ahead of the stop as it suggests a weak pattern that is not likely to play out.

3. The Triangle Pattern

The triangle pattern is similar to the flag pattern as traders look for a technical break to signal a continuation of trend.  The differentiating factor is that within a triangle, the trendlines converge.

 

Trading: Triangle Pattern Visual

As with most patterns, there may or may not be a retest although the former is quite common.  The above is an example of both scenarios.

Usually, there will be about three tests of both the upper and lower line, although the minimum is for two points of contact for each line.  It is not uncommon for the very last decline in a bullish variant to fall slightly short of testing the rising trendline, as seen in the below example.

trading: Weekly Triangle chart

Traders will look for a sustained upside break to enter and will often place a stop below the prior swing low, marked in red in the above example.  A sustained drop back within the triangle suggests a weak pattern and warrants closing the trade ahead of the stop.

Similar to the flag pattern, an equal legs measurement can be taken to derive at the target for the pattern.

4. The Double Top and Double Bottom

Double tops and double bottoms call for a turn of the trend.  They often occur around important technical levels which create a big barrier, causing a reversal of trend or at least a correction.  The main characteristic of this pattern is a minimum of two failed attempts at a level followed by a technical break in the opposite direction.

Daily Double Top pattern in trading

 

In the above example, FDX struggled at around the $184 price point in late 2014 and the first half of 2015.  However, buyers stepped in to support dips towards the $164 price point.  Eventually, there was a downside break of $164 in August 2015, confirming that a double top is in play.

In the above example, there was a retest of the breakdown point, offering a second opportunity to get involved in the trade for those that missed it the first time around.

Daily Double Top w RSI

Using a combination of tools can help the trader in assessing how likely it is for the pattern to play out.   As an example, in the FDX double top, adding a momentum indicator such as RSI reveals a divergence between momentum and price at the time of the double top.

Daily Double Top w RSI in trading

Another tool that could have been used in the same example is a channel.

As can be seen in the below example, FDX broke lower from a rising channel prior to activating the double top pattern.

Channel Break Chart in trading

Combining tools provides a higher conviction of a turn as several technical indicators align and signal the same thing, increasing the probability of the expected move playing out.

Traders that take advantage of chart patterns tend to be patient, waiting for a nicely formed pattern to be presented and often utilize other technical tools to assess the likelihood of the pattern playing out.

The Smart Investor content is intended to be used and must be used for informational purposes only. We are not an investment advisor and you should NOT rely on this information to make investment decisions .

The post 4 Chart Patterns Every Trader Should Know appeared first on The Smart Investor.

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Chart patterns are effective tools for traders to find profitable opportunities in the market.  Although several patterns exist, some patterns are more popular and tend to carry a higher probability of success than other patterns [...] Chart patterns are effective tools for traders to find profitable opportunities in the market.  Although several patterns exist, some patterns are more popular and tend to carry a higher probability of success than other patterns [...] The Smart Investor yes 7:36
How To Choose The Right Type Of Life Insurance https://infoforinvestors.com/personal-finance/life-insurance/choose-right-type-life-insurance/ Fri, 08 Jun 2018 21:41:10 +0000 https://www.infoforinvestors.com/?p=2315 https://infoforinvestors.com/personal-finance/life-insurance/choose-right-type-life-insurance/#respond https://infoforinvestors.com/personal-finance/life-insurance/choose-right-type-life-insurance/feed/ 0 <p>Many financial advisors will quickly suggest a life insurance.  After all, companies design their life insurance products specifically for that need.  They take away the worries and provide peace of mind.  But do you know what type of life insurance is the right one for you?  Choosing the right one is the delicate part.  Getting a life insurance does not guarantee that you will be good financially [...]</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/personal-finance/life-insurance/choose-right-type-life-insurance/">How To Choose The Right Type Of Life Insurance</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p> Death is such a morbid thing so families hardly talk about it, much less plan on how to handle it.

Having a good financial plan will help cushion the impact and stress of untimely passing of a family member.  It gives an assurance that the family will be financially unimpaired even if the breadwinner suddenly dies.

Many financial advisors will quickly suggest life insurance.  After all, companies design their life insurance products specifically for that need.  They take away the worries and provide peace of mind.  But do you know what type of life insurance is the right one for you?  Choosing the right one is the delicate part.

Remember:

Getting life insurance does not guarantee that you will be good financially for the rest of your life.  It also doesn’t assure that it will be sufficient for your family’s needs in the future.  Situations, circumstances, and financial needs change as time passes and unforeseen needs may come in later.

It is always important to review your life insurance policy after major events.  You may have to make adjustments to your coverage.

