Category: Financial Planning

Creating a Balanced Investment Portfolio

Posted by admin – February 2, 2010

A balanced investment portfolio is one that provides you with the maximum profit potential while staying within your investing time frame and risk tolerance. This varies a lot from one person to the next based on such factors as income, age, and personality. You should create an investment portfolio that matches your financial targets.

Your Risk Tolerance and Your Investment Strategy

Your risk tolerance is a major factor in determining what percentage of your investments will be aggressive and what percentage of your investments will be conservative. Most people near retirement avoid having a large portion of high-risk, high-reward investments in their investment portfolios. Instead, they tend to have the major portion of their investments in stocks in low-risk investments and stocks that pay dividends on a regular basis.

However, most people in their early working years want to make their investment portfolios lean towards the aggressive side with a long-term outlook. The main thing to understand is that regardless of whether you are on the low-risk side, the high risk side, or somewhere in between, you will want to have a portion of safer investments and a portion of more aggressive investments. It is just a matter of what percentage you invest in each.

The Idea Behind a Balanced Investment Portfolio

The main idea behind developing a balanced investment portfolio is to diversify your investments so that your investment portfolio will not be ruined by one investment going bad. Diversifying an investment portfolio is simply a matter of purchasing a variety of different types of investments, as well as buying a variety of investment subtypes.

In other words, a diversified investment portfolio might include a couple different types of bonds, four or five different types of stock, and some CDs. As your investment wealth grows, you will have more ability to diversify your investment portfolio. Make sure you have plenty of proven stocks in your portfolio so that you will ride each upward market trend without suffering too many major losses during downswings.

Investment Portfolio Strategy

You may want to follow some of the popular investment portfolio strategies floating around. Each tends to fit a certain risk tolerance. You can strategically allocate your investment portfolio assets so that you will have predictable long term return, or you can allocate your investment portfolio to target current trends.

One of the more popular investment portfolio strategies involves allocating current investment portfolio additions to those parts of your stock investments that are on a downswing. So you purchase your stocks when they are below peak each time you add to your investment portfolio. If you sell any stock, you would sell the stock closest to its peak value.

The bottom line is that you should choose an investment portfolio that matches your risk tolerance and wealth goals. Just make sure you keep it balanced. As your needs and risk tolerances change, you can change your investment portfolio.

How to Save Money

Posted by FinancialGuruOnline.com – November 10, 2009

How to Save MoneyIn an economy that is constantly getting tighter, a consumer must find ways to cinch the belt and save money. The question most consumers are asking is “How to save money?”

There are plenty of ways to save a few pennies here and there. Whether it’s making changes in lifestyle to save over the long haul or choosing less expensive options for various items – you can save money if you try.

Start by saving long-term pennies on utility bills. Turn off lights, computers, and other electrical items when not in use. Turn your water heater temperature setting lower to reduce your electric bill. Install low-flow shower heads and aerators on your faucets to cut down your water consumption.

Rack up some savings through savvy shopping and you’ll keep more than a few pennies in your pocket. Shop local thrift stores for clothing, furniture, toys, books and other household items. When the weather is nice plan to shop yard sales for bargains.

Compare prices between stores. Peruse the sale fliers that usually come in the Sunday newspapers and compare prices from store to store to get the best deals on the items you need. Many grocery stores and even discount stores (like Wal-Mart) will do price matching if you can show them a competitor’s ad with a better advertised price.

Stay home. One of the best ways to save money is by staying home. If you aren’t in a store you won’t be tempted to buy something you don’t need.

Combine trips. Cut down on transportation costs by combining your trips. Try to plan out your week so you can make stops for groceries, household items and errands in an ordered fashion that will save gas and time. If you can have one day full of errands in stead of three partial days of errands, you will be that much ahead on gas savings.

Make a list before you go shopping. Write down the items you need to buy then stick to the list. Extra items that you notice and think “Oh hey! I want one of those!” can set your budget back.

Shop during the least busy hours. If the store you are shopping in is crowded, you are more likely to spend more money just to get out of there. This happens because you don’t compare prices, you simply grab the first items you can get to in order to just get out of the store and away from the crowd. Figure out the least crowded time for your favorite stores – whether it’s at 7 a.m. or 10 p.m. and try to plan your shopping around those times.

Make use of your local library. You can check out (for free) new release DVDs, new release books and new issues of magazines at most local libraries. You can also get free internet and wifi access at many libraries. Check to see what yours has to offer and make use of it to save money.

