My Business Educations Articles: 2009

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June 28, 2009

Student Debt: Some loans help to repay themselves

post by dimas pratama

There might be some relief for recent graduates' struggling to pay off student debt. The interest payable on student loans has been reduced to 0% for some students and for others it has even gone negative to -0.4%. As a result some of these debts are actually reducing in value without any repayments being made.

Students who took out student loans before September 1998 are subject to rules that link the interest paid on student loans to the retail price index (RPI) rates. The economy is currently going through a period of deflation, and the RPI during the last period on which student loans are assessed was -0.4%, hence the negative interest rates.

Students who took out student loans after September 1998, and there are about 2.5 million of them, are not so lucky. Their loans were issued under different rules and the interest charged to them is only partially linked to the RPI. It is also subject to discretionary measures determined by the secretary of state. On this occasion the secretary of state determined that a negative interest rate would put too much pressure on the public purse and so decreed that the interest rate would be fixed at 0% for the next year.

Students must repay their loans at a rate of 9% of the amount by which their gross income exceeds £15,000.

If student loans were all the young graduates needed to worry about then this would be all good news, however student loans only accounts for a proportion of student indebtedness. On average students leave university with total debts of around £18,000. Much of this is in the form of bank overdrafts and credit card debts.

Graduating from university and starting one's first job is a difficult time for anyone, and doing this with the additional burden of financial worries can be quite concerning. Often past students will find that banks, initially generous with their offerings of student overdrafts at low interest rates, are now calling in these overdrafts or are increasing interest payments on them to punishingly high levels.

May 9, 2009

It’s 2009. Do You Know Where Your Money Is?

post by dimas pratama

Money Management 2009
The news seems to go from bad to worse. For months now, interspersed with the generally bad state of the economy and stock market, we also learn that even the rich and their accountants aren’t above being taken in scams that were probably too good to be true if looked at closely enough. While there may be a slight element of schadenfreude in this, it should equally be a wake-up call that in the current economy, it is more important than ever to make sure our assets are appropriately invested and protected to the best of our capabilities.

Anyone who still has the luxury of being able to maintain any kind of retirement account should not only contribute the maximum amount possible, but also keep a careful eye on where and how the money is invested -- especially if one’s employer is kicking in any money at all to a 401K.

If possible, have a trusted accountant review the ratio and investigate what recourse exists if you are uncomfortable with the mix. Often there is no immediate way to change the situation, but when that time does come, it is best to be prepared with what you want to do. It is equally wise in the world of money management never to keep all your eggs in one basket. While 401Ks have traditionally been the best source for retirement funds because they take the money out of our paychecks automatically and before taxes, thus saving us time and effort; it is best to make sure to have a backup plan -- especially in this precarious economy. More staid investments such as IRAs, CDS and even savings accounts do not bring the high returns a successful stock portfolio can, but they also have considerably better security for the money that is invested.

There is also a new phenomenon building in the market-- high interest savings accounts. These accounts usually require a substantial minimum deposit, with comparable penalties for closure. Different companies will have different requirements, but these are also worth looking into as a way of maintaining your current finances and planning for the future.

The main point is to be alert. The days of assuming our money will take care of itself are gone. It is important for us to carefully manage our finances, to monitor our credit reports, avoid identity theft, and ideally have enough in savings, CDs or IRAs to cover our retirement as well as any unexpected calamities.

April 28, 2009

How To Refinance Your Credit Card Dues

post by dimas pratama

Plastic money has changed the way we make transactions today. From the department store to the gas station we can make all our payments through our credit cards. Only a few years back there were just a handful of businesses that accepted payments through credit cards. Today everyone seems to be willing. And there are reasons behind such a credit boom. Businesses have realized that people tend to make more purchases on credit than they do when they pay by cash. And this would be because when they are paying in cash they actually feel what they are spending. Paying through credit card is just about signing on a piece of paper and one often loses the sense of how much his credit has added up to.

Interests that you pay on purchases made through credit cards is quite steep and they can be as high as 18%. In certain cases it can be even more. With such high interest rates you can get into the cycle of paying high interests and late payment fees. And if this continues for long you will soon land in a debt trap. So it becomes imperative that you refinance your debt at a lower rate.

