Free Credit Rating Report Bureaus

The three main credit bureaus TransUnion, Eqifax and Experian by Federal government mandate are required to provide consumers with one free credit report each year if they so demand. Consumers should take advantage of this fact and obtain a free credit score report each year to make sure that they’re making steady progress on the credit scores.

Credit reports compiled by TransUnion, Equifax and Experian are based on the information provided by the partners of each of these bureaus (Read more about partners in our article on ‘What companies report to credit bureaus‘). Partners include banks, mortgage lenders, insurance providers, credit card companies, financial institutions and any other organization that is capable of providing finance. Every loan that you take out or any credit inquiry that you make gets reported by these partners to the respective bureaus.

In most cases these partners report to the credit bureaus every 30 days. That information not only includes credit inquiries and an applications but also missed payments, arrears, foreclosures, bankruptcy proceedings and any other detrimental credit information.

Tips For Free Credit Report Checks

It is essential to remember that not all the credit reports will be the same. Not every partner provides the same amount of detailed information to each bureau. In some cases not only account information is revealed. Owing to this fact, credit scores can vary largely between the three bureaus. As such when making a decision an average of the three scores of is taken.

Only the consumer making the request can see his or her free credit report. Your free credit score report is only meant for you. In some cases however a court made want to see it, in which case you would be required to provide them with your free to report. In certain instances your employer prior to employing you, may want to see your credit report to make sure that you are not an undisclosed bankrupt.

Consumers often feel that by requesting a free credit report they are affecting their credit scores. This is not true. If you request your own free credit report check you are not affecting your credit score. Free credit reports are meant to help consumers improve their FICO credit scores by being able to keep a tab on them.

Free credit reports are available from the age of eighteen for every individual with a social security number in the United States. In a lot of cases because it is the first credit support of an individual, the credit score might be lower than usual. This is quickly adjusted once an individual enters into credit agreements.

These are some facts that individual should know about their free credit score report. As it gets tougher and tougher to obtain credit, individuals should do everything in their power to ensure that their credit scores are the best they can be. Free credit reports are a good tool to help you do exactly that.

Listed below are some of the reasons why investors prefer exchange traded funds or ETFs.

Exchange Traded Fund: Tax Benefits

One of the main reasons why exchange traded funds have gained so much ground in the recent past is owing to the fact that they are extremely tax efficient. In most cases the dividend distributed by exchange rate of funds are tax free because the corporate tax has already been deducted prior to paying dividend. Exchange traded funds only have one tax issue. This is when consumers sell their funds. If the funds sold at a profit consumers are liable for capital gains taxes.

Expense Ratios

Fund managers buy and sell the holdings of an exchange traded front very frequently. This gives rise to capital gains tax. However it is interesting to know that the expenses on an annual basis of exchange traded funds are usually between 0.1 and 0.65% whereas index mutual funds could be as much as 3%.

Exchanged Traded Funds – Cheap Entry

In certain cases buying into an exchange rate fund could be very cheap. If as an investor you do not have not capital reserves and want to start off with just as little as a thousand dollars you could do so by buying just one unit of an ETF. However not all exchange rate of funds have a cheap entry free  In certain cases exchange traded funds have very high entry fees.

Exchange Traded Fund: Check Your Costs

Exchange traded funds can be a very powerful investment tool. While they are actively traded on a daily basis, it is recommended to apply the same strategy as you would with any long-term investment. Buying and holding can be more advantageous and you can imagine. In addition to this consumers ought to be aware of the fact that active trading racks up a lot of brokerage costs and capital gains.

Exchanged Traded Funds: Check Your Investment

As you would with any investment it is wise investment strategy to check the underlying securities often exchange traded fund. Owing to the fact that exchange traded funds have gained a lot of popularity in the past, it is easy for investors to get enamored by investment jargon and lofty expectations laid out by brokers. Make sure that before you dive into investing, you have checked the exchange traded fund and all the underlying securities. You do not want to end up with an exchange traded fund which instead of having resource stocks has stocks from the healthcare sector. Due diligence Is imperative.

These are some of the things investors should keep an eye out for while investing in exchange traded funds.