Personal Finance: Vital to Financial Survival

Posted by FinancialGuruOnline.com – November 10, 2009

It is important for consumers to have an understanding of personal finance. Many consumers, especially around the holidays go hog wild and spend money that they do not have. Credit cards have become a huge crutch for millions of Americans.

The problem with credit cards is that each purchase that is made incurs a finance charge. For example a fifteen percent rate credit card would make a one hundred dollar purchase actually cost one hundred and fifteen dollars. Even if you got the product on sale, after you paid the bill you still would have paid full price for the item.

Credit cards are dangerous because many people abuse their credit card limits. Once you hit the limit, the next month you incur charges because the interest rate kicked in and now you are over your credit limit.

Spending money wisely is very important in order to help protect yourself against incurring large debts, bankruptcy, and even foreclosure. Many Americans have lost their homes due to foreclosure. This is because they took out adjustable rate mortgages. This meant that the interest rates on their mortgages could be adjusted at any time. This action would then increase their monthly mortgage payments.

Many people found themselves with homes that were not worth what they had paid for them and monthly mortgage payments that they could not afford. If these people had planned for this event financially then maybe they could have stopped some of these foreclosures.

When you own a home it is important to have a healthy amount of money in your personal savings account. In a down economy many people can lose their jobs which take a huge blow on their personal finances. You need to pay yourself first when you get your paycheck. Set aside at least ten to twenty percent of your paycheck and put it into your savings account. If you are too tempted to access this money then try getting a savings account that is not linked to a debit card. This will help you really have to think about why you need to spend the money beforehand.

Preparing a budget for your monthly expenses is a great way to manage your personal finances. Many consumers just write checks online and pay their bills without actually viewing how much they are spending. Always make sure that your bill payments have been made and received by your creditors. A missed credit card payment usually makes the consumer incur a thirty nine dollar missed payment fee. If you are over your limit then you will also incur a thirty nine dollar fee for that also. This makes one mistake a seventy eight dollar mistake. Mistakes like this add up and can really hurt your bottom line.

Being aware of your personal finances is very important for everyone young or old. In order to be able to survive financially for years there needs to be a plan in place for every dollar that is earned and spent. Everyone can do it; it just takes hard work and forethought.

Five Types of Budgeting Methods

Posted by FinancialGuruOnline.com – January 23, 2009

Budgeting is an essential part of your financial health – and should be completed by ever individual, every family to ensure that the finances are being met head on with honesty. There are many types of budgets which you can choose to adhere to – here are some methods that have worked for many consumers in the past.

Envelope Budgeting
Envelop Budgeting consists of the use of envelopes and spending cash. It enables the use of different envelopes for expenses or savings during the month. For example, if you have three hundred dollars for food for the month than this money is placed in an envelope labeled food. On your next trip to the grocery store you can remove the money from the envelope and replace the money with receipts from the trip to stock the cupboards and fridge.

Spending categories are created with cash in the envelopes to ensure that you do not go over these amounts every single month. This is an effective tool in maintaining control of the cash that is being spent in your household.

Spending Categories
There are two main categories in which we spend money. These categories are fixed and variable expenses. Fixed expenses are those we are unable to change throughout the course of a month. Keeping in accordance with these two spending categories the fixed expenses are subtracted from the income which is coming into the budget, the variable expenses are than divided of the amount which is left.

Tip: Don’t forget to establish a savings account in the budget to provide a safety net for consumers wishing to create an alternative to credit cards.

Daily Spending Limits
Aside from your fixed expenses, there is a type of budgeting that uses a maximum daily limit of money which can be spent to keep control of your finances. Most people implement a daily spending limit of ten to twenty dollars which is spent for expenses like food, gifts and entertainment. Although this limit may seem low, there are many ways to keep more money for categories by saving for multiple days for purchases – or excluding food from these daily savings and creating another budget for food.

E-Budgeting
E budgeting enables the use of software that can be found on the internet to keep control of your finances. There are many free software programs available for download which can keep track of your spending, your expenses and many other aspects of the budget. These powerful tools can maintain control of your money.

Regardless of the type of budgeting that you use, it is important to adhere to the same system throughout the course of six months to ensure that you become familiar with the program. If the system is not working for you, it can be simply replaced with another system which suits your lifestyle and needs.