The Most Important Factors When Choosing Life Insurance

1. Duration

This might be the most important item to consider before buying. If you need a short or medium period policy of around 5 to 30 years, term insurance is advisable.
Term insurance is less expensive than other insurance types.  However, term insurance doesn’t really work for people who want coverage for as long as they live.  People whose fixed obligations and regular income are higher usually prefer term insurance.  They are attracted to the cash value feature of the plan because it somehow works as a retirement fund.

2. Affordability

Another reason for the choice is that the premium is more affordable. In a case like this, an investor should choose a plan with a good conversion option.  Should they want or need coverage for a much longer time, they can easily change the policy.  If an individual wants to have insurance coverage for his entire lifetime, permanent life insurance is the right one.

The insured will pay a higher annual cost but in the long run, the net cost will be considerably lower.

3. Investment

The government gives life insurance a special tax treatment. In most cases, the insurance proceeds are free from taxes.  In other cases, tax on the accumulated cash value is on a deferred basis.  So, if you have the funds to invest, you can purchase a permanent policy with cash value.  You will have to pay higher premiums but while insured, you also build up an investment account inside your policy.  This accumulated cash value has no restriction to use.

Many investors use it to build funds for a news house, their ‘dream boat’ or to just simply supplement retirement.

Term Or Permanent Life Insurance?

With so many insurance products in the market, it can be confusing to find what to get.

Nevertheless, it is a very crucial stage of the decision-making process.  Here are some guidelines to help you choose the best one for you.

Why Term Life Insurance

You should get a term life insurance if you need life insurance for a specific period of time.

You can make a term life insurance effective according to the length of time of your need. If you want to build up a college fund for your young children, a 20-year term life would suffice.  You would have the money by the time they are to enter college.  Or maybe you want to pay off a debt that will become due in a few years’ time.  You can get a term policy for that period.

Lower Premiums For Youngers

You should get a term life insurance if you need a large amount of insurance but have a limited budget. This type of insurance pays only if the insured dies during the time of the policy.  This causes the premiums to be lower than that for permanent life insurance.  If the insured is still alive at the end of the term, the coverage automatically ceases.  The insured has the option to renew the policy or buy a new one to continue his coverage.  Unlike permanent insurance, the insured will not be building equity in the form of cash saving.

For investors who are anticipating that their needs would change during the period of the policy, there are ‘convertible’ policies.  Convertible term policies allow the insured to convert to permanent insurance without medical examination.  However, he would have to pay a higher premium.

Typically, premiums are lowest when the insured is still young.  As the insured ages, the premiums adjust upward.  Some companies let term insurance policyholders renew their policies when it ends.  They will, however, charge a higher premium.  Some policies will require a medical examination before renewal for the insured to qualify for lower rates.

Term Life Insurance

Why Permanent Life Insurance

You should get permanent life insurance if you want insurance coverage as long as you live.  When the insured dies – whether he’s just 20 or 100 years old, the insurance pays death benefits to the beneficiary.

Get this insurance if you want to build up some savings that will grow on a tax-deferred scheme.  The funds you accumulate could prove to be very convenient for your future needs. You could borrow from this fund and use the proceeds for a myriad of purpose. The good thing is, you could take out a loan against it regardless of your credit score.

You could also use the fund to pay your premiums; you wouldn’t have to dip in your pocket every month. In case you die with an outstanding loan, the insurance company will use your death benefit to settle your debt.  If there is still something left from the benefit, the company will give it to your beneficiary.

Premiums for permanent policies are higher than premiums for term insurance.  However, they stay the same no matter how old the insured gets.  On the other hand, premiums for term insurance tend to go up each time it is renewed.

Permanent life insurance also has several sub-types.  There’s whole (ordinary) life, universal life, and variable life.

Other Factors To Consider When Setting The Amount Of Insurance Coverage

Market participation & cash value

Insurance protection for the long term? Check.  Potential to build cash value and fund you can borrow?  Check.  Lower premiums? Check. If you need all these features, then you should consider permanent life insurance.  The next question is:  which of these three types of permanent life is the right one for you?

  • Whole life insurance. This type of policy will build value based on a set schedule.  Your insurer will tell you how much cash value your policy has at each anniversary.  In case you have taken out a loan against it, your cash value will decrease accordingly.
  • Universal life insurance. This type of policy will allow you to earn a fixed interest on the cash value of the policy.  It states a minimum guaranteed rate.  Over time, the interest rate may fluctuate but it will never go below the minimum guaranteed rate.
  • Variable universal life insurance. This type of policy will allow you to invest your cash value in the stock market.  So depending on how your investment performs in the market, your policy value goes up or down correspondingly.

Length of coverage

How long would you need insurance for?  If you need an insurance coverage for a specific timeframe, then term life insurance is it.  For example, you might want to have protection while you’re still paying off a mortgage.  All other types of insurance will cover you for life as long as you pay the premiums on time.

