Business and Finance

A house is usually the largest asset / investment the average person will ever own during their lifetime and protecting this asset should therefore be a priority in order to maintain any individual’s financial and personal stability.

Would you really be able to afford the cost of replacing your house and all its contents on your own if unforeseen circumstances like fire, flood, burglary or storm were to destroy it? Without home insurance, not only could you be rendered homeless, you stand to lose everything that you have bought to equip your house.

Besides losing your belongings through the natural calamities stated above, you can potentially lose them as a result of theft and without home insurance you may find it hard to replace them.

While you may hate paying the premiums each month, home insurance – also known as hazard insurance or homeowners insurance – is a necessary evil, whether you live in a small house that is all paid for or a huge mansion that you carry a great mortgage on.

A home insurance policy can cover you during the construction of your house but in such cases you need to have the insurance in place before the basement or slab is poured. You will similarly be covered should you decide to carry out renovations on your home.

If you have a mortgaged property, most lenders actually insist that you have a home insurance policy to make sure that their collateral is protected in case something happens to it. You might have no choice in this matter as the mortgage may include a term which requires compulsory home insurance coverage to be effected.

Additionally, home insurance can help protect you from any lawsuits or personal injury claims that may arise if someone were to be injured on your property.

Home insurance is actually a generic term which refers to 2 separate products, contents insurance and buildings insurance.

Standard home insurance policies may not always cover all damages associated with some natural disasters, so getting an endorsement or separate insurance policy in the form of flood insurance or earthquake insurance, etc, might actually be a good idea especially if you live in areas prone to such natural calamities. In any event, it is important to get your home appraised every few years to make sure you have adequate insurance for all the insured perils you envisage or intend to cover.

Value stocks are a type of investment that refers to share ownership in a corporation. They represent the number of shares that one owns in that company and how much the company owes the shareholder. In other cases, they refer to financial instruments like government bonds and securities which can be offered to the general public.

There are many types of value stocks available in the market today. The most common however are the preferred stocks categories. They both have their advantages and disadvantages and this is what a buyer should look at when determining which ones to buy. As for the common category, the stock holder is entitled to voting rights. This means that they can dictate how the corporation is managed. On the other hand however, they are not entitled to any dividends before other shareholders have been paid.

This tells you that, it can be years before common shareholders get their dividends if the corporation happens to be doing poorly financially. The preferred shareholder category is more fortunate when it comes to dividends because they are given preference over all other shareholders, whether the corporation is doing well financially or not. Under this category there is also a sub category known as the convertible preferred value stock which allows one to convert his shares into a fixed number of common shares at a determined date.

The preferred share category is also faced with the advantage of becoming a hybrid. This happens when the shareholder decides to covert some preferred shares into the common category so that he can have voting rights, while at the same time remaining with a share of the preferred share. The preferred category is also open to the choice to accumulate dividends over time.

There have been some exciting developments in the fixed income world that allow for greater diversification and ease of investing in this most important asset class. Bonds are a staple in a well-diversified investment portfolio. Yet bonds have been more difficult to buy and sell than stocks. Prices often are not readily available. And, unless you have a sizable portfolio, diversifying your bond holdings can be problematic.

Simply put, a bond is a loan, and you are the lender. By buying a bond you lend money to a company, municipality or the government. These institutions have the use of your money in exchange for interest payments. Your principal, or the amount you loaned, is repaid at the end of the term of the loan. The beauty of bonds is they provide a steady income stream and are less risky than stocks.

The Beauty of Exchange Traded Funds
You may have heard about exchange-traded funds, or ETF’s. They are investment vehicles that are traded on exchanges much like stocks are. An exchange-traded fund can contain many types of assets, such as stocks, bonds and commodities. You can buy large amounts of these funds or just a few shares.

ETF’s have many advantages. One of the most important is that they tend to have many different holdings. That is to say if you bought a corporate bond ETF you would own a basket of over 200 bonds from some well-known companies. By purchasing one ETF you could own a well-diversified basket of bonds!

Another great advantage of ETF’s is that they tend to have very low expense ratios. The expense ratio tells you what it costs to own the fund each year. The fund company deducts a percentage from the portfolio yearly for management of the ETF.