Fighting Your Debt through Expense Control

Posted by admin – December 12, 2008

You will never tame your debt monster without implementing some type of expense control. In fact, you should work to implement expense control even before looking into ways to increase income. This is because measures to implement expense control can serve to increase your disposable income which can then be used to reduce your debt. Let’s look at some of the ways you can implement expense control and start fighting your debt today.

Expense control starts by compiling a master list of all your obligations and debt. It’s probably best to build your list in some type of spreadsheet. By doing this you can sort the list by either due date or amount due while doing your expense control analysis. Make sure you list the automatic debits that you have set for various payees each month. These expenses tend to be forgotten and are the cause for many overdrafts when your checking account runs low. This causes degradation in expense control along with an increase in debt.

Try to convert all of your variable expenses into fixed ones. When they are fixed, they are much easier to fit into a budget which is necessary for effective expense control and debt reduction. For example, you could convert your current cellular phone plan into a prepaid plan in order to implement expense control on your mobile phone expenses. Utilities are a little harder when trying to implement expense control because of seasonal changes in usage. Try to go through a historical analysis with your utilities and budget how much to set aside based on an average over 12 months.

You will realize with expense control that you can do without more than you think. Now that you have all of your expenses listed, you can analyze carefully which ones you should cut back on in order to help with debt reduction. Expense control requires finding cheaper substitutes or cutting the expense item out altogether. If you can cut the expense of a second car, it will be quite effective towards your efforts for expense control. It will be extremely helpful if you are in debt over the second car. You will find in some cases that it is actually possible to have a two-earner family with only one automobile by using mass transit or even bicycling to work.

Restaurants are a big budget killer and do not help expense control. Restaurants are probably the first non-essential expense you should cut. A significant amount of credit card debt comes from restaurants. It really doesn’t take much to get up a little earlier and make your own breakfast if it will save you money and help with expense control and debt reduction. You can make eggs in the microwave oven if you are pressed for time. A sandwich for lunch might get dull but you can learn creative ways to spice it up.

Buying in bulk sometimes hurts budgeting and expense control. The problem with bulk buying is that it can be very expensive outlay of cash to buy more than you will actually use in a month. Oftentimes, people accumulate credit card debt to buy in bulk. You might be able to implement more expense control by using pay as you go. For example, you might want to buy a monthly bus pass and ride the bus once in awhile instead of drive. You’ll pay more for the pass but make but it will be beneficial for expense control if you make sure you use all of the allotted trips.

Credit cards for students

Posted by admin – November 18, 2008

The budget is small, but the plans are great! Most students see their studies not only themselves but also the period of study in itself as an investment: Preferring many trips abroad, internships and an expensive laptop for most students are now obvious. But because all this is not exactly cheap.

In each case to something more financial leeway to create more and more students with a credit card. How clever! After all, there are credit cards for students to be particularly favorable conditions – with some providers even completely free. The advantages are obvious: Unlike the debit card is the world’s credit card accepted in many places. Who was only in possession of a normal debit card is easy to get problems when you go outside the country and wants to pay. Students know, like traveling all over the world – a credit card makes travel more flexible: Whether at the bank, at bank machines, hotel, restaurant or at the car rental is a credit card is always welcome – and not just abroad.

Most students now book their flights online. No wonder at the abundance of low-cost providers. For only $30 you can already tour all over Europe. But what good bargain prices for student travel, if you are not attached to the tickets coming? Almost all the cheap flights must now be paid by credit card. Who has not quickly looks old: Because the credit is not transferable – a result that only the flies must, to the credit card is issued (and its companion course). Students who have a credit card, here have a clear advantage – and can save a lot of money. If it’s times across the Atlantic should go and fly a little more expensive, is the credit card for students to solve: There is no large banks offer many explanations for certain credit cards financial leeway. So when times very quickly a new machine must be – just because the old spirit has abandoned, but the housework must be done quickly – saving students with the expensive overdraft credit card interest rates. The special credit cards for students allow students in advance about money that is then usually only within one month of back pay – plenty of time, therefore, to quickly even for the excessive amount to a few days casual work. While the extreme for a bank account usually charge quickly, there is with the credit card for students in short-term overdraft no additional cost. The framework in which you briefly about his budget can draw is obviously previously fixed in the contract.

