Month: July 2021

Why Pig In Piggy Bank?

A pig is an animal where it eats and grows fatter. That is why we have piggy bank; a common tool for our personal finance, putting money in for savings. But it has a more in-depth explanation than this.

As the word is spelt using the letters P, I and G; it makes the word ‘Piggy bank’ more meaningful to personal finance. These three actually form the words; Protection, Investment and lastly, Grow. As you can see, in managing our wealth we need to first protect, invest and then let it grow.

Now we will talk a little bit more on protect, invest and grow:

Protect: In personal finance, protecting it means not letting any money slipping away from our hands. This can be done in many ways like: having medical insurance to pay for your medical expenses; accident insurance to cover your expenses in the event of accident; making a habit to ‘pay’ yourself first whenever you got your paycheck.

Invest: In this stage, we will start to invest our ‘spare cash or funds’ to generate extra income. These investments can be in forms of investment-linked policy (ILPs), unit trusts, stocks or trading forex for capital gains. This is the stage whereby gains on these investments are withdrawn for expenses or to reinvest for a bigger portfolio.

Grow: This will be the stage where you are starting to prepare for your future retirement, often stocks or property that bought during the investment phase is included here (if you are still holding to these assets). You can also include your retirement portfolio once you have your first two stages settled.

An interesting fact that this cute animal is actually teaching us the three stages of managing our personal wealth. Let us use these three stages of financial planning to grow our wealth!…

Are Central Banks in Control of the Gold Market?

Until President Nixon abolished the Gold Standard in 1971, central banks had full control of the bullion market as the value of the Dollar was tied to the gold price. It was illegal for a U.S citizen to own gold so all the gold in the markets was held in the bank’s vaults. This system ensured a steady but slow economic growth since governments could just create more money to boost the economy.

After the abolishment of the Gold Standard, the price of gold rose from $43.35/oz up to $850/oz because everyone wanted to invest in gold. People didn’t trust the paper currencies as they weren’t backed by any physical asset. This didn’t please central banks so the U.S with the help of the IMF tried to limit gold sales through auctions. This didn’t work out because in reality the banks wanted to keep the yellow metal so the limitations were withdrawn.

After that the banks tried another tactic, which worked out well up until 1999. They lent their gold to gold miners to finance their operations, which created a massive over supply of gold and the price fell as low as $275/oz. This technically allowed central banks to keep their gold reserves since miners would pay them back with gold from the mines.

At the same time central banks threatened that they would sell all their bullion over time, which ensured the Dollar’s position as the only reserve asset as it was the only currency to purchase oil with.

After Gordon Brown in all his wisdom decided to sell half of UK’s bullion reserves in 1999, the IMF decided to limit annual gold sales to 403.3 metric tons. This removed the fear that central banks would sell all their gold and the gold price started a new bull run.

Central banks still had some form of control over the gold price after the IMF announcement until last year. For the last 20 years European central banks have been selling their bullion reserves and that way controlling the gold floating into markets.

Last year gold sales from the central banks stopped and they have started to buy gold bullion. When the banks stopped controlling the supply of gold bullion, they also gave up the control of the price.

As the old Western nations are paying the consequences of their loose monetary policy, the emerging economies from the East are enjoying healthy GDP growth figures. Such large nations as Russia, India and China have been buying more gold than the miners can supply, which has pushed the gold price up to the current levels.

Western central banks are facing a dilemma with their falling currencies and the rising gold price. If they start to purchase large amounts of gold, they would be admitting that they don’t believe in the current monetary system. This would cause panic and would destroy even the smallest hope of recovery.

Will we see a new gold standard …

Guide to Mortgages in Spain – Commercial and Residential

On average, the cost of buying a property in Spain will be in the region of 10 to 15% of the purchase price depending on the complexity of the procedure and the area of Spain in which you are buying.

