Managing Personal Finance

Apart from maintaining a savings account in Bank, we can think of investing a part of our money in few high return areas. Many of us invest money in the share market, but it’s not a cup of tea for everybody. Mutual Fund is playing as a major role in the dynamic investment sector these days.

But the problem arises when we need to decide which fund to choose, how much to invest, etc. New funds are coming up each month. When we study the performance of last few years for some good funds, we end up with a mixed result. On the other hand, fund brokers don’t guide in the right way as they have targets to promote new funds. So ultimately it’s very difficult to come up with some fruitful solution.

Here I have tried to put forward few suggestions that may help you out taking a brave decision:

• Long termed plans: Mutual funds are divided into two basic categories; a) open ended funds b) locked period (long termed) funds. In case of long termed funds investors can withdraw money only after the locking period is over. So the fund raisers can reinvest the money in a better way. They don’t have the tension / headache to refund money to the investor at any point of time. Naturally better returns can be expected from such funds.

• Tax savings benefit: The financial year ending period has been painful for most of us as Income Tax department snatches away handful of money from our pocket. This is because we don’t keep the tax exemption matter in mind during investment. It can be noted that all mutual funds don’t come under tax exemption. Generally in case of long termed funds we can get such facility.

• Pick up the cream out of Open-ended funds: You can gamble with a part of your savings from open-ended funds. As I discussed earlier, an investor can withdraw his invested money at any point of time, even at its higher market rate. So keep an eye on the market rates, stay in touch with your financial consultant and withdraw money during better rate of your fund.

• Real estate and Gold funds have been worthy: In the fund name / details, it is mentioned that where is the fund going to reinvest. If the mutual fund is related to Real estate or Gold, there is higher chance to get better returns. It’s like playing a safe side game. The value of real estate and gold is in an increasing trend.

• Diversify MF investment for risk minimization: I personally suggest not investing large amount of money in a single fund. In reality, mutual fund investment is a risky business and an investor can suffer huge loss at sudden market crash or any big slowdown of any particular fund. So choose 2/3 better funds and put money in different slots.

Lastly I would like to add that return on investment (ROI) is fully dependent on market conditions and the return calculation as shown by fund brokers are made on the basis of assumptions only. Generally they consider the higher side return into account and present the amortization sheet before us. It may differ a lot in the end. So ask yourself whether you are really willing to play the risky game.

The necessity of credit is felt in every single aspect of a business transaction. Credit helps on smooth execution of a transaction process which would often get retarded in absence of cash. Credit Spy facilitates individuals and business owners with the right credit card suited to their respective needs and preferences. The galaxy of credit cards offered at Credit Spy includes Visa, Discover, American Express and Master Cards. If you have had a decent credit report over years, your credit card application would be approved in no time.

Credit Spy enables the applicants avail the best credit deals irrespective of their past record and helps them building foundation of a clean credit history. The most interesting aspect is that apart from providing business and corporate credit cards to users, it caters its users with other reward cards as well.

Gasoline credit cards happen to be one of the most popularly used reward cards where you credit card rewards and also cash back on purchases. The reward points are available on every single purchase and are not limited to gasoline. The gas credit cards can be used at any gas station and the cards belonging to a particular gasoline company can be used at gas stations specified with the document deal.

Credit Spy caters the customers with a wide range of amenities. It is worth taking a peek at some of the lucrative offers provided at their end.

• Experts arrange all online applications into groups to facilitate your search. Now, all you need to do is to compare card deals from the group you’re interested in, and apply for the most suitable plastic!

• You can observe offers from the world-known American banks and national card issuing companies. Depending on your bureaus’ profile and FICO scoring numbers you’ll heartedly expected to see good-to-excellent card invitations from Citibank, HSBC and Chase banks.

• Foreign applicants can also submit an application herein, provided their credit history is impeccable. Regard the best credit card deals for the UK residents, top bank applications for Canada citizens and Belgium applicants, and apply online!

In a nutshell, the aim of the company is to ensure full satisfaction of the consumers. Special online forums are designed to help them resolve credit card related queries. The members at the forum would assist you with a possible solution and help you get your answers on credit deals.

Recently I had the opportunity to interview Mr. Scott Borden, a renowned Insurance Adviser at Kansas City . He has expressed his concern over health insurance issues and tries to explain the overall scenario.

Me: What is the present standing on health care system?

