BlackFire Finance

Human behavior flows from three main sources: desire, emotion, and knowledge.
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Welcome to Blackfire Finance, dedicated to Finance, Money, Business and Most Importantly Knowledge

Commonwealth Bank

News: CBA Deposit Interest Rates Cuts Hit Savers

Commonwealth Bank (CBA) has cut a range of term deposit interest rates for the second time since August.

The bank blamed the cuts, which took effect last week, on changes in credit markets and the globally low- interest rate.

The rate cuts apply to six-term deposit products, spanning from three months to five years, by 5 to 15 basis points.

“The reason we have made changes to interest rates on some deposit accounts is due to the record-low interest rate environment, changes in underlying funding costs in local and international funding markets, and competitive conditions that affect the interest rates we are able to pay,” said Clive van Horen, executive general manager of retail products and strategy at CBA.

In August, CBA raised deposit rates and marketed it as a win for savers after the Australia’s big four banks passed on half of the Reserve Bank of Australia’s rate cuts to mortgage holders.

CBA reversed these cuts in September, and ANZ, NAB, and Westpac followed suit in October.

Stockmarket: Major US Indexes Close on Record Highs

All three major US stock indexes have closed on record highs on Monday night, following a rise in commodity and technology shares.

S&P energy index jumped 2.2 per cent, while .SPLRCT technology index rose 1.1 per cent.

Facebook increased 4 per cent to $US121.77 after announcing a $6-billion share buyback program on Friday.

LifeLock rose 14.7 per cent to $US23.18 following Symantec’s announcement to purchase the company for $US2.3 billion.

Applied Micro Circuits also increased 11.7 per cent after Macom Tech announced a $US770 million takeover of the company.

Oil prices have risen after Iran and Russia indicated that an OPEC deal could be reached in a Vienna meeting next week.

 

Markets at 8:40am (AEDT):

  • ASX SPI 200 futures +0.7pc to 5,393
  • AUD: 73.65 US cents, 69.31 euro cents, 59.00 British pence, 81.62 Japanese yen, $NZ1.0429
  • US: Dow Jones +0.47pc at 18,957, S&P500 +0.75pc at 2,198, NASDAQ +0.89pc at 5,369
  • Europe: FTSE +0.03pc at 6,778, DAX +0.19pc at 10,685, Eurostoxx +0.29pc at 325
  • Commodities: Brent oil +4.8pc at $US49.11/barrel, spot gold +0.41pc at $US1,213.20/ounce, iron ore -$US2.00 at $US70.50/tonne
trump

Stockmarket: Trump’s Election Win Boosts Market

Donald Trump’s unexpected election to US presidency has boosted the stock market.

Following Trump’s win, economists expect an economic growth of 2.2 per cent in 2017 and 2.3 per cent in 2018, increasing from 1.5 per cent the past year.

Inflation is also predicted to rise to 2.2 per cent in 2017 and 2.4 per cent in 2018. The Federal Reserve has been struggling to increase inflation above the 2 per cent threshold since the 2008 financial crisis.

Bank of America’s stock has climbed by 17 per cent since Donald Trump won the presidential election.

These changes and estimates are underpinned by the belief that Trump’s administration will push for deregulation and provide market stimulus through infrastructure spending and cuts in tax rates.

The Bank of America has indicated that for every 100 basis points increase, the Bank will earn $5.3 billion in additional net interest income.

Taxes/Regulations: Best Things To Spend Your Tax Return On

Getting your tax return back is like celebrating Christmas early. The possibilities are endless – but should you be smart or careless with your tax return money? Money Crashers gives us a few tips and ideas on what to spend our tax refund money on:

Spend It On Something You Need
Low on groceries? In need of a new pair of shoes or a laptop? Your tax return could you save you from saving up. The extra cash bonus is a good way to ticket those items in for when you need them most.

Pay Off High-Interest Debt
The best time to eliminate any high-interest debt that you’re carrying is with your tax return money. Use this as an opportunity to pay off payday loans, title loans, debt consolidation loans, high-interest private student loans, car loans, or credit card debt.

