Personal Finance Do's and Don'ts

Every single one of us, no matter our location, age, gender, hair color, family background or race has to manage our personal finances.
For some, it’s an exciting passion, a never-ending game of “how much can I accumulate in one lifetime”. For others, it’s just part of life, something that needs to be dealt with but doesn’t border on obsession. And finally, for many of us, personal finance is nothing but drudgery at best and an emotional trigger at worst.

Every single one of us has to manage our personal finances. Fortunately, there are a few simple rules that will help anyone stay on track, and reduce the amount of stress involved when it comes to making sure personal finances are well in order.

Fortunately, there are a few simple rules that will help anyone stay on track, and reduce the amount of stress involved when it comes to making sure personal finances are well in order.

Do get organized: Even if you’re a “messy”, this is crucial. You’ll miss important due dates, pay exorbitant late fees and possibly get into serious debt (or credit trouble) if you don’t have a handle on what you owe and when you owe it. A simple rule of thumb: the messier you are, the simpler your system.

Do draw up a spending plan: Every dollar that comes into your household goes out in one way, shape or form, even if it’s to a savings account. Know where your money’s coming in and where it’s going. Without this information, you can’t possibly make wise financial choices. Overwhelmed by the thought? Ask a financially responsible friend or relative (whom you trust) to do it for you. You can’t argue with success and they can help you make the hard decisions when it comes to having to “trim” spending in certain areas.

Don’t cut out all your fun: Decide, along with your family, what’s most important to you in terms of living a happy life. Then divide up your budget accordingly. If your family really enjoys eating out, plan for it. Just keep in mind you may have to spend a lot less on groceries or clothing. If none of us are the same then our spending plans shouldn’t be the same. If you love to read then cutting back on cable TV wouldn’t be a problem. If you love to watch sports, then cutting back on cable TV would be a serious problem.

Do allow impulse spending: You read it correctly. Unless you plan for a certain amount of miscellaneous, unexpected expenses in your spending plan, you’ll always feel as though you’re blowing your budget when you pick up items you weren’t planning to buy. Just like anything else, give yourself a “buffer”. A side benefit: you get to skip the guilt when you pick up that neat velour Elvis on the boardwalk.

Don’t use your local bank: Unless you absolutely have to. Check out all available credit unions first. In most cases, they’ll have better rates and more friendly policies on everything from fees to lending practices. Each dollar you deposit buys you a share, or membership, in the credit union. So instead of being a customer you’re actually a “member”. Like the ad says, membership has its privileges.

Do use a debit card with protection: Before you use a debit card, make sure your checking account is safe in case you lose your card or it’s somehow stolen. Also make sure you have the right to reverse charges in case merchants don’t provide the goods or services you purchased.

Don’t buy a new car: Considering the fact that new cars depreciate thousands of dollars as soon as you drive them off the lot, can anyone explain why buying a new car would be a good idea?

Do run numbers before every major financial decision: Conventional wisdom works most of the time. But there are always exceptions. For example, in most cases, it doesn’t make sense to borrow from a 401(k). But there are instances where it’s financially beneficial. You’ll hear it preached from the rooftops that you shouldn’t use a home equity loan to pay off credit cards, or that debt consolidation loans are nothing but trouble. But if you’re financially responsible and ran into some tough circumstances, a HELOC or debt consolidation could be a lifesaver. Search online for calculators that will help clarify the situation. Numbers don’t lie.
And finally, perhaps the most important “Do” of all…

Do remember that personal finance is just that personal: Everyone loves to give advice, and everyone loves to share their opinions. What worked for your mom and dad may not work for you. On the other hand, they probably have years of wisdom you can draw from.

Consider your personal finances an extension of who you are and where you’re going. Study the topic, and take the time to develop your own unique strategies when it comes to saving, spending and investing. During this information age there’s never been a better time to find the facts you need, in record time.

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Understanding Business Tax Write Offs

A tax write off is the same thing as a tax deduction, and if you don’t know what expenses are legitimate deductions on your tax return, you won’t know what you can legitimately write off either. In the case of tax write offs, what you don’t know can be very painful indeed.

Tax write offs are taken by business owners and are items which in normal circumstances might not be allowable deductions but become so when the situation of a business changes.

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Because the amount of taxes a business pays are based on the income it gets, a debt which not been paid, or receivables which never show up can be categorized as bad debts and written off. You have to declare any bad debts but do not have to include them when you calculate your income for your annual return.

Loans: If you have loaned your personal funds to help support your business, you can write them off, even though you may have referred to them as income in order to raise the net worth of your business for borrowing purposes. But they remains loans, not income, and cannot be subjected to tax. And if you’ve taken a business loan from a third party lender, you may be able to get a tax write off on the interest payments.

Pension Plans: If your business has less than a hundred employees and you are providing them with pension benefits, you can get a tax credit and it will be deducted not from your business’ gross income, but directly from the amount of money you owe in taxes. This may not be called a tax write off in the IRS literature, but for all intents and purposes it is.

The government is concerned that social security will not be adequate to fund the retirements of millions of Americans, so it does what it can to encourage businesses to look out for their employees. You’ll help your workers, and the tax credit/tax write off will help your business’ bottom line.

You can also take a tax write off on any state and municipal taxes which your business pays. This write off includes both state and municipal income taxes and state and municipal sales taxes, deducting them from your total taxable income.

Travel Expenses: While the IRS regulations are somewhat vague on the matter, you can claim a tax write off on trips during which you spend more time devoted to business than to pleasure. You can keep records of your transportation costs, like cab fare, air fare, and rental car expenses. If you drive your own vehicle, you can take a write off for the mileage.

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Do Hedge Fund Need Regulations

The popularity gained overtime and the ever-increasing crowd of investors in the hedge fund industry has augmented the need for higher degree of regulation in the hedge fund market.

• Hedge fund investing guide 101
  Before investing one should first have a basic idea of what hedge funds are all about. A hedge fund is characteristically a privately organized joint investment fund, predominantly invested in public traded securities...

Hedge funds are very similar to mutual funds except that there are fewer regulations on hedge funds. As a result hedge funds require a much larger investment. Hedge funds are very reticent, that is, they are private, between individuals, and do not have to be made known to the government or other companies. This allows hedge funds to be free from the regulations that mutual funds have to adhere to. Because of this large companies move undisclosed amounts of money and gain significantly without authorities noticing. This reticent nature of hedge funds makes them look suspicious and leads to many apprehensions in the minds of the investors, such as; these funds are unethical, speculative and risky. Also their high price tag and the extravagant amount of money required for their initial purchase makes people think that the investors are being hood winked into putting money into these funds. Only ensuring high levels of transparency in the working of the hedge fund industry so that an investor knows exactly where his money is going can clear these apprehensions.

Moreover, better regulation will produce more accountable hedge fund managers in future and the investors would be able to simply research the background of a hedge fund manager before entrusting their money into his hands.

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Another negative aspect of the non-regulation of hedge funds is that there are no official hedge fund statistics. Most hedge fund holders are large companies and hence, little is known about their financial movements. Hedge funds are based in offshore jurisdictions, making them look even more suspicious. For instance, unlike mutual funds that have a base in large cities like New York, hedge funds are based in places like Bermuda, Cayman Islands, and the Virgin Islands.

Hedge funds also have a higher failure rate than traditional funds. Many of them fail by the second or third year of operation. It has been estimated that about 5.7% of the existing 8500 hedge funds closed in 2005. This vulnerability to quick falls that can be detrimental and can lead to sudden losses can be brought down with the help of regulations.

In London, the techniques used for the hedge funds operating from there, have bothered the Financial Services Authority. Hence, to check the functioning of this industry, the FSA has now decided to start regulating hedge funds and their managers. Also, a special hedge fund unit has been set up to determine how the London hedge fund industry which has been estimated at £500-billion, can be controlled better.

However, the Canadian Securities Administrators that is the umbrella organization for Canada's provincial securities commissions has decided that the currently existing rules for investment vehicles are sufficient to regulate the burgeoning Canadian hedge fund industry (a $30-billion industry). This implies that no additional rules and regulations would be laid down specifically for hedge funds in Canada.

