Archive for the ‘Interest Rates’ Category

What Are Safe Investments?

Friday, July 31st, 2009

What are safe investments?

If you are putting consideration into investing money, but you are not sure which is the safest way to invest your money, then your first stop should be someplace where you can get professional advice on the subject. The last thing that you are going to want to do is to risk losing all of your hard earned money because you took a poor recommendation or made a poor bet. So what are the safe investments to make?

If you need to know what safe investments are in comparison to more high risk investments, then you should know that there are many qualified consultants out there who are well trained to give sound advice on the subject. Some safe investments are government backed, guaranteeing that you will receive a predetermined interest rate as well as a solid return on your money. Even then, however, you are going to be faced with numerous choices and will have to decide which one to go with. You are going to hear a lot of the same ideas when talking to different experts, like Treasury Bond, Note and Bill, especially when it comes to Government backed investments. These are low interest investments that have backing from the Federal Government, and they are about as secure as you can get when it comes to investing.

There are questions that you may want to consider, such as “What are safe investments going to realize when I withdraw my capital?” One point that you need to comprehend is that it is really rare to get something out of nothing. In order to have the security that you want, you are going to have to make sacrifices, especially when it comes to the interest rate that your investment offers. Investment schemes like treasury bonds, notes and bills do not carry high returns, but they are still worthwhile simply for their safety.

If you want to opt for a higher type of interest rate instead, then you are simply going to have to forgo some of the assurances that you would receive from secure and stable options, instead putting your money into riskier markets with higher rewards. This may include investing in stocks or shares. If you have a considerable amount of money available to invest, then using a specialist consultant is by far the best way to go. These consultants tend to have up to date knowledge on the current market condition which will help you invest in the right ways. However, they will be working based on commission so expect to pay a little extra in the process.

Keep in mind that even with expert advice, no investment is as safe as a government backed scheme. While you should not let this persuade you against investing in markets with higher returns, you do need to be realistic regarding which investments are the safest to make and which should be avoided based on your expectations for safety, security and return.

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Originally posted 2020-12-01 05:02:19. Republished by Old Post Promoter

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Mortgage Interest Rates Start To Change

Saturday, June 6th, 2009

Mortgage rates are changing – what should you do?

There was big news within the mortgage industry recently as interest rates finally went back below 6%. The reaction was mixed, but the rate did prompt many people to rush to refinance their homes. For those that are stuck with variable rate mortgages, the current situation in the housing market has been volatile to say the least and many consumer advocates have been pushing the need to refinance if at all possible.

This has not been easy for many, especially since interest rates were quite high until this week. Every small drop helps however and the current resurgence for refinances could help bolster the struggling housing market. While much damage has been done, there is still light at the end of the tunnel, despite the decision to take over Freddie Mac and Fannie Mae, two of the US’s biggest lenders.

While there is hope for some borrowers, those in a subprime position may not find it easy to refinance their homes, in spite of the drop in rates. Banks are shying away from this sub-set of borrowers and the specter of foreclosure still looms for many. For those that are unable to refinance, there are steps that can be taken to avoid foreclosure, but they must be taken quickly.

The first step is to determine how to free up enough cash to handle increased mortgage payments. For those that did not plan ahead for a switch to a variable rate, the shock of a much higher payment was a rude awakening. Although thousands knew that their fixed rates were only short term, there was a general lack of awareness of how this would affect them personally.

If you have been switched to a variable rate mortgage and are struggling to make your payments, foreclosure does not need to be the first option. In many cases, the difference in payments can be as small as $50, or as high as several hundred dollars. For those that are living above their means, simply curtailing some additional expenses can free up the funds necessary to make those higher payments.

Other options include getting a second job on a temporary basis until the rates do drop to a point where payments become livable again. For those that do not have the time for this option, selling a car, or other household items may be the best solution.

Today’s news was heartening to many and does show that rates may be on the way back down, at least temporarily. If you can get a refinance plan on a home loan, taking action now may be beneficial. If you cannot seek this type of assistance however there still are plenty of other options available that can help you keep your home, until the economic outlook brightens again. Housing changes and rate fluctuations are normal, and riding out the storm is typically the best solution.

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Originally posted 2020-10-07 05:12:06. Republished by Old Post Promoter

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Should You Pay Off Your Mortgage Early?

