Money Works For Us

Saturday, August 11, 2007

Mutual Fund Classes - Why it matters?

Class A

Class A shares typically have a front-end load or a charge that is incurred when you buy the shares. The fees are charged as a percentage of the amount invested and sometimes can be lower if you are buying more shares.

Class B

Class B shares normally impose a contingent deferred sales charge, or back-end load that can decline the longer you hold your shares. Now, while this might seem to be a less expensive way to buy shares, it can pay to check what other fees are charged. According to the National Association of Securities Dealers Class B shares may have higher expenses than Class A shares. Additionally there may be a sales charge when the Class B shares are sold. If held for a long enough time, Class B shares often convert to Class A shares with lower operating expenses.

Class C

Class C shares, which often are used for asset allocation, do not charge a front-end fee but do typically charge higher operating expenses than Class A shares. Additionally there may be a sales charge if you sell within a certain period of time. If Class C shares are held for a long time, the costs could be higher than either Class A or Class B shares.

Technorati Tags: Investing

Friday, August 10, 2007

Debt Consolidation for starting Freelance Business

Most business advisors recommend that a new business owner sock away enough money to support himself for a year or more before embarking on a business.
This does not mean that the business will not take in money, even early on. The usual course of small business is that business starts slowly at first and builds, often in fits and spurts. However, small businesses will have a disproportionate amount of expenses in these first months and years.
You'll be surprised by the expenditures you'll have in the first year; you have to buy all of your equipment, supplies, permits, software, and so on. These seemingly minor items can end up costing you thousands of dollars. Covering those expenses can be tough. Even when a new business starts to earn money, it is not unusual for it to post losses in the early months because necessary expenditures simply outpace earnings.
Besides saving money for the day you start your business, you should also work very hard to reduce your personal expenditures. Anything that can be paid off before you start your business should be paid off. Besides, it will be good practice for the new business owner to practice living more frugally! Most new businesses will take a lot of financial flexibility and learning how to live on less is a great skill that just about every business owner will tell you is important.
If you have debt (and who doesn't?) you may want to consider something known as debt consolidation. Before you get riled up, debt consolidation is not bankruptcy or debt settlement. It's a perfectly legal, ethical way to roll your many small debts together in one package and then negotiate a better loan on the large amount. The idea behind debt consolidation is that you may be able to restructure (consolidate) your debt in such a way that you will have to pay less interest to pay it off.
Debt consolidation won't hurt your credit report. In fact, it could actually improve it! That's because debt consolidation means you get a big loan to pay off your smaller debts. Paying off a debt usually improves your credit. And if you manage the larger debt consolidation loan well, that will help your credit, too.
By the way, a good credit score is essential for a new business owner!
But how does it work? In theory, you gather your debts. Let's say you owe $5,000 on a department store credit card that charges 22% a year interest. That may sound exorbitant, but it is not all that unusual. The interest on a loan like that is $1,100 a year!
Let's say you have some other loans. For the purpose of illustration, let's say you have one credit card maxed out to $10,000 at 16% ($1,600 interest a year) and another credit card that charges 14% where you've charged $3,200 ($448 a year in interest).
Put these three amounts together and add them up. You'll end up with $18,200 in debt. Now let's just say for theory's sake that you can find a new loan for $18,200 that charges just 12% interest. You get that new loan, use it to promptly pay off your three charge cards, and now you pay off the one new loan. By the way, 12% of $18,200 is $2,184 in interest a year.
Consolidating that debt saves you $964 a year in interest. You have to pay $80 a month less. If you are really savvy, you'll take that $80 and apply it toward the principal. You spend the same exact amount of money, but you will get out of debt significantly faster.
That's a small picture of debt consolidation. You can also roll in car notes, student loans, medical bills, and other debts.
Of course, debt consolidation can be tricky. First, it may not work for you-you may owe money but at rates that are already as low as you can get. Second, you might want to get a lower-interest-rate loan but cannot qualify. It helps if you own your own home, but even if you do not, there are other ways to consolidate your debt.
If you can consolidate and pay off your debt, you'll have a tremendous business edge, one that is hard to appreciate until you've been in business for a while. The lower you can reduce your expenses and the more adjustable you are to living modestly during the early years of your business, the more freedom you'll have and the more time you'll have to give your business the start it deserves!