Life Insurance - Factors To Consider

Fees and charges 

The expense side of insurance policies is not just about the premium.  Some policies may have other charges connected to it.  Before you sign the dotted line, make sure you know all the fees and charges you have to pay.  Ask about fees you may have to pay in the future too.

Access to your money

Are you anticipating that in the future, you will need to take out money from your policy?  For example, you might have to pay for your children’s college tuition.  Most whole, universal and variable products will allow you to withdraw money from or borrow against your policy. However, some policies will have restrictions on when you can withdraw, how much you can borrow and the interest rate.

Flexible payments

There are universal and variable life insurance products that will let you make flexible payments. This comes after you have paid enough to cover your policy charges.

 

The post How To Choose The Right Type Of Life Insurance appeared first on The Smart Investor.

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Many financial advisors will quickly suggest a life insurance.  After all, companies design their life insurance products specifically for that need.  They take away the worries and provide peace of mind.  But do you know what type of life insurance is... Many financial advisors will quickly suggest a life insurance.  After all, companies design their life insurance products specifically for that need.  They take away the worries and provide peace of mind.  But do you know what type of life insurance is the right one for you?  Choosing the right one is the delicate part.  Getting a life insurance does not guarantee that you will be good financially [...] The Smart Investor yes 8:42
How to Use Currency Pairs Correlation in Forex Trading https://infoforinvestors.com/academy/technical-analysis/currency-pairs-correlation-trading/ Mon, 21 May 2018 13:19:08 +0000 https://www.infoforinvestors.com/?p=2431 https://infoforinvestors.com/academy/technical-analysis/currency-pairs-correlation-trading/#respond https://infoforinvestors.com/academy/technical-analysis/currency-pairs-correlation-trading/feed/ 0 <p>Many people like the dynamics and complexity of the Forex (also known as the currency or foreign exchange) market. However,</p> <p>The post <a rel="nofollow" href="https://infoforinvestors.com/academy/technical-analysis/currency-pairs-correlation-trading/">How to Use Currency Pairs Correlation in Forex Trading</a> appeared first on <a rel="nofollow" href="https://infoforinvestors.com">The Smart Investor</a>.</p>

Many people like the dynamics and complexity of the Forex (also known as the currency or foreign exchange) market.

However, if you want to succeed and thrive in this hectic environment, and eventually make a profit, you need to know the intricacies of it.

In this article, you will find out more about currency correlations and how to use them to your advantage.

Basics of Currency Correlation Trading

The main thing one needs to come to terms with is the fact that currencies are traded in pairs, therefore they depend on each other. These are also known as correlations. These correlations have certain patterns and one should spend time to study them in detail. Then you can start building your portfolio.

For instance:

You trade the GBP/JPY pair. In this particular example, you have to know that actually you trade with two pairs of currencies: USD/JPY and GBP/USD. However, often the links between two currencies are not as obvious as in the example. There might be other factors and things to consider before using the pair.

What is a Currency Coefficient?

Currency correlation CoefficientSimply said, currency correlation shows how much two currency pairs correlate – positively or negatively. We use a currency coefficient to express the degree of correlation. Below, you can see a correlation table.

The coefficient varies from +1 to -1. The closer it is to +1, the more positive the correlation. This means that these two currency pairs change in the same direction. The closer the coefficient to -1, the more negative the correlation – the pairs always move in opposite directions. Zero coefficient shows that there is no certain pattern in which the currency pairs react – they can either move in the same direction or the opposite.

How To Calculate Currency Correlation?

Currencies can be affected by a variety of factors – central bank policies, the global economy, local political and social issues, etc. Below you can find a table which shows the correlation between currencies for an hour, a day, a week, a month, three months, six months and a year.
How To Calculate Currency Correlation

Let’s take the first currency pair, AUD/JPY, and discuss the example.

The numbers you can see on the table are actually the currency coefficient. In our case, we take the exchange rate of the AUD/JPY and compare it to the one of the other currency pair, which is EUR/USD for different periods – 1 hour, 1 week, etc.
In the table above, you will have noticed that the figures are in two colors – blue and red. This particular example shows a positive correlation in red, which means that the prices go in the same direction. The ones in blue indicated the presence of negative correlation, meaning that the exchange rates of the two currency pairs move in opposite directions.

Interpretation Of The Results

Now, let’s try to understand these figures and what they mean. If the result is between:

  • 0 – 0.2: the correlation between the pairs is insignificant; therefore, the exchange rates move randomly.
  • 2 – 0.4: the correlation is not that small but is not strong either
  • 4 – 0.7: there is an average correlation
  • 0.7 – 0.9: shows that there is a strong correlation between the pairs
  • 0.9 – 1: indicates that the two pairs correlate very strongly

Changes In Correlations

One of the main characteristics of the FOREX market is that it is highly volatile.