Investing In Equities: Domestic Stocks

These are considered the safest as far as equity investing is concerned, owing to the fact that the companies to which the shares belong are based in the country and hence analysts find it a lot easier to carry out diligence on them. Consumers have the option of choosing between individual stocks and ETF’s (Exchange Traded Funds) which track the specified market index instead of taking a stab at picking the highest performing stocks. Equity investments range from large-cap, mid-cap, small-cap to sector or area specific, or even income or value or growth.

International Equities Investments

As the name suggests these stocks belong to companies, which are based in other countries. These are slightly riskier than domestic equity, as the governance and control is not in domestic hands. Investing in international equity is done through ETF’s and mutual funds. Owing to the fact that international equity is considered riskier, the return on these stocks is usually higher than that of domestic equity.

Real Estate Investing In Equities

Individuals feels that homes, apartments and complexes are the only form of real estate that they can invest in. This however is not true. Various conglomerates and trusts usually own large office building and commercial complexes or shopping malls chains and facilities. Units of these trusts can be openly bought and sold on the secondary market. This kind of investing is referred to as investing in listed property trusts. It is however not necessary that all property trusts are listed. Unlisted property trusts usually offer higher returns owing to the fact that they have higher inherent risk.

There is however another form of equity investing. This is known as investing in hedge funds (structured products) or private equity.  This form of investing in equities is usually meant for high net worth individuals, or individuals who have investable funds in the million. With the recent expansion of markets and greter acceptence of structured funds and their desire to grow, a lot of hedge funds have opened their doors to common investors. These hedge funds are now available through various investment platforms.

These are some common ways to invest in equities

Types of Life Insurance Policies To Choose From

1. Term Life: This type of life insurance policy usually ranges from about 1 to 30 years. If during the term of the life insurance policy you, the policyholder should die, the beneficiaries nominated by the policyholder get the entire amount of the policy. If however the policyholder should live beyond the term of the insurance policy, the beneficiaries do not get anything. With these types of life insurance policies you so have the option of renewing the term of your life insurance policy but it is usually at a higher rate.
2. Whole Life: This type of life insurance policy is unlike a term life policy. Under this policy you are covered for the entirety of your life. In addition to this what you might also be interested in knowing is that the premiums on the policy, is a bit more that than the actual premiums required to cover the policy. The extra amount goes towards a cash holding account, the amount of which you can decide on how to invest. Usually these accounts out grow their limits owing to the dividends being received by the investments made. If you live past the insurance term the amount equal to the death benefit of your policy is paid upon maturity.
3. Universal Life Openness: With this type of life insurance policy you do not get to choose where the cash account is invested.  However this policy gives you a lot of flexibility as far as your premium payments are concerned.  The policy will stipulate the maximum and minimum amounts that need to be paid, however when and how much is going to be paid is left up to the discretion of the insured. It must also be remembered that while this extremely similar to a whole life policy.  The investment decision does not vest with the insured. In addition to this, should you wish to make any amendments to your insurance policy, like increasing the level of cover etc. you will be required to go through the insurance underwriting process again. This may also include an additional medical examination.
4. Variable Universal Life: This is a truly hybrid account. This type of life insurance combines all the benefits of a universal life and flexible account. The consumer has the option to decide where and into which investment subaccount the funds will be deposited. The customer also has the discretion of determining the amount of premiums to be paid and when they are going to be paid, as long as they remain within the guidelines of the policy. In addition to this consumers can also get themselves a guaranteed death benefit and also make taxable withdrawals from their cash accounts. It may of interest to know that most of these policies offer a guaranteed benefit irrespective of how your investments have performed.

These are some of the life insurance policies available on the market today. Consumers should consider their personal circumstances and needs and their risk tolerance prior to making a selection with regard to their life insurance policy or provider.

References:

1. Types of Life Insurance Policies – 360 Degrees of Financial Literacy

Recession Money Saving Tips

Saving money during tough times seems impossible but it is doable if an individual is willing to follow some basic money savings tips.