Thus, with the proper regulations in place, the clouds of suspicion and uncertainty that are hovering over the hedge fund industry will certainly clear up and would pave the way for a much safer hedge fund market that would attract a larger number of investors.

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Hedge fund investing guide 101

Hedge funds have become a new craze among the investors who are looking for higher net returns and to diversify their investment portfolio.

However, before investing one should first have a basic idea of what hedge funds are all about. A hedge fund is characteristically a privately organized joint investment fund, predominantly invested in public traded securities. It is a pool of invested capital, used mainly by wealthy or financially experienced individuals and institutions.

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Usually, law to just 50 to 100 investors per fund restricts hedge funds. Thus, most hedge funds set very high standards for an individual to be a qualified purchaser. Most often, an investor with a net worth of above one million dollars and an annual income exceeding two hundred and fifty thousand dollars is only considered as a qualified customer. Hedge funds are very similar to mutual funds. The difference between the two is of strategies they use. Hedge funds use a set of strategies other than investing long in bonds, equity, mutual funds and money markets. Thus, its strategies can generate positive returns irrespective of the rise and fall in the equity and bond markets.

One way to invest in hedge funds is to invest in a company just before a major merger, as shares go up significantly once the merger occurs. This technique is called ‘Risk Arbitrage'. However one should have a prior knowledge of the merger before buying large amounts of shares in a company, as it is a very high-risk investment strategy since some mergers may not occur at all. Another technique, which one may adopt while investing in hedge funds, is ‘Leverage'. This means using borrowed capital in to own capital for investment. ‘Selling Short' is also a popular strategy where one invests in apparently undervalued securities, trading commodities and FX contracts, and takes advantage of the difference between current market price and the highest purchase price in events such as mergers.

Even though most hedge funds promise higher net returns, they are accompanied by some limitations. For instance, in case of many hedge funds, there are certain restrictions on one's right to redeem his shares. Often, there is a lock-in period that can extend to over a year. During this period one cannot redeem his shares. Hence, one should reconsider his options and take into consideration a long-term perspective before investing in hedge funds.

• Research Guide about Hedge Fund
  The origin of Hedge Funds dates back to the year 1948 when Alfred Jones, a Harvard University graduate, while writing about current investment trends was inspired to try his hand at managing money. He followed...

Moreover, hedge funds also have a higher failure rate than traditional funds. Many of them fail by the second or third year of operation. It has been estimated that about 5.7% of the existing 8500 hedge funds closed in 2005. Also, because of their non-regulation there are no official hedge funds statistics. Besides, hedge funds are more suited for large businesses because they have a price tag.

However, hedge fund is a very helpful tool for the diversification of one's investment portfolio. It reduces the overall portfolio risk and volatility, as it is not related with the broad stock market indices. Thus it is a smart choice for those who are willing to take the risk.

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Tock Research - As Hedge Fund Industry

Both the hedge fund and private equity industry had free rides during George Bush's Administration when the Congress was safely in Republican hands. All that changed in November 06 when the Democrats swept the Congress, and with the change in control came new Democratic responsibilities to address the fiscal deficits generated during the time, the Republicans controlled both the executive and legislative branches of government.

All About Hedge Funds : The Easy Way to Get Started by Robert A. Jaeger Explains how any investor can take advantage of the high-potential returns of hedge funds while incorporating safeguards to limit their volatility and risk. This clear-headed, commonsense guide tells investors: What hedge funds are and what they are not Four key hedge fund strategies How to incorporate hedge funds into an existing portfolio Types of risk involved in hedge fund investing

It is strange to ponder, but the Republican Party which is considered by most to be the party of fiscal responsibility has probably generated 80% to 90% of the nation's accumulated national debt. Nevertheless, myths still persist that the Democrats are the big spenders. Just today, the major newspapers featured articles stating that Bush says Democrats must control spending.

Now there are only two ways to deal with spending. The first is to spend less, but no politician likes that concept. The first rule of government is that politicians regardless of party spend money. The second way is to raise taxes in an attempt to close the gap between spending and revenues taken in. With the Democrats in power, they will use the second method, which now brings us to Hedge Funds and Private Equity.

Under the provisions of the current tax code, both Hedge Funds and Private Equity are given preferential tax treatment. Certain items of income which might be considered subject to ordinary income tax rates are instead subject to 15% capital gains tax rates. As for the equity of this policy, the quick and dirty of it, is that there is no equity or fairness. The tax code is 80,000 pages of special interests. Every provision in the tax code was written in a certain way to benefit some one, or some special interest, whether it's the farmer or a hedge fund, or the restaurant industry. Everybody exercised their political muscle at one time or another to get what they could out of the tax code.

These special interests just head down to Washington DC and meet with the people who control the Congress, go to fancy restaurants, and try to re-work the tax code to benefit themselves. The latest journeyman to Washington is none other than Henry Kravis, the man who made the private equity industry what it is today, through the formation of Kohlberg, Kravis, Roberts and Company (KKR). Democratic Congressman Sander M. Levin is proposing to more than double the amount of taxes Kravis now pays. Kravis is a billionaire several times over, and he's still looking to cut his tax bill. Whatever happened to giving back. Whatever happened to Andrew Carnegie's approach to civic responsibility?

The Congressman's staff asked Henry Kravis very pointedly, if increasing taxes on private equity would adversely affect workers and other middle income type families by distinctly lowering returns that pension funds got on their investments. When Kravis answered "No", the meeting ended abruptly.

In other meetings, Stephen Schwartzman who founded the Blackstone Group, and David Rubenstein, who co-founded the Carlyle Group have met with other regulators in an attempt to stall the tide. Lobbying groups are being set up in a hurry, and money is being poured into them by private equity and hedge funds, who up until recently were asleep at the switch. They did not realize to what extent Washington has had them in their gun sights. For more on this topic, please visit our website.

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Protecting Your Credit Card Information Online

One of the biggest trends of today's world is shopping online. It is convenient, easy, and saves a great deal of time, not to mention that it, in many cases, saves you a great deal of money at the same time. However, while shopping online is the latest and greatest trend for consumers, hackers and other dishonest people have also turned to online shopping as a way to obtain credit card information for fraudulent use.

You take a risk every time you use your computer and the internet to do your shopping, however, if you know what to do and what to look for, you can take steps to ensure that you do everything possible to protect your credit card information.

Fraud Prevention Techniques for Credit Card Fraud by David A. Montague Effective credit card fraud prevention programs can increase sales revenue while decreasing administration costs and fraud losses. Learn the techniques and strategies to feel secure about accepting credit cards.

Safe and Secure – That's the Ticket
Before you start shopping on ANY website and provide your credit card information, you want to be sure that the website you are shopping with has taken measures to secure your order and payment. There are two specific things you want to look for:

• Encryption Sign
• Secure Website Address

The encryption sign can be found on the bottom of the webpage you are viewing. This typically looks like a padlock. An "open" padlock indicates that the website is not secure. It will not encrypt your credit information when you provide it. A "closed" padlock indicates that the site is using security and encrypts the information you provide. Typically, this is shown on the website page that is asking for this information.

A secure website address is a good way to tell that the information you provide is secure as well. When asked to provide your credit card information look at the website address. https:// indicates a secure website; http:// indicates that the website is not secure.

Check Your Credit Card
It is advisable to make sure you understand the terms and conditions of your card, as well as benefits. Use only cards that protect you and your liability if something were to occur. Some credit cards protect you entirely against credit card fraud while others will have a liability limit.

It is a good idea that you keep track of your credit card statements and your purchases. If you notice things out of place, it is important to contact your credit card company immediately to take action and remedy the situation.

Know Where Your Information Is Going
It is important to read the terms and conditions of use for the website you are shopping from, as well as the privacy policy. The information contained in both of these documents should inform you as to how, when, and where your information is stored, if it is at all. The most important thing in protecting your credit card information is that you trust the website you are conducting online shopping with. Some things to ask yourself include:

• Does their privacy policy protect my information?
• Does the company sell my information to other companies?
• Did I read the fine print and understand it?
• Does the company store my credit card information?
• If so, where is this information stored? An online database, their own business files, or both?
• When filling out credit card payment forms, what information is required?

