Business and Finance

Archive for October, 2011

There are two types of insurance in particular that you should consider if you are a home owner. These are flood insurance and earthquake insurance. Of course, this is not for everyone, but if you live in an area where either of these is highly relevant, acquiring either of these is a solid investment. However, if you are living in an area that is prone to floods or earthquakes, it is important to understand that most property policies will not cover these disasters. On the flipside, some independent carriers in fact offer both. For flood insurance, you can also contact the National Flood Insurance Program if you cannot find a provider which covers flood insurance. In California, you can obtain earthquake insurance through the California Earthquake Authority.

Flood insurance represents the specific insurance coverage against property loss from flooding. To settle on the risk factors for specific properties, insurers will often look at topographical maps that refer to lowlands and floodplains that are at risk for flooding. Insurers in the US do not provide flood insurance coverage due to the hazard of flood typically being confined to a few areas. Because of this, it is an objectionable risk because of the inability to extend the risk on a broad enough populace to suck up the latent disastrous nature of the vulnerability. As a result of this, the federal government formed the National Flood Insurance Program in 1968.

Some states only have one type of natural disaster, and that is the earthquake. For this reason, it is highly recommended that you invest in earthquake insurance if your state is prone to this natural disaster. Most likely the most imperative thing to recognize about earthquake insurance is that a basic homeowners policy will not cover earthquake damage. But even if you do not live in an area where earthquakes are common, it is possible that you might need earthquake insurance.

Every year, more homeowners get rid of their earthquake coverage than buy it because, according to end user groups, consumers carry the belief the policies cost too much and cover too little. Earthquake insurance can be quite inexpensive depending on where you live. It is a good idea to contact your insurance agent or company to find out what the costs would be for your home.

Not surprisingly, Californians buy the most earthquake insurance, but earthquake insurance has been sold to residents of all 50 states. But earthquake insurance is not like health insurance or auto insurance. It is catastrophic insurance. It is what insurance was invented for in the first place, which is for protecting yourself against a destructive financial loss that will come to pass at some point in the future, even if it is not to be in your lifetime.

Is it available, and is it too pricey? That depends on the insured value of your home, the location of your home, and the age and construction type of it, in addition to your delivery service and your deductible. Either way, those are the facts, and now that you are equipped with the knowledge, it is now a little easier to know whether you should invest in either flood or earthquake insurance.

There are many of us that have been badly stung by credit card companies that have charged exorbitant fees to use their credit cards. Several years ago an APR of 25% to 29% was common place which in simple terms means that if you borrow

Prepaid Visa gift cards are basically plastic money on a plastic zippy card to the limit of the value that an employer or a parent is willing to spend on a gift to child, or bonus, rebates, remissions for employees. All the person giving one to someone to someone has to do is buy it and give it. It is prepaid so it is easy, safe and convenient to have one issued. Providing one allows your loved one or friends to pick exactly what they like within a budget that you like. The gifted person lucky enough to receive one can go to any online merchandising store or an actual retail store and use it.

If you do not know how to use your gift card once you have received, the first thing to do is to check if it has already been activated or not. Some cards are activated automatically by the card issuing entity whether it is a bank or a non bank. However some of them need to be activated by the user.

It is also really important to know how much balance has been credited to the card before you run out and go shopping. This is because the card won’t tell you how much it has, and retailers can’t always check for you, although some of them certainly can. So if you exceed the card’s limit, the transaction will simply be declined, unless you are ready to supplement and fulfill the amount required through a secondary mode of payment not accredited to the gift card.

Using the card itself is very similar to using a credit card. You zip it and then sign for it.

It is advisable to familiarize the receiver or if you are the person who has received a prepaid Visa gift card, then to familiarize yourself with the terms and conditions acquired with the card. For example, is the card only meant for Domestic Use (within the country it was issued from) or can it be used internationally as well?

Another thing that is strongly advisable is that the back of the card be signed on by the user/ receiver. This way if it gets lost or stolen it cannot be used by another person. Also, it’s a good idea to maintain some sort of record of the card number and your personal details that have been given to the provider, for the same reason – that is, in case of loss or stolen property (property being the card) it is immediately possible for you to contact the provider and cancel the old card and get it replaced.

Employers are using Payroll Cards nowadays which work on a similar system. This allows them to buy a large number of payroll cards in bulk. This offers them a huge discount on user fees from the bank or card providers because the banks or card providers are happy they’re receiving so much custom. It is also extremely user friendly and a very easy system to establish. By directly depositing salaries, bonuses, rebates, rewards etc onto an employee’s payroll card, it associates the brand every time they make a purchase and thus makes for great brand marketing internally in an organization, which effectively builds employee loyalty.

Are you seeking for a loan that protects and relieves you from taking extra tension of the loan burden? The unsecured loans for bad credit will be the right loan for you. You will find these loans much better and superior in quality where all your desires and problems are being duly paid interest by offering the best service.

People that suffer from bad credit record and also are incapable of offering collateral will find these loans quite good. As a primary reason it can be stated here that these loans are absolutely collateral free. No one needs to place anything as security and none is being turned down for their bad credit records. But as these loans are being provided without any security the rate of interest in it is a bit higher. It is quite fair and you can therefore, go for these without any hesitation. However, you will also get the chance to avoid it for which you can take up other loans available in the loan market. It provides an amount ranging from

I’m 10 years old and sitting at the kitchen table with my grandfather. I remember it like it was yesterday. He was reading the paper and I kept asking him questions about the stock market. I must have been on my 3,000th question when he told me something shocking. At least to my 10 year old brain…

You could loan money to people, and they’d give you more money back.