Technorati Tags: Finance, Money, Debt-consolidation

Thursday, August 9, 2007

Investment and Saving Tips

Index Funds? Is it really good? How Much?

Index Funds are very safe and rewarding funds for safe players who don't have much knowledge of stocks/mutual funds or don't have time for that.

But, as these Index Funds are aligned with American Biggies it doesn't show large growth or reward potential. So, if there is any Index Fund investing in Mid-Cap or Small-Cap that would be real good to go. e.g. ING Direct has Index funds in all 3 segments Small Caps, Mid Caps and Large Caps.

This small move can fetch real good rewards with almost the same safety.

Diversifying from Stocks to Real Estate

It's called a Real Estate Investment Trust or REIT.

Vanguard's REIT Index Fund (VGSIX), which has a dirt-cheap expense ratio. With a $3,000 initial investment, your fund only costs a measly 0.21% per year -- a huge advantage over the average expense ratio of 1.55%. On a $3,000 investment, that means you'll pay just $6.30 instead of $46.50. Another bonus: This fund has a total return of more than 288% for the 10 years that ended with May 2006. Or You can cash in on streetTracks Wilshire REIT (RWR), whose gain of 31% for the 12-month period that ended with February makes it a "hot property!".

Dividend Reinvestment Plans (DRPs) and their cousins, Direct Stock Purchase Plans (DSPs)

More than 1,000 major corporations offer these types of stock plans, many of them with fees low enough (or free) to make it worthwhile to invest as little as $20 or $30 at a time. DRIPS are perfect if you only have small amounts to invest and want to make frequent purchases (a strategy known as dollar-cost averaging). Once you're in the plan, you can set up an automatic payment plan, and you don't even have to buy a full share each time you make a contribution.

Save on Broker Cost

At Merrill Lynch "representative-assisted" (that's "broker" in plain English) trades cost $85 per transaction (plus a per-share surcharge) if you're buying 251 to 500 shares. Make just 10 trades in a year and you've given $850 of your hard earned dollars to your broker. But make those same trades using one of the online brokers below and even at the highest commission, you're paying just $199.50.

You can go online brokers like Fidelity, ShareBuilder, TD Ameritrade.

Great Advice of Diversification for New Bies from Tom Gardner

Take $5,000 and open a discount brokerage account, paying something like $10 per transaction -- and spread it across 15 different investments including: funds, larger individual names that pay a dividend and smaller companies that most Wall St. investors aren't watching.

15 names? That's only $333 per investment on average. That's OK because diversification is the key to your long-term success. Tom Gardner (Motley Fool CEO and co-founder) should know. He says "by spreading out your money, you also beat away the speculative instinct." Highly diversified people end up realizing that their stock investments are a lot like a bank account with much, much higher interest rates.

A real small tip for buying any good Stock

With a stock-price way below its 52-week high would surely reward us while tending to reach its 52-week high again. So, any good stock like Apple or Dell or Intel would be a good purchase when they go way below its 52-week high.

Wednesday, August 8, 2007

Recycled Gold: A Hot New Investment Strategy

Away from Wall Street and the stock market, investment professionals understand that although they can spread their bets across sectors and industries it is hard to distance oneself from the overall economic climate of a country. That is of course unless you invest in commodities such as gold. The reason for this is that gold, like currency has the same value anywhere around the world, and a value that is generally immune from economic forces such as interest rates and employment. The use of recycled gold is not just for jewelry as many amateurs believe. Gold is used in many products, such as satellites for example, because of the unique qualities that it has. Gold is naturally corrosion resistant; however it is also very soft. This makes gold an ideal candidate for being used as an alloy or compound where its qualities can be mixed with another metals to yield strong results. For those reasons, as well as its aesthetic qualities, gold is always needed and its price is generally affected by both supply and demand alone. The reason for this is that it is needed in countries around the world, so only an overall drop in the world’s economy can have an affect.