The security for many online shopping sites has been beefed up. At one time, it was only necessary to provide your credit card number, expiration date, name, and address. Well, it turned out that hackers and scammers had the ability to obtain this information in multiple ways. Now, more and more sites are requiring that you provide the CVC2 code, which is a series of three digits located on the back of the credit card.

Make sure the site you do your online shopping with is secure, safe, and requires the information you deem pertinent to ensure fraudulent activity does not occur on their site.

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Year End Financial Tips

When year-end is fast approaching, taking a few minutes to give your finances an once-over will help ease the post-holiday money hangover. By completing just a few tasks, you will save money on your taxes, make your tax preparation much less stressful and give you a bit more peace of mind during this hectic holiday season.

At Work
Use up your flex spending dollars at work. If you don’t, you will lose it! This is for those extra medical expenses (eyeglasses, prescriptions). Don't miss out on saving those hard earned dollars. Schedule those doctors’ appointments or get those new glasses you need. Plus, there are some over-the-counter drugs that some flex-plans cover, such as Claritin and Zantac. Check with your HR department about new items that are now covered. If your company offers a flex spending account and you don’t take advantage of it, you could be missing out on saving hard earned dollars. If you are self-employed, you can check out a medical savings account to get similar benefits. If you haven’t already, maximize your retirement contributions for your 401(k) or self-employed retirement plan. Also, if you have moved recently, let your employer (or previous) know therefore you can get all your W-2 forms together. This will save you so much time when you are doing your taxes.

At Home
It’s time to clean out your closet. Donate any clothing or other items you don't use any more to your favorite charity. It is a great tax deduction! Make sure you keep your receipts. You can also attend a charitable benefit (another reason to celebrate with friends and support a good cause). If you itemize your deductions, it should help save money on your taxes. Consider setting up an automatic savings plan. Why not get a head start on your New Year's Resolutions? Start small, $50 a month, and then raise it in 6 months. You will be saving so much money without even thinking about it. If you already have one, raise the monthly contributions by $100.

Your Investments If you are expecting a tax refund, get your paperwork together now (i.e. charitable donations, work-related expenses, brokerage account statements, medical receipts)! You will have a head start on collecting your refund - and putting it straight into the bank - which will save you time and get you your money sooner. Even if you are not expecting a refund, this is a good time to start collecting information for your taxes. You should also put off buying any mutual funds for your taxable accounts until January 1st. Many mutual funds declare capital gains in December and you could be hit with a tax bill right away.

Now, when January 1 rolls around, you can start thinking about your New Year’s Financial Resolutions with a head start.

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Let Your Tax Attorney Answer IRS Questions

The beginning thought of T.S Eliot’s masterwork “The Wasteland” states that “April is the cruelest month,” and while his poem deals with themes far more universal than tax time in the US, millions of American taxpayers can only nod their heads in agreement at its opening words. But those taxpayers for whom April has added insult to injury in the form of an IRS or state tax board dispute, a tax attorney can be a longed-for ally.

Tax This! An Insider's Guide To Standing Up To The IRS by Scott M. Estill Written by a former IRS attorney, Tax This! gives you an edge in dealing with the IRS by showing you how to level the playing field and win at the tax game.

Having to come face-to-face with any tax authority, be it the IRS or at the state level, can be very intimidating for most average taxpayers. And taxpayers who try to deal with tax authorities on their won may find themselves completely immersed in legal speak which they do not understand, and agreeing to things contrary to their own best interests.

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  Your accountant depends on you to provide the details on all your income and expense transactions so they can apply the most advantageous tax strategies. Documentation is the key to sustaining all tax positions. Without documentation it is easy for the IRS to call foul and deny your tax position. Or even worse penalize you with back taxes and interest.

By hiring a tax attorney, you as a beleaguered taxpayer can have someone speaking the same language as the authorities and interpreting what they are saying in easy-to-comprehend terms. A tax attorney will also be able to help you dial down the stress level a few notches by letting you know when the taxmen are bluffing you.

When To Call A Tax Attorney
If for some reason you find yourself in the position of being in debt to the Internal Revenue Service, and thousands upon thousands of taxpayers are, you should not waste another minute before contacting a tax attorney. A lawyer trained specifically in tax law, a tax attorney can find you the quickest and least expensive way out of your predicament.

Giant business entities have stables of tax attorneys on retainer simply to keep them from running afoul of the IRS Tax Code. A tax attorney can address your tax issues regardless of their nature, from the failure to file, to audits, to property seizures and liens, to wage garnishment.

Is It Really Worth it?
While the cost of hiring a tax attorney may at first seem prohibitive, you will save far mire in the long run than if you let the IT run roughshod over your bank account. The IRS is interested in only one thing: getting what you legitimately owe and whatever penalties they can tack on to it. A tax attorney will negotiate the best possible terms for you and that can mean a significant reduction in penalties.

If you have the IRS coming after you, hiring a tax attorney is the best way of protecting your interests. All the effort you have put into building a life for you and your loved ones can be wiped out with a single IRS decision, and you need someone who talks the IRS’ language to speak for you. Your accountant, if you have one, may be able to recommend a good tax attorney; otherwise, you can contact the American Bar Association. If you are lucky enough to find a tax attorney who is also a CPA, you’ll improve your odds of a fair outcome even more.

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Entrepreneur Tax Guides & Tips

One of the most popular myths among business owners is that their accountant will take care of their taxes. FALSE! All the numbers included in your tax return are your responsibility. Your business transactions create the numbers not your accountant. Essentially, your tax return and the amount of your deductions are only as accurate as the records you have maintained and provide to your CPA.

Tax Savvy for Small Business: Year-round Tax Strategies to Save You Money by Frederick W. Daily, Diana Fitzpatrick Tax Savvy for Small Business provides valuable strategies that will free up your time and money for what counts -- running your business, and running it effectively. It explains how to: deduct current and capitalized expenses write off up to $105,000 of long-term assets each year compare the advantages of LLCs, corporations, sole proprietorships and more take advantage of fringe benefits keep records that will head off trouble with the IRS get tax breaks from business losses deal with payroll taxes negotiate payment plans for late taxes handle an audit get IRS penalties and interest reduced maximize retirement funds use retirement funds as a tax break

Your accountant depends on you to provide the details on all your income and expense transactions so they can apply the most advantageous tax strategies. Documentation is the key to sustaining all tax positions. Without documentation it is easy for the IRS to call foul and deny your tax position. Or even worse penalize you with back taxes and interest.

The IRS unlike a court considers you guilty until you prove you are innocent. The burden of support is on you.

So what can you do get start putting more money back in your pockets and audit proof your tax returns?

• Build a Documentation System
  The system should include three components: permanent files, monthly files and daily files. Permanent files would include your prior years’ tax returns, stock buy and sell confirmations, contracts and real estate records. Monthly files would include invoices, cash receipts, canceled checks and payroll support. Daily files are basically your appointment book. We will provide tips in later articles on how to beef up your appointment book as it is an overlooked area where many deductions are missed.
• Never Use Your Personal Checking Account or Credit Card for Business Purposes
  This is a tough one for young businesses but I always recommend to my clients that they should separate the two as soon as possible.
• Have All your Records Digitally Imaged
  Your accountant should be taking advantage of imaging technology and putting all the records you provide them into a digital database. This will help to guarantee they are maintained for the required 3 years. In addition, I also recommend to all my clients they prepare a digital video for all their personal and business assets. Video everything in your home and business. This will help if documentation gets lost and it will also give you solid evidence to support an insurance claim. Unfortunately, you never know when a fire or burglary might occur.

When you’re prepared the IRS or insurance examiners have a lot less ammunition to fight you with.

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Dow Jones Industrial Average Explained

We see the numbers nightly on the evening news. The Dow Jones Industrial Average may be up 100 points one day, down 30 the next. But what happens when the Dow rises 100 points? Is that a good day? Or just an average one? Measuring the markets can be a daunting task if you don’t know what to look for.