1. Budgeting: This is one word that cannot be emphasized enough. More now that ever before it is necessary to budget if one wants to save money. Make sure that you have a complete understanding of your all your cash inflows and outflows. Once you have met all your compulsory obligations, make sure that you put away between 10-15% of the residual amount towards a money savings plan. If after having met all your expenses and putting money away for your savings, you still have residual funds; use these to pay down any debt you may have accumulated.
2. Beware Of Luxuries: It is not unheard of that consumers make luxuries a part of their budget. It is not that essential to buy that new television, car or boat especially if you are trying to save money. During an uncertain economic climate, it is always beneficial to put off expenses that you could do without in order to stick to your plan of saving money. If any of your goods are still working and have not given you a reason to change them, then it might be prudent to extract as much out f its useful life as possible.
3. Education: Not only did a lot of investors lose money during the market down turn, individuals lost money which they had stashed away for their children’s education. It might be a good time to start thinking about investing in your state’s 529 education plan. Not only is it a good place to put away money savings for education, but it also fits in quite well if you are looking to start a pattern for saving money.
4. Expensive Projects: In line with your money savings regimen, expensive projects like renovations and modifications should be put off. When you feel that you have saved a sufficient amount of money to create a financial buffer for yourself and have been able to meet other immediate liabilities it may be a good time then to re-embark on these endeavors.
5. Eating Out And Vacations: A lot of families are in the mode where they must have a family vacation each year. If you are not in the pink of financial health, it might be time to break that tradition and save money first. Family vacations are usually never a part of a family’s budget. Unknowingly this hidden expense throws a lot of calculations out as most people do not consider the annual family vacation as a part of their estimates. Another expense you might be able to curtail is eating out expenses. If you are struggling financially then it may be time to stop spending on eating out and start eating in. You will be surprised with the amount you save.

Consumers, by making small changes to their everyday expenditures can save a lot of money. These money savings can be used to meet more immediate expenses and even reduce debt or start a savings plan. Hence it is always beneficial for consumers to be financially savvy when it comes down to meeting their expenses and creating savings.

Reference:

1. Seven Ways to Save Money During A Recession – Learn Financial Planning

Invest In Stocks – Advantages

Some of the advantages of investing in stocks are:

1. Capital Appreciation: One major reason for holding direct shares is “Capital Growth / Appreciation”. Over the years shares have know to exhibit great capital growth with the increase in share prices. In addition to this corporations and companies and also sometimes issue their share holders with what is known as a “Bonus Issue” In this case, instead of paying individuals dividends, the company issues them with additional shares at no extra cost. This leads to increase in share holding of investors. Another way in which shares show capital appreciation is by a “rights issue”. In this case the company gives their existing share holders the right to purchase shares in accordance with their existing holdings. This offer is made to existing share holder directly and they do not need to go through a broker thus saving on transaction and brokerage costs.
2. Dividends: This is a major plus for direct shares. A regular income stream though dividends for shareholders is what makes investing in shares very attractive. Shareholders also have the option to chose whether they want their dividends paid directly to them or whether they want to re-invest those dividends into the buying of additional stocks.
3. Transaction Ease: Owing to the fact that there is an extremely developed secondary market for shares, it is very easy to buy and sell shares. Individuals do not have to wait to for a company to issue new shares. They cam readily buy or sell these shares in various financial markets. In addition it is very easy to liquidate shares and convert them back into cash should you wish to do so.
4. Diversification: Shares are a great way to diversify your existing portfolio. For instance if you are a growth investor you would like to have as much as 33 percent of your portfolio invested in direct shares. Shares provide the steady growth element and diversification aspect to a portfolio.

Disadvantages On Investment In Stocks

While the advantages of investing in shares outweigh the disadvantages, there are certain disadvantages none-the-less. For starters, the prices of shares can b extremely volatile. For one, if the management of a company makes one bad business decision, it could mean that the value of the stock would fall. In some horrible situations this could lead to a company becoming bankrupt and the shares of that company becoming worthless. In addition to this stocks are susceptible to various market and geo-political risks which could also lead to the devaluing of a company’s shares.

While markets risks and company risks are some of the major disadvantages of investing in stocks another disadvantage is transaction cots associated with shares. Brokerage and transactions costs could sometimes be so high that they actually eat into any profits made by you on the buying or selling of shares.

These are some of the major advantages and disadvantages on investing in stocks.