Because gold is heavily commoditized, this means that scrap gold has a value based on the weight of gold that you have. For example, an old necklace made of gold does not just have value in terms of what someone may pay for the necklace. It also has value in terms of what someone would be willing to pay for the weight of gold that it is made of. For those reasons alone, pawn brokers and cash day advance companies are happy to give gold a value, without being worried about their ability to resell it in jewelry form. You see, gold is also a highly liquid market. What does this mean? Well when a stock broker buys shares in a company he does not just consider value based factors, he also considers how liquid a stock is. This mean, how often it is traded. A stock which is not traded very often will usually be much more difficult to sell when it comes to a time that one would need too. Because gold is bought and sold all the time, there is never any difficulty in being able to sell it.
For those reasons and more, businesses and high net worth individuals have invested in gold for the past 5000 years. Now buying recycled gold can have more value because an individual can pay less for the gold, because of the perceived cost and inconvenience of turning it back into pure form. That is where the market is, and as something which can be sold easily it is a business which is easy to scale when you have all the fundamentals in place. It is also the case that because everyone is not aware of the commoditized and liquid market that exists, people you are buying from might not know how easy it will be for you to make money they could otherwise make.

Monday, August 6, 2007

Does Debt Consolidation Service Work?

If you have applied for a credit card, which you got it the following month. You involved yourself into equity speculation and you lost big. You applied for more credit cards and you are just paying the minimum sum each and every month. The interest is killing you and you are in an absolute financial mess. Well, from a personal financial management point of view, individuals are experiencing these are facing bankruptcy.
However, there is this miraculous solution that has been showed on TV as well as on papers that seems so convincingly that this is your only chance. Well, it can be a chance as well as a bottomless pit. Do you think a finance company is going to you solve your problem for charity. Needless to say, nobody in the right mind is going to lend you such a hand without some tradeoff involved. Because by putting your leg into this solution, although it holistically centralized your debts into one single debt, it does cost some money, which is substantial enough to make you way poorer than, you already are. Why let someone manage your debts for a price.
Debt consolidation solution offered by finance company may not really work, as it is just another service to earn your money, thus making you a few thousand of dollars poorer. However, you can actually try to take a loan from banks or finance company by mortgaging your house as a form of collateral for paying off the other miscellaneous debts that incur comparatively high interest. This is just one way, which you can take and not paying any consolidating planning as well as solution that even a kid would probably understand.
Well, if you do not have a house, approach your creditor to work out a way to repay your debt. Chances are, they are going to work it out with you, because it is just not cost effective for them to issue that letter of demand through lawyers, which could cost more than the money, you owe them.
As you can see, there are many other alternatives that you can actually take instead of debt consolidation service. But the most prudent thing to note is never get yourself in such mess. Take debt consolidation as a form of last resort.

Debt Consolidation, Finance, Money

Calculating Debt - To - Income Ratio

Avoiding or Reducing Debt has always been a priority.

When we go to a bank to borrow some times they say that our debt ratio is to high. Basically what they mean is that our debt payments are more then 40% of our income. When the banks are calculating debt ratio they take in to consideration your credit cards, loans and credit lines. If you have mortgage with other bank and not add it to the total Then your calculation will not be accurate.
We can calculate oour ratio like this
Debts
1) 5 %of all credit cards available credit
2) 5%of all Credit lines available credit
3) Monthly mortgage payment
4) Monthly loan payments
5) Any other debts .

Add all this up and add up all your monthly income and then calculate your percentage of debt to your income if it is near or more then forty do not borrow any more.
Also add your insurance to this because it is also a fixed payments that way you have an exact figure of your debts.
Banks calculate your debt ratio similarly but it may not be a correct picture because you may not be using your credit cards or you line of credits at all so this is not providing you with an accurate picture. Hence remember one thing if you are not using your credit cards cancel them keep only one or two cards same goes for credit line keep only the one with low interest rate close all others.