Investments: Analysis and Management by Charles P. Jones Teaches readers not only how to identify successful investment opportunities, but how to anticipate and deal with investment problems and controversies. Jones carefully and gradually develops key concepts, while covering all the necessary background material. Only essential formulas are included. It's one of the most readable, comprehensible investments titles available! Details the variety of securities available, the markets in which they are traded, mechanics of securities training, and insight into the important concept of risk and return. Examines portfolio analysis, valuation and management of stocks and bonds. Complete discussion of Exchange Traded Funds, operations on NYSE and NASDAQ, margin trading, electronic communication networks, global investing, and technical analysis.

Actually the Dow Jones Industrial Average (sometimes known as the Dow 30, the Blue Chips or just the Dow Jones) is only one of several markets on Wall Street. Every evening, with the Dow numbers, you may see the NASDAQ or the S&P 500. These are some of the other markets. But it is the Dow 30 that is the most recognized and most talked about market.

A journalist named Charles Dow first created the market indicator. In the late 1800’s, people on Wall Street found it difficult to interpret the clutter of numbers tossed around on a daily basis. Some companies would be up an eighth of a point or down a half. It was easy to tell how a company was doing if it had a string of down days, but it was much more difficult to figure out how the market was doing as a whole. On May 26th, 1896, in an attempt to clear the confusion, Dow started putting out a nightly report in which he combined the daily results of 11 stocks. Railroad industries were the big traders of the day, but when utility companies started to come along, the number of industries in the report jumped to 20. Today, the Dow holds 30 companies. You probably recognize most of them. They are some of the biggest names in American business- General Motors, Microsoft, Coca Cola, 3M, Disney, IBM and Exxon are just a few. It is a rare occurrence for these businesses to change. Coca Cola has been listed since 1932. We’ve seen GE since 1907. This is why the Dow is the most talked about market on Wall Street. Because these are the most established business in the country, the Dow30 provides the best indicator of how the market, as a whole, is doing.

Historically, there have been good times and bad times for the Dow Jones. During the Great Depression, the markets were performing so poorly, and so many people were losing all the money they had, some turned to suicide. It was only after the bombing of Pearl Harbor and the start of World War II, that the markets started to turn around. The call for war supplies boosted many industries and secured their bottom line. During the economy boom of the late 90’s, the Dow traded around 11,500. However, just a couple of years later, in the middle of an economical recession, it hovered around 7,500.

Daily, investors buy a tiny piece of these Blue Chip companies. These pieces are called shares. The value of these shares goes up or down depending on how many people buy or sell these shares. If several people buy shares of the company on a particular day, the value of one share will go up. If several people sell shares, the value will go down. For example, if you buy 1 share of “Company X” at $10, and over the course of the day, the value of the shares go up to $11, you just made $1. Many times, these numbers are reported in percentages. In this example, “Company X” gained 10%. However, if the value of the share goes down to $9, you lost $1 or 10%. Easy, isn’t it? This is the simplest of examples, however. Companies in the Dow see millions and millions of shares exchanged in a single day. Generally, if the company is doing well, more people will buy shares, and the value will go up. However, there are several factors that decide if a company is doing well. If a report comes out stating “Company X” didn’t reach their sales goals for a particular quarter, investors might see that as a bad sign and start selling shares. This would decrease the value of a share. If “Company X” surpassed their goals, investors will see that as a good sign and buy more shares, thus increasing the value. If only it were that easy. Because companies can’t control what people think, many times companies have little control of the value of their company. For example, let’s say both “Company Y” and “Company X” sell widgets. If “Company Y” sees a bad earnings report, investors might see that as a bad sign on the entire widget industry, and start selling their shares of “Company X” as well. World events also play a major role on how the markets do. Usually, these events have a negative affect on the market initially. Sometimes, the market recovers within a couple of months. Sometimes they don’t. The day a gunman assassinated President Kennedy, the Dow fell 2.89%. A year later, the market gained 21.58%. The day the Federal Building in Oklahoma City was bombed, the Dow gained .68%. One year later, it was up 14.07%. On 9/11, the market fell 7.12% and was still down 10.66% a year later.

Sometimes, companies reward their investors by splitting a portion of their profits. These are called dividends. If 10 people own 1 share of “Company X”, and “Company X” makes a $100 profit, each investor would get $10. Again, this is the simplest of examples, as the Dow 30 companies each have millions and millions of outstanding shares. IBM, for example, has somewhere in the neighborhood of 1.7 billion outstanding shares. That means, a dividend for a single share is usually only around a couple of cents. So which companies offer dividends, and which don’t? That’s up to the Board of Directors of each company. Some companies share their profits. Others think it is a better business move to reinvest their profits to make the company better- thus raising the value of each share.

Many people spent hours a day studying companies that are poised to make a significant gain. The nice thing about the Dow 30 stocks is that these are usually a safe bet. Most people don’t expect Coca Cola to go out of business any time soon. Even if they have a bad couple of quarters, these companies have proven leadership that will eventually turn the company around. They wouldn’t have lasted all these years if they didn’t. So with thousands and thousands companies trading on Wall Street, you now have a better understanding of what all those numbers mean, the next time you see them on the evening news.

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Make your Choice on Mutual Fund

There are thousands of mutual funds to invest your money in. So how do you pick one over the other? Here are some things to look for when making your choice:

• Fund Performance. The single most important measure to consider is how the funds have performed over time. Check the three- and five-year annual return (and ten-year if available) and see how well it’s done through the years. Anything that has returned at least 10% or more per year over a long period of time would certainly be worth considering.
• Fund Management. The next thing to look at is how long the current management has been managing the fund. If a fund has returned 20% a year for the past five years, and the current manager is the one who managed it for those entire five years, you should certainly feel comfortable with that person’s skills. If the fund returned 20% for four years and 3% last year, and the current manager just took over last year, I’d be skeptical until he’s managed it a few more years.
• Volatility. The most volatile funds (like aggressive-growth) will return more in the long run, but will also drop more on bad market days. If you can stomach volatility and are in it for the long-haul, go with a more volatile fund. If you are in it for the short-term or just can’t stand to see your fund go down even for a day, get into something more conservative.
• Cost of getting into a fund. Every fund will have an expense ratio. This is the percentage of the fund’s money that is deducted each year for the fund manager’s salary, mailings, marketing, and other costs. As long as the ratio is in line with most other successful funds, I wouldn’t be concerned about it. If it’s extremely high compared to others, I would certainly expect a much higher return than other funds. Also, you need to be concerned with whether the fund is a “load” or “no-load” fund. In other words, do you have to pay (load) to get into the fund or is there no cost to get in (no-load)? There are many successful no-load funds to get into. I’d only get into a loaded fund if it has produced exceptional returns year after year.

All of the information I mentioned above on mutual funds can usually be found in a special mutual fund issue published at the beginning of each year by Kiplinger’s or Money Magazine. Using those sources, along with asking a financial professional should help you pick the fund that is right for you.

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• Buying Growth Stocks / Mutual Funds
• Guide to Mutual Fund Investment

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Finance Tips for Stock Market Investor

So, you're ready to dive in and become the next Gordon Gekko. Alright! Time to get on the wait list for that Rolls Royce Phantom, right? Not so fast. Stock picking is tricky business and is, frankly, not for everyone. Many newcomers have discovered just how fast their life savings can evaporate, and that's a lesson you probably don't want to learn first-hand.

The Stock Market Investment by Richard J. Teweles, Edward S. Bradley Packed with clear definitions, cutting-edge strategies, and helpful examples, this new edition provides in-depth information on topics that have changed how stocks perform, as well as how they should be handled. In addition to the globalization of the securities business, regulatory changes, program trading, and advances in online services, you'll find details on key developments in several important areas, including the derivatives market, index fund investing, and technical and fundamental analysis.

But let's start on the other end; your financial situation. Before you plunk a single cent into the stock market, you should take a hard look at your other assets, debts and financial obligations. If you have thousands of dollars in revolving credit card debt (i.e. you don't pay your balance in full each month), the wisest investment you can possibly make is to pay that off first. Why? Since credit cards typically charge some 15-20% interest, any investment you'd make instead would have to have a guaranteed return of at least as much - and there's no such thing.

Other types of debt, such as mortgages and student loans, are less of an emergency. Mortgages are tax-deductible (as opposed to credit card debt) and student loans generally have generous terms. Some like the peace of mind that comes from being entirely debt-free, but it's not really important once you've cleaned out the credit cards. Car loans is a gray area - if you got a good deal, it's ok, but if the dealer slammed you with a high interest loan you're wise to pay it off.

