Posts Tagged ‘Should’
Three Reasons Why You Should Invest in Precious Metals
With the national economy still in recovery mode, a lot of investors who learned their lessons the hard way are now trying to knock financial uncertainty by coming back to precious metal investments, a conventional source of stability. Investments in gold bullion, silver bars, coins, and crucial mining metals help ease widespread fears about unsteady markets, the specter of a double-dip recession, and inflationary practices by in-the-red governments.
Investing in precious metals swiftly appears as an effortless, proven, and secure path to monetary security for 3 basic reasons:
1. Play it Close to the Chest with Precious Metals
It’s widely understood – and legitimately feared – that the zealous overprinting practices and reduced interest rates of central banks all over the world will derail global economic output and recovery. Printing far more dollars than a government can safely back forces investors and average citizens to concern themselves with palpable fears about inflation and stagflation, regressive economic states that will drive down the value of a dollar overnight.
The value of precious metals like gold, silver, and mining metals stays stable in the course of beneficial times – and skyrockets throughout the bad. When all the economic indicators are pointing down, gold, silver, as well as other metals point up, precisely simply because these commodities are required across the world for so many factors. The truth that investors can store precious metals like these in a safe or in non-fungible storage having a bank portends nicely for everyone who needs to rely on gold or silver. When the economy rebounds, or you need the funds, you are able to always exchange these precious metals for their monetary value.
2. Precious Metals are a Diverse Bunch
Events like recent uprisings inside the Middle-East trigger sudden spikes within the value of precious metals. Gold is among them. 1 troy ounce of gold, or about 31.10 grams, worth $31.00 in early January, now rates at $1,396.30 as of this article’s writing. Anybody can follow the “yellow brick road” by investing in gold and riding the sudden increases to greater value for their investments.
For more careful investors, silver bars and bullion emerge as precious metals that are simpler to have an understanding of. Smaller markets for silver within the USA and UK translate to increased stability. Moreover, the slow rise up the silver ladder appears to be coming, with Money Morning forecasting that the value for silver can surge to $50 per ounce in 2012, signaling a 150% spike.
3. Emerging Markets Hunger for Precious Metals
Aside from the normal interest in gold and silver, precious metals also incorporate key baseline metals needed for the production of industrial goods in emerging markets, like those in China, India, and Brazil. Investors could be smart to ride bargain opportunities found in silver as well as coal and steel, which lots of markets rate in a number of the same categories as their prettier cousins.
Why? It is no secret that state-funded corporations in China and India are gobbling up precious metals in domestic and foreign markets, importing vast amounts of silver, coal, and steel. These precious metals are used to fire up factories, create advanced instruments for solar panels along with other option energy products. Having a green-tech revolution past the tipping point, precious metals like silver will continue to rise in value and make new capital opportunities for investors abroad.
Confident inside the long-term reliability and new opportunities that these markets represent, any investor can see that there is no time like the present to invest in precious metals – and thus in the future.
How Much Money Should I Invest in The Stock Market?
Many investing books say you must invest a certain portion of your capital in stocks and the rest in bonds. The figures vary, some say 50% in the stock market is too much, others say 20% is better and others believe that anything less than “everything” is a complete waste of time for the investor.
But really, how much should I invest in stocks?
The answer depends on several factors. The first is the investor’s risk tolerance. If you always had money invested in a simple savings account, you will have psychological difficulties in investing all your money in stocks. Likewise, if you’re an entrepreneur which is not used to any certainty in your life, you will probably feel more comfortable with the ups and downs of the stock market.
The recommended approach is that the investor should not invest a portion of his money that causes discomfort in the near future. If desired, you can always increase your investiments later, when you are better prepared.
The second factor is the purpose of investing and age. A teenager will have much more to gain by investing in equities than people older than 80 years. If you are middle age person, it pays to reduce the amount of investments in equities to get bonds, which are way safer.
It makes sense to invest a lot if you’re young and if you’re just a little older. In the case of a young man, if he loses anything, he has his whole life before his eyes, he can still recover everything and more later. But if he put all his money in bonds, he is really wasting his time.
On the other hand, if you’re old and already has the assurance of a secure source of income in bonds, it doesn’t makes sense to invest much more in equities just because you will not need the money anyway. Plus, what if somethin happens (like, hmm, the 2008 crisis) and you lose all your savings in the stock market? That’s not great, is it?
Therefore, as your getting older, you should become a more conservative investor.