1. The Notary fees are established by law and depend on the mortgage value

2. The Registry Fee/Land registry is usually 0.25% of the value of the mortgage

3. The Property Tax is 7% of the declared purchase price

4. The cost of the Property valuation depends on the value of the house usually it is from 0.80 to 1.5%

5. Spanish lenders will charge you an Opening Fee of between 1 and 2%

6. Stamp Duty (AJD) is paid to the government and is calculated as a percentage of a Spanish mortgage (between 0.85% and 1.75%).

Obtaining mortgage finance in Spain has become increasingly difficult over the past few years, with banks restricting lending. In particular Spanish banks are reluctant to lend finance for new property purchase, as they already have huge stocks of repossessed properties on their books. However, if they are trying to sell on this repossessed property stock on the open market, they have been known to offer buyers 100% finance.

The options open to UK nationals wanting to buy in Spain (whether resident or non-resident), are via Spanish Banks, International Banks, and UK lenders. There are a wide variety of mortgage products around, and it is wise to seek mortgage advice for the most appropriate deal.

In terms of commercial finance there are two routes. A secured loan against the commercial asset in Spain, or a loan secured against a personal asset (e.g. a property in Spain, or Elsewhere). The difference between a residential and commercial mortgage application is how affordability is calculated, and the length of the procedure.

Usual process for commercial mortgage application can take between 4 weeks and six months. (As per LLoyds TSB Cross Border Financing). The key stages are:

1. Information gathering, discussion and initial data analysis

2. Issuing of an “Indication of Terms” which will outline the proposed facility structure and pricing.

3. Site visits, which will focus on assessing the quality of the receivables (and other assets)

4. Formal submission to the lenders credit committee/underwriters for sanction.…

Manufactured Home Refinancing

For the last couple of years interest rates have been at record lows and it is only a matter of time before they start creeping back up again. If you own a manufactured home and the interest rate on your current mortgage is on the high end then refinancing might be a good idea. It’s also a good idea if you currently have an adjustable rate mortgage (ARM) and the interest rate is about to adjust.

There are several reasons to refinance your current mortgage; first getting a lower interest rate can save your tens of thousands of dollars in interest payments over the life of the loan; second it can significantly lower that monthly payment, freeing up valuable cash for other purposes; and third you can tap into the equity of your home and get extra money above what you currently owe.

The most compelling reason for manufactured home refinancing is the case of the adjustable rate mortgage. Even though rates are low now, those with an ARM face the prospect of increasing interest rates that will drive up their monthly payments when those loans hit their next adjustment period. Refinancing out of that arm into a low fixed rate mortgage can take that anxiety out of the equation, ensuring a consistent payment for the life of the loan.

If you are considering refinancing your current mortgage here are some tips to make the process easier.

– Get at least four or five quotes from different lenders for the sake of comparing in order to get the best deal for your financial situation. Never jump on the first offer because here might be a better deal out there.

– Pay close attention to closing costs, fees charged by the lender, and in some cases third party fees. Excess fees and costs may offset an offered low interest rate.

– Keep an eye on interest rates as you start shopping around for the best refinance option. Rates will fluctuate on a daily basis, so it pays to keep an eye on them before you lock in.

– In some instances you can negotiate the interest rate with your prospective lender. Just make sure that they don’t charge you an increased fee which may negate the benefit of a lower rate.

– You can also negotiate the lender fees directly with the idea of saving some money. Any governmental fees cannot normally be negotiated. Again make sure any fee negotiation doe not affect the interest rate.

– Refinancing is not a good idea if you plan on moving in the next few years as you will not gain much of advantage on your long term return even with a lower rate.

Manufactured home refinancing is a great way to lower your monthly mortgage costs. Just keep the above tips in mind as you research your options to get the best available deal for your budget.…

Advantages of Equipment Leasing Services

Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. With leasing services, your business can get access to all the high end equipment with less investment. Business needs proper equipment to function. You can grow business without investing money from your pocket. Equipment leasing provides funds to purchase them.