How The Stock Market Works by John M. Dalton Explains the workings of the securities industry, including the initial public offering, types of stocks, who's who inside the brokerage firm, back-office operations and investment analysis. This new edition includes new chapters that cover ongoing changes at the NYSE, the AMEX, Nasdaq, online trading and the globalisation of the stock market. It has been thoroughly updated to reflect changes that have taken place on Wall Street and in the way securities transactions are conducted.

Next, make sure you have a sufficient cash cushion for emergencies. Remember, the stock market goes up and down. If you get laid off or have a sudden big expense dropped in your lap, you may have to sell your stock at the worst possible time. By keeping 3 to 6 month's worth of living expenses in a savings account or money market fund you can handle the curveballs life throws at you without the added grief of losing money in the stock market.

Last but not least, do you have the nerves for stock investments? If the market takes a sudden plunge and you see thousands of hard-earned dollars disappearing into a black hole, will you panic and sell at a loss? Will you be stressed out at the expense of work and family? Will you check the online stock tickers every hour to track your investments? If you said yes to any of the above, you may want to stick with treasury bonds, Certificates of Deposits (CDs) and other safe investments where you have a modest but guaranteed return on investment. You probably won't make as much money in the long run, but at least you'll sleep well at night.

Ok, now that we have the fundamentals out of the way, let's focus on the actual investing. If you are fresh to the game, you may not want to jump off the deep end and try to pick the next Microsoft out of the thousands of publicly traded stocks. By investing in an index fund or a stock mutual fund, you can be part of the stock market drama without having to lift a finger once you've mailed in your check.

Index funds are pre-packaged baskets of stocks that follow the market ups and downs in lockstep. The S&P 500 index funds, for example, invest in the 500 largest US companies. That's it. There is no team of bean counters and analysts working the phones all day long trying to catch the latest trends. The fund simply buys shares of those 500 companies and does absolutely nothing else. When you buy into the fund, the fund buys a tiny bit more of each other 500 companies, and when you sell your share of the fund, it sells a tiny bit of each company.

This is obviously not very exciting, but it has the advantage of low cost (since there are no analyst salaries to pay, the fund companies can offer very low management fees). Another advantage is that your odds of long-term gains are pretty good. History shows that someone who plunked down money in this type of fund in the 1950s and sat on his hands through ups and downs would have an average annual return in excess of 10% by now.

You can also buy index funds with a more narrow scope, such as small-cap (smaller companies), but the principle remains the same. The smaller index funds are typically more volatile (higher possibility of bigger gains or bigger losses) which can be an option if you feel that a specific section of the market has better potential than others.

Another route is the regular stock fund, where you pay a bit more in fees to have the analysts try and beat the market. Some succeed and reward their investors handsomely, others lose a big gob of dough even though the rest of the market is heading up. The most important thing to realize here is that last years winner isn't necessarily this years winner. In fact, if a fund brags about having returned so-and-so much last year, they probably took great risks to achieve such spectacular results. That's the bummer about risk; the more you stand to gain, the more money you'll lose if the fund manager is wrong. Simply put: avoid the hotshots and seek out the mature funds with competent, experienced managers and a track-record of moderate but consistent gains.

If you decide to try your own hand at stock-picking, get an online discount broker such as Ameritrade, E-Trade, Scottrade or Sharebuilder. These offer cheap trades (less than $30) while many also provide basic research tools. If you pick a broker that doesn't offer research tools, don't fret - there are tons of free websites that will help you get started. However, no tool will replace your most important asset: your mind.

Getting good at identifying strong companies with good growth potential takes years and requires a lot of homework. Tons of books have been written on the subject, most of which are fads and shortsighted baloney. Start with down-to-earth books like Investing for Dummies and the like, and don't forget to tap the power of the Internet. The Motley Fool (www.fool.com) is a great place to start for beginner do-it-yourself stockpickers.

Full service brokers charge considerably more for each trade, but they also offer investment advice. Many of these guys are brilliant and earn a lot of money for their clients, but you pay accordingly and have no guarantee that their "hot tip" won't go belly-up next week. As a rule, a small-time beginner eager to learn is best off with a cheap online discount broker where trial-and-error is simple and won't hurt very much. A well-heeled investor with a busy schedule may be better off handing the money over to a broker and make it her problem to make the pile grow.

Finally, a word about fees. Whenever you invest, the house always takes their cut whether you're up 20% or down 20%. Over the years, that half-percent makes a big difference. Whether you're shopping for a fund or a broker, compare the fees with others. Do your homework, watch the fees and keep your cool when the market doesn't, and you're off to a great start in stock investing. Good luck!

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• Reasons Why Index Funds Should Be Part Of Every
• Working With A Financial Planner

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How Financial Planner can Help you Meet your Goals

Choosing a financial planner can help you meet your financial goals. However, the process is not without pitfalls. Selecting a financial planner is a very personal decision depending upon what you would like to accomplish, but there are broadly applicable criteria as well.

Personal Financial Planning by G. Victor Hallman, Jerry S. Rosenbloom Provides in-depth coverage and analysis of the latest tax law changes. In addition, it features an entirely new chapter on planning and paying for education expenses, including the new 529 plans; ramifications of the GST estate tax repeal; new checklists and questions to tie up each chapter; and more.

The most important thing to remember is that the financial planning industry is unregulated. The majority of planners have not passed any tests to demonstrate their competence. Only about 40,000 of the 250,000 or so planners in the United States are Certified Financial Planners. Chartered Financial Consultants and Personal Financial Specialists, which are certifications offered by the insurance and accounting industries, account for only a small portion of the remaining planners. Selecting a planner with a certification is a critical initial consideration. Finding someone who is also experienced and participates in continuing education is important as well.

In addition to their qualifications, it is important to understand how you will be compensating your financial planner. Many supposed financial planners are really just sales representatives for a particular financial product. Understanding whether your planner subscribes to a code of ethics that includes fiduciary responsibilities can shed light on the degree to which the planner is likely to place your needs ahead of their compensation system.

Two compensation systems are prevalent in the world of financial planning. Most planners get a portion or all of their compensation through commissions on financial products they sell you. These arrangements can create a conflict of interest between you and your planner. Your planner should be forthcoming about how commissions affect their compensation and will influence the products they will recommend to you.

Alternatively, some planners are compensated solely by an annual fee. The fee is typically based on a percentage of your assets under management. One percent per year is typical. Fee-based planners are not subject to the same conflict of interest that exists with commission-based planners. However, you may pay more for their advice than you would by going the commission-based route. They are also more difficult to find.

Another important consideration is the aspects of your financial life that you are seeking advice about. Many financial planners only have adequate knowledge to address a small portion of a client’s financial condition. Those with an insurance background are best at insurance, while those with a brokerage background tend to be better at investing. It is best to find a planner who can understand your entire financial situation and provide comprehensive financial advice. At the very least, try to match your planner’s background with your most important problems or obtain advice from multiple planners with different specialties.

The final consideration is the nature of the firm you would be working with. Larger companies and smaller companies will likely provide different degrees of service and fee structures. Understanding whom you will be working with on an ongoing basis to formulate and implement a financial plan is very important. There is little point in interviewing a famous financial planner if you are ultimately going to be assigned to a staff planner that you have never met to actually create your plan.

By interviewing multiple financial planners before you make a selection, you will best be able to find one you are comfortable with. Personality, qualifications, and compensation structure are all important areas to evaluate. Before making a final selection, check into any disciplinary problems your prospective advisor has had by contacting your state’s insurance department, the National Association of Securities Dealers, the Securities and Exchange Commission, and the group overseeing their planning certification. While not guaranteeing you will not encounter problems, applying this approach will greatly reduce your chances of having an unpleasant experience.

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Open a "Swiss Bank Account"

In 1934 the Swiss passed a law which made it illegal for any bank to disclose any information about an account, including the fact of whether an account actually exists or not.

This act, passed in response to the growing strength of the Nazi revolution, and underpinned by a long-standing commitment of the Swiss to the notion of privacy, was the embryo of the now infamous “Swiss Bank Account”.

