EMI calculators calculate the EMIs based on three factors; the principal amount, the housing loan interest rate and the loan tenure. Out of these, the home loan rate is the most important one, as it is the only factor that can vary after you have started paying off the EMIs. Whether you have a floating or a fixed home loan rate , it will be based on the RBI rules and regulations, the profit margins and economy variables as well.
Due to the various financial challenges, it is likely for your EMIs to become the biggest deduction from your monthly earnings. This can be hazardous to your financial life for two reasons:
1. You may not have sufficient funds set aside for emergencies due to which you may end up losing your home because of the additional expenses.
2. Any external factor like a raise in the home loan rates in India can affect regular monthly payments such as EMIs, utility bills, grocery purchases and insurance payments. At times, it can imply that you won’t have sufficient savings for any other financial or medical emergencies.
If you understand the impact of the potential growth in home loan rates, you must ensure that your EMIs account for less than 30% of your monthly income. This will help to make certain that any possible increase in the housing loan interest rates can be dealt with easily.
It can be challenging to keep this percentage consistent throughout the term of your loan repayment though. However, it is the most strongly advised course of action. Fundamentally, there are two strategies that can help you get there:
1. You can work towards an increase in salary or your monthly business turnover, to stay ahead of this ratio.
2. You should make significant low-risk-higher-liquidity investments with whatever funds are left after all the expenses.
The most suitable type of investments for this purpose include SIPs in balanced or gold mutual funds, fixed deposits, recurring deposits, and gold and blue chip equities from stock market. These are realistic as they offer the right combination of liquidity and rewards. You can use them if you get into a situation where you can’t depend on your salary or business turnover to pay your EMIs. First time borrowers believe that home loans are about making the repayments by the set date. However, if you ask any financial expert, they would tell you that it’s much more about the financial discipline of setting enough money aside.
In this world of ubiquitous ATMs, tap-to-pay checkout and automated bank deposits, there are still times when it’s necessary to hand over, or collect, hard cash. That’s why money-transfer services Western Union and MoneyGram have tens of thousands of agents in cities and towns around the world.
Money-sending services can be a lifesaver. You may feel it’s unlikely you’ll ever be broke and stranded in a bus station in Bengaluru, needing your spouse to send cash, but stranger things have happened – and not just when you’re traveling abroad. How about when your kid, who’s gone off to study at a Canadian university, needs you to send rent deposit – pronto? More routinely, money-transfer companies provide banking services like money transfers, money orders and bill payment to people who don’t have bank accounts. In the United States and Canada, many customers are new immigrants who send money regularly to family members in their home countries. Outside the U.S., it’s even easier to find a nearby agent for Western Union (WU) or MoneyGram (MGI) or both. Cash is still king in many countries, and in developing nations many people don’t have bank accounts.
So which is better, MoneyGram or Western Union?
The Big Three
There is now actually a “big three” in the money-transfer business: Western Union, MoneyGram and Wal-Mart (WMT), with the retail giant recently big-footing into this business. (Its service is currently limited to in-store domestic transfers, while its international and online transfers are handled by MoneyGram.)
In the U.S., Western Union or MoneyGram services are available in many pharmacies and supermarkets as well as small local businesses, bus stations and check-cashing outlets. For most of these agents, handling money transfers is a side business. Wal-Mart, of course, offers its service in its stores.
A Few Drawbacks
One drawback to sending cash through these services is that they open or close with the shops’ usual hours. You may have to cool your heels at the bus station until the next morning before your family can get you that emergency cash.
The biggest drawback of any money-transfer service is the vulnerability of its customers to fraud. A request from a stranger for payment via cash transfer is usually a fraud. Since the recipient is untraceable, it’s the modern equivalent of stuffing a wad of unmarked bills into an envelope and leaving it in a public place on instructions from a stranger.
Which One to Use
There are a few differences between the services:
Western Union is the larger of the two companies and has instant name recognition around the world, thanks to its one-time monopoly of the telegraph business. Sending telegrams was discontinued only in 2006, but by then Western Union had moved on to new ventures. It has about 400,000 locations around the world. Customers can send money by phone, through the Western Union website or in person.
Fees can be steep or cheap, depending on a long list of factors including the form of payment used, how fast the money is delivered, whether it is paid in cash or wired to a bank, where it’s sent from and where it is delivered. For international transfers, the exchange rate adds another element of uncertainty to the cost.
Say you are in Philadelphia and want to get $500 delivered to someone in Mexico. If you pay cash at a Western Union agent, and the recipient picks it up in cash, it costs $28 for three-day service, and $40 for immediate delivery. The same transaction costs $5 if it is a bank-to-bank transfer, or $25 if a credit or debit card is used to pay money into a bank account. The most cost-effective way to pay is online or via the mobile app, where fees for most of the above variations are only $4 to $7. But even using the mobile app, if you’re paying with a credit or debit card, and the money will be picked up in cash, the fee for that $500 transfer is a steep $45.
MoneyGram is Western Union’s biggest rival, and its fees are often cheaper. It recently changed its fees to a flat rate of $11.50 for transferring $50 to $900 within the United States, and 2% for amounts over $900. But MoneyGram built its reputation on international money transfers. It has 25,000 payment locations in Africa alone.
MoneyGram’s rates for international money transfers don’t appear to be much simpler than Western Union’s. You can transfer $500 to Mexico, even using a credit or debit card, for a $6.65 fee, but the same transaction costs $29.45 if the money is picked up in Ireland, and $23.75 if it goes to China.
Another big difference: For now, MoneyGram transactions can be initiated only in the United States and a handful of other countries, although it claims some 350,000 locations around the world for pickup.
Wal-Mart offers a lower price than its rivals in this area, but its in-store service is limited to transfers within the U.S., using cash, a debit card or a WalMart MoneyCard. (International money transfers are available in the stores and the website through MoneyGram.) Its fees are currently $4.50 for up to $50, and $9.50 for up to $900.
Most housing finance companies offer ahome loan balance transfer as a housing finance service. This has been available in the market for quite some time now. However, you need to do this smartly. You cannot rush into these decisions as they can turn out to be expensive. Therefore use this step-by-step guide to select the right financial service for you.
Step 1- Consider all the options available:
Most borrowers do not research the home loan transfers holistically. However, it is a new home loan after all. So, you need to take similar precautions. Check out the organizations offering this particular product because all the organizations don’t offer it. Then, identify the most beneficial one that will suit your requirements perfectly. Are you getting lower interest rates or a no-prepayment-charges clause in the home loan transfer? Find out.
Step 2 – Focus on your requirements:
Why do you need to opt for a home loan balance transfer ? What are your requirements that aren’t being met efficiently withthe current housing finance company? Are you earning more and need the loan with no prepayment charges? Or do you want to be offered lower interest rates that are available to new borrowers? Are you interested in the top-up loan for home renovation? When you make a clear list, you eliminate some organizations by default. You will only select the housing finance companies that serve the requirements you seek.
Step 3 – Watch out for loan details:
You will need to check out the terms and conditions of the home loan agreement. You need to look at it as a home loan rather than just a home loan balance transfer because you do go through the entire home loan process again. You need to meet their home loan eligibility criteria. You need to consider the housing loan offer along with its terms and conditions. This is not optional. It should meet your financialsituation too. Simply put, an ideal home loan transfer will allow you to save more than the amount that you are spending on it, since you will spend on the legal fees, processing charges, credit score report, service taxes, etc. So, as long as you are profitable in this equation, it is a smart decision. If you are not profitable, you will have to say a “No.”.
Step 4 – Finalize the transfer:
If you are certain that you will be in a profitable situation, then you will need to obtain a NOC (No Objection Certificate) from your current lender. This is an additional document required for a home loan transfer. The submission of all the documents and signed application form will seal the deal. Though, you must realize that the NOC is non-negotiable and will not be issued by your current lender if you have defaulted any of your repayments. So, make this transfer swift by following up diligently for the same.
When you borrow money, you have to pay back the amount of the loan (called the principal), plus pay interest on the loan. Interest essentially amounts to the cost of borrowing the money – what you pay the lender for providing the loan – and it’s typically expressed as a percentage of the loan amount. You might be paying 3% interest on your car loan, for example, or 4% for your mortgage.
There are actually two different kinds of interest – and it pays to know the difference. Depending on the loan, you will pay either compound or simple interest. Compound interest is calculated on the principal amount plus the accumulated interest of the previous periods, which means you effectively pay interest on the interest. In contrast, simple interest is calculated on the principal only, so you don’t pay interest on the interest. Because you’re paying interest on a smaller amount of money (just the principal), simple interest can be advantageous when you borrow money. But do simple interest loans exist?
You’ll find simple interest loans offered by a variety of loan products, including car loans. With most car loans, interest is calculated on the principal loan balance on a daily basis, and payments are first applied to any interest due, and then towards the principal balance. The daily interest amount is equal to the annual rate (3%, for example) divided by the number of days in the year (365, except 366 during a leap year). So the daily interest on a loan balance of $10,000 at 3% interest would be $0.82 ($10,000 x 0.03 ÷ 365), assuming it’s not a leap year.
Like many loans, simple interest loans are typically paid back in equal, monthly installments that are established when you receive the loan. These loans are amortizing, meaning a portion of each payment goes to pay down interest, and the rest is applied to the loan balance. At the beginning of the loan, more of your monthly payment goes towards the interest since the interest is always calculated off the remaining balance, which is highest at the onset of the loan. As the loan term progresses, less of your payment goes towards interest and more applies to the principal.
If you have a $10,000 loan at 3% for three years, for example, your monthly payment would be $290.81. Twenty-five dollars of your first payment would go towards interest and the remaining $265.81 to the balance. The next month, $24.34 would go towards interest ($9,734.19 x 0.03 ÷ 12), and $266.48 to the balance, and so on until the loan and interest are paid in full. (If you are thinking of buying a car, see How Interest Rates Work on Car Loans.)
If you make all your payments on time each month, you should expect to pay back just the amount that is stated on your loan agreement. If you make a late payment, however, more of that payment will be used to pay the interest you owe because you’ll be paying more days of interest – and less will go towards reducing your principal balance. This adds interest to your loan, plus you may have to pay late fees.
Most student loans use what’s called the Simplified Daily Interest Formula, which is essentially a simple interest loan since interest is only calculated on the balance (and not on the previously accrued interest).
Most mortgages are also simple interest loans, although they can certainly feel like compound interest. In fact, all mortgages are simple interest except those that allow negative amortization. An important thing to pay attention to is how the interest accrues on the mortgage: either daily or monthly. If a mortgage accrues interest daily, it is always a simple interest loan; if it accrues monthly, it is simple interest unless it’s a negative amortization loan.
It’s important for borrowers to know how interest accrues on their mortgage since simple interest loans need to be managed differently than monthly accrual mortgages. One thing to watch out for: Late payments on a daily accrual loan can cost you dearly. If your payment is due on the first of the month, for example, and your payment is a week late, you’ll end up paying an extra seven days’ worth of interest. The grace period just allows you to avoid paying a late fee – not more interest. Since more of the payment goes towards interest, the late payment can actually make the loan balance go up instead of down. See What Are the Pros and Cons of a Simple Interest Mortgage? for more on this topic.
The Bottom Line
Simple interest loans calculate interest on the principal balance only, so you don’t end up paying interest on interest as you would with a compound interest loan. If you keep a balance on your credit card, you probably pay compound interest, and any interest charges are added to the principal – making your debt grow exponentially over time. Adding insult to injury is the fact that most cards compound interest on a daily – not monthly – basis, which can cost you even more over time.