Start Itemized Savings Accounts
Create a budget and divide your refund into pieces, with each set aside for savings for different items you’ll need in your bank account for important future purchases. Putting your refund toward specific savings goals can prevent you from debt.

Start or Increase Your Emergency Fund

According to Money Crashers, experts say “that your fund should contain about six to eight months’ worth of savings in an easily accessible interest-bearing account (such as an online savings account or money market account). Storing that much money might take months (or even years) if you’re just taking a little bit out of each paycheck, so use your refund to make a significant deposit to your emergency fund.”

Donate to Charitable Causes
Donating to charity may seem like the least priority on your list, especially if you are low on money. But giving back to the community can be a generous and a much more rewarding option than splurging on useless things.

Spend It On Something You Want
You’ve worked hard all year, it’s time to treat yourself to what you’ve earned. Set aside a desirable amount for your savings and an allowance on what you want to splurge on. That way you can use it for something fun like a holiday or shopping trip without surging into a financial chaos.

Personal Finance: Debt vs More Debt – Are Personal Loans A Good Idea?

So you’ve gotten yourself into a bit of a pickle, and you can’t get out of it without some help. Without a lot of financial options, the easiest solution seems to be taking out a personal loan. But are personal loans a good idea? They seem to be a continued chapter of another financial burden. We take a look at the factors and types of personal loans that could be suitable for you:

A Secured Personal Loan

Having assets such as a house or car can be used as security for the loan. Your provider will take these assets into consideration, and possibly offer you a lower personal loan interest rate, as there is less risk to the provider if there is a loan repayment default. In the event of a default or inability to repay the personal loan, your assets can be legally seized by the lender.

In other words, you will need to make an accurate application with your chosen lender to make certain you are not under financial pressure to pay off the personal loan. It could be a good idea to have repayments automatically deducted from your pay or bank account to guarantee they are made on schedule.

An Unsecured Personal Loan

In this scenario, you won’t have any assets to protect the lender, and your personal loan will incur a higher interest rate. Nevertheless, the same rule of thumb applies, and you need to ensure that repayments are affordable and ongoing for the duration of the loan.

It’s a good idea to compare various lending institutions to make sure you get the best possible deal. A dollar saved is a dollar earned and a step closer to becoming financially solvent.

Interest Rates

As with other types of loans, there are several ways of making repayments. The most popular methods are Variable Interest Rates and Fixed Interest Rates.

Variable interest rates are influenced by the final decisions made by the Reserve Bank of Australia. Changes to the Reserve Bank cash rate filters down to the banks and their customers. Taking out a variable rate is the option to make additional repayments on the personal loan without incurring any additional fees – which can be a major perk. On the downside, the nature of variable means that your interest rate can go up or down at any time, and repayments could become unsustainable if finances are tight.

Fixed interest rates can provide you with confidence in knowing that your repayments will remain steady for the entire duration of the loan. The downside is that fixed interest rates are generally higher than the prevailing variable rate at the time of taking out a loan.

Additional repayments on top of your scheduled repayments may also not be allowed with a fixed rate, or will incur a fee. Extra charges in the case of early termination or a change of loan agreement are also the norm for a fixed interest rate loan.

All information sourced from: http://aussiefinanceblog.com.au/personal-finance/should-i-get-a-personal-loan-to-pay-off-debt/

Insurance: Rundown on Life Insurance

Your life is worth the investment and considering life insurance can secure you and your family in times of great need. For example, if you were to leave dependants behind, your policy will ensure they are financially secure and able to meet ongoing expenses.

According to George from Aussie Finance Blog, “everyone is ultimately vulnerable to health complications and accidents, so it’s hard to understand why anyone with available finances would remain uninsured. It’s true that nobody wants to contemplate death for themselves or their loved ones, and when things are going along nicely, life insurance is easily forgotten. However, there’s no denying that life insurance cover could prove invaluable in a time of need.”