Effective Ways to Erase Bad Debt

Posted by FinancialGuruOnline.com – August 22, 2008

Buying new clothes, shoes, and gadgets definitely sound like a very enjoyable past time — but not so, when you are using a credit card for this past time and are paying a very high interest for such purchases. If you feel happy after making new purchase, you will not feel as blissful afterwards so much so if you can not pay the balance and the interest charges of your credit card debt. As your financial obligations increase, making it difficult for you to meet the payment schedules, the more the credit card issuers will charge higher interest on your debt. If you are one of those caught in the cycle of debt, yours is not a hopeless case because there are actually things that you can do to erase bad debt.

Credit card should not be made as a substitute for cash. This means that your credit card should be used as much as possible, only when you have run-out of cash when you need purchase an item and it is really important for you to make the purchase. If you are also expecting a sum of money that you can use to pay your credit card debt, then it is alright to make use of your credit card.

As much as possible, do not use your credit card when shopping and for paying stuff you buy at the stores. Using your card every now and then will just make you acquire more and more debt that will eventually become difficult for you to pay. If you miss to pay the balance, the credit card issuer will charge more debt until your outstanding debt will become twice as much as your original credit, making it more difficult to erase bad debt. Consumers should not be compulsive in making their purchases and should only buy items with their credit cards when truly necessary.

You can start to erase bad debt by making a firm commitment to refrain from bringing your credit card with you when you are planning to shop. You should be mindful of the items that you are planning to buy because most of the time, they are not really essential. For instance, there are so many of us who would indiscriminately buy the latest gadgets in the market even if we already have our own phones. Some of us no longer buy cell phones for the phone’s use but more because they are considered as status symbols. It is therefore good to think first before making such purchases if the items that we are buying are actually the kind of things that we need.

If you have a significant credit card debt, try to pay more than just the interest to gradually erase bad debt. Make use of your credit card less. Slowly pay your way out of your debt. Be conscious also of your debt payments because if you miss just one, interest will be charged on your debt, making it more difficult for you to pay the credit card company. So erase bad debt to live a worry-free life.

Does Credit Rating Matter?

Posted by FinancialGuruOnline.com – August 20, 2008

Why do we need to be reminded of the credit rating we have? What role does good credit play in our daily lives?

            These two are the nagging questions we gnaw at when matters of credit rating abound. Before get to answering them, the first thing we need to know is what a credit rating really is.

            Credit rating or scoring is a way of indicating whether we have good or bad credits. We score or rate credits as either good or bad in the micro level as well as the macro level. While the micro level of credit scoring or rating is entirely a personal process of knowing how our financial credits are, the macro level of determining a society’s credit rating or a corporation’s credit rating is entirely a different matter altogether. While a micro level credit scoring may be distinguished as a personal matter, the macro level credit rating is more technical and the methods used in this kind of credit scoring is more difficult to digest and oftentimes are kept by the credit rating companies themselves. Simply put, a lot of factors come up when we speak of identifying credit ratings in the macro-economics or business level.   

How de we know if our credits are good or bad? To roughly put it, we know we have good credits if we have made minimal to zero debts, we do not overspend, and we have more than enough finances we need to even come up with a savings account for other uses such as in cases of emergencies. Its either we rarely cross roads with debt or we don’t go making them at all.

Now, you may ask what the role of good credit ratings are in our daily lives. The thing is that having good credits is very important. That fact is something we cannot refute because we do experience the best of what it is like to have good credit ratings and we also go through financial hell when we accumulate bad credit ratings in whatever aspect of life we are in, the businesses, our financial relations with others and such.

Good credits matter. If you have good credit ratings, the more chances you have of getting really good financial deals. Example, let us say that you have one or two credit cards and you want to apply for another credit card account in another credit card company or bank, one of the things that a credit card company or a bank with credit card services look for is your credit rating history. If they find that you have maintained good credit ratings in the past up to the present such as you pay your monthly credit card bills on time, you have minimal to no debts at all, you are capable of paying another set of credit card bills in their company, then you may just get yourself another chance at opening a third credit account. If they find that it is beyond your financial capability to pay off another set of monthly credit balances, you may just get yourself refused by the company. That is just one of the many financial scenarios that a good credit rating or a bad credit rating can affect. There are many others.

 

So does a good or bad credit rating matter? One simple answer: Yes, it does.

How helpful are Debt Counseling Services?

Posted by FinancialGuruOnline.com – August 19, 2008

Many of us have already enlisted the help of debt counselors to aid us in cutting down on the debts we have accumulated over the years. Many of us remain adamant to the fact that we need the service called debt counseling.