Scott: Renewing your health insurance used to be easy. Now it seems to take all year. Your employees seem to be healthy, but your renewal rates disagree. You contact your old consulting firm. Utilization is too high…again. Emergency room visits are too frequent…again. Generic prescription substitution is too low…again. You are told to increase co-pays and raise deductibles to create the necessary "steerage" to help hold down your health care costs. The result? Double-digit premium increases…again. You are reminded of the definition of insanity: doing the same thing over and over again expecting different results.

Me: What other options are there?

Scott: By now you’ve heard of "consumer-driven" health care plans. At this time there are two versions showing promise, Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA). They are designed to lower health insurance costs by engaging employees to take a vested interest in their own health care expenses.

There are significant differences between how these plans work. The employer is the owner of the HRA. The more successful HRA plans are designed to allow a portion of the unspent accounts to roll over from year to year as an incentive to the employee not to spend them. There are no requirements for which type of insurance you use with an HRA. The money that is not spent stays with the employer if an employee leaves.

The employee is the owner of their HSA. Both the employer and the employee can fund this account. HSA funds can be used to help offset all medically related expenses including a tremendous number of things that do not count towards the insurance deductible such as dental, vision, and even some over-the-counter medications. In order to establish an HSA the employee must be covered exclusively by a High Deductible Health Plan (HDHP). The federal government has placed specific guidelines for deductibles and out-of-pocket maximums for these plans to be qualified. Since these plans have a higher deductible than most co-pay plans there is usually a significant premium savings. The concept is to place the premium savings in the tax deductible HSA account and use these dollars to pay your smaller expenses at the insurance company’s negotiated PPO discount while maintaining the insurance plan for major expenses. There are now many examples of the premium savings being large enough to cover most or all of the HDHP deductible!

The HSA accounts can be opened through the insurance company or through local banks and credit unions. You can deposit up to $2,900 individual or $5800 family into an HSA account for 2008. Account balances roll over year to year. HSAs are the only products that offer triple tax advantages; tax-deductible deposits, tax-deferred interest earned, and tax-free withdrawals as long as they are spent on qualified medical expenses. Since the employees own their HSA account there is a significant difference in how this money is spent. Imagine your employees all having a vested interest in not spending their health care dollars. This is why self-funded plans tend to benefit most.

The city of Iola, KS is a perfect example. They switched all of their employees to an HSA plan in 2004. Their utilization has decreased substantially which has allowed the city to deposit nearly half of the employee’s individual deductible into their HSA account each year. Employees have embraced the new plan and are seeing their HSA not as an entitlement to be spent but as a retirement account that should be saved whenever possible. The city now has their health insurance costs in check.

The new generation of consultants will need to be focused on educating businesses and their employees offering workshops and educational tools to help employees understand how these plans work.

Otherwise you can keep your current consultant and accept your insurance premium increase… again!

Lastly I would suggest you to check Scott Borden’s blog for many more discsussions on related topics.

Money is a medium of exchange. The statement doesn’t holds true in today’s parlance. Money has almost been replaced by plastic money, better known as credit cards. Credit cards are an accepted medium of exchange and are widely used medium for transactions across the globe.

Recently I went through Applyforbestcerdit.com, there I found all necessary information regarding credit cards its usage and application. It discusses about different kinds of credit cards viz. reward cards, cards for business, student credit cards. And, their aim is to cater the applicants with the best credit card suited to their requirements. A number of factors are taken into consideration for this purpose. For instance, those who are having a good credit score and history are eligible for getting more favorable terms and conditions.

The most interesting section that attracted me is its Fraud section. A vivid description of the pros and cons of using plastic money has been explained here. Though plastic money has actually accelerated economic and business transactions, it has a few marked drawbacks within its fold. As we know, credit card happens to be one of the finest specimens of technology. And, technical loopholes are sometimes used as a weapon in hands of crafty individuals to ruin the financial wellness of the card holders. Sneaky fraudsters can easily steal credit card details without the knowledge of the cardholders and use it to their advantage.

Applyforbestcredit aims to make the visitors aware of these probable hazards associated with the use of credit cards.

Besides it provides useful information in matters of credit score, protection of identity thefts, and also cash advance cards. All its efforts are directed to cater visitors with essential information on credit and direct them with needful guidelines to derive the best use of credit cards.