Let’s take a look at the different types of life insurance options available and are suitable to your needs:

Term Insurance

The most common life insurance policy is a term insurance. You are able to choose the length of your insurance plan, with policies generally set for a period between 10 to 25 years. The agreed payment, or ‘sum assured’ is agreed upon when you take out the policy, but remember to read the fine print as some policies don’t pay out if you die soon after taking out cover. If the set policy time-frame expires before you die, there is no pay out. There are several term insurance variations:

  • Level term insurance: The ‘sum assured’ amount of cover remains the same for the duration of the policy.
  • Decreasing term insurance: Your pay-out will reduce over time, usually in keeping with reduced mortgage repayments or other debts.
  • Increasing term insurance: Your pay-out increases over time to keep pace with the cost of living, and is usually pegged at 5%, or in line with inflation.
  • Guaranteed premiums: Your payments will remain the
    • same over time, assisting you with budgeting.
    • Reviewable premiums: This can be less expensive initially, but is subject to review, with the potential for payment increases over time.

     

    Factors that will be considered:

    The good news is that life insurance premiums are currently much lower than they were previously. Factors that influence the cost of your insurance cover include:

    • Your age
    • Health considerations
    • Occupation
    • Smoking status

    If you stop smoking after taking out cover, let your insurance company know, as they may reduce your monthly premiums. Honesty is important, and if you provide false or misleading information regarding your health or smoking status your policy will be invalidated and you won’t get a pay out.

    Family Income Benefit

    Instead of being paid a lump sum, your family will be provided a regular monthly tax-free income for the remaining duration of the policy term after you die. The downside is that if the policy expires shortly after you die, your family will only get monthly payments for a short period of time.

    Whole of life cover

    This kind of policy provides a guaranteed pay out, and as a consequence premiums are much higher than for term insurance. You will also be paying premiums until you die, even if you have already cleared your mortgage and are in a good financial position.

    Over 50s life insurance

    This policy option is popular with those who have been a little slow getting around to life insurance cover. An attraction is that you will be accepted even if you have a medical or illness history. However, these policies commonly have a maximum age limit, and will need to be in place for a period of time for a claim to be considered. Premiums can be inexpensive, but cover is also relatively low, and will only assist with immediate expenses, such as funeral costs.

    All information sourced, detailed and provided by: Aussie Finance Blog

Lifestyle: Are Credit Cards Worth It?

For most cardholders, credit cards can be your ticket to a wide range of great spending opportunities such as shopping, business, and travel. But for others who will often misuse their credit cards, owning a credit card may lead to financial hardship in the long run. Aussie Finance Blog gives us a preview of the perks and disadvantages of owning a credit.

PROS:
Convenience: A credit card will save you the trouble of finding a nearby ATM, and you will need to carry less cash with you.

Statements and records: You can easily keep track of expenditure, receive ongoing bank statements and retain records for tax purposes.

Cash flow: A credit card is a convenient way to obtain a cash advance at a time when you need it most.

Build a good credit rating: Having a history of controlled credit card use will supply banks and other lenders with a good impression of your money handling skills. It will also help negate past bad credit history.


CONS:
Overuse
: Credit cards can make you feel you have an abundance of ready cash. A credit card used inappropriately can result in overspending, leading to repayment difficulties.

Extra paperwork: It’s not uncommon to lose track of spending. You will need to keep receipts in order to check them against bank statements.

Missed payments: If you miss a payment, you may end up paying much more than required for your purchases.

High interest rates: High interest rates can often outweigh benefits. Many purchase savings offered by credit cards are also available elsewhere.

A cycle of debt: Customers sometimes obtain a new credit card to alleviate debt on their present card. This approach leads to a cycle of debt, with increased monthly payments.

Credit card teaser rates: Companies lure customers with attractive introductory interest rates. Although initially helpful, the expiry of the introductory rate is also the start of a new rate which can be much higher and difficult to manage.

Verdict: Are credit cards as bad as they seem? Credit cards are like tools, if you use them correctly and responsibly there won’t be any negative consequences. What do you think about credit cards?

Personal Finance: The Best Way To Save Up Your Money

Dinners on a budget, using no-frills home brand products and skipping small little splurges here and there may seem like the only real way to save money. But there are more refined tricks and life hacks that could easily save you a buck or two. Here are a few tips from The Simple Dollar that could help you sustain your finances and give you a lot more security.