So how do you refinance your credit card debts? There are several ways in which you can do that. You can take a personal loan and pay off your credit card debt with that money. Since personal loan has a much lower rate of interest it will be easier for you to pay off that loan. And not only do you save on interest rates. There are quite a few fees that you need to pay regularly for your credit card. You get rid of that need also. The interest rates on personal loans do vary and the variation largely depends on the individual's personal credit history. But no matter what the variation is, it is still much lower than what you will have to pay for a credit card.

Another way you can refinance your credit card dues is to take a home equity loan. Again the interest rates are much lower compared to the rates of a credit card. In fact with this type of loan, rates are lesser than even personal loan interest rates. At such low rates you can make a lot of savings by refinancing the credit card dues.

Secured credit cards are another very popular breed of credit cards. Secured credit cards, as their name suggests, are secured. Well, they are secured for the credit card supplier, really. Secured credit cards require you to open an account with the credit card supplier and maintain some cash balance in that account. This cash balance acts as a security for the supplier of secured credit card. Your credit limit is dependent on the amount you hold in the account that you have started with the supplier of secured credit card. This is generally between 50 to 100% of your account balance. So in that sense, secured credit cards are not really credit cards (since they don't offer you any credit really). For this reason, the secured credit cards are sometimes also referred as debit cards.

April 25, 2009

13 Reasons Why Reverse Mortgages Just May Be The Perfect Marketing Niche

post by dimas pratama

For most of us, our mortgage pipelines are in dire need of some good solid loan business. If you fall in this category, it may be time to evaluate the business opportunities that await you in the Reverse Mortgage marketplace.

If you've been paying attention at all, you probably know that the projected potential of the Reverse Mortgage market is absolutely staggering. As you probably know...The Department of Housing and Urban Development (HUD) refers to a Reverse Mortgage as a HECM, which stands for Home Equity Conversion Mortgage.

When you do your review and evaluation of this growing niche, be sure to take into account these thirteen (13) facts and how they can impact your mortgage future:

1. It is estimated that between 9,500 to 12,000 people a day turn 62 years of age and if they are home owners, eligible for a Reverse Mortgage.

2. Seniors that are 62 years of age and older (our definition of a senior for this discussion), control more than three quarters of our nation's wealth.

3. They are living longer and continue to be more active than any generation before them. They, like many of us...continue to have goals, aspirations, desires and even problems...that they would love to solve.

4. They have equity in their homes but don,t have a clue how to convert their equity (non-liquid asset) into spendable and useable cash (a liquid asset).

5. Originations of Reverse Mortgages have increased 109% for the past few years. In fact, each year for the past 5 years the number of loans has doubled each year.

6. FHA endorsed 10,026 reverse mortgages in June alone, bringing the year-to-date total to 83,871. By comparison, FHA insured 8,925 loans in June 2007 totaling 80,425.

7. Its estimated that there are now 75 million prospects that would benefit from this type of program and that number continues to grow every day.

8. Less than one quarter of all Mortgage Companies currently offer the Reverse Mortgage product. Now is the time to market Reverse Mortgages while competition is minimal.

9. Recognizing our current credit crisis and the problems we have funding our normal forward based mortgages...credit and credit scoring models are not used with the Reverse Mortgage product. The benefits received are based on age and equity.

10. The Reverse Mortgage product is a Federal Housing Authority (FHA) insured non-recourse loan and subject to FHA loan limits.

11. Recent surveys of Reverse Mortgage holders indicate more than a 95% satisfaction rate of the product.

12. There have been drastic improvements since the first Reverse Mortgage was written in 1989 and, the number of Lenders has increased.

13. Effective January 1st, 2009, the HECM Purchase Program is now operational, allowing Seniors to purchase a primary resident.

On the surface you may feel that a Reverse Mortgage could be the easiest type of loan you could ever originate. After all...there is no Credit Qualification, no Income Verification, and best of all...your commission is generally based on the value of the home...not the loan amount.

But please remember...a marketing niche is only as good as the dedication, knowledge, expertise, and professionalism you are willing to bring to bear on the marketplace.

Yes...working with Seniors can and will prove to be extremely profitable. Plus...You will also get personal satisfaction and gratification as a result of your efforts.

If your current organization or situation does not allow you to originate Reverse Mortgages, you need to either be the catalyst to change that...or, find a home that does allow you to market to Seniors.

You can become very successful by dedicating yourself to Reverse Mortgages and the Senior market. If you prepare yourself and your marketing program well, you can get ready to explode your Mortgage Business.