The average bond mutual fund costs about three quarters of one percent per year to own. A bond ETF may only cost.15 percent annually. It may seem a small difference, but with bond investments, as with investments in general, investors need to be mindful of expenses. They ultimately detract from our returns.

ETF’s Make It Easy To Diversify
The most exciting advantage of using bond ETF’s as an investment tool is the ease of diversification they offer the investor. Bonds come in many types and flavors. U.S. Treasury bonds are the safest and most common. There are also municipal bonds and corporate bonds.

Corporate bonds of higher risk companies, paying higher dividends, are called high yield bonds (in the past referred to as junk bonds). Convertible bonds have characteristics of both bonds and stocks. They pay interest and have the potential to rise in value as the stock of the company appreciates. Inflation protected bonds have an interest payment that increases with the rate of inflation. And, you can even invest in the government bonds of foreign countries.

Bond exchange-traded funds are an excellent, low-cost way for individual investors to diversify their fixed income portfolios. They are easy to buy and sell. While there is only space in this column to discuss the virtues of ETF’s, it is vital to remember that all investments involve some form of risk. As with any investment, do not invest until you understand the risks.

It is always nice not to rummage through your wallet and fish for the amount of money you need to pay for your purchases. This is the advantage prepaid Visa gift cards provide us. With this card already preloaded to the amount of money you need, shopping is a breeze.

How to Get Prepaid Visa Card
Step 1: Log on to the official website of Visa. They provide you with information on their various locations where you can purchase the cards. Some of them are affiliates of Visa card. If you have your bank in the list, you can just go to your bank and purchase directly from there. You can also purchase online. They will ship the card to your address.

Step 2: Get it from grocery stores and drug stores. The biggest supermarkets and drug stores carry this card. You can search online to find the ones that carry this card.

Step 3: Get it from online stores like giftcards.com. You can even customize the card to the design you want. They will ship the card to the address you indicated.

How To Use The Card:
Step 1: Depending on your provider, you might need to activate the card first. Some cards are activated the first time you use it. The instructions usually are included in the papers with the card.

Step 2: Just use the card like you would a credit card. You need to tell the cashier to swipe using debit card. Afterwards, the amount you paid will be deducted.

Step 3: Keep the receipts every time you make a purchase so that you will know your remaining balance. If you lost track of your remaining balance, you can just call their customer service and ask for the details. If you are paying more than the balance in the card, there is a big chance that it will be declined.

Step 4: If your total is more than the remaining balance, you just tell the cashier to use the specific amount left in the card and tell them that you are going to pay for the extra total using a different mode of payment. This way, you will use up all the money in the card.

Step 5: Once you have used all the money in the card, you can keep it for future purposes. You might want to return something you have purchased and the store will reimburse the money on your prepaid card.

This month marks the worst January in the history of the stock market. With the housing bubble bursting and the dollar fading the future for US investors doesn’t exactly look promising. It seems like anything our friends at the all mighty Federal Reserve try to do misses the mark every time. Is it time to shake things up in Mr. Bernanke’s fleet of Harvard economic geniuses, or does congress need a slap in the face and a lesson in long run economics? If you share my opinion we need a large helping of both and if we don’t, a portfolio fortification is critical.

In the likely occasion of a recession in the near future few investors cannot afford to ride this terrifying roller coaster out. A major revamp of your portfolio needs to be on the top of your financial to-do list. First off most advisors are suggesting less equities and more debt investing. We all know what that means; get out the less glamorous yet notably more secure bond list. Here were going to do something a little different then what the typical investor would think of doing. Instead of investing in the usual 10 year T-bill, we are going to go the other direction. Moving about 15% of our portfolio into more profitable corporate bonds can add the necessary security needed, with about a 2-2.5% larger ROI compared to your average treasury bond. This accounts for anywhere between 10-25% of your portfolio the next step is figuring out what to do with the rest.

With a recession impending on the horizon one awful truth is imminent. Company earnings will start to contract and with earning contraction comes employment contraction. With this alarming truth comes the necessity to start preparing for an extended period of time without an income source just in case. If you feel like there is even the most remote chance of termination you will need some cash put aside that is readily accessible in times of distress. The general norm is to have at least six months worth of living expenses set aside in an extremely liquid account. Let’s say that at the very most 10% of your portfolio should be some form of cash or any other easily accessible investment depending upon your net worth. With the safest investments out of the way lets move on to more profitable/secure investments.