For most of us such accounts are the domain of corrupt politicians, the mega wealthy, arms dealers, despicable dictators and mythical arch villains and spies. For the most part the mention of the words “Swiss Bank Account” conjures up images of mysterious big black sedans bearing faceless men, of eyes of cold steel guarding the cache of secret numbers that are the key to untold riches.

Like all legend, this one is somewhat based in fact, however the “Swiss Bank Account” is a far more mundane creature than this and something that is accessible to most people from most parts of the world.

In fact, opening an account with a Swiss bank is much the same as opening an account with any bank, and provided one has good reason to do so, provides some useful advantages over banking in many countries.

Firstly and foremost Swiss law decrees absolute secrecy of banking details in all civil matters including divorce, lawsuits, creditor claims, inheritance disputes and the like.

This secrecy does not extend to any activities that are criminally related, but the Swiss authorities do not regard tax evasion as a criminal offence (it is regarded as a political matter).

Put simply, unless a foreign government can prove that an individual has committed one of the specified crimes that is also a crime in Switzerland, and link the individual to an identified bank account used for transactions associated with that crime, the bank may not release any banking details to anyone without their customer’s consent.

While the cloak and dagger stuff may be beneficial to some, there are other advantages to opening a Swiss account which are more applicable to the common person.

Switzerland is a politically and socially stable economy, with a reliable legal system and a history of economic prosperity. The Swiss have a long standing tradition of excellence in banking which has been legitimately earned and their bankers offer outstanding levels of experience, knowledge and service.

Furthermore, the banking system is based on the concept of a full service bank, with banks performing services such as securities brokerage, investment counseling and portfolio management.

Put simply, if you put your money in a Swiss bank account it will still be there as the rest of the world’s financial institutions crumble.

There are basically three ways to open a Swiss account. Firstly you can pay someone to do it for you at a cost of between $US400 to $US1000 depending on the account type. Just do a search with the keywords “open Swiss bank account” and you will find a number of firms who are willing to take your money to open the account for you.

If you are likely to be dropping into Switzerland at any time then you can simple drop into one of the banks and open an account in person. Its handy in this case to have some record of past earnings just to prove to the bank that you are on the “up and up” and you’d also need to be carrying the minimum deposit in one form or another.

If you value your hard-earned cash then opening an account via the mail is the best option.

Choosing this option is time consuming as you have to wade through the huge variety of services that Swiss banks offer, however it is your money so a little extra time spent finding out how to best use it is not a bad way to go.

While most of the banking options include the standard services such as checking accounts, credit cards and internet banking, you may have to search harder to find a bank that will purchase and store bullion for you.

In basic terms there are four types of accounts that may be opened.

1. The Swiss Postal Account
This account is offered by the banking arm of the Swiss postal service, requires no minimum balance, has minimal fees, but does not have a checkbook. Unfortunately the bank offers few investment offers but the account can be useful if you are trading on the internet (for example) and choose to pay all your bills via the bank’s card services.

It is the bank of choice should you want to be able to drop the “just send it to my Swiss bank account” line at dinner parties and can easily be searched out on the net.

2. The Standard Account
One notch up from the postal account is the standard account that gives you the added options of phone banking, online trading, enhanced investment options and checkbook. This account does require a minimum balance of somewhere around $US4000 and has small annual fees.

3. The Investment Fund Account
If you want to want to ‘play the markets’ then this account is the one to opt for. To do so, however, carries a necessity for a $5000 minimum balance. With this account you fix an investment strategy with the bank and they do all the securities trading for you. Come withdrawal time they simply liquidate the necessary shares and forward you your money.

4. The Swiss Numbered Account
The stuff dreams are made of, expensive dreams. We’re talking a minimum balance of $US100,000 but for that you buy total discretion, attention from the best people in the bank, total discretion and the ability to purchase anything that is traded on the public markets.

Also you get the pleasure of only a few select bank officials knowing who the name behind the numbers is.

The only hitch with this one is that you have to apply for it in person, but of course with that sort of money to hide away a trip to Switzerland is part of the business.

Opening your Swiss Bank Account
You’ve made one trip to the Swiss Consulate, waded through the list of Swiss banks that they’ve given you, sent off for all the information and forms and painstakingly gone through every one of them. Finally after an eternity of sorting and resorting you have identified an account with a bank that you want for yourself, what next?

Once you’ve filled out the requisite forms, take them and your passport to your closest Swiss Consulate, or an affiliated bank and get your signature verified; simple red tape.

At this point it is wise to contact the bank and ascertain whether they need any extra information (such as proof of income for the past whatever years) and whether they need a deposit to be forwarded with the forms. In all likelihood a deposit won’t be required until after the account is verified and then it is prudent to send it off as a money order.

After you have everything the bank needs then just mail it off and wait a couple of weeks. The bank will get back in touch with you and tell you where to go from there.

Remember that banks exist because they want your money, and if everything is on the up and up they’ll be happy to take it.

Depositing and Withdrawing Money
There is no secret to depositing and withdrawing money from your Swiss bank account, it is simple as trading with checks, money orders and credit cards.

Should you want to divulge your secrecy then you can also simply wire money back and forth through your local bank accounts.

Clearly, the best way to operate your secret Swiss bank account is to have others deposit money in there for you and for you to pay for goods and services through the vehicles of that bank. That way, no one other than the bank will know and remember, they can never, ever tell.

Some words of caution
While Swiss banks are under legal obligation not to disclose account details to anyone (except in criminal cases), in many instances, such as with the IRS, it is the obligation of the individual to disclose their financial affairs with their local taxation authorities.

There is no way that such authorities can find out about a Swiss bank account that is held by someone however to deny ownership of such an account in court is to commit perjury. In the case of divorce proceedings for example, it is quite legal to have a fortune tucked away in such an account but if you are asked whether you have such an account, it is illegal to deny it. Food for thought.

One further concern of operating a Swiss bank account is that Swiss authorities impose a 35% withholding tax on all interest earned by the account.

Much of that (depending on your country of residence) can be refunded but in order to do so you have to disclose the account to your local authorities. Bye, bye secrecy.

Internet banking
Swiss banks do offer full internet banking services, however, such activity is restricted in many countries including the USA. Nevertheless, as time progresses it is probable that many of these countries will ease up on this restriction and that such accounts will be viable in these countries.

Most recently an online Swiss bank, Swissnetbank.com have set up shop and are offering a simple fee free worldwide moneymarket account. This account operates in three currencies, the Swiss Franc, the Euro, and the US dollar.

Deposits and withdrawals can be made in any of the currencies via nominated accounts and you can shift your money into any of the three currencies with a few strokes of the keyboard.

Its not a Swiss bank in the time honored tradition of Swiss banks but it is another feather in the cap of those who are unwilling to let their wealth dwindle away in some petty interest bearing account somewhere.

Let’s see how long it takes 007 to jump onto this one.

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Modern Creative Financing

Creative financing is usually a term used in real estate, where you are able to buy a home with little or no money down. If you take these ideas and look on a broader term or expanse you can come up with funds you had no idea where available to you. If you are starting your own business, to a small purchase of a new computer system for your child going to college.

Many people today feel that using a credit card or other loan procedures is creative financing. It isn’t, all that does is to create a new bill that you must add to your monthly budget.

Simple ways to creatively finance any venture you would like to make are unbelievable easy. First you must set a budget, estimate the amount of money you want to spend. Once you come up with that figure it is then time to look at your surroundings, what do you have that you can gain monies from that you have not thought of?

If you own land, look around your land: do you have trees? Why not call the local saw mill, or timber company and sell the trees from your land? You may be asking yourself will this take away from the value of my property the answer is no it will not, but you will end up with cash in your pocket.

What else do you have that you are willing to get rid of? Antiques? Rare coins? Books? A swing set your children have outgrown? Do you have a vehicle that you rarely use and want to sell? Used computer programs, CD's, movies, tapes, and clothes? List them in the local paper as a must sell. Use the Internet to your ability and list them on Ebay or one of the other leading auction blocks.