There are many advantages of leasing equipment. Some of which are listed below:

Purchasing equipment with Lease is more beneficial than purchasing it with cash.

It is flexible payment plan which suits your operational requirement and allows balancing of the cash flow.

No down payment is required

You do not have to invest all to get the best equipment.

Leasing provides businesses with beneficial stepped payment plans, custom and flexible terms, and seasonal schedules.

Even in long term leases, the lessee has to pay only the same interest.

Lease is an ideal solution for start-up companies. Some companies upgrade their equipment periodically and some cannot afford these costs. But with the help of leasing all types of companies can easily upgrade and maintained their equipment if necessary. Before signing the contract you should make sure that the lease period of the equipment is not longer than the life time of the equipment, and the rent paid for lease should not more than the buying cost. Also make sure that the payment made for the lease is also tax deductible.

For people who have problem of financing due to limited cash flow can equipment financing is a better way to acquire the machine. It is generally seen that companies follow different rules and regulations when it comes to financing. It is good if you check them on this in advance. You can purchase high quality equipment on a budget. At the end of the lease contract, you can even buy the equipment at a bargain price or can also renew the contact.

Equipment leasing and Equipment Financing both are great options for any kind of business with minimal funds.…

Personal Training-Finance Tips in Exactly Three Words

Last fall, after years as a “do-it-yourselfer” in the area of fitness, I surprised myself and decided to hire a personal trainer, Laura Creagan of New England Endurance Training. No, I’m not a Hollywood starlet trying to get her pre-baby, red carpet-ready body back or an elite athlete trying to win Olympic gold. I’m not even trying to compete in, much less win, any races at the local, “age group” level.

I’m just someone who loves the same activities Laura loves – cycling, cross-country skiing, running, etc. Someone who gets a kick out of reaching new milestones in old favorite activities. Someone who loves getting out in the great outdoors for a couple/few hours of aerobic activity. Someone who values the resulting health benefits…

So why on earth would I need a personal trainer? The thing is: I like these activities so much so that I sometimes overdo it and end up injured. (So much for those health benefits!) Plus I’ve got a few new milestones in mind for next bike season.

So when I read an article about Laura describing how she’d excelled in a grueling winter triathlon in Austria, I couldn’t help but think: “If she can perform at that level, she obviously knows something I don’t. And I’d sure love to know whatever that is (sooner rather than later) without Googling and poring over books and distilling boatloads of information and using trial and error.”

It took a few months before I could convince myself to take action – what with not being a starlet or star athlete – but I kept hearing the echo in my head of words I’d said to potential financial planning clients thinking about making the switch from do-it-yourselfers. “Yes, you might achieve your goals on your own, but getting one-on-one advice from someone who’s been trained and is around this stuff all the time is likely to get you there sooner with fewer missteps.”

So I finally decided to give it a try. And – no surprise – it turns out Laura does know plenty that I don’t about training, but our work together has also taught me a lot of lessons about advisor/advisee relationships of all sorts, especially those I have with my clients. Not all of these lessons are new, nor are they rocket science. But my experience working with Laura has helped me to better understand them from the advisee’s perspective, which I’m convinced will reflect benefits back in my practice.

In keeping with the fact that this is the third in a trilogy of articles of physical/fiscal fitness analogies ( see footnote for other two ), and to reuse a fun gimmick I recently ran across, those lessons… each in exactly 3 words.

1. It’s not magic. There are no guarantees in personal training or personal finance, but if you stick to a plan based on time-tested principles, you’ll get better results.

2. Goals dictate actions. Only do enough to …

Your Money Milestones’ Refutes Mainstream Financial Wisdom

Calling Moshe Milevsky’s views on personal finances unconventional is an understatement. Who else but this York University business professor and author of Your Money Milestones (FT Press, $19.99) has the audacity to write things like the following?

•Not enough people borrow from their 401(k) retirement plans.

•Parents should think of their kids as financial assets, not liabilities.

•You’re wasting money on insurance.