This, consequently, means that currency correlations might change over time. For instance, the correlation between a pair is positive for weeks and even months. However, this does not mean that next year this correlation will remain the same. Unfortunately, often investors do not anticipate the changes in these correlations and it’s not easy to predict such occurrences.

Let’s take a look at an example table:

Changes in currency correlations

As we can see in the table, we have different currency pairs compared to USD/JPY.

As it is apparent, the correlations in the table vary so much that sometimes they move in the opposite directions. This table shows that in one year, the correlation between two currency pairs changes significantly. It also shows that great changes might occur only in a week or two. For instance, look at the first column and see how the correlation has changed. In the first month, we have a strong positive correlation. In the third month, however, the correlation is strong but negative.

If you observe the second column (USD/CHF pair), we will notice that in the first week there was almost no correlation between the two pairs: just 0.25. With time, the correlation increased and in the 6 month it reached 0.84, indicating a very strong correlation.

Let’s take a look and analyze another table:

currency correlations over time

Now, we have the EUR/USD currency pair compared to others.

The first column in blue shows that only within a month the currency coefficient can change by more than a point. During the first week, we can observe a strong correlation of 0.85. However, for the 1 month this correlation dropped dramatically to -0.27. Then for the three-month framework, it rose again to 0.42 and for the rest of the year (9 months) stood at and surpassed 0.8.

Why Do Currency Correlations Change?

As clearly shown in the previous paragraph currency correlations do change dramatically, and there are quite a few reasons for that.

The main one is the different interest rates central banks set. In addition, a country’s financial matters and policies strongly affect a currency. We shouldn’t forget all political and social tremors that also affect currencies, therefore their correlation.

What is Currency Exposure?

If you are reading this article, most probably you have become or want to become in the future a Forex trader.

To do so, you need to understand the basics of the Forex and the main factors driving it. All Forex traders have to deal with the so-called currency exposure if they want to make a profit and, eventually, avoid serious losses. Since currencies are exposed to many factors that affect their exchange rates, there is a serious risk stemming from currency exposure.

The Most Important Rules Of Currency Correlation Trading

In the previous paragraphs, the mechanism of currency correlations was clearly and easily explained.

Now that you know what it is, how it functions and what factors affect it, you can actually use it to your advantage and manage risk and move forward for the next steps – the most important rules of currency correlations trading.

Avoid Opposite Currency Pairs

A basic rule – avoid trading currency pairs that contradict each other.

For instance, the USD/CHF and EUR/USD pairs. If you go back to the last table in the article, you will see that these pairs pretty much all the time go in opposite directions. In practice, this means that you won’t make a profit trading these pairs.

In contrast, when you hold EUR/USD and AUD/USD or NZD/USD for an extended period of time, you can use them due to the fact that they are strongly correlated.

Spread And Diversification

You can use currency correlation to hedge and manage risks of buying too many positions of the same currency pair and suffer possible negative consequences. As you already know, the EUR/USD and AUD/USD currency pairs have a strong positive correlation, you can use them to spread the risk.

For example:

You are waiting for a European Central Bank meeting that will affect the price of the EUR/USD pair. Instead of buying a hundred EUR/USD positions, you can do the following: buy some EUR/USD and also AUD/USD.

Why?

Remember, they are positively correlated. This is how you diversify your positions and mitigate potential losses.

Use Pips

To begin with, a pip is a small price movement in a currency pair. To show you how to use them, let’s take again one example – the EUR/USD and USD/CHF currency pairs. Their correlation is very strong but negative. However, the pip move for one hundred thousand units of both pairs is very similar – $9-10. Therefore, you can use USD/CHF to manage the currency exposure of the EUR/USD pair.

Keep in mind:

The best protection against risk is knowledge. To use the above-mentioned tactics, you need to understand the broad market picture. These techniques can be only of additional help and support.

Final Words

If you want to become a successful trader, you need to possess a profound understanding and knowledge of the global market.

Currencies are volatile and various factors affect them on a daily basis. The most important thing, however, is to know how the different currencies react to each other. This is where currency correlation comes in handy.

As you already know, in some cases they move in the same direction, in other – the opposite, while in third situations – there is no pattern whatsoever. Not only can you use currency correlation to help you make better trades but also can be used to manage your risk strategy.

The post How to Use Currency Pairs Correlation in Forex Trading appeared first on The Smart Investor.

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Many people like the dynamics and complexity of the Forex (also known as the currency or foreign exchange) market. However, Many people like the dynamics and complexity of the Forex (also known as the currency or foreign exchange) market. However, The Smart Investor yes 9:07