Compound interest can sometimes work in your favor – just not when you borrow money. Here’s when: Simple and compound interest also apply to interest you earn when you invest money. But while simple interest can work to your advantage when you borrow money, it will end up costing you when you invest. Say you invest $10,000 at 5% interest paid once a year for 20 years. If your investment earns simple interest, you will have $20,000 – your original $10,000 + ($10,000 x 0.05 x 20) – after 20 years. If the investment earns compound interest, on the other hand, you will have $26,533 – your $10,000 + ($10,000 x (1 + 0.05/1)^20) – assuming interest is compounded one time per year. If it’s compounded 12 times a year, you’ll end up with even more – $27,126 in this case.
Dollar wise, you’re typically better off with simple interest any time you borrow – as long as you make payments on time and in full every month – and compound interest any time you invest.
When it comes to retirement investing, many people understand the basics. Essentially, start investing in retirement funds as early as possible and utilize your employer’s 401(k) match and individual retirement accounts (IRAs) to the best of your ability. However, many people want to know if there is anything else they can invest their money in to diversify their retirement portfolios. While you should always do your research when it comes to alternative investments, many people have had success investing in some of the options below which range from investing in your favorite wines to investing in yourself.
This is a lesser known and highly unique investment that you might consider if you love wine. Essentially, you can purchase wine and then hold on to it for years and wait for the value to accrue. In order to make money investing in wine, the wine has to be stored appropriately. If you don’t have the facility for that, you can actually pay companies to store your wine for you, sometimes without ever holding the wine in your hands yourself. This type of investment requires significant research and know how to ensure you choose the correct types of wine and vintages to create a profit. But it could be a fun and interesting investment for someone looking for a different way to grow their money. The best part is that if it doesn’t sell, well then you just have a lot of wine to enjoy in your retirement years. There’s nothing wrong with that. (For more, see: Investing in Fine Wine.)
If you have a love and a knowledge of antiques, this can be an extremely lucrative way to diversify your retirement portfolio. Keep in mind that during recessions, items like antiques and art do not hold great value. However, with the right piece, you can turn a significant profit at any time. Keep your eyes peeled for unique antiques at thrift stores and garage sales. If you inherited furniture or other objects from your parents or grandparents, keep them in good condition and seek out the advice of an expert who might be able to tell you what they’re worth. You can always sell antiques in a private sale, or if you prefer to make it more official, you can always place them with an auction house. Many people keep their antiques to enjoy them and then sell them off periodically well into retirement to generate cash flow. Either way, if you have a love of old objects with unique history, this could be a good option for you. (For more, see: How to Cash in Your Heirlooms.)
If you enjoy real estate, this is an excellent way to invest any additional funds you may have. Many people invest in second and third homes and rent them out, which can generate much needed cash flow during your retirement years. For the inexperienced buyer, real estate can be risky. However, if you learn valuable skills in the process, you can grow your wealth by adding to your real estate portfolio over time. Be careful, as always, when borrowing money for this endeavor. Namely, always purchase a home that is affordable enough to where you can pay your mortgage and your second home’s mortgage if you don’t have a renter for a certain period of time. (For more, see: The Income Property: Your Late-in-Life Retirement Plan.)
Peer-to-peer lending has gained immense popularity in the past few years, and many people report excellent returns. Essentially, peer-to-peer lending is when you offer a loan or a part of a loan to someone who needs it. Many of the loans on peer-to-peer lending sites are for credit card consolidation loans or real estate loans. In many ways you can be helping someone who might not be able to qualify for a traditional bank loan.
It’s typically always a good idea to invest in yourself. This might include taking additional college classes, learning new skills, honing your business acumen or paying for a personal trainer to get in shape to improve your long-term health. You should never invest money you don’t have in yourself, but if you have spare cash and have always wanted to learn a new language or experience a new culture, this is absolutely a valid investment that can bring you great joy in your retirement years. (For more, see: 8 Affordable Retirement Hobbies.)
Teaching others your expertise and skills is a great way to supplement your income. It can also be a low-cost route of profiting from the ever-present demand for valuable information. In fact, many successful entrepreneurs have built their business empires by simply selling useful content and information.
For example, Martha Stewart became the first self-made female billionaire in the United States after taking her housekeeping media and publishing company, Martha Stewart Living Omnimedia Inc. (MSO), public in 1999. Similarly, Robert Kiyosaki, author of the New York Times Co. (NYT) bestselling book “Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!”, has made a lot of money by publishing a number of books tall geared towards helping improve the financial conditions of others.
Below are three ways in which you can monetize your knowledge and make some money on the side.
Build an Audience and Sell Advertisements
One way to make money from your expertise is to attract a sizeable audience by publishing free, useful content on the Internet. This can take the form of YouTube (GOOG) videos, articles, blog posts, email newsletters, Instagram photos, podcasts and even tweets. Regularly publishing fresh content will help to rapidly grow your platform because people typically gravitate to free resources. With this approach, you’ll make money from advertisers interested in promoting their products and services to your subscribers.
Take, for example, reality television star and entrepreneur Kim Kardashian. She charges businesses up to $10,000 to have her tweet about them to her more than 19 million Twitter (TWTR) followers. Then there’s sales trainer and real estate mogul Grant Cardone, who has produced three online one-hour live shows on relationships, finance and sales every week for the last four years. In the process, he built a YouTube following of 95,000 subscribers. The live shows are streamed to his subscribers for free, and he makes money by selling advertising space to sponsors.
Many well-known online media companies also use this strategy. Sites like Ask.com, Nolo.com and Entrepreneur.com attract visitors to their website with free, valuable and insightful content. They can then fund their operations primarily with advertising revenue because the volume of visitors they attract is so large.
Schedule One-on-One Sessions
Although selling advertisements can be quite lucrative, building a brand and following that’s strong enough to attract advertisers will take a long time. Individuals that are looking to monetize their expertise from day one should strongly consider charging for one-on-one tutoring or consulting sessions. These sessions can be conducted in person or virtually, and fees can be charged to clients based on the length of time of each session.
For instance, a person who knows more than one foreign language could use a service such as Verbling or italki to tutor private classes, while a recent college graduate could earn extra income by conducting one-on-one piano lessons with children in her neighborhood.
Create and Market Information Products
Conducting one-on-one sessions can become time consuming for anyone looking to make a lot of money by teaching others. One way around this dilemma is to create and sell information products, also known as info-products. These can be any product or service — a books, audio lecture, online course, or instructor guide — that provides learning material on a particular subject matter.
Info-products can turn into a strong passive income source. Unlike one-on-one sessions, a creator of an info-product can make money even while sleeping. Added to that, an info-product can be created once and sold multiple times. For example, an individual who is good at sewing can create a course on sewing by using a service like Udemy. The majority of that person’s time can be spent on promotion and getting new customers because the course creation is a one-time event. This is the complete opposite when charging for one-on-one sessions. Likewise, authors of books receive regular royalty payments years after their books are published.
When do you need to keep tabs on home loan rates in India ? The factual answer is; all the time really. It may not be something that all the borrowers want to do, which is understandable. However, you cannot escape the practical realities of it. You need to watch your housing loan interest rates regularly as they have serious implications on your home loan, repayment schedule and EMIs. So, these are the three important reasons namely for keeping a check on the home loan rates in India.
Negotiate a better home loan deal
There is a time gap between the date of your home loan application and the approval for the same. This time may work against you; if competitive banks and housing finance companies make better home loan rates in the interim. You certainly do not want to miss out on these deals. You want to be in a position to take the maximum advantage of these ongoing home loan offers. So, keep an eye out for related advertisements and online offers so that you can have a word with your branch manager or loan executive to make the most of it.
Opt for a home loan transfer
Within the first few years of the home loan; most borrowers pay a significant portion of their home loan principal amount. You can watch out for home loan offers from competitive banks and housing finance companies so that you can choose to carry outa home loan balance transfer; provided it is a profitable decision. You must focus on the lowest home loan interest rates rather than prepayment offers because it will actually go a long way in minimizing your interest repayment considerably.
Adjust your monthly cash flow
There are always clues in the home loan market that the interest rates may escalate. The home loan borrowers need to watch out for such kind of news. You may need to pay higher amount of EMIs from the subsequent month if the housing loan interest rates for your home increase. It is especially a risky situation for borrowers with floating interest rates. So, keeping a close eye on these fluctuations is almost mandatory.
You will need to tighten your expenses to make room for the additional EMI payment that you will incur. So, it is not a casual choice. It will be much more challenging if you have other expenses or financial commitments. However, you cannot default on your EMIs as it will affect your credit history and also chances to get a loan transfer. Hence, it is a smart choice to keep a look out on the housing loan interest rates and be prepared for any possible fluctuations
As a holistic guide for home loan buyers, it is important to offer useful and actionable insights to them.Prepayment charges on housing loans have always been there. However, there is a greater awareness about the subject in today’s market. Therefore, explore this concept thoroughly so that you can fit this strategy into your housing loan repayment scheme profitably.
What are prepayment charges?
When you opt for a house loan, you are expected to pay a certain amount as EMIs for the next 20 to 30 years. Most borrowers can, however, save sufficient additional fundsby repaying more than this set amount. This additional repayment is known as prepayment. Since, prepayment allows home loan borrowers to repay the principal amount sooner, they can save substantial amount of interest. For most housing finance companies in India, this is not a profitable practice, as their return on investment is lower than anticipated. So, to discourage this practice, there are minor charges levied on these repayments, which are known as prepayment charges. The percentage of prepayment charges varies from one housing finance company to another, nonetheless, it is applicable in 99% of the cases.
What are the advantages and disadvantages of these charges?
There is no advantage of the prepayment charges for housing loan borrowers. You have to pay more to repay early. However, housing finance companies in India need this kind of charges to operate profitably and continue their services. So, in a way, it is an advantage that you can prepay your house loan and spare some funds that would have been spent as the interest otherwise. In financial terms, the main advantage of using the prepayment charges to prepay the loan is that these charges are way lower than the interest that you would have ended up paying eventually. So, if you are in a position to prepay, it is a great deal because, in spite of the prepayment charges, you are saving cash and lowering your account payables.
What are the current standards for prepayment charges?
Since May 2014, RBI has made an announcement that banks are not allowed to levy any prepayment or foreclosure charges on floating interest home loans. So, if you have opted for a floating interest on your home loan in India, you can prepay your loan without any prepayment charges. It is great news for people, who have access to disposable funds, which can be channelized to repay their home loans sooner than later.
So, equipped with this information, the borrowers can evaluate their finances and identify the amount of prepayment that they can make efficiently.
A Good and a bad home loan is all about convenient and affordable EMIs. Borrowers want to repay the loan without any financial or mental stress. They want to maintain a high credit score, accumulate good savings and repay their EMIs without the monthly hassle. If they are in a position to repay the loan sooner, they want a housing finance company that supports it. So, here are a few hallmarks that separate good and bad housing loans. Use them to distinguish the loans strategically.
Productive home loan eligibility:
When the banks and housing loan companies include credit score, finances and professional standing in the home loan eligibility criteria, they do it for a reason. Agreeably, a stringent housing loan eligibility criteria cannot be appreciated. However, even borrowers must be qualified to repay the house loan that they borrow. If a borrower decides to opt for a home loan that he cannot afford to repay comfortably, then he will be in a long term fiscal challenge. The only way to get out of such circumstances is to sell the house or default the loan. None of these situationswould have occurred if you had opted for a loan that you can repay steadily and effectively. So, the EMIs, interest rates, type of interest rates, borrower’s income and current assets, all play a vital role.