If you are willing to go into a small amount of debt to gain financing try a local institution such as a lending company or bank. Use a vehicle that is paid for and apply for a signature loan for the amount you need. If you are unsure of what your car’s going rate is you can also use online Kelly blue book price guide for used cars.

If you have a car that is not running and you want to sell parts from it, list it with an auto trader: it is a free service. It is unbelievable the responses you will get from people who need just parts. Selling equipment you do not use, or tools that you have not touched in years can also be listed in the classifieds for sale.

Applying for grants for special projects often work well: as stated before this takes some effort, but the rewards can be upward of $30,000 or more depending on your project. Grant information is available online as well as the proper forms to fill out to obtain them. Use them, that is what they are there for.

Everything has a monetary value, and income can be forthcoming if you put the small amount of effort into it. Effort, initiative is what most people lack when it comes too creative financing. Taking the time to actually inventory what is worth value. Even a simple garage sale will bring in income you had not had before. Every penny, nickel, dime, quarter matters when you are in need of creative financing. Use it all to your ability and make it happen.

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Which Bond are Right for you?

Most people know about the basics of investing in the stock market but many people are puzzled as to what bonds are. In one word, a bond is a loan. The loans can be from the federal government, a federal agency, municipality, or corporation. When you purchase bonds you are lending your money to whomever you buy the bonds from. In return for lending them your money you are paid a fixed rate of interest over a set period of time. When the bond matures the investor’s money is usually returned with the earned interest included.

Bonds: The Unbeaten Path to Secure Investment Growth by Hildy Richelson, Stan Richelson An expanded and updated version of "The Money-Making Guide to Bonds", is designed to educate novice and sophisticated investors alike and serve as a tool for financial advisers as well. It explains why bonds can be the right choice and how to use them to achieve financial goals. It presents a broad spectrum of bond-investment options, describes how to purchase bonds at the best price, and, most important, shows how to make money with bonds.

Bonds are like stocks because they are both traded. Therefore you can buy the bonds after they are originally issued while at the same time you can sell bonds before they mature. Bond prices are subject to volatility in relation to market conditions.

When a person is issued a bond they are basically promised to get their money back. Bondholders are paid before anyone else, even stockholders and creditors, if the company runs into hard times or goes bankrupt. Bonds give you a stream of income based on their rate of return. Bonds are usually much less volatile then stocks are. Bonds also can provide a tax break because municipal and government bonds are sometimes exempt from state and federal taxes.

When a bond is issued, the issuer is essentially promising to return your investment, the face value of the loan. The main disadvantage to bonds is that they generally have lower returns than stocks and mutual funds. Bonds are like stocks because their prices are sensitive to interest rates as well. Bonds also carry with them some heavy terminology, which can be confusing and hard to understand.

Type of Bonds:

Government Bonds – The U.S. Department of Treasury and other federal agencies issue treasuries and federal agency bonds. Treasuries are basically risk free because the U.S. government backs them. They are issued to help finance all of the costs involved in operating the government. Municipal Bonds – State and local governments to help pay for schools, streets, highways, hospitals, bridges, airports, and other public works issue municipal bonds. You usually don’t have to pay federal taxes on the interest earned from municipal bonds.

Corporate Bonds – Corporate bonds are issued by businesses to help pay for business expenses. There are a ton of different corporate bonds available all with their own interest rates, maturities, and credit ratings. Corporate bonds are generally higher risk bonds in comparison to municipal and government bonds. They also have a higher rate of return than municipal and government bonds. However you do have to pay taxes on the interest earned from corporate bonds.

Municipal bonds are issued by more than 50,000 state and local governments and their agencies to fund projects such as schools, streets, highways, hospitals, bridges, and airports.

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Conveniences of Life can Ruin your Budget

When looking for ways to save money, starting with a budget is the way to go. A budget outlines your various expenses in a given period of time versus the amount of your income, and the balance between the two. A monthly budget is probably the most useful to track your spending habits. In fact about 15% of spending can be lowered without much lifestyle change at all.

Just by writing down a budget you will be better prepared to understand where your money is going. Sometimes it is shocking how much money gets spent on useless items like Starbucks or eating out at lunch. Writing your budget down will help you see where money is being spent and establishes a guideline to look back on at the end of the month. A budget gives you reason to take action and propels you toward a life of financial freedom.

• The Importance Of A Budget
  Budgeting requires you to look ahead and formalize future goals. By establishing a budget, you can set goals for achieving a certain level of income and monitor your expenses. Many home based and small-business owners have remarked that their increase in profit margins did not occur until they had a written revenue goal and a method with which to monitor expenses.

Coming up with your first budget is fairly straightforward. Gather those involved in either income or spending of the budget and first list items that are monthly necessities. List things like: rent or mortgage, groceries, utilities, gas, and car payment. Payments on credit card debt should also be considered a monthly payment and included in your budget. The next step is to tally up the various sources of income for your family. Now you can compare income versus expenses and see how you are doing. Is there a great need for more income? Are there some things on your list that could be reduced or eliminated completely?

• How to Build, Manage & Maintain Wealth
  You’ve tried borrowing and consolidating. You’ve tried some sure-fire quick fixes. You’ve denied the situation and justified it because others are in the same situation or worse. And besides, when the kids move out, go to school, or you give up the house for a condo, there will be more money and you’ll have two incomes again!

Take a good look at the items you purchase each month and classify each as necessary or unnecessary. Now, take a look at the items with the unnecessary label and decide where each fits into the budget, and which items don't belong at all. Ask yourself what you need instead of what you want when sifting through these items. Things like food and shelter are clearly necessities, but what about that impulse bought shirt or that expensive sushi lunch you just had to have? Try to keep items in the entertainment, travel, dining, and impulse purchases category to a minimum in order to meet your budget.

Americans are all about convenience and retailers are setting us up to pay more money for a little more convenience. Fast food restaurants, quick marts, and cell phones are prime examples of conveniences. Credit cards are another convenience that could very well be hurting your budget. You can buy just about anything with a credit card and it seems so easy, until you get the bill. The biggest problem with a credit card is that it is quick and you don't realize how quickly you are spending until it is too late. The majority of credit cards have an APR of around 18%. This means that, unless you are consistently on time with your payments, you are paying an extra 18% for all of the goods you purchase with a credit card. Sure cards can be convenient, but they can also be expensive!

By sitting down and thoroughly planning out a budget you are giving yourself a chance at spending money in a wise manner; the benefits of a budget are far greater than any negatives. Most importantly a budget tells you where you are spending money. This allows you to make more informed decisions when making purchases. You are now able to stretch dollars a bit further, pay bills on time, and eliminate needless spending. Plan out a budget and you just may be surprised at how efficiently you can spend money.

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Research Guide about Hedge Fund

The origin of Hedge Funds dates back to the year 1948 when Alfred Jones, a Harvard University graduate, while writing about current investment trends was inspired to try his hand at managing money. He followed his instinct and came up with the innovation to sell short some stocks while buying others. Thus, he raised $100,000 and got some of the market risk hedged. Further, he employed leverage in an effort to enhance his returns.

Investment Strategies of Hedge Funds by Filippo Stefanini This excellent introduction to the world of hedge funds takes the reader on a tour of the wide variety of strategies employed by these often mysterious but increasingly important investment institutions. Both students and professionals will value the nicely organized presentation that combines insightful discussions with many interesting facts and figures.

Then in the year 1966, an article in the Fortune magazine highlighted an investment that had outperformed the mutual funds. This gave birth to the hedge fund industry. Just after two years, there were about 140 hedge funds operating. However, a number of hedge funds collapsed in the period from 1969 to 1970. But this downtrend didn't continue for long and the hedge fund market got a new life in 1986 when a hedge fund captured the interest of the investors because of its outstanding performance. After this the ups and downs continued but the hedge fund industry is still prospering and currently there are more than 7000 hedge funds in the United States, with an estimated US $750 billion in assets with a strong role-play in the financial market. They are believed to account for as much as 20% of all US stock trading.