Thursday, May 7th, 2009

With the trouble in the housing market, those that are financially stable are left wondering whether now may be a good time to pay off their mortgages. There are some definite pros and cons to early payment, and this strategy is one that must be carefully considered before taking action. Let’s look at a few of the considerations that should be thought out ahead of time.

What are the pros and cons of paying off the mortgage?

Pros

1. Interest rate fluctuations no longer matter.

For those with variable rate mortgages, the past few months have been incredibly stressful. It’s not easy to put your finances through this kind of wringer and in many cases, for those with high interest rates and burgeoning payments, paying off a mortgage early, or at least paying it down, may have many benefits.

2. Freeing up monthly income.

If your mortgage payment is taking up a large chunk of your monthly finances, paying off that loan early can help free up income that can be used for other things, such as paying down debt, or simple living expenses. For those that are finding it hard to make ends meet, dipping into savings to get rid of that high fee loan may not be a bad idea.

3. Lack of worry.

Once that mortgage is paid off, you never have to worry about interest rate changes or problems with the bank. For many people, this kind of peace of mind is more than worth the extra expense of paying off a mortgage. If you are concerned about financial stability in the future, this course of action can provide some relief.

Cons

1. Loss of tax benefits.

Since you can write off the interest that you pay on your mortgage each year, losing this ability can have a big impact on how much tax you pay. For those in a high tax bracket, this may be the straw that breaks the camel’s back. Consider carefully the tax implications that you can face by paying off that mortgage early.

2. Initial expense.

Paying off that mortgage, especially if it is still quite large, could mean that savings may have to be used. In addition to that initial expense, you might also have the loss of extra income if that account was earning interest. In most cases, this would be slight, but for those that rely on additional streams of income, this can have an impact.

3. Penalties.

Most banks will charge a penalty fee if you pay off a mortgage early, or even prepay a large chunk of what you owe. Always read the fine print before you decide to pay early to see just how much you will have to end up paying in extra fees. These may be quite large, so it is vital to take this into consideration.

Any major action requires a good deal of thought beforehand and paying off a mortgage early is no exception. Always take the time to read the fine print and ask your financial advisor about any additional implications you may be facing.

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Originally posted 2020-01-06 05:23:11. Republished by Old Post Promoter

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How Do Savings Bonds Work?

Friday, April 10th, 2009

What are Savings Bonds?

Savings bonds are a major offering in credit unions and at banks. It is important to know what savings bonds are all about so that you can understand whether or not they will benefit you in any way. This page is going to take you through some of the basics of what savings bonds are and how they are used.

What are Savings Bonds?

Savings bonds are securities that are issued by the United States Treasury Department. They are designed to provide funding dollars for the United States Government. In return for making use of your money, the government can then pay you interest. This discussion is going to specifically focus on covering EE Savings Bonds and I Savings Bonds.

How much interest is earned in Savings Bonds?

The interest rates generally depend upon the economic conditions. As interest rates in general begin to rise, so will the interest rates that are paid on these savings bonds. If you are looking for exact numbers based on the current conditions, the best resource is the website for the Bureau of Public Debt. In general, you will find that the interest rates are fairly competitive as far as safe, government backed investments go, and you may even benefit from additional tax incentives to enhance the returns that you receive.

What Tax Benefits are offered by Savings Bonds?

This is really going to depend on your individual situation. Depending on your situation, you may be able to earn some really nice benefits simply by using savings bonds. For starters, for example, savings bonds do not pay periodic interest that is subject to an income tax. Instead, they increase in value over the span of years. What this means is that you can delay claiming the interest until your bonds are redeemed, or until they mature, which is around 30 years following their issuance. If you do not want to claim the income now, but you want to claim the income later instead, then savings bonds can make this possible.

Another tax benefit that is associated with savings bonds is the Educational Tax Exclusion, or the Educational Savings Bond Program. If you cash your bonds in for use for qualified higher education related expenses, you may be able to exclude that income all together from your taxes. It is important that you are sure to follow the rule regarding the expenses, income limits and other regulations that exist if you want to take full advantage of this. For more information about this exclusion program, visit the website for the Savings Bond for Education Program.

Finally, savings bond interest is exempt both from state income taxes and local income taxes. What this means is that you can spend more of what you earn without worrying about the taxes. Depending on your state that you live in, this may be a big deal, but it may be insignificant instead so find out about your state’s regulations before you invest.

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Originally posted 2020-12-10 05:03:46. Republished by Old Post Promoter

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