Dependable home loan package:
You can find the best home loan in India, with the lowest interest rates and the most affordable EMIs. Though this can turn into a bad house loan for you if you did not pay attention to the other factors of the loan, which are equally vital. When you are about to enter in a legally binding long term financial contract, you vet it out. You consider all the possible aspects to differentiate a perfect housing loan offer from a bad one. Consider the following criteria and calculate if it suits your personal long term financial plans:
• Loan tenure
• Fees and charges
• Terms and conditions
• Type of interest rates
Doable long term repayment plan:
Though it is one of the factors affecting home loans in India, it is the most vital one in the long run. You cannot anticipate all your financial variables for the next 30 years. So, you need to work with the branch manager who understands that and helps you along the way. A good home loan has a right repayment option, which can be changed as per the financial conditions of the borrower. A housing finance company should be flexible enough to consider restructuring of the loan, when a borrower needs to. There should be enough room for the borrower to make the prepayments comfortably and profitably.
If you examine the home loan offer along with the terms and conditions document carefully, you can distinguish a suitable choice for your personal finances easily and confidently.
The projections for the growth of robo-advisors are ambitious to say the least. However, this is a normal reaction for a growing trend. In many cases, the analyst is not looking at long-term patterns, assuming that the investment environment will remain the same for many years. This doesn’t mean robo-advisors are a bad option. It depends on your goals. Where do you fit in?
A few of the most popular robo-advisor services today are Wealthfront, Betterment, Personal Capital and FutureAdvisor. Charles Schwab Corp. (SCHW) offers its Intelligent Portfolios service.
A big reason for robo-advisor popularity is affordability. For instance, 90% of Wealthfront’s 30,000 clients are below the age of 50 and 60% of those clients are below the age of 35. This points to the Millennials, a generation that is still in the early stages of building wealth. Most Millennials can’t afford the fees of a traditional financial advisor who also typically require a minimum amount of assets to invest.
Wealthfront has a minimum investment of $5,000. If that total is below $10,000, then the service is free. After $10,000, there is just a 0.25% fee. Betterment works a little differently, with no minimum investment required and a 0.35% fee if the total investment is below $10,000. If the investment is between $10,000 and $100,000, there is a 0.25% fee. If the investment is north of $100,000, the fee is 0.15%.
But let’s skip right to Schwab and its Intelligent Portfolios. This service requires a $5,000 investment, but there is no fee. That being the case, it’s going to be difficult for Wealthfront, Betterment, and its peers to compete over the long haul. As we all know, nothing beats free. And if you’re wondering how Charles Schwab makes money on this service (you have to read the fine print), it’s through its proprietary exchange-traded funds (ETF) and third-party ETFs. But this is still a top option for an investor interested in robo-advisor services. In addition, Intelligent Portfolios will diversify your account across stocks, fixed income, real estate, commodities and more.
Another reason for the popularity of robo-advisors is tax-loss harvesting, which automatically minimizes tax obligations on your profitable trades and maximizes tax reductions on your losing trades. And, best of all, it’s all done by a computer, requiring zero effort on your part.
Millennials have seen the worst of it during their lifetimes, including the Dotcom Bubble and 2008 financial crisis. Many are risk adverse and wary of the stock market. Unfortunately, the same pattern that helped create the last crisis is likely taking place again (record low interest rates). Only this time, the problem is global. And instead of just corporations being overextended and unable to pay their debts when growth stalls, you can now add countries to that list.
Is a bear market is approaching? Even if it isn’t on the horizon, it’s only a matter of time. It’s important to realize that while robo-advisors can rebalance portfolios all they want, those portfolios are going to be almost 100% long (excluding cash positions). It will be impossible for those robo-advisors to deliver a positive return. Millennials will see their investments head south and robo-advisors may wane in popularity.
Paying for a good financial advisor might be money well-spent in a bear market. Unlike a robot, a human can look at trends, keep up with all the up-to-the-minute headlines and make sense of them in a way that only a human mind can. At least there is potential of navigating a bear market when you have a human financial advisor. When you use a robo-advisor and the markets head south, your investments are likely to head south as well.
This is one question that many people consider closely. Floating home loan rates, for the most part, are a major concern for potential home loan customers for two main reasons:
• Wider market affects the interest rates.
There are several aspects that determine the floating interest rates for housing loans. Select organizations play a key role in influencing them; such as the Reserve bank of India, International and Local markets such as NASDAQUE or BSE, etc. How do they actually affect the home loan interest rates? The RBI can change the rules and regulations, which in turn will affect the banking operations. Fluctuations of the money market can affect the entire economy, which in turn affects the availability of funds and the housing loan interest rates for customers .
• There can be potential threats.
You cannot anticipate these changes. Worst of all, you cannot control them. If your interest rates lower, you will be happy as a customer. However, if there is, for any reason, an increase in the home loan rates, most consumers may not be in a position to afford the growth in the EMIs easily. The bottom line is, when you choose floating interest rates, you consent to the possibility of these fluctuations.
So, the reality is that it can be a hard road ahead. When you opt for a home loan, the typical tenure of the loan is 20 to 30 years. No one can anticipate the long term changes in the RBI policy, the Indian economy or the lending policy of your lender. You are taking a risk – the size of the same depends on you, though.
How to afford floating rates for home loan?
While it is a risk, the rates are manageable too. Home loan rates in India are always going to vary. Hence, you must take certain strategic actions to stay ahead of the game.
• Ask for the strategic housing loan duration and the interest rate. You should negotiate the details well enough so that your EMI is 30% of your monthly earnings.
• Use the no-prepayment changes clause to your advantage and repay the largest part of your loan when you can.
• Do not ignore better interest rates during the first 5 to 10 years of the home loan duration. If a lower interest rate opportunity is available, then go for a home loan balance transfer. It is a great decision in the long term.
• Understand that there is a possibility of a home loan rate hike over a period of 5 to 10 years. You must stay ahead of this potential landmine by increasing your earnings by investing your savings into the right financial products.
People perceive loans as a huge liability. Aside from marriage, it is probably the longest commitment that people take up. Apart from savvy business owners and investors, most people do not even understand the financial strategy of loans well enough. One of the better strategies available is loan against property. Before analyzing that, it is important to consider some principles of borrowing money that businessmen and investors use to optimize their funds:
1. Stay updated about the aspects of loan process and eligibility criteria that matter.
2. Take each and every effort possible to get the best loan possible. It’d be time worth spent for years to come.
3. Do not sign on the dotted line if you are unsure about any aspect of the loan agreement.
So, how do you use these principles for getting the best loan against property in India ? There are several factors that play a vital role in such an important financial transaction. Here is how you can optimize this loan on each factor:
• Know where you stand and what you want.
If you are taking a loan against property for the first time, this is where you may fall short. You need to understand a few important aspects such as:
1. LTV ratio: Loan to market value of the property
2. Potential criteria for evaluating the cost of the property
3. Suitable repayment strategy
These are very important and can be considered almost non-negotiable. It may not seem to make sense that this list doesn’t include interest rates, but the fact is, after you have taken this loan, these factors will matter as much as loan rates.
• Know what you would be willing to adjust.
You may not find the perfect loan against property in India . In that case, there are certain factors that you will have to adjust with. You should, however, be certain about how much you can adjust. In other words, if the interest suggested by the housing finance company is too high to make comfortable repayments, then you should negotiate it. In the end, ensure that these factors are within your comfort zone. These include:
1. Loan tenure or the loan term offered
2. Pre-payment penalty
3. Interest rate
4. Processing fees and other charges
• Know your finances well enough.
Here are some factors that should be in the best possible condition to provide you with maximum advantage in loan negotiations:
1. Credit score
2. Property documents and evaluation
3. Employment details
The list may seem to be a long one. Keeping these factors in mind though, you can ensure that you get the best loan as per your requirements.
Home loan protection plans (HLPP) are unique insurance plans for home loan borrowers. Simply put, this gives a lump sum benefit in the event of the death of the insured, which can be used to pay off the pending home loan amount to the bank or housing finance company. This basically helps to safeguard your decision of buying a home using a housing loan . That being said, it is important to know a few facts about this to make the best decision possible.
• It is a term insurance.
This cover works as a term insurance i.e. provides coverage at fixed rates of payments for a limited period of time. In case of death, the nominee gains full benefit, which is the lender, in case of a house loan. While most mortgage organizations have collaterals, this insurance cover is a great asset for the insurer as it can ensure that the borrower’s family don’t lose their house in the event of an accident.
• The premium is a very small amount.
Like term insurance, the premium on this is a small amount and can be paid annually or in a single payment. Most Indian housing finance companies also allow you to include it in home loans, if you don’t have sufficient balance for paying the premium.
• There are no benefits in the event of survival.
This type of policy has no benefits if the insurer survives. This drawback is the main reason why low cost insurance plans are available in the first place. However, this home loan insurance cover is valid for the entire duration of the loan. That makes it a great and affordable safety net in case of death as your home stays within the family. For most people, this is an important cover as their home is the largest asset for them.
• You can use term insurance for the same purpose.
If you already have term insurance of an equivalent amount and time period, you may not need to buy HLPP separately and can use the same. In most cases, people need to buy it as they don’t have an existing term insurance policy of equivalent value.
The safety of this policy is very important to people who do not have any major investments that can be used to repay pending amounts in EMIs. While this is not a necessity for people buying homes as an investment, it can be deemed as a requirement for self-occupied property purchases with housing finance.
Even in this charge-it world, there are times when having cash on hand is handy, especially when traveling out of the country. When abroad, you have to deal with the issue of coin. Specifically, the coin of the realm.
Sure, there are plenty of places waiting to make a currency exchange quick and easy. But that almost always means that you will pay more for converting money than you should. What’s the best way to exchange without giving too much of it away? We asked around.
If you have to have cash fast, an exchange firm is the easiest way. Travelex is probably the best-known company. You don’t have to order five days in advance (as you often do with your local bank, see below) and you don’t have to deal with language barriers. Travelex will even deliver the money to your home or to your departing airport.
Of course, all of this convenience comes at a price: the service charge. If you wait until you get to an airport to exchange your currency, you’re probably going to pay a hefty foreign transaction fee. Branch locations may be a little cheaper: Some Yelp customers (who generally give Travelex high marks) have commented that fees were waived if they checked in to a branch location online, and the company would take back any unspent money within 90 days of their trip, converting it back to U.S. dollars for no additional fees. Others comment that there are minimum amounts you have to exchange to avoid larger fees.
Think of Travelex as a concierge service. Like most anything else, you can always pay less if you’re willing to invest more of your valuable time doing the legwork on your own. But if you are taking an impromptu trip, waited too long or just don’t want to go through the hassle, Travelex, and companies like it, will make the process easy.
Your Local Bank
To avoid high fees, you can always go to your friendly local bank branch. But you’ll probably have to arrange for the money several days in advance. “Most banks will allow you to order foreign currency prior to traveling internationally. Banks such as Bank of America offer their customers the options to order currency online or in their banking locations by using Bank of America checking or savings accounts,” according to Ileaa Swift, owner of the website Swift Travel Deals. “If you do not have a savings or checking account with a particular bank, but have a credit card with the bank, visit the local branch and ask about onsite foreign currency exchange options. Most banks even offer tips that will help you figure out how much foreign currency you will need to order and also offer options for cash advances. Most banks also have the option to print out currency exchange rates as wallet cards for you to take with you during your trip.”
You read that right. People who travel abroad sometimes end up with foreign currency they haven’t changed back into dollars Place an ad on Craigslist, Facebook or your local newspaper saying that you would like to exchange your currency. You avoid all fees and depending on the other person, you can probably make the exchange at current exchange rates without any markups.
There are some caveats. First, you have to understand how to calculate exchange rates. There are online currency exchange rate calculators and plenty of articles to help with that, like Understanding The Spread in Retail Currency Exchange Rates.
Second, any time money is involved safety becomes a concern. Make the exchange in a public place and have somebody with you. If you have a GoPro camera, consider recording the transaction by leaving the camera on your dashboard.
The plastic in your wallet isn’t a bad resource. But be careful: If you use your bank ATM card or a credit card, make sure it doesn’t charge a foreign transaction fee. If it does, be prepared to pay an extra 1% to 3%. If you plan to travel abroad regularly, consider getting one of the Top Credit Cards With No Foreign Transaction Fee.