As investors are gradually recognizing the value of hedge funds, the need for the study and research in this field has multiplied. According to a recent study hedge funds do not fall into a strategic asset class. Thus is because hedge funds are heterogeneous and cannot be modeled. Most hedge funds highly specialized and their performance depends on the expertise of the manager of the management team. The returns from hedge funds are usually consistent and have over a period of time outperformed standard equity and bond markets. These have a much lower risk factor as compared to equities. They use a strategy or a set of strategies other than investing long in bonds, equity, mutual funds and money markets. These strategies have the propensity to generate positive returns irrespective of the rise or fall in equity and bond markets.

According to a latest research on hedge funds one classic hedge fund strategy that is gaining popularity is "paired trade". In this strategy an investor buys shares of a company that is doing well, while short selling another company (usually in the same sector or industry) that is struggling. By purchasing shares in one company, and selling borrowed shares short in another, hedge funds can make a greater return than if they just entered a single trade. This strategy offers tremendous profit potential for professional traders. Experts say that this strategy is gaining popularity off late, because hedge funds hedge funds have been struggling to generate the exciting returns to justify charging their investors 20% of profit and a 2% management fee.

Today, in spite of the fluctuations seen in the last few years, the hedge fund industry is flourishing as people have realized that hedge funds can prove to be beneficial as long as they plan there moves carefully.

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Government Grants for Single Mothers

Being a single mother at a very young age can be difficult. Not only will you need to worry about the welfare of your child, you also have to worry about continuing your education. So how can a single mother at age of eighteen afford to go to college and take care of her child at the same time? Fortunately, the government can provide you with a financial aid to ease the burden for you.

Financial Aid
There are many types of financial aids that can help a single mother continue her academic pursuits. In order to get these grants, you need to fill out a form from the Free Application For Federal Student Aid or FAFSA. The application process will take around three days to a week, but once you have completed the requirements, you will be able to start college right away. The requirements for applying for this program include:

• Being a valid citizen of the United States
• Social security number
• A high school diploma or a general education development certificate or pass and approved ability-to-benefit test
• Be enrolled or accepted as a regular student working to attain a specific degree.

Aside from these requirements, your eligibility for financial aids also depends on the income tax of your parents or dependents. So if you are a single teenage mother but your family is well-off, then your application for these aids may be denied by the federal government. The amount of funds that the government will provide you will also depend on your income tax. So the single moms with a high income tax who are accepted in the program may be funded a lesser amount of money. Once you have been accepted, you will also need to keep a certain grade point average in order to maintain your aid.

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Negative Equity - A National Disease

Capitalism has many benefits in a free society. It has inherent benefits to those who are creative and willing to work hard. Nowhere else can such a variety of people from many diverse backgrounds and countries succeed by their own efforts.

An Introduction to Equity Markets An Introduction to Equity Markets An Introduction to Equity Markets guides novices through the intriguing world of equities. This book explains clearly how equity markets work, what the instruments traded are, who trades them, how equities are valued and how the international markets differ. Subjects addressed in this book include equity valuation, share issues, equity-linked securities and derivatives.

However, sometimes our creative efforts cause serious problems. As a people, we have become enamored of things, possessions, and goods. We want to own the biggest house, the biggest automobile and other possessions without number. And for all the things we say we want, there are manufacturers ready and willing to provide them. In order to be competitive these same manufacturers are always seeking better ways to convince us that it is possible to own that Cadillac El Mundo Gordo Magnifico SUV when realistically we can only afford the Ford Sub-Midsized ordinary Sedan. Desire for things, plus superb salesmanship overcomes common sense and basic math. The result can be what the subject of this article is all about.

Let’s clear up a couple definitions.

Equity: The market value of a property (house or car or whatever) minus any mortgage or money owing on the property.

Example # 1 Positive Equity:
You have owned a house for thirteen years. Its market value is $400,000. You owe the bank $225,000 over the next seventeen years. Your equity in the house is $175,000. This is positive equity.

Example # 2 Negative Equity:
You buy a house for $300,000. The housing market changes and the market value drops to $200,000. You owe the bank $225,000. Your equity in the house is $25,000. This is negative equity and sometimes referred to as being "upside down". This is a very bad thing.

Negative Equity occurs frequently with automobile purchases. What do you do if you’ve had the car two years and want to trade it in? The "upside down" buyer frequently adds the amount on the trade-in onto the loan for the new car. They also stretch out the loan to keep the payments low. This is a losing proposition as the longer the loan, the longer it takes to reach a point where they owe less than the vehicle’s depreciating value. It is a financial Catch-22.

How does this happen?
It is a combination of things. In order to sell more cars, manufacturers offer deep discounts on new cars. This has the effect of depressing the value of cars, which coupled with five and six-year loans means it’s going to take much longer for car owners to achieve a position of positive equity. (two to three years is not unusual)

It is a fact that the moment you drive your car away from the lot it is a used car. If you are paying $45,000, the Kelly Blue Book value may be $40,000. If you still owe $43,000, there’s a $3000 difference. How do you protect yourself if you have an accident? Now the vehicle owner has more problems.

Gap Insurance
Why is an auto gap insurance policy so important? Because standard comprehensive and collision auto policies only cover your new car's "fair market value". And that can be as little as 80% of what you paid for your car, starting the minute you drive it off the lot. This condition of negative equity may exist for the first two or three years of ownership.

This means that if you're involved in an auto accident that leaves your new car "totaled", you could end up paying off a loan on a car that you can't drive. This is where gap insurance comes in. A gap car insurance policy insures you for the difference between what you owe on your car and what your insurance company says it's worth. In some cases this insurance will be required as part of purchase or lease.

Gap insurance coverage would also become critical if your car is stolen. Thieves prefer new cars and they seek out specific models, which usually happen to be the most popular models of cars sold. (Honda Accord, Ford Taurus - etc. etc.)

If your car is stolen, the insurance situation is the same as in the case of an at-fault accident on your part: comprehensive insurance will cover the value of the vehicle, but not necessarily the value of the loan that you owe to the bank. You could be stuck paying thousands for a car that's long gone. Add that to the truly disheartening feeling of having your car stolen, and that makes for a really rough time.

We see many situations of negative equity when a case is being settled with an auto manufacturer. Often it is the first time the owner discovers the reality of being upside down on their loan or lease. It is always painful. We certainly could offer scads of advice about this situation. The first piece of advice would be, never buy something that is beyond your means. This advice will surely be ignored over and over. The other thought, which isn’t really advice is, if you get caught in a situation where your negative equity is going to be expensive, bite your lip and promise yourself you will never get in that sort of situation again. It’s bad for you and accepting these kinds of deals only encourages manufacturers and their financial organizations to offer these "good deals".

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Bank Overdraft Fees Are Sucking Americans Dry

Overdraft fees, we have all paid them at one point in time in our financial lives. The cost of over-drafting your account keeps climbing. At Sun Trust as of July 1st they raised the fee from $32.00 to $35.00 every time you go in the negative. Most banks will clear the highest item first so that they can charge you a fee on each of the lower items.

The bank is constantly pushing us to set up over-draft protection with one of their credit cards. So when you overdraft they charge your credit card, charge you a $15.00 fee to do this for you, then if you do not pay your bill on time or in full they are going to hit you with interest and late fees. It is a never-ending cycle.

They will link a savings account to your checking account for protection but again, they will charge you $15.00 for transferring the money in your account to prevent an overdraft fee.

According to a recent study by the Center for Responsible Lending the nations 15 largest banks collected $17.5 billion dollars last year from us for over-draft fees.

I love it when they tell you that they are going to give you a “one time courtesy” return of the over-draft fee. No one is perfect and life happens, banks should give us a set amount of “courtesies” per year. I am sure they would attract more customers this way.

There is a bill “gaining moment” that would require banks to tell people at the ATM and possibly at the checkout counter when their accounts run dry, It would also prohibit banks from charging overdraft fees unless customers have agree to pay them and it would prohibit the bank from clearing the highest check first.

Banks have also held and delayed deposits so that an overdraft incurs and they receive the fees.

We should take more responsibility with our money. The only way to not pay these fees is either not letting your account fall in the negative or for example, keep $1000.00 in your account and vow never to fall below that amount and you will not have to worry about being charged a $35.00 fee.

Banks continue to charge these ridiculous over draft while only offering pennies on CD’s, savings accounts, and mutual funds. No wonder there is a new bank popping up on each corner, they are getting rich!

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