A Credit card is the most sensitive product of a bank. Most of the time, we can’t avoid the attractive offers that come with it and enter the world of credit. Only two years ago few banks offered credit cards, but now almost all banks are into the credit card business. Therefore the credit card business definitely provides the banks with more revenue, but do we analyze what we expect from a credit card and exactly where we are driven to? I am trying to explain few things on the whole concept:

Glimpses of Credit card packages that make us jump to our toes:

• Interest free credit period (around 50 to 60 days)
• A financial instrument that can be used almost everywhere, no tension of carrying cash
• Payments can be made partly or in installments.
• Earn reward points that can be utilized to get free gifts and even flight tickets
• Automatic Life insurance coverage
• Additional offers during festive seasons
• Personal loans (pre-approved unsecured loan) against credit card account with attractive rates
• Avail additional discount while booking air / railway tickets, hotel bookings, car fuel purchase etc.
• Emergency cash withdrawal from ATMs
• Money back offer (named as cash back for specific cards).
• Purchase through internet: Few products can be purchased on internet through credit card only
• Now cards are available without any annual charges
• Overall personal status up gradation.

The game starts when we use the credit card for the first time. It feels great after the usage, and seems very convenient too. Slowly people get addicted to it and use at most possible cases, even for shopping grocery.

Hidden fees: If payments can’t be made within due date, banks do start charging extra fees. Most of us don’t read the details of interest rate structure given with card kit. There are high interest rates in case of late and default payment.

"Minimum payment due" trap: There is an option of paying a very small amount of the total amount due (say 5% of the total amount due) against each month’s expenses. Banks insists their customer to pay that amount. Even after paying that much amount, bank still charges interest on full value.

Business tie-ups with different companies: Almost everyday banks reach us by phone with various offers. In reality they get associated with different companies to promote product to the credit card holders. For an example, say, AXN bank has tied up with an insurance company and provides health insurance coverage for its customer where payment can be made through is credit card account. The insurance documents are sent at the easiest convenience. Similarly banks try to engage its credit card customer in various programs and pull out money from his pocket. Along with the monthly statement, small brochures of consumer durables and home appliances are attached for business promotion.

EMI payment mode: Payment has never been so convenient. Today we have the option to redeem credit card payments in installments. In case of bigger amount purchase, we can convert it into equated monthly installments (EMI). It gives us the flexibility to redeem the amount partly. Apparently it looks convenient but, in reality it results in very high rates of interest (including processing fees).

Free add-on cards: Banks offer add-on cards to the primary card holder for free. The add-on cards can be used by other family members (children or the spouse of the main card holder) against the same card account. It creates a possibility of additional expenses as well.

Other high risk factors:

1. In case of loss of credit card
2. Card information leakage through net banking
3. Fake transactions may cause harassments

Last but not the least is the effect on the credit report. One default and the account get negatively reported to the credit bureau. Your creditworthiness gets attested by the credit activities that reflect on your report and your credit score. Sometimes this credit rating gets affected without the knowledge of the victim. You might have applied for a card online; it might be so that you did not even complete the application and then forgot about it because the card also never arrived, but suddenly one day while applying for credit somewhere you realize delinquent account reported to the bureau. These mistakes keep happening the one who suffers is you. So whenever it comes to credit cards make sure you are well versed about the pros and cons from the direct source i.e. the bank.

To me, it’s absolutely foolish to give away the maximum part of our monthly income to the bank. It’s definitely not the exact amount that we used to spend before knowing the concept of credit cards. Somewhere in the line we are losing out the balance in the income - expenditure ratio. I guess the main motive is to take away the maximum part of our income by hook or by crook. Under no circumstances, can it be tolerated. So let’s be strict and don’t let the banks win the cool game.

The Mortgage industry is on the rocks in USA today. Sardonically the fortune magazine is putting together the names of Top Ten Most Admired Mortgage Companies. Infact the firms that provide ancillary services to the mortgage industry are counted amongst these names. Most of them are not direct mortgage lenders. Jeff Corbett questions, how they got selected for this category.

Working for Trust and Branch Banking in The Triad area of North Carolina Corbett collected enough hands on experience and knowledge about the mortgage industry. You can expect radical transparency from the XBroker which deals with the Mortgage and real estate companies. “Top Ten Most Admired Mortgage Company’s”, Real-time Paradigm shifting in the Real Estate and Mortgage Industries”, “How to Speculate on the Future of Mortgage Interest Rates”, “Potential Mortgage Malpractice”, “Yield Spread Premium. Capital hill testimony” all are examples of the detailed work on the industry specific matter. The very different “the Mortgage Industry’s Internal Civil War” elaborates on the legal viability of the YSP’s. The messages are sent across through debate. Being a member of a very popular Real estate network, he is popular in the industry as well. The XBroker is paraphernalia of the real estate latest and beholds information that can create enough awareness in the reader.