“Not only is the lack of a foreign transaction fee important, but so is the exchange rate,” says Mike Scanlin, CEO of Born to Sell, a software development firm that creates covered call investment tools. “I did a test when I was in Japan. I used the same ATM machine first with a Bank of America debit card and then with a Capital One Visa card (with a cash advance feature). Even though the transactions were done one minute apart, the Capital One [card’s] exchange rate was much better than the Bank of America [card’s] exchange rate. Plus, Bank of America charged a foreign ATM fee, where Capital One did not. Even though the Capital One [withdrawal] was treated as a cash advance (since it was a credit card and not a debit card), I was able to pay it off immediately with online banking so there was no interest charge for the cash advance.
If you have multiple cards, you can do a similar test in a foreign country and then log onto the bank site to see what happened. Take out $100 with each of two or three different cards and see which cost you the most. Then use the best card for the rest of the trip.”
Last week was another difficult one for stocks, marked by a bruising mid-week selloff triggered by China’s surprise devaluation of its currency. For many investors, the move reinforced fears about the growth prospects of the world’s second-largest economy. Though U.S. equities remained resilient, other markets came under pressure. European equities in particular struggled as the fall in China’s currency and the appreciation of the euro hit exporters especially hard.
It also did not help that the news came on the back of another worrisome trend: an accelerating decline in U.S. inflation expectations. Too little inflation can be just as perilous as too much, as a decline in inflation expectations can indicate slower growth ahead.
That said, as I write in my new weekly commentary, “The Scene Is Set for Higher Volatility,” there is a big difference between slow growth and no growth, so it’s important to put last week’s events in context.
China’s surprise devaluation.
While I don’t believe China’s move has the dire repercussions some have suggested, it does fit within the broader narrative of a slowing global economy, with less support from emerging markets.
But it needs to be viewed in the context of the currency’s relative strength: The yuan was one of few currencies to have appreciated against the dollar over the past five years. In that light, the move can be viewed as part of a shift toward a market-determined exchange rate and broader financial liberalization. In addition, over the intermediate term, it should provide some modest stimulus to that economy.
Declining inflation expectations.
Despite the slump in inflation expectations and other signs that U.S. growth remains below trend, I don’t view deflation as a real risk. Last week brought more evidence that U.S. economic growth should be modestly higher in the second half of the year, although it’s unlikely to surge. Reports on retail sales, industrial production and producer prices were all solid.
Finally, much of the recent drop in inflation expectations is being driven by lower commodity prices, particularly oil. Last week, headlines were focused on oil trading down to a six-and-a-half-year low. However, this had more to do with supply than demand and was mostly a U.S. phenomenon, driven by the recent stabilization in the U.S. rig count as well the fact that production has remained resilient, despite the pullback in drilling activity.
As for what this means for investors, there’s one key takeaway: the ingredients are in place for more financial market volatility.
At its peak last week, the VIX Index, which measures volatility of the S&P 500 Index, was up 50 percent from the previous week’s low, according to Bloomberg data. Yet volatility is still below its long-term average, and the low-volatility climate of the past few years is incompatible with a world marked by slow growth, unstable inflation expectations and a likely Federal Reserve rate hike before year’s end.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog and you can find more of his posts here.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.
Most expenses for a home loan seem small as compared to the principal amount, due to which people fail to take them into account and include them in the principal amount. Thus, it should come as no surprise when the final home loan calculations bring about EMIs that are shockingly huge to pay. It makes sense, thus, to include these minor expenses in your principal amount while calculating your EMIs with the home loan EMI calculators in India .
It is a tiny percent of your principal amount and can even be waived off in certain cases. In most banks, it can be anywhere up to 1%. However, the final processing fee will be charged along with the requisite service tax.
This amount was earlier included in the principal loan; however, from mid-2012, this amount must be paid in its entirety separately. So, calculate the stamp duty and set aside sufficient funds for it like you would save up for the down payment. Since it costs up to 8% to 10% of the principal amount, you must include it in your home loan calculations carefully. As, you can’t pay it via EMIs, exclude it from the amount you enter in the home loan EMI calculators.
A home loan protection plan is a term insurance product for homes. You can pay it all at the start or you can pay it in monthly instalments. This choice mostly depends upon available funds after the down payment and stamp duty cost. If you plan to pay it on a monthly basis, you must include it accordingly in your EMI calculations.
Interest rate fluctuations:
These are really challenging to anticipate. Most people fail to include them in the home loan calculators in India . But, for floating and fixed interest rates, these fluctuations are very common. So it would be smart to make a few rough calculations to observe their impact on your EMIs. You should be in a position to pay off the EMIs in spite of the variations as they would occur eventually. Therefore, don’t plan your EMIs in such a way that there is no money left for these additional expenses.
It is imperative to foresee all these factors and understand their impact on your total expenses. A smart strategy would be to keep sufficient room in your monthly cash flow for these additional expenses. So, plan smart and choose well for your dream home.
Most people provide the much required maintenance, update or total overhaul to their homes from time to time. How you choose to improve your home depends on your lifestyle, home management and discretionary income. Most people can easily afford the partial renovation, basic decorations or painting. However, a complete home renovation would need major financial support. This is where the home improvement loans come handy.
Nowadays, most people can change the look of their homes or make major changes easily. All they would need is a house renovation loan from the right housing finance partner. When you understand the developments in the interior designing or architecture field, you know that you can overlook some of the trends although you cannot neglect all of them. For example: You can be choosy about furniture or electronic gadgets for your home and these can even be changed as per your convenience and personal choice. However, you must ensure that you use concealed wiring, in-wall plumbing, recessed lighting, etc in your home. In addition, there are certain choices such as wall mouldings, installation of German kitchen, eco-friendly furniture etc. that would require you to possess considerable amount of funds for effective execution. When you plan major alterations for your house, you must ensure that you consider all the involved variables well. If you don’t get a contractor adhering to his deadlines and budget, your borrowed amount may turn out to be insufficient.
You must also pay close attention to your loan contact. The tenure for a home renovation loan can extend for as long as 20 years. However, obviously, you would not want to extend it for that long since you would end up paying much more interest as compared to the principal amount.
The interest rate for home improvement loans is variable. Hence, it is best to negotiate it well with the finance institution or bank beforehand. A lot of people contact the same housing finance company that they were in touch with for their home loan, as the process tends to be faster if you already have shown your repayment ability and credit score to an organization. The borrower must also pay close attention to important factors such as processing fees, stamp duty, EMIs, etc. If you can manage to add it to your existing home loan, then you can enjoy the tax exemption on the respective EMIs of the renovation loan too. Hence, make a smart and financially savvy choice for your home.
It’s a sad fact of modern life: Senior citizens are often targeted by thieves and financial tricksters, and those residing in nursing homes can be the most vulnerable of all. If your loved one is in a facility, or will soon be entering one, how can you make sure that his or her pension plan payments, Social Security income, annuity income or other funds are protected from unscrupulous employees? Here are a few pointers.
1. Set Up a Power of Attorney
Have the senior legally appoint a trusted relative or friend to act as a representative with the authority to manage money and make financial decisions by having a lawyer draw up a power of attorney (POA) document. In fact, you can do this long before you think your loved one might ever end up in a nursing home; the POA can be written to go into effect only if, and when, the patient enters a facility or can no longer make his or her own decisions. POAs can act as a deterrent: If a sticky-fingered staffer at a facility knows John’s son has control over his finances, he or she might be less likely to target John. (For related reading, see Power Of Attorney: Do You Need One?)
2. Ask About Safeguards
Another important step is to interview the appropriate nursing home staff prior to admission. Ask about how they respond to late or missed payments (unpaid bills can be a sign of hanky-panky), how they handle cash for residents, how they release money from residents’ accounts and whether they allow salespeople to make onsite presentations. Also ask what the facility’s policies on theft are and what measures they take to safeguard residents’ checkbooks, ATM cards, federal benefit cards and other sensitive documents against financial and identity theft. Finally, ask what the facility’s procedures are if they suspect that a resident is being financially exploited or a victim of theft or fraud. A trustworthy facility will have clear procedures in place to prevent and detect problems. (For related reading, see How Seniors Can Fight Identity Theft)
3. Use Direct Deposit
Don’t have checks mailed to the nursing home; have payments directly deposited to the resident’s bank account. Nursing home residents will also want to receive their bank statements electronically to prevent someone from gaining access to their financial information by stealing their mail. Residents should also avoid logging into sensitive accounts from any public or shared computer, where account security could be compromised (see Tips For Keeping Your Financial Data Safe Online). If you suspect mailed checks have been stolen and fraudulently cashed, notify the US Postal Inspection Service as well as the facility. And, as always, watch out for fake mail and email that pretends to be from a financial institution. but is really a ploy to steal money.
4. Don’t Let the Facility Receive Disbursements
A nursing home can be appointed a patient’s representative payee; this means the facility can directly accept federal benefit payments from the Social Security Administration, Department of Veterans Affairs, Department of Defense, Railroad Retirement Board and the Office of Personnel Management on a resident’s behalf. The facility is then supposed to use those payments for the resident’s benefit – to pay legitimate bills he or she is responsible for, for example.
The potential for financial elder abuse is obvious with this arrangement (if not from outright fraud by the nursing home, then from administrative snafus). There have been cases of nursing homes overpaying themselves with that income. “If a resident has dementia to the extent that it limits his or her ability to handle finances, a trusted authorized representative, often a family member, should handle income and bills,” says Eric Carlson, directing attorney of Justice in Aging, a national organization that uses the power of law to fight senior poverty. “Some residents do not have such representatives, and these are the residents at greatest risk.”
5. Don’t Bank with the Facility
Nursing homes may offer resident trust funds into which patients can deposit their pension checks, Social Security checks and other monies. The problem is that unscrupulous nursing home employees can potentially steal from these accounts. And they have.
As a 2013 investigation by Peter Eisler for USA Today revealed, “Nearly half the states do not require background checks for nursing home office workers who handle residents’ trust accounts, and only a handful of states require that those accounts be audited.” The investigation found that business managers, bookkeepers and other office workers had stolen from thousands of residents’ accounts; the lack of audits made it easier for thefts to go undetected. Some of these thefts were in the hundreds of thousands of dollars.
Nursing homes cannot require residents to deposit funds in resident trust funds and have no legal right to manage residents’ money, according to the Atlanta Legal Aid Society. Even if a resident does put money in one of these funds, he or she must authorize every transaction or appoint a representative to do so (unless the resident or the represent directs the nursing home to release some or all of the funds on an “as needed” basis).
If you are going to deposit your funds in such an account, know whether your state requires audits and background checks; if not, find out if the nursing home conducts its own criminal background checks on the people who will have access to residents’ accounts, and if it performs voluntary audits of accounts.
Buying a home is probably the largest single financial investment you’ll ever make and, if you’re like most people, you’ll need a mortgage to make it happen. While there are no guarantees that you’ll qualify for the mortgage you want, there are certain steps you can take that will make you more attractive in the eyes of lenders. Read on to find out the best tips for improving your chances of getting a mortgage.
1. Check Your Credit Report
Lenders review your credit report – a detailed report of your credit history – to determine whether you qualify for a loan and at what rate. By law, you are entitled to one free credit report from each of the “big three” credit rating agencies – Equifax, Experian and TransUnion –every year (see, What’s On A Consumer Credit Report?). If you stagger your requests you can get a credit report once every four months (instead of all at the same time), so you can keep an eye on your credit report throughout the year.
