MONEY INVESTING IDEAS

Reduce Your Debt With These Money Saving Ideas

noreply@blogger.com (Harshil) — Mon, 05 Jan 2009 11:45:00 +0000

There are lots of things you can do to reduce the amount you spend, and the following suggestions are some of the best ways to save money, because they can have the biggest impact on your spending. The more you can save on what you spend, the more you have available to pay off your debts.

Save Money - Examine Your Mortgage Deal

This is likely to be your single biggest cost, and therefore has the potential for the biggest saving. The large amounts involved mean that even a small difference in interest rates can have a significant impact on what you pay. The fact that you are going to be paying it for so long is another reason to examine it closely and regularly. A relatively modest change per month could save you thousands over the term of your mortgage.

Start by asking your existing lender for a better deal – that would be less hassle than changing to a new lender, so it is well worth a try. Some lenders are less desperate to keep your business than they used to be before the credit crunch, but many would still be happy to improve your deal rather than lose your business.

If you do consider changing to a new lender, you will need to know if there are any penalty charges for leaving your current mortgage early, as this will need to be allowed for when you are calculating what you might save. Ask your lender to confirm the total costs involved in closing the mortgage. You must also consider legal costs and any fees for setting up the new mortgage.

Save Money – Pay Off Debts First Instead of Saving

This feels counter-intuitive when we are always told we need to save more money, but it does not make financial sense to put money in the bank if you have debts that are costing you money in interest. Pay off your debts first.

The rationale behind this is very simple – the interest you pay for borrowing money is ALWAYS more than the interest you will get from having money in the bank (with the odd exception such as special short term offers on some credit cards). This has to be the case – it is the basic operating system for banking. They give you a bit of interest for the money you deposit with them, so that they can lend it out to someone else and charge more money. The difference between the two rates is their profit.

When you are planning to pay off your debts, always tackle the most expensive ones first. Look at the interest you are paying and use this to work out a priority order for paying them off.

Save Money - Review Your Energy Suppliers

You really do have to keep a close eye on your gas and electricity supplier these days. This is a constantly shifting field and you need to compare the rates about every six months or so. Try to leave it until just after there has been a big price change. Once one supplier changes their prices, the others usually follow in a few weeks, then it should be fairly stable for a while and that is the time to change.

The easiest way to compare prices is on one of the comparison websites. They make it very easy to swap now, and you can often get incentives for changing through them, such as cash back or vouchers.

It is usually cheaper to pay by direct debit, but you should always check your actual meter reading every month rather than rely on the company’s estimates. They seem to go for ages without bothering to read meters at the moment, and their estimates can be wildly out, so to avoid being lumbered with an unexpected bill a year down the line, check what you are actually using, give them your meter readings, and pay the correct amount.

Save Money - Credit Cards

This is a huge area and I could write many articles on credit cards alone, but for our purposes here, the main point is that you should not sit back and just make the minimum payment each month. Ideally, you need to try to pay your cards off in full each month. If you can’t do that, you are storing up problems for the future.

Assuming you do have some debts on credit cards and can’t afford to pay it all off in one go, you should at least set up a direct debit to make a fixed payment each month, based on the very most that you can afford. The credit card companies want you to just make the minimum payments, because then you pay them interest for a very long time, which is how they make their money.

The extra cost to you in just making the minimum payments is huge – the less you pay each month, the longer you take to pay them off and the more interest you pay. The other advantage of setting up a direct debit to pay your cards is that you make sure you don’t miss any payments by accident and incur any needless penalty charges.

Save Money - Shopping for food

The fact that you go shopping so regularly means that it is a very substantial cost when you look at it over the course of a year. We all have our favourite brands and reasons for choosing one make over another, but with the advent of supermarket own brands and now economy brands, there is a huge price difference available on what are often very similar (if not identical) products.

Research shows that if you can drop one brand level on all your shopping, you will save about one third on your shopping bill! I think that is a stunning statistic, which will have a massive impact on your pocket. You don’t have to change to the economy version of everything, just experiment with dropping one level. If you normally get luxury, get standard, if you normally get own brand, try economy.

In my experience, the difference between products will vary from quite noticeable to non-existent. Just make sure you are judging objectively, and not making your mind up before you taste it because of your expectation. Blind tasting is preferable if you want to do it properly.

Depending on your current situation, following the above advice could potentially save you a very sizeable amount of money over the course of a year. For people who are getting into some debt, this sort of expenditure management is well worth the effort as it can be enough to put a hold on the level of debt and help you climb back out. Debt has a habit of increasing and spiralling to crisis level if not tackled early.

Penny Stock Fortunes Begin With One Investment

noreply@blogger.com (Harshil) — Wed, 12 Nov 2008 10:21:00 +0000

With the stock market at levels not seen in years, the time for investing is now, but if you are like one of the millions of Americans who have never invested before, it can be a bit confusing figuring out where to start. The world of investing is very jargon-heavy and the risk involved with investing can scare off some people.

A great place to get your feet wet with investing is with penny stocks. Penny stocks are any stock with a value in single digits. They are a popular first investment because the initial investment amount can be very small, but the payoff can be quite large if you do your homework.

Pretty much every company out there started as a penny stock at one point or another. Even the biggest companies on the block started out as an idea someone had that was turned into a success through years of hard work. Penny stock fortunes can be made, but you can’t simply throw your money at any stock with a value under $10 and hope for the best.