We’re going to steer away from owning to many individual stocks in this volatile market so the next areas we will look into are mutual funds and ETF’s. Investing in foreign companies seems to be the most logical way to go when the US is teetering on the brink of a recession. Finding mutual funds that invest heavily in companies in China and other emerging markets have the most promise right now. ETF’s, emerging market funds, also offer a very nice blanket of diversity. ETF’s focus investments on an entire market sector such as energy, technology, agriculture and so on. Investing anywhere from 20-30% of your portfolio in these particular vehicles will provide you with optimal security and diversity.

Recently looking more and more attractive, are what some people deem “Sin Funds/Vice Funds”. These investments focus on stocks that do particularly well historically in times of ill market conditions. Unlike most stocks during a down turn in the market, sin stocks or vice stocks, earning actually increase. It’s really a phenomenon most investors ignore. Vice funds offer a very unique intangible asset that is impossible to duplicate in times considerably rough markets. Focusing most of there investments on companies people tend to use more of when stressed and pinched for money, such as tobacco and alcohol, makes sin funds a very safe investment. Committing up to 25% of your portfolio to a reputable sin fund could have you bragging to your friends while they are crying about how much money they’ve lost in recent weeks. As you can see individual stocks aren’t exactly the safest investments for this market, but there are some stocks that are considered as relatively safe.

If you must invest in individual stocks please take our advice and go big. Large cap stocks seem like the only way to go right now, offering little relative risk. Companies like Coca-Cola and Microsoft are looking decent right now, but don’t risk too much money on individual stock picks they’re probably not worth it in the end.

Hopefully we have provided at least a slightly enlightening way of invest your money securely in the uncertain near future. Remember with every problem comes an opportunity so keep your eyes open for companies severely undervalued. Value investing for the long term right now is your safest bet when it comes to stocks so steer clear of most growth stocks unless you know something I don’t!

Over recent years credit card fraud has become a major problem, and the level of card fraud, particularly CNP fraud, which is card not present fraud, has been rising.

Card not present fraud is, as the name suggests, fraud that affects transactions where the card does not have to be physically presented such as with telephone and online purchases, where the card details are provided but no card is actually seen by the seller.

Because credit card fraud with CNP transaction has become so prevalent more and more people are becoming nervous about shopping online with their credit cards, according to recent reports. The research showed that one in every three people knew someone that had been the victim of card fraud, and this increased their wariness when it came to making credit card transaction online themselves.

In fact, it has been found that over half of the population is nervous about using their credit cards online, and given this information some officials are questioning whether those that are wary about online credit card transactions could benefit from using a prepaid card rather than a regular credit card.

One official said: “Prepaid cards allow such people to be part of the modern day ‘plastic culture’ which allows you to take advantage of online shopping discounts as well as access to hugely popular sites such as eBay.” He added: “The risk with a credit card is that the fraudsters will be able to max out your card, where a prepaid card is almost like a pay-as-you-go mobile phone. The only money that can be stolen, is the money you have loaded on. And unlike a debit card, a prepaid card does not have any link to your bank account or address, so the chance of fraud is next to none.”

You can compare prepaid cards to find those that offer lower or waive the usage and loading fees.

However, there are also disadvantages to using prepaid cards over credit cards. Firstly, you may find that you have to pay charges for using your own money, which can be somewhat offputting. Another downside is that with prepaid cards you do not get the benefits that you get with many credit cards such as section 75 purchase protection (which can be protection from fraud if you are missold an item or it never gets delivered), the interest free credit that you can get on credit cards or the rewards that can be earned on some cards.

For those that do not want to give up these benefits the key to avoiding fraudulent activity may simply be to ensure that you are careful about your credit card details, and this means not saving account details and passwords on websites, not saving account information on shared computers, and not falling for phishing scams, where you link to a website or bank via an email that has been sent to you.

You should also never give out your card details to someone on the phone if the call was not initiated by you, and don’t give your card details to strangers who stop you in the street or come to your door claiming to be selling something, as you never really know who you are giving your details to. With some simple and sensible precuationery steps you could minimise the risk of card fraud without having to opt for a prepaid card and lose the benefits of a traditional credit card.