2. Fix Any Mistakes
Once you have your credit report, don’t presume everything is accurate. Take a close look to see if there are any mistakes that could negatively affect your credit. Things to watch out for:
debts that have already been paid (or discharged)
information that is not yours due to a mistake (e.g., the creditor confused you with someone else because of similar names and/or addresses, or because of an incorrect Social Security number)
information that is not yours due to identity theft
information from a former spouse that shouldn’t be there anymore
incorrect notations for closed accounts (e.g., it shows the creditor closed the account when, in fact, you did)
It’s a good idea to check your credit report at least six months before you plan to shop for a mortgage so you have time to find and fix any mistakes. If you do find an error on your credit report, contact the credit agency as soon as possible to dispute the mistake and have it corrected.
3. Improve Your Credit Score
While a credit report summarizes your history of paying debts and other bills, a credit score is the single number that lenders use to evaluate your credit risk and determine how likely you are to make timely payments to repay a loan. The most common credit score is the FICO score, which is calculated from different pieces of credit data in your credit report:
Payment history – 35%
Amounts owed – 30%
Length of credit history – 15%
Types of credit in use – 10%
New credit – 10%
In general, the higher the credit score you have, the better the mortgage rate you can get, so it pays to do what you can to achieve the highest score possible. To get started, check your credit report and fix any mistakes, and then work on paying down debt, setting up payment reminders so you pay your bills on time, keeping your credit-card and revolving credit balances low, and reducing the amount of debt you owe (e.g., stop using your credit cards).
4. Lower Your Debt-to-Income Ratio
A debt-to-income ratio (see Debt Management Ratios) compares the amount of debt you have to your overall income. It’s calculated by dividing your total recurring monthly debt by your gross monthly income, expressed as a percentage. Lenders look at your debt-to-income ratio to measure your ability to manage the payments you make each month, and to determine how much house you can afford.
If you have a low debt-to-income ratio, it shows you have a good balance between debt and income. Lenders like to see debt-to-income ratios that are 36% or lower, with no more than 28% of that debt going toward mortgage payments (this is called the “front-end ratio”). In most cases, 43% is the highest debt-to-income ratio you can have and still get a qualified mortgage. Above that, most lenders will deny the loan because your monthly expenses are too high compared with your income.
There are two things you can do to lower your debt-to-income ratio, and both are easier said than done:
Reduce your monthly recurring debt.
Increase your gross monthly income.
The single most important thing you can do to reduce your monthly recurring debt is to buy less. Take a careful look at where your money goes each month, figure out where you can save and make it happen.
While there’s no easy way to increase your income, you can try to find a second job, work extra hours at your primary job, take on more responsibility at work (and get a pay increase) or complete coursework/licensing to increase your skills, marketability and earnings potential. If you’re married, another option to increase your household income is for your spouse to take on additional work – or go back to work if one of you has been a stay-at-home parent.
5. Go Large with Your Down Payment
Nothing shows a lender more that you know how to save like a big down payment. A large down payment reduces the loan-to-value ratio, which increases your chances of getting the mortgage you want. The loan-to-value ratio is calculated by dividing the mortgage amount by the purchase price of the home (unless the home appraises for less than you plan to pay, in which case the appraised value is used). Here’s an example. Say you plan to buy a house for $100,000. You put down $20,000 (20%) and seek a mortgage for $80,000. The loan-to-value ratio would be 80% ($80,000 mortgage divided by $100,000, which equals 0.8, or 80%).
You can lower the loan-to-value ratio by making a larger down payment: If you can put down $40,000 for the same house, the mortgage would now be just $60,000. The loan-to-value ratio would fall to 60% and it will be easier to qualify for the the lower loan amount. In addition to increasing your chances of getting a mortgage, a larger down payment and lower loan-to-value ratio can mean better terms (i.e., a lower interest rate), smaller monthly payments and less interest over the life of the loan.
When you’re setting your down payment, remember that a 20% or larger down payment will also mean that g you won’t be subject to a mortgage insurance requirement, all of which can save you money.
Traditionally speaking, most investors considered identifying the right fixed deposit to be as easy as visiting a bank and opening an account. With the current economy, most banks compete with each other for your money. So, they offer the best interest rates they can. It won’t be as easy as visiting a third party website to check out all the interest rates though. If you do visit these websites, you can find the bank that offers the highest interest rate on the fixed deposit schemes . There are a few other considerations too, that are important for savvy investors.
There are several organizations that offer fixed deposits today. All nationalized, cooperative, private and foreign banks, select mutual funds, select companies and the Indian postal service offer term deposits. So, you should evaluate all these organizations to select the best one possible. Company FDs have higher returns and an even higher risk, just like cooperative bank FDs. Nationalized banks and the Indian Post offer higher safety and lower returns. Hence, evaluate all these options based on your investment agenda.
For investors looking for a high yield, FDs are not the ideal choice. You must invest funds as per your agenda so as to choose the right investment tool, organization and amount. The most popular reasons for investing in low risk and low gain tools like the FD are:
• To earn interest
• To maintain liquid assets
• To have spare cash for an emergency like an accident or a surgery
• To diversify the investments
• To invest for a certain long term objective such as a gift for a minor
Based on your agenda, you can narrow down the specifics to look out for in the fixed deposit options. For example: If you want to save some extra cash for an emergency, you can read up on the premature and partial withdrawal penalty. If you want to diversify your investments, then you won’t invest the entire sum in one organization. Company FDs and fixed deposits in banks can make a great choice. You can’t invest anything more than 1 lakh rupees in any bank, though, as this is the maximum limit of insurance on these term deposits.
If you have chosen your specifications well, you can end up with the best possible investment. While this process may seem a bit complicated when compared to just choosing the highest interest, the result can certainly be a useful investment for you.
Many first time borrowers are hastily impressed by the interest rates advertised in newspapers and television ads. However, most people don’t get their home loan at those advantageous rates. There are a few factors to bear in mind to get the ideal home loan rates possible for your brand new home.
• Credit history
This factor is all about financial standing. It allows the lenders to see your repayment ability, which is one of the most important factors. The smart thing to do before you apply for a home loan is to improve your credit history. Get rid of those credit card debts and personal loans. There are a number of things that you can do to show yourself as a reliable candidate for a home loan. Hence, you should take all the necessary steps to let these factors work in your favour.
• Nature of employment
Since your income is the means of repaying your EMIs, the nature of your employment is essential to your lenders. If you’re working in a smaller organization, you may come across as a less reliable candidate as compared to someone working for a public sector bank or a government job since their income is considered more consistent. Thus, your organization, years of experience and appraisals affect your credibility and repayment ability. If you compare a professional to a SME business owner with the same income, a professional is sometimes deemed more credible. You can certainly make this bias work in your favour. Today, most employees are job-hopping only for a 5 to 10 percent increment in salary. You can either choose to work with a more established organization or apply for a loan along with a co-applicant, who is working in a reputed organization.
• Your lender and home loan market
Many banks and housing finance companies are offering home loans today. There is a huge market and substantial competition. So it makes sense to apply to several organizations and let the competition work in your favour. If you get an approval from more than one organization, you are in a good position to negotiate and get the best possible housing loan interest rates .
There are some factors that affect your home loan rates considerably; however, these factors are not under your control. The Reserve Bank of India has several rules and regulations that affect rates for all kinds of loans such as SLR (Statutory Liquidity Ratio) Rate, Repo Rate, Cash Reserve Ratio (CRR), etc., which you need to be aware of.
The economy of India can also affect interest rates significantly. It is possible, though, to anticipate the possible changes to an extent and use them to your favour. So, make sure you use these factors where you can.
Exchange Traded Funds. Likely you’ve heard of them. But you may not know exactly what they are or how they could work for you.
The truth is ETFs are an easy and low-cost way to invest across many stock and bond markets. But even as they’ve gained broad investor acceptance and lots of media attention, many people still have questions about them, such as, “Why should I use ETFs?” and “How do I buy them?” Here, we cut through the noise and offer some key facts about ETFs.
Once you understand the benefits of ETFs, you’ll see how they could be an exciting and smart way to help meet your financial goals, no matter your age, investment experience, or how much money you’re looking to invest.
The simple facts
Let’s dissect what the name “ETF” actually means. ETFs are investment funds that trade like a stock. Made up of a mix of stocks and/or bonds, most are designed to track a major index, like the S&P 500 or the Russell 2000.
Index ETFs aim to match the returns of their market index, often at a lower cost than most mutual funds. Over time, you may do better than if you were invested in a similar mutual fund. In fact, for some markets, ETFs may outperform active mutual funds.
Put simply, ETFs can help you:
- Save money — ETF managers help keep fees low by managing a fund to track its benchmark index. And the taxable capital gains distributions of an ETF can be lower than the average mutual fund. Over the long term, these savings can really add up. Note that you may need to pay a trading commission to buy or sell an ETF (just like a stock), although some brokerages let you trade many ETFs for free.
- Diversify your portfolio — There are many ETFs to fit your personal investment goals — whether it’s building a diversified core across broad markets, investing in short- or medium-term opportunities, or targeting a specific purpose such as cushioning against jumpy markets. You can quickly achieve broad diversification with a single ETF that contains both stocks and bonds. Or choose from specific asset classes, sectors, geographic regions or countries.
- Quickly capture market opportunities — ETFs offer the same trading flexibility as stocks, meaning you know the price throughout the day and can easily buy and sell them during market hours using limit, market or stop-loss orders.
- Earn income — Many ETFs pay dividends, and some focus specifically on high-dividend-paying companies, which can be important if you’re looking for potential regular income. ETFs are also an easy way to access bond markets.
- Manage risk — There’s a growing array of ETFs that can help you hedge currency risk on foreign investments, reduce market volatility, or target specific “factors” such as growth-oriented companies.
- Stay invested — Rather than parking your money in low-interest cash accounts, you can invest in an ETF and still have the potential to earn market returns while you save for short-term goals or decide on specific stocks or bonds to buy. Of course investing in ETFs comes with more risk and volatility than cash accounts. But you may also have better growth potential.
Does the debt from your college days seem overwhelming? You’re not alone: According to the Consumer Financial Protection Bureau, student loans total more than $1.2 trillion in the U.S. That’s second only to the size of the nation’s mortgage debt. Ironically, the burden of student loans is making it harder for college graduates to buy a home. Politicians are debating what to do about the problem, but in the meantime, individual Americans can’t wait around for them to work it out.
Developing a plan to manage your student loans is critical to your long-term financial health. We explore 10 steps to help you get control.
1. Calculate Your Total Debt
As with any type of debt situation, you need first of all to understand how much you owe overall. Students usually graduate with numerous loans, both federally sponsored and private, having arranged for new financing each year they were in school. So gird your loins and do the math: Only by knowing your total debt can you develop a plan to pay it down, consolidate it or possibly explore forgiveness (see Who is eligible for student loan forgiveness?).
2. Know the Terms
As you sum up the size of your debt, also itemize the terms of every loan. Each one could have different interest rates and different repayment rules. You’ll need this info to develop a payback plan that avoids extra interest, fees and penalties.
3. Review the Grace Periods
As you pull together the specifics, you will notice that each loan has a grace period (the amount of time you have after graduation to start paying your loans back). These too can differ. For example, Stafford loans have a six-month grace period, while Perkins loans give you nine months before you have to start making payments.
4. Consider Consolidation
Once you have the details, you may want to look at the option of consolidating all your loans. The big plus of consolidation is that, often, it lowers the weight of your monthly payments burden. It also frequently lengthens your payoff period, which is a mixed blessing: more time to pay the debt, but more interest payments, too. What’s more, the interest rate on the consolidated loan may be higher than those on some of your current loans. Be sure to compare loan terms before you sign up for consolidation. Also, if you consolidate, you will lose your right to the deferment options and income-based repayment plans (see below) that are attached to some federal loans. For more on the subject, see Student Loan Debt: Is Consolidation The Answer?