There is a huge amount of stock research out there, it is up to you, as an investor, to read up and choose which ones have the brightest future.

Many people believe that penny stocks are always companies that are up and coming and not established. This isn’t always true. For instance, CitGroup (NYSE: CIT) is a company that we’ve all heard of that currently qualifies as a penny stock.

Many experts believe that the market has overreacted greatly to their recent troubles and that the positives this company still has outweighs the small risk you would undertake by investing in it. It is amazing to think of such a well known corporation like CitGroup being a smart penny stock investment, but it is!

Pervasive Software (NASDAQ: PVSW) is another company that many industry insiders have heard of that is widely considered to be a smart penny stock investment. With shares around $4, Pervasive has shown strong growth in recent months as sales for their integration software has increased significantly.

Companies like Pervasive actually go against the conventional wisdom you would apply when it comes to picking investments during an economic downturn, but once in a while, a companies’ outlook is so bright, you can’t help but see success in their future and Pervasive fits that description to a tee.

One final stock we’ll look at is Lion’s Gate (NYSE: LGF). With share prices hovering around $7, this penny stock has already shown exceptional growth over the last few years. The Vancouver, British Columbia based film and production company benefited greatly from the provincial and national tax credits given to Hollywood filmmakers who choose scenic Vancouver to shoot films in, and with the sudden swing in the exchange rate over the past few months, Canada is again back at the top of every film maker’s list of places to make movies.

As long as the US dollar is trading at $1.20 or more, Lion’s Gate’s profits are sure to have a healthy roar.

Financial Investment

noreply@blogger.com (Harshil) — Wed, 12 Nov 2008 10:19:00 +0000

Investment is the choice by the individual to risk his savings with the hope of gain. Rather than store the good produced, or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits for example a surety bond The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: Managers determine the investment value of the assets that a business enterprise has within its control or possession.

These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). Assets are used to produce streams of revenue that often are associated with particular costs or outflows. All together, the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business.

In finance, investment=cost of capital, like buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price.

Returns on investments will follow the risk-return spectrum. Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.

In real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. The seller is also called a Vendor and normally the purchaser is called a Buyer. Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment.

Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation. Too bad Wall Street didn't take that to heart.

Poor risk management practices played a role in the financial industry's downturn by unnecessarily exposing companies to dangerous investments, according to observers and industry reports, and the result could translate into big new technology investments for the financial industry.

Buffett’s Value Investing Style

noreply@blogger.com (Harshil) — Mon, 10 Nov 2008 06:48:00 +0000

Warren Buffett is the world famous stock market guru. Recently, he bought stakes of General Electric Co (GE) and Goldman Sachs Group. General Electric Co (GE) is a technology and services giant company which is listed in Dow Jones board; whereas, Goldman Sachs Group (GS) is a financial heavyweight company, which is listed in New York Security Exchange (NYSE).

Through his famous investment company; Bershire Hathaway, Buffett invested US$8bil in these two companies. His action startled many people in stock market. When everybody was taking their money out from the Wall Street, he invested such a huge amount of money.

There is no surprise actually because he at one time said that the best time to enter the market was when everybody was not interested in stocks. He also stated that it was difficult to buy a popular stocks and made profit from it. Besides, he also said that when everybody was in fear was the best time to enter the market but not when everybody was greedy.

According to financial specialists, Buffett investment is a long term investment. Currently, stock prices are considered as irrational due to the heavy sell down. So, now it is the best time to invest. When investing in a company, we should invest to the company management and market strategy. In this type of investment, good stocks should be held as long as possible by the investors.

When investing in stock market, Warren Buffett is very careful. He sets very strict requirements to select stocks. So, stocks that fulfill his requirements are seldom being found. Earnings versus growth, high return on equity, minimal debts, strength of management and simple business model are five main criteria, which are used by Buffett to select stocks to invest.

He usually concentrates in a few solid stocks, which able to give high return of investment. These few stocks usually are in the industries that he understands the most. He is also very careful to the local bourse, which is an emerging market that could be very volatile. Besides, he is also watchful to the market sentiment, which could be easily affected by many other external factors.

Good stocks are worth to hold for as long as possible. This is because good stocks such as blue chip stocks are able to ride through bad times and recover over time. Buffett is the most successful and trusted investors. His investments in GE and Goldman Sachs will restore the confidence of some of the investor on the Wall Street. When Buffett invests in stocks, underlying fundamentals of a company are the must will be investigated by him rather than market sentiment.

Because of his astute investment skill, he is dubbed as "The Oracle of Omaha". Intrinsic value of a business is always will be determined by him and he is willing to pay a good price for it as long as the business has the intrinsic value. Buffett is very prudent and holds a principle that if he can not understand the operation of the business; he will not invest in it.

That’s why, he escaped the dotcom market crash. He will check the fundamentals of the companies that he intends to invest by analyzing the companies' annual reports. This is his simple investment principle.

He is the chairman of Berkshire Hathaway and this company's stock is the most expensive on Wall Street. In a letter last year to his shareholders, he stated that Bershire was looking to invest to the companies, which had competitive advantage in a stable industry for long-term prospects. His philosophy is that the stock price will increase as long as the business does well.

Investment in PetroChina, which is an oil and gas firm in China, was one of his most successful investments. He bought the stake for this company for an initial sum of US$500 mil and then sold it for US$3.5 bil. Investments in companies such as Coca-Cola, American Express and Gillette are also among his successful investments.