It was a very simple concept, learning about interest. But I was blown away at the time. My mind raced with thoughts of making lots of money. That’s how my first introduction to bond investing went. Loan out money, get more money back.

Over the years I’ve learned a great deal about investing from my grandfather. He’s explained stocks, bonds, commodities, even real estate. I remember the discussion about bonds most clearly.

Right now many high-yield bond investors are feeling the same way I felt then… excited and happy!

Last week, High Yield Corporate Bond funds received the largest inflow of cash in many years – $882 million in all. This is on top of the $690 million and $731 million invested during the last two weeks of December.

That’s a lot of money being put to work.

Why are investor dollars flowing into these funds at such a high rate?

Before we get to that… let me tell you a little bit about high yield bonds.

High yield bonds are bonds with a great PR (public relations) firm. You may know these bonds by their less flattering name – Junk Bonds.

High yield or junk bonds are typically issued by companies with a credit rating below “BB.” Their stated interest rates are usually three or four percentage points higher than those of government bonds. Why the higher rate?

Because they have a higher risk of default.

Most high yield bonds are issued for one of two reasons – general corporate purposes or to fund an acquisition. In the 1980s the junk bond industry became famous for financing the leveraged buyout boom. Today the high yield industry has issued more than $600 billion in bonds and has offerings from nearly every industry.

So what’s so special about these bonds? Why is all this money flowing into high yield bond funds now?

I’ve got one word for you – YIELD.

Right now a 10-year U.S. Treasury Note (T-Note) is yielding about 2.3%.

High yield bonds normally provide 4 or 5 percentage points of yield over T-Notes. That’s known as the spread. Today the Merrill Lynch High Yield 100 has a yield of more than 12%, a spread of more than 10 percentage points over T-Notes.

That’s more than double the normal spread.

But that’s nothing. Earlier this year the yield was over 17% – that’s a spread of almost 15%.

The spread’s a great indicator of fear. The bigger the spread, the bigger the fear companies will be going bankrupt. Clearly the market was very, very fearful when yields were 17%. Now yields are falling and the spread is tightening… a good sign the markets are returning to normal.

The opportunity to grab part of these big yields is quickly slipping away. As investors on the sideline become disgruntled with government bonds only paying 2%, it won’t be long before they’re looking for something with a better return.

Now there is a risk. Some of these companies could go bankrupt rendering their bonds worthless. Investors might lose a chunk of their hard earned money… to some that’s a risk worth taking.

If you want to buy into these funds you might look at a high yield bond mutual fund. According to Morningstar there are more than 150 to choose from. I know Vanguard has the High-Yield Corporate Fund (VWEHX), or you might look at the Fidelity Capital & Income Fund (FAGIX).

There’s an ETF you can trade as well.

One I like is the iShares iBoxx High Yield Corporate Bond (HYG). It boasts heavy trading volume and a 12% yield. With assets just under $1 billion, they’re not as big as the mutual funds, but big enough to provide some decent diversification.

Take a close look if you want to add a high yielder to your portfolio.

If you reside in an area prone to earthquakes, have equity in your home, and you couldn’t afford to rebuild it on your own, buying earthquake insurances makes financial sense. If you can afford it, the best way to protect the investment in your home is to retrofit your home and buy earthquake insurance. The more steps you take to retrofit and improve your home’s ability to resist the impact of an earthquake, the less likely you are to face expensive repairs. Retrofitting your home includes, bracing your water heater, installing “sheer” panels and bolting your foundation. If you decide that your home needs protection beyond retrofitting, then shopping for earthquake insurance is your next step. Several key factors you should consider and research as to whether you buy insurance or not are:

The amount of equity you have in your home.
Your current proximity to a fault zone.
The construction and age of your current home.

The satisfaction ratings and financial strength of the insurance companies that will potentially sell you an earthquake insurance policy Earthquake insurance policies are usually accompanied by high deductibles and premiums. When the time comes to receive any benefits under your insurance policy, your claim needs to exceed your set deductible. Most homeowners and auto insurance policies have a fixed dollar amount deductible. Earthquake policies are different, their deductible is a percentage figure based on the total policy amount. The damage to your home or structure must exceed your deductible to trigger a payment from your policy, and the payment will be the amount of repair costs above your deductible. So on a home with $500,000 of coverage, and a 15% deductible, the homeowner will be expected to cover the first $ 75,000 of repairs. Your carrier will determine your premium. Usually older homes cost more to insure than newer homes and retrofitting is required for homes built before 1955. Premiums should not be the only thing you take into consideration when you are purchasing an earthquake insurance policy. Often you can find policies with low premiums, but they are accompanied by poor coverage.

One important thing to keep in mind when shopping for earthquake insurance is that the insured value of your house is determined by your homeowners insurance. If you are under insured on your homeowner’s policy, you will also be underinsured on your earthquake policy. Purchasing earthquake insurance can be a difficult decision. People who live in the Bay Area of California have a 75% chance of a 6.0 magnitude or greater earthquake hitting them, but only about 14 % of CA residents carry earthquake insurance. If you decide to buy earthquake insurance, place your limit so that it is adequate to completely replace your property, any outbuildings, cover any engineering costs, and temporary living expenses that you may have.