5. Hit Higher Loans First
As with any debt-payoff strategy, it is always best to pay off the loans with the highest interest rates first. One common scheme is to budget a certain amount above the total monthly required payments, then allocate the overage to the debt with the biggest interest bite. Once that is paid off, apply the total monthly amount on that loan (the regular payment, plus the overage plus the regular amount) to repaying the debt with the second highest interest rate. And so on. This is a version of the technique known as a debt avalanche.
For example, suppose you owe $300 per month in student loans. Of that, a $100 payment is due to a loan with a 4% rate, $100 is due to a loan with a 5% rate and $100 is due to a loan with a 6% rate. One would plan the budget with $350 toward student loan payoff, applying the extra $50 to the 6% loan. When that is paid off, the $150 used to pay the 6% debt each month would then be added to the $100 being used to pay the 5% – thus speeding up that payoff. Once that is paid off, then the final loan at 4% would be paid at the rate of $350 per month until all student debt is paid in full.
6. Pay Down Principal
Another common debt payoff strategy is pay extra principal whenever you can. The faster you reduce the principal, the less interest you will pay over the life of the loan. Since interest is calculated based on the principal each month, less principal translates to a lower interest payment. For more techniques, see Student Loans: Paying Off Your Debt Faster.
7. Pay Automatically
Some student-loan lenders offer a discount on the interest rate if you agree to set up your payments to be automatically withdrawn from your checking account each month. Participants in the Federal Direct Student Loan Program get this sort of break (only .25%, but hey, it adds up), for example, and private lenders may offer discounts as well.
8. Explore Alternative Plans
If you have a federal student loan, you may be able to call your loan servicer and work out an alternative repayment plan. Options include:
Graduated repayment – increases your monthly payments every two years over the 10-year life of the loan. This plan allows for low payments early on, accommodating entry-level salaries and assuming you will get raises, or move on to better-paying jobs, as the decade progresses.
Extended repayment – allows you to stretch out your loan over a longer period of time, such as 25 years rather than 10 years, which will result in a lower monthly payment.
Income contingent repayment – calculates payments based on your adjusted gross income (AGI) at no more than 20% of your income for up to 25 years. At the end of 25 years, any balance on your debt will be forgiven.
Pay as you earn – caps monthly payments at 10% of your monthly income for up to 20 years, if you can prove financial hardship. The criteria can be tough, but once you’ve qualified, you may continue to make payments under the plan even if you no longer have the hardship.
While these plans may well lower your monthly payments (click here to review the complete list of repayment options), bear in mind that they may mean you’ll be paying interest for a longer period, too.They also aren’t applicable to any private student loans you took out.
9. Defer Payments
If you not yet employed, you can ask your student loan lender to defer payments. If you have a federal student loan and you qualify for deferment, the federal government may pay your interest during the approved deferment period. If you don’t qualify for deferment, you may be able to ask your lender for forbearance, which allows you to temporarily stop paying the loan for a certain period of time. With forbearance, any interest due during the forbearance period will be added to the principal of the loan.
10. Explore Loan Forgiveness
In some extreme circumstances, you may be able to apply for forgiveness, cancelation or discharge of your student loan. You could be eligible if your school closed before you finished your degree, you become totally and permanently disabled or paying the debt will lead to bankruptcy (which is rare). Less drastic, but more specific: You have been working as as a teacher or in another public service profession.
The questions that possibly come to your mind when you think of opting for housing finance are – ‘How much will I have to pay in the form of EMIs every month? Will I be able to afford it?’ These questions are answered to a large extent by the amount of home loan interest rates that we choose. If our home loan rates are chosen well, we have nothing to worry about in terms of our monthly repayments. With careful planning, a home loan can be exceedingly easy to pay off; however it’s imperative that we choose the best available home loan interest rates . This aspect of the home loan can be a huge deciding factor in understanding how our funds will be paid off in the years to come.
The amount we pay as EMIs every month certainly has an impact on our lifestyle. If your EMIs are too high, the other expenses would have to reduce drastically. This in turn causes your lifestyle to take a downslide and has you compromising on basic things at times. A home loan shouldn’t mean that you lose out on your quality of life in any way; on the other hand, it is supposed to make your life much better. The opposite, paying slightly low EMIs means that your loan is being stretched for a much longer duration than it has to and you’re, hence, paying back a lot more money than you borrowed. Why drag on the home loan for any longer than you have to? Make sure that your home loan rates are just right and choose the best option carefully.
You need to communicate your needs to the bank/financial institution so that they can help you with the kind of housing finance that is apt for you. It is essential to know the home loan amount that you’re eligible for so that you have a defined budget for the property you wish to buy. Then figure out how much you can afford to pay every month in the form of EMIs. This gives you a defined direction to choose the interest rates and loan tenure accurately. Bear in mind that it’s very important to plan out your monthly budget; since it’s the only way you’ll know whether or not your home loan is affordable.
It’s not as hard as it seems to find the perfect home loan rates in India . With a large variety of home loans available, you can easily pick an option that suits your financial situation. Look carefully and select the loan with the ideal home loan rates to make sure that your new home never feels like a burden.
This debate is a common one among most home loan borrowers. Honestly, they both have their merits and demerits. You may wonder; how do you then select a strategy for a future that you can’t definitively predict? How will your profession or job shape up eventually? What kind of gains will your investments offer? Without a realistic understanding of these details, selecting the ideal home loan interest rates from among fixed or floating rates can be tough, and should not be treated as a random part of the house loan package. There are, however, three important factors that will affect your home loan rates.
• Home loan rate fluctuations
The RBI regulations, the market changes and the changes in the economy (local and international) affect floating interest rates whereas the fixed interest rates remain constant for a pre-determined period of time. Floating interest rates can increase or decrease and you may pay more or lesser EMIs when compared to the fixed rate counterpart. You cannot foresee specific details; however you can benefit from fixed rates if the floating rate escalates. You can also benefit from floating rates if they sink down. Keep that variation in mind before making the choice.
• Higher interest rates
Fixed rates are higher than floating rates. So, the question is simple. Will you like to pay more EMIs every month to avoid the fluctuation? Do you have enough funds and self discipline to pull it off? Is it a smart decision, a lot of people wonder, to take up additional responsibility? Can you pay more than the floating home loan rates for the next 30 years? Yes, the interest rates will not stay the same for next 30 years. Most lenders adjust the rate after 3 to 10 years, based on the agreement consented to by both the parties.
• Financial management
Lenders are never at a loss. Fixed interest rates on housing loans always place their rate of interest higher than the conventional floating rates of interest. As a borrower, you can do little to avoid the risk. This is an important factor – can you afford to pay this extra charge for the home loan tenure? Does it fit in your monthly cash flow? Most people will need much higher monthly earnings to afford the fixed home loan rates in India .
If you consider these three factors in detail, you can hope to understand how you want to take the home loan. So, take a look at your financial planning and make the best possible “long-term” decision for your family.
A home loan balance transfer is a mere financial service to avail certain advantages that you previously didn’t. Any smart borrower should be able to determine if the transfer is worth the expenditure. Otherwise, it may turn out to be a very expensive choice. This is a primary reason why financial experts do not suggest opting for a home loan balance transfer in the last 2 to 5 years of the housing loan tenure. Hence, every borrower must identify the vantage point for his or her Home Loan before considering a transfer.
Lower interest rates
When you opt for a housing loan with certain interest rates, you may gain an advantage by shifting to another housing finance company, which offers much lower interest rates. For most borrowers, who have made well-disciplined repayments, it can be a huge save. This kind of ideal home loan transfer is a profitable choice based on the home loan offer received. So, make your own calculation before making the decision, though.
No prepayment charges
A lot of borrowers do not want to pay the applicable prepayment charges for Home Loans with fixed interest rates. If the new housing finance company allows you to repay your loan in a lesser home loan tenure, you can save a substantial amount of interest. That can make it a smart move, based on the other costs incurred in the home loan transfer, though. So, you must calculate the savings against the expenses incurred before signing on the dotted line again. Most borrowers forget that this is the same home loan process – you will need to meet the home loan eligibility criteria, you must submit the documents required for home loan and you will need to pay the processing charges, service taxes etc. Hence, you must include all these expenses in your calculations.
Loan restructuring options
Some of the housing finance companies in India deny two types of home loan restructuring that you may need as a borrower; extra money for home renovation, and extending the home loan tenure as the current floating or fixed interest rates may be too high for easy repayments. Sometimes, housing finance companies fail to take this into account and make the necessary changes. It is perfectly alright to seek an alternate lender. Even if your current lender fails to offer the restructuring, you still will need to get a NOC (No objection certificate) from them, because no housing finance company will complete the home loan process otherwise. It is a much needed move; though, you must make it cautiously.
When discussing how to invest like a millennial, I mentioned that social responsibility is a key factor when making investment decisions. A study from Morgan Stanley’s Institute for Sustainable Investing supports this claim, finding that millennials are two times more likely to invest in companies that target impact outcomes. What’s more, 76 percent of women surveyed prioritize economic, social and governance factors in their investment decisions. But this phenomenon isn’t limited to any one generation or gender. I spoke with Deborah Winshel, BlackRock’s Global Head of Impact Investing, to learn more about what she is seeing in this space and why sustainable investing is here to stay.
First things first. What is sustainable investing?
At BlackRock, we define “sustainable investing” by three key segments: exclusionary screens, ESG considerations and impact investing.
1. Exclusionary screens
Exclusionary screens remove specific products or industries that don’t align with an investor’s values. For example, you may decide you don’t want to invest in tobacco or fossil fuels. This approach was really the first iteration of making investment decisions based on factors other than just financial performance, applying constraints based on personal beliefs.
2. ESG considerations
ESG considerations use environmental, social and governance factors to identify not just what a company does but how they do it. Companies report on how they pursue environmental responsibility, how they support employee diversity, how many volunteer hours they devote to the community every year, etc. We then use these standards to build a portfolio.
3. Impact investing
Impact investing targets a very clear social or environmental outcome that is measurable and transparent. Instead of just refraining from investing in something that doesn’t align with your beliefs, you’re focusing on companies that are operating responsibly and having a positive impact on the world.
How much of an increase have you seen in sustainable investment assets globally?
We have seen sustainable assets increase by 61 percent in the last few years and the growth continues globally. About two thirds of the sustainable investment market is in Europe and 30 percent in the U.S., where we are seeing faster growth. We know that exclusionary screening is most prevalent in Europe, whereas the ESG approach is most common in the U.S.. In my opinion, a key reason why growth isn’t even greater is because there hasn’t been a wide range of investment opportunities to meet the demand until very recently.
If you could pinpoint the source of this increased demand, what would it be?
No matter how old you are or which generation you identify with, there is an increasingly undeniable overlap between our personal lives, our financial lives and the world at large. Whether it’s carrying reusable bags with you to the grocery store or hearing the Pope talk about climate change or reading about President Obama’s environmental initiatives, it’s clear that what we do today has long term impact. There’s now an opportunity for people to direct their investment capital in a way that is meaningful to them beyond just generating a financial return. This opportunity is resonating with individual investors who are looking to do more with their money. At BlackRock, our job is to try to protect and grow our clients’ assets, and our investment platform, insights and technology drive our ability to identify and track attractive impact opportunities. Our objective with any impact investment is to deliver two outcomes: (1) defined and measurable impact outcome alongside (2) a targeted financial return.
How can an investor be certain that they are making a difference and having a positive impact overall?
Transparency is very important. With the reporting capabilities that are being made more readily available through technology, it is becoming easier to effectively measure the repercussions of where we as investors direct our money. For example, my colleagues and I are laser focused not on what makes a “good” company or a “bad” company but which companies have a carbon footprint that is better than the index, or companies that are achieving environmental outcomes through green technology and innovation. By making this information readily available to the investor, we are helping them to decide for themselves which investments will have the impact that they are hoping to achieve.