References:

1. Advantages and Disadvantages of Investing in Stocks – OTC NYSE stock tips

Housing Market 2010: Consumer Outlook

With changes in the property market, consumers can look forward to the following housing market forecast for 2010

• Affordability

The primary thing to remember at the moment is that for the last 3 years or so housing prices have been inflated. With the latest bust in the housing bubble, homes now and for the next couple of years will be more affordable than ever. In addition to this, one should also keep in mind that low housing prices coupled with low interest rates of 5.15% percent or thereabout make this and the coming months the idea time to buy property.  It might also please buyers to know that interests rates are expected to stay low over the next few months.

While considering the above, there is a flag that you might need to watch out for.  Builders have belief that single-families will be re-entering the market soon. As a result of this they have been applying for permits to construct such dwellings. This is a sign that the housing market could be seeing stability sooner rather than later.

• A Buyers Market

If you have been waiting for an opportune moment to enter the housing market and purchase your first property, this may be your time. Remember that while prices are expected to stay low over the next year or so, these conditions will ease as the housing sector experiences improvements and prices will once again start to rise. Moreover the decision of the government to expand and extend the first home buyers tax credit to not only include more individuals at a higher salary bracket, but to also include individuals who have previously owned makes this the right time to enter the market. Another interesting fact is that while cash is king in the lower tier housing sector with the increased supply of middle to top end properties, if you can stick to your guns you might just be able to pick up a very good property at an absolute steal price.

• Sellers Beware

If you are a seller and are looking to list your property on the market and are not in a desperate situation, then it may be a good idea to hold off for a bit. With the increase in the number of buyers and the falling prices of houses in a same tier most good properties have lost their appeal and hence are no longer facing the prices they should have. This will also be re-asserted should you get a valuation or appraisal done on your property. Your property would either not have moved in value in comparison to when you bought it, or might have only slightly appreciated or in the worst case scenario would have depreciated in value. Hence it might be a good idea to hold off on selling your property at the moment.

Apart from homebuyers and sellers, we have some advice for owners as well. Let us not forget that nearly a quarter of the country is up to get their adjustable mortgage rates adjusted this year. If you feel that you are in a good position to refinance then this may just be the best time to refinance your mortgage and save yourself a rate increase.

This is what the housing sector could look forward to in the new year. On the whole the housing market outlook on the year 2010 remain positive and we hope that a lot of financial sectors including the housing sector will stay stable and start showing signs of sustainable growth.

References:

1. Make money in 2010 – Your home – CNN Money
2. US home builders expect sales improvement – All Business

Questions To Ask Your Lending Officer

Some of the important questions you need to ask your lending officer about your home loan may involve:

• The Terms Of The Loan: It is best to start the application of with this question. It is always beneficial to understand the terms of the mortgage upfront rather than wait and be surprised with something that you should have cleared up at the very outset. Ask questions like, what are the terms of the mortgage, what is the interest only period, what are the undisclosed charges that could apply to this loan structure etc.

• Can I Pay Off The Mortgage Early?: Often consumers feel that there are no penalties, which apply to paying off their mortgage early. This could be a mistake. Quite often you will find that your mortgage provider will charge you penalty interest for paying off your mortgage early.

• What Interest Rates Are You Looking At: If you are looking at getting yourself a fixed interest mortgage loan, then it is easy to figure out what your payments are going to be now or a future date. If however, you decide to brave the market and get yourself a variable loan, you might want to quiz your mortgage officer on the kind of range you might be looking at with regards to interest rates and payments.

• Principal And Interest Break Ups:  Another thing that you might want to figure out is what is the principal and interest break up. You may want to ask your mortgage officer as to how much of your repayments go towards the principal component and how much goes towards the interest component. The reason this should be of interest to you is owing to the fact that you should want the majority of your payments to go towards the principal component thereby reducing your overall interest payments.

• Other Factors: In addition to the aforementioned questions you would should also ask your mortgage officer questions like, if there re any closing costs.  These are hidden costs and are sometimes added over the above the general costs associated with getting a mortgage. It is always beneficial to have these factors cleared up front as you find yourself short on the day of settlement. Further you should also enquire whether it is possible for you to get a fixed mortgage. If you can qualify for one, ask your mortgage officer to explain the terms and conditions of a fixed mortgage.