March 21, 2009

What if your bank fails?

post by dimas pratama

Your accounts in any given bank are likely covered for up to $250,000, so you needn't worry about losing everything. But there's still plenty to do to keep your money safe.
Bailout or no bailout, your money -- as long as you have $250,000 or less in insured accounts at any one bank -- is safe.

Yanking your money out does nothing other than feed the insecurity.

Consider the case of the now-defunct IndyMac Bank, whose customers sweltered in long lines outside branches last summer as word spread that regulators had shut down the once highflying institution. The scene -- folks fanning themselves in the July heat, some even bringing along beach chairs for the wait -- made great images for the media.

But the whole waiting-in-line thing was supremely pointless.

The vast majority of IndyMac depositors were fully insured and didn't lose a dime. Customers could still use ATMs, debit cards and checks to access their money over that weekend as the Federal Deposit Insurance Corp. sorted out the failed bank's business. By Monday, customers could resume all other transactions, including transferring their accounts to another bank if they wanted.

The fact is, we're out of practice when it comes to failing banks. Nearly two decades have passed since the savings and loan crisis took out more than 1,000 financial institutions at a cost to taxpayers of $125 billion.

Unfortunately, we're getting a refresher course:

* A staggering 26 banks failed in 2008 and six more have failed through January of 2009. The list includes Washington Mutual, by far the largest institution ever to fail.

* The FDIC's list of "problem" institutions jumped to 171 at the end of September 2008 (the latest total was released Nov. 25), compared with 117 at the end of June. The agency doesn't release the names of banks it worries about, fearing such disclosure will contribute to bank runs, but said assets held by the troubled banks swelled from $78 billion to $116 billion.

* Bank analysts predict dozens and perhaps hundreds more failures are to come, driven by bad mortgage loans, falling home prices, the credit crunch and a flagging economy.

Here's what you need to know about the safety of your bank accounts:

Don't expect to call it. It's virtually impossible to tell in advance which institutions will fail. Some can limp along for years and then recover; some can plunge from seeming strength into chaos virtually overnight.

You can (and should) consult ratings services such as Bankrate.com's Safe and Sound system or TheStreet.com ratings so that you have some idea of your institution's relative strength, said longtime banking analyst Bert Ely of Ely & Co. But you should understand that these ratings are largely based on the banks' own reports of their financial condition, known as "call reports." Fraud and other problems can be hidden for months or even years.

"I've been reading call reports for 25 years, and every once in a while I still get surprised," Ely said. "The rating services are not bad, but they're not foolproof."

February 28, 2009

Risks, Benefits and Procedures of No-Equity Loans

post by dimas pratama

Home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. But, there could be occasions when the home does not have any equity, especially if home values have decreased considerably or it has a second mortgage. In such cases it is often difficult to get a loan. Still, there are some ways to get a loan on the home, popularly known as no-equity loans provided you are able to meet certain terms and conditions.

The terms and conditions are mainly associated with your credit score and history depending on the requirement and policy of each lender. The lenders will want to see your credit report. So you need to check everything is in order before applying as you may get declined and this will affect your credit score even more. It will also help to determine the loan amount you can get, the lending schedule and the repayment schedule.

Some lenders require that you spend a certain amount of time living in that home prior to granting the loan. This period of time is not fixed and depends on your credit score and on the lender; some of them do not require it at all. But normally two months residing in the property is the minimum period of time required.

Additionally, you will have to pay significantly higher interest on these types of no-equity loans. In many cases, the interest can be up to 6% higher than a conventional equity loan.. Moreover, the closing costs and other fees will be higher. The amount you will have to pay depends on the policy of each lender, your credit history, income, financial position and so on.

If you get a Home Equity Loan without any equity in your house, you will have to pay private mortgage insurance. The amount varies, depending on your lender, your homes value and other circumstances. Also, because of the risky nature of these types of loans, you may have to do without any tax deduction on the amount.

However, if you try to borrow after you have built up some equity, you can expect to get lower interest rates and other financial concessions. You further reduce the costs by searching around for the best loan rate before signing any loan contract. Many financial companies are now offering no-equity loans, so it is fairly easy to lender both online and offline.

