Tag archive: finance

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

Market: Latest Stock Market News – US Election

It has been reported on Monday that international stock markets has risen. With the Dow Jones industrial average increased by 371.32 points, this has suggested positive news for Clinton following the FBI email investigation.

According to an article on CBC, “Investors have been anxious in recent weeks over signs that the presidential race was tightening. Stock markets hate instability, and a Clinton presidency is being interpreted as a continuation of the status quo.”

CBC also reported that “A broader market index, the S&P 500, ended Friday on its longest losing streak since 1980 — nine days in a row — on fears that Republican candidate Donald Trump may ascend to the White House.” There was confidence on Monday as the market with the S&P reaching 46.34 points, to 2,131.52

Phil Blancato, CEO of Ladenburg Thalmann Asset Management has stated that “This is not a rational market. This is a reaction to less uncertainty,” “In those kinds of markets, people are jumping into stocks that they think are cheap. And what are the cheapest right now? Financials and health care.”

For Toronto’s stock market, the S&P/TSX composite index is rising by 143.20 points to just over 14,652.45.

Gold has lost $25.10 US an ounce to hit $1,279.40 US an ounce.

The December contract for light sweet crude dipped by 82 cents, closing at $44.89 US a barrel.

The Canadian dollar rose by 0.17 of a cent to finish at 74.78 cents US.

Finance Trends: Construction Industry

Financing in the construction industry continues to be a challenge for many contractors in the United States, according to Todd A. Feuerman of Construction Global.

He states that “even during the pre-recession period, lending to construction firms presented challenges to most banks.” Feuerman suspects “that this was due to a number of economic factors, including the sensitivity of contractors to economic cycles, revenue fluctuations from year to year, excess competition and the expansion of the construction industry”.

Additionally, Feuerman concludes that “there are other credit underwriting issues that continue to challenge banks in lending to construction firms, including prominent construction company failures, the unpredictable nature of the work, estimates used in the preparation of financial statements, diminished gross profit margins with continued backlog profit erosion, lending against bonded accounts receivable and addressing “quasi liens” on accounts receivable secured with joint check agreements”.