Give yourself a goal

Setting yourself a goal can be the most challenging and rewarding ways to save money. Identify your purpose, why do you want to save money? What are you working towards? Are you saving up for a goal, a house, a holiday trip or an expensive pair of shoes? Give yourself a number and calculate between your salary and how much you’ll need to divide and set aside in order for you to reach your goal.

Keep track of your spendings

It’s not always easy to remember where all of your money is going. Keeping record of your spendings can help you track your patterns and bad habits in order for you to reduce excess costs and keep you spending on the right things.


Move bank accounts to take advantage of perks and earn more interest

According to The Simple Dollar, “if you’re paying a monthly fee for your checking or savings account, you would benefit from researching some of newest banking offers out there. Not only do some banks offer sign-up bonuses simply for opening an account and setting up direct deposit, but some offer attractive interest rates to new customers as well.

It’s true that interest rates are not what they once were, but it’s still worth a look. Some of the best free checking accounts and best savings accounts can be found online. Here’s a guide on how to make that switch.”

 Sell your goods

If you own any high quality products that are of value and not in use, it’s always a good idea to sell it to someone in need. This rewarding trade can help you earn a few extra dollars whilst also freeing up your home space for more important things. Consider selling your items on online platforms such as gumtree.com.au

Sign up for every free customer rewards program you can.

The Simple Dollar suggests that, “no matter where you live, you’ll find plenty of retailers who are willing to reward you for shopping at their store. Here’s the basic game plan for maximizing these programs: create a Gmail or Yahoo address just for these mailings, collect every card you can, and then check that account for extra coupons whenever you’re ready to shop. You can add to those rewards and discounts by using rewards credit cards to earn points on purchases at a wide range of stores that can be redeemed for cash back or other benefits.”

The 30-day rule.

The most important rules of personal finance is waiting 30 days before deciding to make a purchase. According to The Simple Dollar, “After a month has passed, you’ll find that the urge to buy has passed as well, and you’ll have saved yourself some money simply by waiting. If you’re on the fence about a purchase anyway, waiting a while can give you a better perspective on whether it’s truly worth the money.”

Avoid convenience foods and fast food.

 

As well as eating healthier, avoiding packaged frozen foods, takeaway or fast food can save you a lot of money as fast food items tend to cost a lot more whilst feeding you less.

CBA

News: CBA Delivers $2.4 Billion for First Quarter Profit

Commonwealth Bank of Australia has recorded a $2.4 billion profit in its first quarter, with slight slowdown in income growth compared to the previous year.

CBA said the decline was due to the falling interest rates, stronger currency and higher insurance claims.

In total, CBA’s full-year cash profit to June 30 amounted to $9.45 billion.

Westpac announced on Monday that its full-year profit amounted to $7.82 billion, while National Australia Bank delivered $6.48 billion and ANZ reported 18 per cent decline in profit to $5.9 billion.

Alipay CBA

News: Alipay Enters Australian Market With Commonwealth Bank Partnership

Commonwealth Bank of Australia have signed an agreement with third-party payment platform Alipay to allow Chinese tourists and students to use Alipay in Australia.

The deal will also enable Australians to use Alipay for purchases over AliExpress, a platform for Chinese merchants to reach global consumers.

“We are constantly working on payment solutions that offer flexibility and choice for our customers so the prospect of bringing them closer to a globally leading mobile payments provider, and its 450 million active users, is truly exciting,” said Kelly Bayer Rosmarin, group executive of institutional banking and markets at CBA.

Alipay said the deal is targeted at the 19,000 Chinese tourists who visit Australia every week.

“Australia is a popular destination for Chinese travellers and Chinese students studying overseas,” said Douglas Feagin, senior vice-president at Ant Financial Services and head at Alipay International. “We want Alipay users to enjoy the kind of convenience they are used to at home.”

Alipay’s parent company, Ant Financial was valued at $US75 billion in September.

China is the world’s largest market for mobile payment, with a transaction volume of $US235 billion in 2015.