Compare closing costs is as important as rates, since this can be a hidden expense. By looking at the APR, which calculates both closing costs and interest, you can find who has the cheapest loan overall. The duration of the loan also impact the rates. It is advisable to opt for a shorter term period, if possible, because the interest rates will be much less than longer term loans.

Be careful of unscrupulous lenders in the no-equity loan market because they can manipulate your situation to their advantage. If a homeowner defaults on the mortgage, these lenders will quickly foreclose on the property. Additionally, if the amount owed is more than the value of the home, the homeowners are required to pay the difference.

Hence, it is very important that before engaging with a lender, you should be aware of the benefits and the risks as well as the procedures of taking the loan. Research enough information about the practice so that you can have a clear idea on what you are about to go through. If such a loan is your last resort, you must consult with your licensed expert before taking the plunge.

February 27, 2009

Where The Money Comes From for Mortgage loans

post by dimas pratama

In the "olden" days, when someone wanted a mortgage loan they walked downtown to the neighborhood bank or savings and loan. If the bank had extra funds laying around and considered you a good credit risk, they would lend you the money for mortgage loans from their own funds. It doesn't generally work like that anymore. Most of the money for mortgage loans for home mortgage loans comes from three major institutions:

Fannie Mae (FNMA: Federal National Mortgage Association)
Freddie Mac (FHLMC: Federal Home Mortgage loan Mortgage Corporation)
Ginnie Mae (GNMA: Government National Mortgage Association).

This is how it works now:
You talk to practically any lender and apply for a mortgage loan. They do all the processing and verifications and finally, you own the house and now you have a home mortgage loan and you make mortgage payments. You might be making payments to the company who originated your mortgage loan, or your mortgage loan might have been transferred to another institution.

The company you make your payments to very rarely owns your mortgage loan. They are the servicer of your mortgage. They are called the servicer because they are simply servicing your mortgage loan for the institution that does own it. You see, what happens behind the scenes is that your mortgage loan got packaged into a pool with a lot of other mortgage loans and sold off to one of the three institutions listed above. The servicer of your mortgage loan gets a monthly fee from the investor for processing payments and taking care of your mortgage loan. This fee is usually only 3/8ths of a percent or so, but the amount adds up. There are companies that service over billions of dollars of home mortgage loans. Three-eighths of a percent on a billion dollars is a tidy income.

In fact, mortgage servicing is where lenders make the real money for mortgage loans. The entire system of originating mortgages, including wholesale lenders, mortgage brokers and mortgage bankers is designed so that servicers get mortgage loans into their portfolio--hopefully at a break even level--but often at a loss. Mortgage servicing is where they make their profit. Once your mortgage loan has been packaged into a pool and sold to Fannie Mae, Freddie Mac, or Ginnie Mae, the lender gets additional funds so they can make more mortgage loans (to service in their portfolio) and sell to those institutions, so they can get more money for mortgage loans, and so on....

This is the cycle that allows institutions to lend you money for mortgage loans.
Remember the old song about shoveling coal all day long and just ending up another day older and deeper in debt. Not even being able to die because I "owe my soul to the company store". Today people have an opportunity to get out from under and they aren't taking it. About a year ago, lower mortgage rates allowed me to reduce my mortgage from 25 years remaining to 15 years remaining with the same monthly payment. Today I am looking at refinancing again. I will be able to reduce it to 10 years.

A 30-year mortgage at 5% mortgage rate will end up costing you almost twice the amount you borrow, over the life of the loan. While a 10 year mortgage at 5% will only cost you about 30% more than the amount borrowed. So in addition to eliminating the aggravation of a mortgage starting 20 years earlier you end up saving roughly 2/3 of the price of your house in additional payments! Don't increase the amount you borrowed unless you absolutely have to.

In most cases, when a mortgage loan officer locks in a mortgage rate, all borrowers provided documentation must be given to the lender within a week. This includes pay stubs; w-2 forms or other proof of employment and salary; bank account numbers, your latest bank statement, and your bank branch address; all loan and credit card account numbers, and the names and addresses of your creditors; and evidence such as canceled checks of your mortgage or rental payments.

Locks are available for varying lengths of time, from as brief as 10 days to as long as 120 days, with small increments in the mortgage rates from the shortest to the longest period. The briefest lock period is only used with mortgage loans that have already been approved. Usually such a loan can be handled within 10 days. Locks of 30 or 45 days are typically used when your mortgage loan officer has most of the information he or she needs and he or she has already begun processing your loan. Usually a competent loan office can complete the processing transaction in 30 days.