The one issue that any start-up construction company faces is capital. The business is just getting off of its feet which mean money will not be easy to come by. But the paradox here is you NEED money to get your operations going. Those backhoes and diggers and other heavy duty equipment you need – they certainly aren’t cheap. Then there is the matter of you being a newbie in the industry which means that a business loan won’t be easy to obtain either. So how DO you get the ball rolling? What means do you have of acquiring the machines that are essential for you to deliver your services?
The answer is construction equipment financing.
There are various companies out there that are willing to take the risk of providing loans to start ups for their machinery and equipment needs. Of course their terms and conditions will be a bit different from what you would expect in a regular term loan. The equipment that you will buy will have to be mortgaged to secure your payoff. The financer will also perform a stringent analysis of your future business prospects. But this money can be the life-blood you need to kick-start your enterprise. Matching these eligibility requirements is something you should seriously look into.
So how do you ensure that you make the right decisions when it comes to heavy equipment financing?
• First you must understand that the financing you are about to avail can make or break your business. Be sure you are ready to take up the responsibility.
• Carefully go through the different construction equipment financing plans that different lenders offer. A thorough study of all the options is a must here.
• Look into their eligibility criteria next. That will narrow down your list of financers considerably.
• Always check the terms and conditions of the loan they are willing to offer, especially of the company that is offering a too-easy-to-be-true loan. Beware of falling into a trap which you are incapable of getting out of.
• Check their repayment terms carefully. Look for hidden charges and overheads.
• Scan through the experiences of past customers. How do they rate the lending company’s services? What do the review portals say about them? Or the social media? Look for any clues on their service quality.
Now comes the hardest part. Once you have found the right heavy equipment financing company and availed of the loan from them, the true struggle begins. You are a start-up enterprise. How on earth will you be able to pay back all that money?
Here are a few tips on making some smart savings
• Take a look at your buying habits. Do you buy construction material in bulk? Consider buying in off season?
• Think about a liaison with your local supplier and agree on terms that are easier than the market price.
• Keep an eye out on the market for any new deals, offers and clearance sales.
• Don’t overlook the small savings like on utilities and regular bills. Even if you save $100 a month it still totals out to $1200 for the year.
For more information on construction equipment financing, be sure to visit Aberdeenfinancialgroup.com.
Every finance expert and finance blog suggests that reading the fine print for your home loan agreement is very important. You must understand it, clarify your doubts and enter into a contract with complete awareness about the implications of the terms and conditions in the contract. However, most borrowers don’t. But, this long and boring document can help you to understand the ramifications of your contract like no other housing loan blog post or article can. So, it is a must-read. Though it is not entertaining, it is an important piece of information. If you would not want to read it all, here are a few crucial pointers that you should pay attention to:
There will be an extended section about all the possible charges and fees. It will be vital to understandhow and where you will need to pay. This category will include details about:
• Prepayment charges and foreclosure charges on fixed rate housing loans
• Applicable variations in floating and fixed interest rates on housing loans
• Late payment fees for house loans
• Loan default
• Top up loan processing charges
Most borrowers are likely to take certain actions under specific circumstances. They are expected to present certain documents and inform precise changes to the lender. The housing finance companies in India are at liberty to change the house loan agreement accordingly. Though the best home loans in India are accommodating in this section, it is essential for people to understand their duties as borrowersand submit all the required documents on time. The primary advantage of this kind of effort will come in handy when you want to opt for a top-up loan for renovating your home.This is more important if you are a self-employed person because there will be over-draft facilities available on the property in question. So, understanding the rules and regulations for home loans are vital.
Last but not the least, these documents are complicated and include quite a few terminologies, which will be well-explained in the document itself. So, take a look at the definitions of certain words if you do not follow them easily. It will help you to process your home loan terms and conditions clearly. When you submit the documents required for home loans and sign the agreement, these are the rules and regulations that you are agreeing to. Hence, understanding the terms and conditions appropriately will be as crucial as the signature on the document.
When you do what you love, you won’t work a day in your life. At least that’s how the saying goes. Even if that is a high ideal to live up to, it doesn’t mean you can’t incorporate some of the things you love into your work. The marketing of your financial advisory business can often be conducted while you are pursing your hobbies. So why not take advantage of the situation when the opportunity presents itself?
Mixing business and pleasure is actually not that hard. Many people find golf to be an ideal sport for business owners and advisors in that it allows them to get outside, engage with others and talk shop, all while getting in a bit of exercise. In fact, many professionals, from Presidents to Wall Street moguls, have closed deals or settled on a plan of action while taking in 18 holes on the golf course.
Do the thing you love while at the same time trying to sell your services to prospective clients or forge partnerships with other professionals that could help your business, like insurance agents and tax attorneys.
Many of your current clients may already be golfers, or they may have friends who play. So why not arrange a day of golf that includes lunch and a financial advisory workshop that you offer to your clients and any friends they would like to bring along? Not only will your clients enjoy a day out on the golf course, but the outing may provide an informal setting for them to get better acquainted with you, your work and some of your colleagues.
It could also be a good way for some of your clients to get to know one another, and if they bring friends, you will have a chance to pitch your business to these potential clients in a relaxed atmosphere among people who already know and trust you and your work. Be sure to extend the invitation to women as well as men — more and more women are looking to take up this pastime.
Knowing the difference between $10 and $100 bottles of Chardonnay can not only help you choose the right taste for any meal, but it’s also a good way to impress others. When attending a business dinner, the last thing you want to do is look lost when the waiter hands you the wine list and asks you to choose a bottle for the table. Many of your clients most likely feel the same way. A wine testing event for your clients, where you can all learn together, enjoy the wine and talk shop would be a unique, interesting chance to network (not to mention that wine can be a good investment). Again, encourage clients to invite friends who may be looking for a financial advisor.
Ladies Night Out
If you advise a good amount of female clients, you could organize a ladies night out. Dinner, drinks or taking in a cultural event like an art exhibit or a play would provide a comfortable environment in which they could talk about their investments and their futures. Invite professional women to join who work in a field that would be of interest your clients. The outing is also a good opportunity for the women to network with one another and talk about some of their concerns and goals. The women may find some common ground in their financial challenges, or they may be looking for more information about investing or buying insurance. This type of night out could easily pay off in terms of increasing your client roster.
Clients and other professionals you work with might appreciate a day of letting off some steam at a sporting event. If you can get enough people together who might be willing to rent a box, you will have a place where you can have some food and drinks and chat while you watch the game. Exchange investing and saving ideas with those in attendance and make sure to give your card to any potential clients who join in.
If you have the time, organize a weekend away, take some clients fishing. Professionals often look forward to time away from the stresses of the office. A day or two away to decompress in nature may provide a way for clients to relax and talk about their hopes and dreams for the future and exchange ideas about how they can financially accomplish those goals. Again, encourage clients to invite friends. Fishing involves a lot of time sitting down and waiting, so you could use the time to ask prospective clients if they have any questions for you about financial planning.
Your credit score is a long-term view of your use of credit. Most credit problems, such as late payments or nonpayment of debt, must be removed after seven years, but some types of bankruptcy stay on your credit report for 10 years. Student loans can be there even longer; some may stay on until paid in full or forgiven.
The time it takes to fix a problem will depend upon what is negatively affecting your credit score. If credit information owned by someone else is harming your score, for example, removal of that information could result in almost instant repair once you get the error corrected. But you shouldn’t expect a quick resolution; for most people who want to fix their credit score, it’s not that simple. Here are five steps to improving your score.
1. Get the Facts
Your first step in attempting to fix your credit score requires that you get the facts. You can do that by ordering a free credit report from all three of the credit bureaus: Experian, TransUnion and Equifax. You are limited to one free report a year from each bureau, which you can order at AnnualCreditReport.com. But it is a good idea to order them throughout the year. Ordering one report immediately and then one in four months and the third in eight months will allow you to order a report every four months for free.
If this is your first time looking at your reports, order a free one from Experian using the link above and then get your TransUnion and Equifax reports for free by signing up at CreditKarma.com. Membership at this website is free, and so are the reports; there isn’t any kind of monthly fee (see Why Credit Karma Is Free & How It Makes Money). You definitely want to look at all three reports as quickly as possible to be sure they are accurate. (To find out what a credit report will tell you, read What’s on a Consumer Credit Report?)
2. Dispute Errors
You may find errors on your report, such as payments being late when you were not late, or a credit card shown as yours that is not yours. Mistakes like these can drag down your credit score. There are several key things to look at that will help you identify the problems:
• Personal information – Make sure the names and addresses reported match your personal history. Sometimes the credit reports of people with the same or similar names get combined incorrectly; having your report tied to that of someone with bad credit can lower your score. To correct an error you need to document what is wrong and send a letter to the credit bureaus. This can be a quick fix if all the negative information belongs to someone other than you, but proving that may take some time.
• Account Information – Carefully check all accounts listed and make sure they are actually accounts that you have opened. If you find an account in your name that you did not open, contact the credit bureaus, explain the fraud and ask that a fraud alert be put on your account. Then contact the card-issuing company to find out more details about the account. The fact that it is on your report means it is likely that someone used your Social Security number in opening that account. Also be sure that the balance information and payment history for each account is accurate. If any information is inaccurate, you will need proof of the correct information and you will have to start a dispute with the credit bureau to ask that the wrong information is corrected. For more detailed advice on this, see How to Dispute Errors on Your Credit Report.
• Collections – If there are collections on your credit report, check to be sure there are not multiple reports of the same unpaid bills. Collection accounts are bought and sold, so the same information could be reported by more than one agency, which would make your credit history look worse than it is. Dispute the information and send documentation to prove the debt is listed more than once.
• Public Records – Negative information from public records can include bankruptcies, civil judgments or foreclosures. Bankruptcies can be on the report for seven to 10 years, but all other public records must be removed after seven years. If the public record on your report is older than is allowed, dispute the information with the credit bureau and send documentation to prove that the debt is too old and should no longer be on the report.
3. Negotiate with Creditors
If you have a past due account and have the cash to pay it off, try negotiating with the creditor by offering to pay the balance in full if it will remove the information from your credit report. If not, try getting the company to make the debt “paid as agreed.” Getting the negative information completely off your report is best, but a creditor may not be willing to do that. Make sure you get any agreement in writing before making the payment.
If your account shows non-payments for a couple of months, but you can prove the problem was caused by a hardship, you might be able to ask your creditor for a “goodwill adjustment.” If you were injured and in the hospital or rehabilitation for a couple of months, for example, you might not have had the money (or been in physically healthy enough) to pay that bill. Write to your creditor, explain the hardship and provide proof. Ask if the company would consider a goodwill adjustment erasing the late payment history on your credit report. Your payments will need to be up-to-date to succeed in getting this adjustment.
4. Get Your Limits Under Control
Check your credit reports to be sure they accurately reflect your credit limits. Then add up all the credit limits in one column and all the outstanding debt in another. For instance, you could have $10,000 in total credit limits and $4,000 in total debt, which would mean you are using 40% ($4,000/$10,000) of your available credit limits.
“It’s best to keep your debt-to-credit ratio 30% or lower – the lower the better,” says Anthony Sprauve, former director of public relations for FICO, one of the key credit score companies.
You can make your credit utilization look better than it is by making your payments just before your statement is sent, rather than waiting until it goes out. Most credit card companies report your balance at the same time that they send a statement, and the balance reported to the credit bureaus is the statement balance. If, for example, your statement goes out on the fifteenth of the month, as long as you have the money on hand, pay your bill early so the money will arrive prior to the statement being sent out – let’s say the thirteenth of the month. That way your outstanding credit balance reported on the statement and to the credit bureaus will be lower.