            Let’s face it, in these times when technology quickly advances and when many commercialized products are on the market, our wants are being fuelled. We cannot avoid spending for things we want and bring debts into our supposedly debt-free life. For those with debts that have already reached a lot, there is the need to undergo debt counseling, for those who are about to measures to avoid making debts need to be taken and seriously.

            The first question to answer with the concept of debt counseling is: What is debt counseling?

            Debt counseling deals with debts that are unsecured. This kind of services comes up with ways and means to clean out credit card debts, medical debts, loan debts, and even overdue utility debts.

            Again, let’s face reality here. Thousands of people, especially in the first world countries, are heavily indebted and debt counseling services are mostly sought after in these places. We do need help with managing our financial resources.

            The next question is: Who gives these services?

            Individuals who have expertise in finance budgeting and financial matters are those who are being attracted into this kind of career. These finance experts guide the heavily indebted individuals and households in completely paying off the heavy debts they have accumulated and help them recover from the after effects of having getting out of being in moderate to heavy debts.

We cannot deny the fact that once we are freed of these debts that chained us to personal and financial troubles, there are after effects. We may be freed of the heavy debts we have had but we, again, feel the need to stabilize our household’s finances. We even go as far as repeating our past habits. That is, we tend to go back into overspending and debt accumulating. In this light, perhaps debt counselors need to be placed as prominent fixtures in the financial and economic world.

How do we get hold of these services?

Availing of debt counseling services is fairly easy. Debt counselors can be contacted by phone, through the internet, or by going onto local offices that have this service. 

The last question is: Why do we seek this kind of service?

As consumers of those commercial products offered in the market, we need help in distinguishing what we need from what we want to avoid adding up to the debts we already shoulder or to avoid making them at all if we don’t have one yet. In this day and age, when all kinds of problems arise aside from financial matters, solving the financial matters may be the best way to go through to answering the next problem. We are no stranger in this case scenario. Many have undergone debt counseling to free themselves from debt and to start anew after.

 

So how helpful are debt counseling services? One word: Very.

 

           

 

 

Finance 101: Getting to know Finance

Posted by admin – July 30, 2008

Finance is an interesting field of study wherein the relationship between money, time and risks are being considered. The word ‘Finance’ ignites thoughts that usually deal with the study of assets, money in particular, as well as the management and control of these equities, not to mention managing and profiling the risks associated with Financial projects. Also, it is concerned with providing Financial services which is why the word ‘Finance’ as a verb usually means to provide money or funds for a business venture.

Finance has different sub branches depending on the industry that utilizes it. Finance can be used by businesses in the form of corporate Finance, governments using public Finance, entrepreneurs with personal Finance, and even other organizations which may include but are not limited to non-profit organizations and even schools.  Usually, the aims of each Finance sector are attained by using the proper Financial tools that correspond to their respective institutional structure.

When it comes to business management, Finance will always find a pivotal role since it is considered the key to the success of an enterprise. Finance finds its role in the appropriation of various assets. Liquid assets in the form of money have to be managed suitably to secure an individual/organization’s success.

Corporate Finance commonly deals with large to medium-scale companies. Corporate Finance features the sale of stocks to company investors. The stocks generally give ownership to the person who buys it. For example, If you buy a share of the APC company and the company has 1000 shares (usually held by investors), then you own 1/1000 of the company.  Generally, the company receives money in return for the stock which they can use to expand their company further in a process termed ‘equity financing’. The company’s Capital Structure is usually composed of the company’s equity financing together with the sale of bonds (a form of debt financing).

Personal Finance is concerned with making ends meet with a person’s needs.  It involves carrying out rules of Financial undertakings to arrive at a personal decision that supplements Financial endeavors. It considers an individuals source of income or Finance which may take the form of mortgage loans, expenditures, savings, payday payments, etc. This aspect of Finance also takes into consideration the record-keeping of income, budget, net worth statements, savings, investments, estate planning, insurance, taxes and credit, among many others.

Credit, the purest form of which is the credit default swap, can also be bought and sold in the market. Credit default swaps embody the price at which the buyer and seller exchanges risks. The seller runs the risk of the credit’s default in substitute for the expense of the notational quantity to be referenced. The buyer meanwhile pays this premium and usually in the case of underlying loans and bonds, conveys this receivable to the seller and collects the par amount that is usually made whole.

Financial Management is a juxtaposition of the Financial utility of the Accounting profession. Although, we should mainly consider Financial accounting as more concentrated on the reposting of past Financial data, while having the Financial decisions geared toward the prospected future of the company.