Locks longer than 30 or 45 days are usually used when there are external factors that may delay the mortgage loan closing. These may involve the need to sell an existing home before the new loan can close on the purchase of another home. On the other hand, they may include a delay in the completion of a new home that is under construction. Since long locks begin to involve greater costs in rates or points, the longer the lock that is contemplated, one should take a hard look at the market, at whether mortgage rates are remaining rather steady or are going up or down. If the market is declining, you may decide not to ask for a lock-in.

Everyone needs to play their own game, make their own decisions. You need to decide if mortgage rates are changing fast enough to warrant a lock-in mortgage loan rate or not. If they are, then decide for how long a period you need to lock a rate.

Hopefully, with well-considered decisions, your results will be rewarding!!!

February 18, 2009

All You Need to Know About Instant Payday Loans

post by dimas pratama

What do you do if you are a salaried individual looking for a little cash to tide over the sticky financial situation just when the month has progressed a bit? Not to fret! Instant payday loans are just the schemes you need. They offer the timely monetary help since they can be applied and approved of online almost instantaneously. They are also highly advantageous for people with adverse credit history due to late payments or payment defaults, arrears, bankruptcies and county court judgments. The most attractive feature of the instant payday loans is that if approved the lenders deposit the loan amount in your checking account definitely within a period of 24 hours of receiving the application.

The application form for the instant payday loans requires certain details pertaining to the loan amount and the repayment period. The loan amount can be returned once the applicant receives the paycheck at the end of the month. Instant payday loans fall in the category of unsecured loans since the loans are approved without any collateral in the form of property or fixed asset. Because there is no need for any evaluation the lenders approve of such loans right away.

Since the credit status does not matter individuals with adverse credit can apply for the loan anytime from anyplace. The primary requirements for the instant payday loans is that the borrower needs to be 18 years of age and should be earning a stable income as salary for some years. The customer also needs to have a checking account in his name. The amount sanctioned by way of the loan depends on the monthly income of the applicant. Because it is an unsecured, very short term loan the instant payday loans often charge very high rates of interest. Hence such types of loans should be resorted to only if there is no other possibility of financial assistance. Normally people avail such loans for a period of two to four weeks or till the forthcoming paycheck. In case the loan repayment duration needs to be extended the borrower has to pay the interest.

The traditional method of applying for the loan consisted of visiting the loan counter in the company or establishing contact with the concerned personnel. To check your credit worthiness there was endless mailing or faxing of documents and records. These would be examined further and finally the loan would be approved. The entire process could take anywhere between two weeks to a month. However with the improved technology it is now possible to apply online for instant payday loans any time of the day during the year.

Before opting for an instant payday loan it is a good practice to compare the deals provided by several companies. Due to the fierce competition among the different companies there is a good chance of discovering an instant payday loan with a nominal interest. Examine the annual percentage interest charged and seek one with the lowest interest rate. This will save valuable cash. It is always better to opt for the loan from the residing state since then the company abides by the state laws. Later on if the need arises it is easier to sort out a discrepancy in the loan process.

February 13, 2009

Use Business Credit Cards To Grow Your Business

post by dimas pratama

Business credit cards are a convenience for those who have money. However, they are not an antidote for those who don't. Business credit cards are beneficial as well as blight to every businessman. All major credit cards issuers will be more than happy to supply you with business credit cards. The credit cards come in all shapes, sizes, and flavors - meaning interest rates, features, benefits, reward programs, and the like. Business credit cards will help your business grow; there is no doubt about it. The difficulty is in finding the one that suits both you and your company, provides the maximum amount of benefit to your company, and will help grow your business the most.

The first reason of having business credit cards is they help your company to establish the credit it will need to grow in the future. By using business credit cards to make small purchases for equipment and other office and business supplies, you will discover that it is much easier to keep track of purchases when you receive your monthly credit card statement

Another benefit of having business credit cards is you will free your staff from having to carry cash, travelers' checks and using their personal credit cards for business purposes. Business credit cards can also help you reduce your paperwork and time spent on reconciling accounts. Moreover, unlike some business checks, you won't be charged any transaction fees.