Even if you pay your bills on time, in full, every month, the credit bureau will only see the statement balance, which can make it look like you are carrying more debt than you are.
5. Eliminate Your Low Balances
A factor that affects your credit score is the number of credit cards you have with open balances. Having a lot of small balances lowers your score. So if you have VISA, MasterCard and American Express cards that you alternate using each month, for example, you could end up with three cards that all have low balances – perhaps under $100.
“The solution to improve your credit score is to gather up all those credit cards on which you have small balances and pay them off,” says John Ulzheimer of Credit Sesame and former credit expert for FICO and Equifax. Then consolidate how you use them.
Some key financial ratios investors and market analysts use to evaluate companies in the health care sector include the cash flow coverage ratio, the debt-to-capitalization ratio and operating profit margin.
An Overview of the Health Care Sector
The health care sector is one of the largest market sectors, encompassing a variety of industries such as hospitals, medical equipment and the pharmaceutical industry. The sector is popular among investors for two very different reasons.
First, it is viewed by many investors as containing stable industries that offer a good defensive play to help weather general economic or market turndowns. Regardless of the state of the economy, individuals continually need health care. Hospital and pharmaceutical revenues may suffer somewhat during difficult economic times, but the overall consumer demand for health care services is considered less subject to significant drop-off due to economic conditions than is the case for sectors such as the retail sector or automotive sector. For the same reason, while health care stocks may decline in conjunction with an overall bear market, they are generally considered less vulnerable than the stocks of companies in many other sectors.
The second major reason the stocks of health care companies are attractive to investors is the fact the sector has consistently been one of the best-performing sectors in terms of growth. Two contributing factors to the sustained growth of companies in the sector are an aging baby-boom population in need of ongoing health services and continued development in the fields of medical technology and pharmaceutical disease treatments.
Evaluating Health Care Stocks
Because the health care sector is so broad, it is important for investors to compare similar companies within the same industry in the sector when making equity evaluations. However, there are some key ratios that can be effectively used in a basic analysis of virtually all health care stocks.
Cash Flow Coverage Ratio
The cash flow coverage ratio is a good general evaluation metric, but it can also be particularly important for businesses such as hospitals and medical practices. Because such companies must often wait substantial periods of time to obtain financial reimbursement from insurance companies or government agencies, having sufficient cash flow and good cash flow management is essential to their financial survival.
This ratio is calculated by dividing operating cash flow, a figure that can be obtained from a company’s cash flow statement, by total debt obligations. It reveals a company’s ability to meet its financing obligations. It is also a ratio considered particularly important by potential lenders, and therefore impacts a company’s ability to obtain additional financing if necessary. A ratio of 1 is generally considered acceptable, and a ratio higher than 1 more favorable.
The long-term debt-to-capitalization ratio is an important leverage ratio for evaluating companies that have significant capital expenditures, and therefore substantial long-term debt, such as many health care companies. This ratio, calculated as long-term debt divided by total available capital, is a variation on the popular debt-to-equity (D/E) ratio, and essentially indicates how highly leveraged a company is in relation to its total financial assets. A ratio higher than 1 can indicate a precarious financial position for the company, in which its long-term debts are greater than its total available capital. Analysts prefer to see ratios of less than 1 since this indicates a lower overall financial risk level for a company.
Operating margin is one of the main profitability ratios commonly considered by analysts and investors in equity evaluation. A company’s operating profit margin is the amount of profit it makes from the sales of its products or services after deducting all production and operating expenses, but prior to consideration of the cost of interest and taxes. Operating margin is key in determining a company’s potential earnings, and therefore in evaluating its growth potential. It is also considered to be the best profitability ratio to assess how well-managed a company is, since management of basic overhead costs and other operating expenses is critical to the bottom line profitability of any company. Operating margins vary widely between industries and should be compared between similar companies.
When you have an investment portfolio, you can’t be opinionated about investment tools. You should consider the pros and cons of each and make the best use possible. For example, there are several finance professionals who may suggest that fixed deposits are not beneficial. It is true that they have much lesser returns on investment than other investment tools like mutual funds. However, if you are building an investment portfolio, you would need to make some investments in low risk tools too as all high risk investments may not turn out to be profitable. There are other ways in which this product is helpful though.
• Invest for emergencies: Most people cannot anticipate every kind of emergency. For such situations, the safest, most rewarding & ideal investment would be fixed deposits . It offers higher returns than a savings account. While it is much lower than mutual funds and stock market, it has the highest form of liquidity besides a savings account. So, it continues to grow till you need it. If you plan to save and invest for this purpose, you must ensure that:
I. This is the best interest rate possible. Invest the right amount for the right period to earn the highest returns possible.
II. Ensure that the premature penalty is zero or very low since you use this financial tool to protect yourself against emergencies. Premature withdrawal penalties vary with every financial organization.
You must ensure that you opt for the best combination of the above factors for your investment. There are different ways to invest in this product, which are:
• FDs for low-risk investment: If you are a HNI (High Net-worth Individual), you are definitely in a position to take the risk. You have a substantial support system in place to protect you against major financial threats. Most retail investors, though, can’t claim to have this. So the question is can you risk losing it? If your answer is no, then high risk investment tools like the stock market or mutual funds may not be right for you. Fixed deposits, on the other hand, might be the most suitable choice instead. This low-risk low-gain tool is guaranteed to provide assured returns.
• Invest as a gift: While there are a few mutual funds that allow you to invest on a minor’s behalf, a FD is still a much better way to invest. If you find a good fixed deposit scheme that offers:
I. Best interest rate for the possible long term
II. Reinvestment of the annual returns option
Then you can easily invest in such a Fixed Deposit and nominate the child as a beneficiary to ensure that the said minor can use it for his/her education or wedding expenses.
When you start your hunt for a housing loan, you may have an option of getting the best home loan in India available. However, without the right structure, it won’t be a beneficial financial decision in the long term. When most borrowers go through such a stringent home loan eligibility criteria and a tedious home loan process, they fail to notice the important details of the agreement. Here is how you can structure the home loan process in India.
Finalize the primary details:
There are certain details of the home loan that you will need to determine or agree with the ones stipulated by the housing finance company, since these details are primary foundation of what the home loan structure is all about. Therefore, it is crucial to get them right. So, this part of the home loan structure starts when you decide to apply for a home loan and ends when you receive an offer letter that you are ok with. These primary details are:
• Interest rate
• Type of interest rate
• House loan tenure
• Repayment option
By far, these details will be the most important details in your home loan package. However, they can be easily affected by the smaller factors that seem unimportant while signing the house loan agreement.
Fine-tune smaller details:
When you are opting for a housing loan with a certain bank or a housing finance company, you need to understand that the fine print in the home loan agreement is as important as the details mentioned above. Do not ignore them. When you have an offer letter from the bank or the housing finance company in your hand, it is important to take time and understand how it can affect your future. The factors to be considered are:
• Prepayment charges
• Processing fees and charges
• Home loan term insurance
Anticipate the details right:
Most borrowers ignore the potential variations in the home loan structure over a period of time. The interest rates will certainly vary, especially if you have opted for the floating interest rates. Your EMIs will be affected by quite a few factors that are part of the home loan agreement. A smart borrower will, hence, want to undertake the exercises that will help him to anticipate these details. Some of them may even opt to use the home loan EMI calculators available online to identify these possible variations. Alternatively, if you have plans to earn more in the upcoming future, then determine the prepayment strategy and repayment options that will suit you. This kind of plan may not always fall in place as you will like; yet, you should have itin place.
The Internet offers nearly endless ideas for new businesses. In fact, the Internet offers so many opportunities that 571 new websites are created each minute. If you want to take advantage of online business, you are not alone. Here are some great resources to get your online business up and running quickly.
WordPress is a content management system, or CMS, used to power roughly a quarter of all websites on the entire Internet. There is a good reason for that. WordPress is free, open-source, well supported, easy-to-use, and has thousands of people building free and premium themes and plugins to customize your site to do nearly anything you can imagine.
WordPress was initially developed as a blogging platform, which is still a core feature of the software. However, plugins have expanded the features to include online stores for digital and physical goods, membership websites, and invoicing systems that can integrate with popular payment gateways and accounting software. (For more, see: The Best Online Accounting Systems for Small Business.)
To use WordPress, you do have to register your own domain name, at a cost of roughly $10 per year, and have a website hosting account, which can start around $3 – $5 per month. You can download WordPress and learn more at WordPress.org. (For related reading, see: Getting the Most Out of Your Web Presence.)
Some would-be business owners look at phrases like “domain name” and “website hosting” and get glassy eyed. WordPress is easy to setup and use if you are comfortable with computers, running a website, and technology in general. But not everyone is, so there are other options like SquareSpace you can use.
SquareSpace allows you to create a website very quickly with no code, hosting, or advanced technical knowledge. SquareSpace allows you to create a website with drag-and-drop features. The site also offers pre-made templates and the ability to integrate a store.
For these features, you must purchase a recurring monthly plan that will likely cost more than a WordPress site, but takes less time and knowledge to setup. Learn more at SquareSpace.
If you want to create an e-commerce store and do not want the hassles of setting up hosting and payments, you can use Shopify (SH.TO). Shopify is filled with features to create an online retail experience if you are selling a product that needs to be shipped to customers.
Shopify features include a website builder, store designer, and even the ability to integrate with a point of sale system for in-person purchases.
Shopify charges a monthly fee plus a payment processing charge. Expect to pay more than a comparable site at SquareSpace. However, you have many more tools at your disposal designed just for online retail stores. Learn more at Shopify.
Bigcommerce is a competitor of Shopify, as the services the two sites offer are fairly similar. Bigcommerce is set apart by its apps and integrations that you can use to add more power to your online selling experience.
Not only can you create a store, you can integrate with a large number of free and paid services, including Salesforce (CRM), shipping services, print on demand fulfillment services, loyalty programs, social media integrations, customer support software, and vendors who can create a mobile app for your store.
Bigcommerce allows you to choose your favorite credit card processing vendor from a list including stripe, PayPal (PYPL) and Square. Plans start at $29.95 per month. Learn more at Bigcommerce. With Etsy, you do not need to build a website of your own, you can operate your online business on the Etsy site. Etsy allows you to sell handmade goods, vintage items that are at least 20 years old, and craft supplies. No other items may be sold on the platform. Etsy is a fully global marketplace that allows you to reach customers around the world. Sellers pay a listing fee for each item, and then a 3.5% fee on the sale price. Learn more at Etsy. Amazon What many people do not realize, however, is that they are not buying everything right from Amazon. Amazon Marketplace allows people like you to sell new and used goods right alongside the items sold directly by Amazon. Sellers can choose to ship items themselves, or send the items to Amazon for automatic shipping when a purchase is made. If you sell on Amazon, all you have to do is register an account, select a selling plan (some have fees), and setup your account and items for sale. Learn more at Amazon.
You can buy pretty much anything on Amazon (AMZN). Whether you want a book, gadget, or even a maid or plumber, buyers around the world head to this massive site and can have whatever they need delivered right to their door.
With Etsy, you do not need to build a website of your own, you can operate your online business on the Etsy site. Etsy allows you to sell handmade goods, vintage items that are at least 20 years old, and craft supplies. No other items may be sold on the platform.
Etsy is a fully global marketplace that allows you to reach customers around the world. Sellers pay a listing fee for each item, and then a 3.5% fee on the sale price. Learn more at Etsy.
What many people do not realize, however, is that they are not buying everything right from Amazon. Amazon Marketplace allows people like you to sell new and used goods right alongside the items sold directly by Amazon.
Sellers can choose to ship items themselves, or send the items to Amazon for automatic shipping when a purchase is made. If you sell on Amazon, all you have to do is register an account, select a selling plan (some have fees), and setup your account and items for sale. Learn more at Amazon.