Before you dismiss Milevsky’s views as nutty, think about this: How well did following the conventional wisdom work for you in 2008 and early 2009?

Milevsky confesses that mainstream financial planning rules caused half of his family’s net worth to disappear between November 2007 and mid-March 2009. He bought and held onto an ultralow-cost, globally diversified portfolio that included stocks of solid companies.

“I lost hundreds of thousands of dollars by doing everything exactly right,” he says.

The experience caused Milevsky to rethink everything about money.

In the past, he thought about markets as a kind of roulette wheel. With enough data about historical behavior and outcomes, the argument went, you could predict the odds of success and make money with reasonable confidence.

Today, he takes the nuclear approach. You can’t predict a nuclear accident using history or statistics, and you can’t predict the next market meltdown. What you should do, Milevsky says, is concede that the future is unpredictable and then manage your most important financial decisions with clearheaded math.

For example, you should spring for a costly top-flight education when you’re young, so the investment can pay off handsomely over the long term.

When investing, take more risks if you have a job with flexible hours and an income that’s relatively immune to a recession. If your financial capital takes a hit, you can fall back on your human capital. Conversely, if your job is tied to the economy or the stock market, invest conservatively.

Milevsky gets a little too cute trying to turn his approach into principles of addition, subtraction, multiplication and division. And the book isn’t really about money milestones. It’s about the best way to think about money.

The author’s theoretical principles make the most sense when he brings them into the real world. Take borrowing. Milevsky says we’re thinking about debt all wrong.

Too often, he notes, we err by diversifying our debts the way we diversify our investments. We have credit cards, car loans, mortgages and home equity lines, paying off debt at different rates. Instead, you should use your low-rate debt to pay off your high-rate debt and stop incurring high-rate debt.

Americans could save billions yearly if they borrowed from their 401(k)s and used that cash to pay off their high-interest debt, Milevsky says. You won’t owe interest or tax penalties, so you’d likely “earn” more by erasing the 18% credit card interest than you’d make keeping the money invested in your 401(k).

Parents should also rethink the way they perceive their kids economically. Milevsky says children are actually hidden assets. “Your …

One More at the Party – Estonia

The Eurozone welcomed a new comrade on the first day of 2011: Estonia. The press reported somewhat muted celebrations around the country and in the capital, Tallinn. This Soviet breakaway had a poster campaign in anticipation of the event – a modern shot of a handsome, well-scrubbed smiling family comprised of early thirties parents and a cherubic baby; somewhat at odds with the current death-pallor of the European Union, but a picture of Irish government ministers handing out cheese isn’t exactly a positive PR spin, now is it? Nonetheless, some celebrated and others berated. The loss of the Estonian currency, the Kroon, was actually lamented by many. And of course the question of ‘what will this mean for us now?’ was on everyone’s lips. Estonia is now the 17th country to adopt the Euro, and the new question on many economists lips is, ‘will the single currency even survive?’

A good question, indeed. Portugal and Spain are currently fighting for dear life as the IMF is perhaps preparing to hand out yet another dubious flotation device, and old Germany sits there shaking her head wondering what the hell will happen next. Tony Blair’s former Economic Advisor, Derek Scott, was quoted in The Guardian saying that the problem is that higher inflation for the struggling countries in the Euro, means that their goods and services will never be able to compete with those of the relatively healthy Germany. And they can’t devalue because of the shared currency – the only option being austerity and deflation. And Germany isn’t prepared to ‘recycle the current-account surpluses it has accumulated,’ as that would ultimately destroy their own economy.

The economic experts don’t reckon the single currency will die, but perhaps there will be a breakaway of the northern European states (essentially those not in ‘better’ shape). But, as one blogger pithily pointed out at the end of a recent piece on Estonia’s acceptance to the collective: ‘I’m still waiting for someone to explain to me how you have one currency and 17 finance ministries.’ But, for now, we can toast a new partner in the messy battle to keep Europe’s single currency alive.…