Exceptions
Obviously there are exceptions. Most investors are not professionals. However, if you know the market like the palm of your hand, go on and keep investing in stocks. Warren Buffett has already passed the age at which normal people would be advised to stay away from equities but still remains firm and strong in investing. But Buffett knows what he’s doing, he knows how to invest in the stock market.
So this is it. If you’re young, try to invest at least 80% in equities and a 20% maximum in bonds. If you are afraid to invest directly in stocks, invest in an index fund (Buffett’s tip). If you’re middle aged, try to keep a 50/50 ratio. And finally, if you’re close to retirement, there is no reason to risk your savings, invest almost all (90%) in bonds and just relax.
What You Should Know About Your Housing Loan
When there is an increase in the Prime Lending Rate (PLR), the interest rate on your loan will also go up, and your repayment would be higher. However, in most cases, financial institutions would allow you to pay the fixed amount of monthly repayment (EMI) throughout the loan tenure and would make any adjustment caused by the variation in interest rate by increasing or shortening the loan tenure, as the case maybe. Also, do note that the PLR will soon be replaced by the Base Rate (BR) from July 2010 onwards.
Owning a piece of land, a house or a property is a lifetime dream for every individual. Maslow’s law of hierarchy indicates such a dream as well. Taking a home loan nowadays has become much simpler. Each year the budget regulations seem to lean towards the housing sector and construction sector in terms of generosity!
There are many home loan providers in the market to make your dream come true. However, before you opt to take a home loan, you need to consider certain factors related to the property that you are interested in buying and also understand the features offered by a home loan provider.
Choosing Your Financial Institution
When you shop for a home loan its good to research your financial institution well before opting to go with them. Remember that when you take up a housing loan, you will be dealing with the lending institution you choose on a regular basis for a long period of time.
Therefore, you should also consider factors other than just interest rates. Some of these are:
How professional is the financial institution in dealing with customers? Does it offer quality service in terms of efficiency and reliability? What are the available loan packages and which package suits you best? What are the various charges involved?
Assessing your loan repayment capacity
You should ensure that your monthly loan instalment repayment (EMI) should not be more than around 40-50% of your gross monthly household income. If you have savings or fixed deposits, they can be used to support your loan application as financial institutions may take them into account in evaluating your eligibility. Different financial institutions have different criteria in calculating the repayment capacity. In the case of a floating rate loan, you should also note that your loan tenure or (if you so choose) your monthly repayment may increase substantially when interest rates go up.
When there is an increase in the Prime Lending Rate (PLR), the interest rate on your loan will also go up, and your repayment would be higher. However, in most cases, financial institutions would allow you to pay the fixed amount of monthly repayment (EMI) throughout the loan tenure and would make any adjustment caused by the variation in interest rate by increasing or shortening the loan tenure, as the case maybe. Also, do note that the PLR will soon be replaced by the Base Rate (BR) from July 2010 onwards.
Margin of finance
It is assessed on factors such as:
- Type of property
- Location of property
- Age of the borrower
- Income of the borrower
- Generally the margin for the borrower (down payment) will be about 15% of the property as assessed by the bank/ lending institution. For mortgage loans the lending institutions will assess the value for the property based on the Distress Sale Value this is the value of the property in case it is sold on an urgent need basis. This value can be much lower than the market value of the property.
Rights and duties of the borrower and the financial Institution
Both the borrower and the financial institution have certain rights and duties during the course of the loan repayment period. Some of these include:
RIGHTS
- Borrower Right to have access to all information that would affect your borrowing decision Right to be treated professionally, courteously and without prejudice
- Right to be consulted on changes to the terms and conditions of your loan
- Right to have accurate information on a regular basis on your loan account Right to enforce legal action in the event of a breach of contract Financial Institution Right to have full relevant disclosure of information on borrower’s credit standing Right to correct and truthful information on the borrower Right to timely repayment of interest/ installments of the loan Right to enforce legal action in the event of default/breach of contract
DUTIES
- Borrower Duty to read and understand all terms and conditions of the loan
- Duty to observe the terms and conditions of the loan at all times
- Duty to enquire and get clarification on all aspects of the loan to their satisfaction
- Duty to make prompt payment on the fees, charges, interest and installment of the loan Financial Institution
- Duty to discharge borrower’s obligations as described in the loan agreement
- Duty to consult borrowers on any changes made to the terms and condition, fees charged and other relevant information.
- Duty to attend to all queries made by borrower
- Before getting a housing loan take stock of your finances and assess your loan repayment capacity. Then shop for the best offers available. You can also approach a financial counselor for optimum allocation and utilization of your money.