Business and Finance

Archive for August, 2010

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.

The Federal Reserve cut interest rates again yesterday and will be likely to do so again in six weeks. Yields on 5-year Certificates of Deposit are down to around 4.25% and falling. On top of that, the mortgage meltdown has hindered the performance of the entire stock market. If you are retired and need your investments to generate income you don’t have to settle for these paltry rates and dismal returns. Read on to learn how you can get rates that are double that!

I have written several articles on various types of investments that can generate a dependable income stream that is far higher than that paid by certificates of deposit. I’ve talked about income deposit securities, closed-end funds, regional telephone companies and Canadian income trusts in previous articles. Keep in mind that these types of investments aren’t guaranteed by the government and their share value will fluctuate from day to day.

Closed-end funds make attractive income-oriented investments. Think of a closed-end fund as a pool of underlying investments. Those underlying investments can be U.S. corporate bonds, foreign bonds or even stocks. Something unique to closed-end funds is that they don’t always trade at the same price as the underlying value of what they own.

For instance, a closed-end bond fund may own a pool of bonds that, if sold that day, would be worth $10 per share. Those shares don’t always trade at $10. They can trade above or below that price at a premium or a discount to the fair market value of what it owns. Currently, high-quality closed-end funds that previously were trading at a premium are now trading at a discount. Some have discounts of 10% or more.

One reason why I particularly find select closed-end funds attractive is because the share price has been declining much faster than the value of the underlying securities. To me, this is an indication that the decline is a result of investor panic, not the underlying fundamentals of the fund. The yields on attractive closed-end funds have increased 2-3% with many yielding in the 9-10% range.

I also like the stocks of select regional telephone companies. Studies have been done that show how stocks paying dividends tend to out-perform those that don’t over longer periods of time. That’s because companies that pay dividends tend to be older and are in industries where their cash flow is more dependable.

These telephone companies have a steady, stable and growing cash flow. Think about it. Every month you pay your phone and cable bill. Things would have to get pretty bad before people allow their phone and cable to be shut off. Recent market fears have even caused the price of these stalwarts to decline. That means you can now get yields close to 10%–or even higher.

Canadian Trusts are popular among those seeking higher dividend yields. These investments are out of favor due to changes in Canadian tax laws. Those laws don’t take effect until 2011 though, and even then will only have a limited impact on certain trusts. Yet the share prices of all of the trusts have declined as much as those trusts that are adversely affected. That means that high quality trusts with healthy and growing underlying businesses are paying unbelievable yields.

A company that prints telephone directories is now yielding over 7.5% and has already increased their dividend this year. There are trusts in the oil and gas sector that have shown they can weather the stress of low natural gas prices. Some are paying over 10%–some even 15%—and still they are only paying out 70-80% of the money they have available for dividends.

The key with all investments like these is to own several of them to reduce your risk. The prices will fluctuate. The prospects of individual companies can change. That’s why I use groups of these in my clients, portfolios. For instance, my growth stock portfolio may utilize 10-15 different positions like those mentioned here.

So while everyone else is in a panic and rushing for the exits, I am using this opportunity to pick up investments that will give my clients a steady and growing source of income for years to come.

Some of us may not be able to have credit cards, maybe we have bad or poor credit, so we opt for other ways to get money quick. A Quick Easy Payday Loan can help you solve this dilemma, They are easy to obtain and require no credit check and are paid back on your next pay date.

Bad or No Credit? No Problem

The quick easy payday loan do not normally require you to have a credit check prior to borrowing the money. Since credit checks may take several days to run, and you are not going to be borrowing a large lump sum from them, the company does not require credit checks. After all, it is not like you are going to be borrowing enough to purchase a home or a luxury car, that would make a big difference is you were at high risk on receiving credit.

The companies that offer you cash advances in the form of a quick easy payday loans are there to deal in smaller monetary amounts. They will usually loan out about $50 up to $1500, making it affordable for the person seeking the loan can pay it back on their normal income source. Another key time comparison is that since you don’ t have to worry about what your personal credit score may be when applying for a quick easy payday loan, you save money in the amount of time you have to spend waiting for the application to process. Sometime “time” is of the essence and a quick easy payday loan may be just the right solution.

They Offer Quick Turnaround Times

It is much quicker to obtain this type of loan than say applying for other credit. All that is usually required is that you submit your personal contact, checking information and photo ID and in just a few minutes you can have your quick easy payday loan. All the lender has to do is run your information through for quick verification and the money can be wired into your account with just a few hours times. It could take you up to a few weeks in order to get a lender to check all your personal financial background and get a standard loan out to you.

Flexibility in their Hours

Since many of the quick easy payday loans can be obtained online, you have twenty-four (24) hours access as to when you choose to apply. And you can do this from the comfort of your own home, even during the midnight hours. Most lenders will also make a contact representative available even on off hours, not only during “normal operating hours” like most banks and other lenders.

Compare your Choices

Not only is it easy to use the quick easy payday loan application online, but it also makes it easier for you to compare the lenders and make the right choice. Most of them will have their fees and APR posted on their website in the frequently asked (FAQ) area. So by doing just a little research you can choose the lender that will give you the best rates and lower fees. Saving you money in the long run.

Will Not Affect Credit

The payday loans will stay off of your credit records providing you pay them back on time. With the standard, traditional credit line or personal loans you immediately lower your personal credit score by even attempting to open such. Since the payday loans to not affect your credit, they make short term loans needed quickly, usually for something that is considered an emergency issue, quick and easy and the right choice.