These are some of the questions you might want to ask your mortgage officer prior to settling down on a particular lender. As with any investment it is very essential that you do your research adequately.

References:

1. Ten Questions to Ask Your Mortgage Officer – Fine Tuned Finances
2. 10 questions for lenders – BankRate
3. Ask the Lender the Right Questions – Yahoo Finance

Identifying Dividend Yielding Stock

When it comes down identifying high yield stock it may be beneficial to look at, what is known as the “Coverage” ratio. This is calculated by taking the earnings per share dividend and dividing it by the dividend per share. Usually with regard to the coverage ratio, a figure higher than two is considered good. A lot of fund manager and industry analysts swear by this philosophy. In addition to this is the usual judging of a stock by taking into consideration its dividend yield to it’s share price. When calculating this take the dividends paid by the share over the last 12 months and divide it by the current share price.

Yield Stock Bargains In The Market

A lot of investors often ask the question can dividend yield stocks be used to identify a stock market bargain, and the answer is an unequivocated “YES”. Let us put his in perspective, assume that a share has a total paid dividend of $2 in the last 12 months and it’s current price is $80, therefore the yield is 2/80 or 2.5%. However if the price rises to $82 the yield will fall to 2/82 or 2.43%. Of course the opposite will happen if the price falls. Come to think of the reason why dividend yield stocks can help you identify a bargain is owing to the simple reason that the yield is usually high if the price of the share is low. This reflect the outlook of management who feel that they do not need to alter their payout policy as their outlook to the future is positive.

High Yield Stocks & Dogs Of The Dow

This theory was popularized by Michael O’Higgins in the year 1991, represents a theory that the highest yielding stocks in the Dow are representative of the best bargains available in the market. This is owing to the above stated facts that the management of these companies feel that they are in a good position and do not need to alter their dividend payouts as their outlooks remain positive. In regards to “Dogs of the Dow”, there is an entire investment strategy dedicated to this theory. In this strategy you buy the top 10 dividen yielding stocks for a financial years and then after holding them for one year sell them and replace them with the top 10 stocks for that year. This has been a very popular investment model with active investors and asset-allocators.

As with any investment process it is essential to consider your risk tolerance and do ample research to ensure that you are comfortable with any investment decisions you might be making. While there are a lot of stocks in the market which appear to be yield stocks it might be beneficial to conduct both fundamental and technical analysis prior to settling on the investments you feel would work for you.

Reference:

1. Dividends for the long run – CNN Money

Making The 401 (k) Retirement Plan Work

• Increase Your Savings

In today’s economic climate where several households have suffered reduced income and stagnation coupled with unemployment, increase your savings, is easier said that done. None the less, if you want to be able to retire comfortably, it might be a good idea to increase your savings pattern. The last 10 years were supposedly one of the worst as far as returns on stocks were concerned. In comparison to this it is believed that the next 10 years will provide above par returns. However it would be unfair to expect that the market would take care of all your problems. Where the market cannot meet your requirements, you might to meet those yourself by increasing your savings. In addition to this it might also be beneficial to remember that if your 401(k) account has the increase your savings option, take it. This will help you by making it easier to be disciplined.

• Be Prudent With Your Investments

It should be remembered that larger accounts are more susceptible to market movements than smaller account. The reason for this is that larger accounts are usually held by individuals who are nearing retirement or are about to retire. Hence they stand to stand to lose more with a fall or correction in the market. The solution to this is asset-allocation and portfolio rebalancing. Put simply this means that based on your time to retirement and risk tolerance investment in a diversified range of investments, ranging from direct stocks, to managed funds, bond funds, mutual funds, property funds, commodities etc. Moreover it is also essential that you from time to time rebalance your portfolio to make sure that your are not over or under exposed to any one sector thereby being affected adversely by one while losing out on the gains of the other.

Having said all of the above we also feel that one of the mantras to making your 401(k) work for you is to be flexible. Depending upon the way the market is moving make sure that you are moving in the similar direction. If stocks are falling in value and bonds are rising, it may be time to off load a few stocks and get some bonds and do on and so forth.  The trick is to stay tuned in and take advantage of opportunities that may arise in the market.

Reference:

1. Three Tips to Make Your 401 (k) Work For You – Yahoo! Finance