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  • Selecting The Right Bank Account For You

    A bank account is noted as one of the safest places to store your money. Until a few years back, getting a bank account was a fairly simple process as there was only a single type of account in existence. Now however, with multiple types of accounts existing, it is important to choose an account which is best suited to your needs to stay in control of your finances. Here is a bit of guidance on finding the right bank account for you.

    You can choose from the following bank account types, each offering different benefits:

    Checking account:

    Checking accounts are the absolute necessities in today’s world as they provide a liquid source of money that is commonly used to pay bills and take care of daily household needs. This includes groceries, gas, clothes and so on. There are various types of checking accounts available. Such as basic, business, interest-bearing, student, express, and low income checking accounts. Most people use either basic or express accounts.

    To find the best checking account for you it is best to shop around and find out what’s available. Ask friends and family who they bank with and why. Look for a bank or credit union that offers no fees. Check the other options that they provide which are usually free checking, a debit card, low deposit to start the account, low overdraft fees or overdraft protection, and so on.

    When you have decided on a checking account, make sure that you ask the representative to discuss any and all charges or fees that you may incur on a usual basis. These should usually include any account maintenance fees, ATM withdrawal fees, NSF fees, inactivity fees, etc. Also, make sure they are FDIC insured as this means that your money is secure.

    Savings Account:

    If you do not have a savings account yet, it’s time you got one-ASAP. Even a savings account with a very small amount of money in it will earn some interest, not to mention that your money is also safe and secure. Savings accounts are offered by a lot of banks and a wide range of providers, including building societies. Hence, when looking for a savings account, you have a lot options to choose from.

    Before, settling on a specific savings account be sure to take a look at the types of accounts available. These include traditional savings accounts, certificates of deposits, and money market accounts. Most people like traditional savings accounts and certificates of deposits because they are FDIC insured. While money market accounts are savings accounts in which your money is used to give short term loans to banks and other organizations.

    The interest you receive is the reward you get for investing, so the interest rate of a savings account should be a good rate which will earn you maximum rewards. The rate of interest for savings accounts can vary greatly so it is important to do your research and shop around.

    Even though you never pay directly for a savings account you should still think of it as a major deal and shop around and research. Be absolutely sure you are clear about the product details – not just the headline interest rate –and if there is something which seems fishy then just don’t go for that deal.

    If you already have a bank account but are looking for one that offers you more, or looking to open a bank account for the first time, these are a few things you will need: proof of your address, proof of employment/income/earnings, and a household bill.

    Remember, it is a matter of financial responsibility to research a bank before committing to opening an account. So, take your time to browse around online or ask a few people what they think of the particular bank. You will surely reap the rewards later.

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    March 4, 2011
  • Corporate vs Government Bonds

    Corporate bonds are different from government bonds. There are more risks involved while dealing with corporate bonds as compared to government bonds. If the company issuing the bonds undergoes any losses, or dwindles mid way, the investors directly affect from it unlike in government bonds. Other factors like the market condition, like a recession or inflation, can also affect the investors directly. However, there are ways you can prevent from losing your money by using the call-back option. You could also invest your corporate bonds to create equity. These are definitely safer than others without it.

    Corporate bonds are issued by a company with the intention to expand their business and make it profitable. So the interest rate depends on the success of the company and the customers are likely to get back the principle amount along with the interest rate if the company succeeds.

    What are the risks involved with corporate banking?

    Since corporate bonds are issued by companies to raise capital for further investment, the money the investors get back depends solely on the success of the company. As such if the company issuing bonds fail to meet up to the expectations, incurs losses, or dwindles mid way, the results are catastrophic.

    There is a high amount of uncertainty involved with corporate bonds and hence many people hesitate into venturing into corporate bonds and would prefer government bonds since return is guaranteed there. Also the interest rate offered by the company could not be sufficient enough for the customer. The lack of secondary market makes it difficult for the customers to sell off their bonds. In the event, a new bond issued can dampen the spirit of the investors. All these shortcomings make corporate bonds very vulnerable to the financial market.

    Why is there a demand for corporate bonds?

    It is important one does enough research on the company issuing bonds they are willing to invest in. There are businesses with brand image and are controlled by enterprising businessmen that are going to succeed in no time. It is always wise to invest in such businesses with a back up than the one with no back up as corporate bonds come with hefty interest rate as compared to government bonds and make them a lucrative proposition for all, provided the market is blooming and the economic condition looks good.

    How to pick up specific bonds?

    If you have decided to go with corporate bonds, then it is important to research on the credit rating of the company before buying the bonds. There is something called as investor bonds with high interest rates which are often backed by the government. It is always advisable to invest in these binds since you are likely to be profitable.

    You can also invest in mutual funds, which are corporate bonds issued by a group of companies. The mutual funds manager does the needful of investing the funds collected from customers.

    What is money back option?

    There is a way by which the money once invested in corporate bonds can be retrieved mid-way by using the call-back option. In short, although corporate bonds are not very secured, the risks can be minimized in different ways to ensure that customers don’t lose their money.

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    February 8, 2011
  • Don’t Know Where to Invest Your Money?

    There are many of us who wish to invest their money to secure their future, for retirement or their children’s school, etc. Although important, it is not wise to just jump to any opportunity that comes your way. That’s when we wonder where to invest. What is the best and the safest option?

    1) Invest your money first.

    The most important thing you need to consider while investing in binds is not what you should buy or sell, but rater how much return you are going to gain in the form of dividends.

    2) Investing in stocks

    Stocks would outdo any other option such as real estate, bonds, or commodities, since a general rule is to hold them for at least 10 years and Stocks will, over this period of time, give returns of up to or over 10%.

    However, it does not imply that stocks are the safest option always as very few investors hold stocks for 10 years or more. Also, with time, new and better technologies come to pass. For instance, General Electric no longer makes most of its revenue from light bulbs. With the option of mutual funds, individuals hesitate to invest in stocks in general, but rather in a particular company.

    3) Invest in bonds

    It is always advisable to invest in bonds that is rated AA or higher, and stick to a well known, major brokerage to handle your investment. The minimum you are expected to pay is $5000 but even with inflation you can expect to make only 4% profit per year. It might seem like a small amount but think of it in the long run. Bonds definitely have an edge over others since they are much more reliable than stocks and their behavior is much more readily predictable.

    4) Invest in Currencies and Commodities

    The investors should avoid trading in commodities or currencies, such as FOREX in the beginning. It is only because so many people are losing it that there is so much money floating around.

    5) Invest in funds

    For those looking to make quick money should definitely give this a thought as funds offer a great alternative to direct investing. The common one being mutual funds where investors put money into a variety of instruments- stocks, bonds, currency, commodities, etc. They can save money by not incurring a fee for every trade, but on the other hand pay management fees of one kind or another.

    Read more ..
    February 8, 2011
  • Opening a Checking Account

    A checking account is a bank account that allows for easy access to funds. It is the account that you would generally use to pay your bills and make most of your financial transactions. The money that you have in your checking account is accessible either by writing checks, automatic transfers or by using your Debit cards.

    A typical checking account is handled through careful management of deposits and withdrawals. The account holder is equipped with a supply of official checks. A check when filled out correctly is treated as cash by the recipient. The transaction process begins when the recipient deposits this check into his own bank account. From here the bank files this check electronically at which point the check writer’s bank receives the cancelled check and the amount to be debited. This process is identical for every check written against an individual checking account.

    To summarize, you successfully open and manage a checking account by following these simple guidelines:
    1. Make sure you know and understand the bank’s policies for all matters pertaining to the management of a checking account. This involves :
    a. Minimum Balance requirements
    b. Monthly limits on check/debit transactions, if any
    c. Monthly limits on bill pay transactions, if any
    d. Overdraft protection and all the costs incurred by you in the event that you do overdraw on the account.
    *If you find that the banks policies are restrictive consider opening/moving your account elsewhere.

    2. Remember that you as the owner of the checking account are responsible for keeping track of your funds, even thought the bank will issue accounting/ bank statements routinely. It is important to balance you account each month, as this will help you to detect any errors that you or your bank has made.

    3. Understand that checks represent the actual amount of money contained within the checking account. If a check is written for a higher amount than the available balance, you could face numerous fees and is some cases possible legal action, which will be clearly outlined in the bank’s overdraft policy.
    It pays to avoid writing checks when the available balance is not known.

    4. A checking account is typically insured by the FDIC for up to $100,00. If however, you have that much money you are better off transferring a major part of your money into savings account or other investments. Your checking account should hold only the money that you would require for your daily transactions during the month. Some banks do offer interest on checking accounts, but their rates are usually lower than a savings account.

    It is important to understand that there may be no such thing as “ the best checking account” as different banks have different banking policies and finding the best combination of policies that would work for you, would result in you having what could now possible be stated as the “the Best checking account for me”

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    January 24, 2011
  • Do You Need Life Insurance?

    Do I need life insurance? This a question we all ask ourselves at some point or the other. But think about it this way, can you afford to die without it? If someone depends on you financially, you probably need life insurance. Life insurance gives you and your family the peace of mind to know that when the time comes, there will be funds available to take care of costly funeral expenses or make things easier on your family.

    The first thing to consider before you even start shopping for life insurance is your budget. You need to calculate what your family’s budget can handle comfortably and stick to that number. While many theories exist as to how you should calculate your insurance need, the best would be to multiply your annual income times 10 or 15. This will give your family 10 to 15 years of your income even though you are not around. Also take into consideration things such as, your home mortgage, vehicle loans and credit card bills. If you can afford to buy a life insurance policy that will take care of some of these items as well, it would be great.

    Always do your research when making financial decisions, more so when choosing a life insurance company. Look out for a company in good standing with the insurance commissioner.
    When it comes to choosing a policy, keep in mind – not all policies are alike and there is no such thing as a “one size fits all” policy when it comes to life insurance. However, there are two main types of life insurance – Whole Life and Term.

    Whole Life is exactly what it means; that you pay a fixed premium on this for as long as you live. However, some whole life policies pay up in a certain amount of time or by a certain age. Meaning that at the end of a given time frame, say 30 years, or by a certain age, say 80, the policy is considered fully paid up and will just sit there and accrue interest. The downside is that whole life insurance policies can be expensive.

    Term life insurance is pretty self explanatory. You pay for it for a certain number of years, at the end of which, the policy ceases to exist. The pros to this policy are it is generally inexpensive and you can afford a lot more coverage for a lower price. In addition, some term policies are convertible which means that you can, at some point in the future, you can convert all or part of the policy to a whole life policy. The con to term life insurance is that the premium cost will go up every year.

    The important thing is to have adequate life insurance for your individual situation.

    Read more ..
    January 21, 2011

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