But as with all things financial, you have to be careful. You should not rely on it to actually run your business. You should only use your business credit cards to make small purchases and for backup or emergency purposes. Just as with personal credit cards, if you use these business credit cards in a reckless or careless manner, your business, along with its prospects for success, is likely to suffer. And just like you should do with your personal credit cards, you should make it a point to pay your credit balances when due.

Any business can apply for business credit cards, though if you have just started, it may be difficult to find credit cards. Your business has a credit history, just as you have a personal credit history. Credit cards companies look at your business credit history the same way, and with little credit history, it can sometimes be difficult to locate credit cards companies willing to approve your application.

If you are willing to pay slightly higher interest rates, it is more likely that some credit cards companies will be ready to take a chance on your business. If you search online for business credit cards, you will find a list of companies that are offering business credit cards. After searching through each, you can determine which company best suits the needs of your business, and then you can apply for a credit card or credit cards from that company.

Also this is extremely important for all small business owners to be careful to separate business expenses from personal and leisure expense, and having business credit cards will certainly help do that. As your accountant has no doubt told you, perhaps many times, you have to keep separate accounts so that there is no confusion between your private expenditures and those of our business, otherwise the IRS is likely to get very testy, and we all know what that can entail.

When shopping for business credit cards, you must be always sure to keep an eye out for anything that is going to save your company money. This includes low interest rates, even though most business credit cards come with a rate that consumers would drool over. Make sure, when searching for a business credit card, that you find one with the best rewards program for you. There are thousands of different types of rewards programs, and you can find one that will benefit your small business with free products or discounts on the products you purchase most. Also look for credit cards that don't have any fees associated with them, and credit cards that have cash back bonuses and /or purchase discounts associated with them.

So, why waste time, opt for business credit cards now.

February 11, 2009

Personal Finance

post by dimas pratama

Personal FinanceMost of personal finance is actually planning for your future. Depending on your age and your need you goals in your personal finance can be very different. When you are younger your personal finance goals may involve paying for a big wedding, buying your first home, or starting a family. As you grow your needs grow. You may want to finance your own business or go on a once in a lifetime dream vacation. As you get older you will focus more on retirement and living the lifestyle you are accustomed to during your golden years.

Being able to meet you personal finance goals takes a great deal of money management right now. Personal finance is always a careful balance of budgeting your money so your needs are met now all while putting aside money to use in the future. If you don't know much about personal finance, or want to live a much more extravagant lifestyle then you do currently, you may need to enlist the help of a financial planner.

Many people mistakenly believe that only people who already have a lot of money need a financial planner. This is not true. Many average people are able to meet their personal finance goals with the help of a trained professional. Financial planning is so common and so important that banks and credit unions usually keep a financial planner on staff for their customers. At most banks, this is a free resource for all bank customers. In fact, many banks these days require customers to consult with a financial planner before they will consider then for home loans if they are first time buyers.

A financial planner will educate you about budgeting and saving, help guide your investments, help guide you through the complicated and often confusing tax laws, and help you plan for the distribution of your accumulated wealth after passing on. Financial planners do all this with your specific personal finance goals in mind, drawing of detailed plans to help you reach them, while considering your resources and already existing financial situation. Since personal finance encompasses all of the ways you earn, spend, and save money a financial planner can help you see the bigger picture of how you financial picture looks over time.

In the United States, financial planners are a licensed professional who has passed an investment advisor exam. Your personal finances can be greatly strengthened by the experience and knowledge your financial planner brings to your investments. If you despair of ever living the lifestyle you dream of, a financial planner may be just what you need for your personal finances.

February 2, 2009

At the Gate of Recession

post by dimas pratama

High yield spreads remain stubbornly high despite dramatic interventions from UK and US central banks. Banks are hording cash due to mistrust and fear over who will make the next big write down. Nationwide, the UK's largest building society, put up the rates on some mortgages despite there being a reasonable probability of a rate cut on the 10th of April.
So after the Easter recovery, it looks as though it's business as usual for the credit crunch. Oil and metals were in demand again as traders reverted back to the buy commodities, sell the dollar tactic that has worked so well over the last 12 months. Consequently, the Dollar sold off heavily against the Euro, as speculation mounted that the Fed is not yet done with cutting rates. Cable was not as lucky, mainly due to speculations that the BOE will be cutting rates at their next meeting.
UK financial companies will be listening to BOE governor King's speech today, for any clues of further direct intervention in the mortgage securities market. They will certainly need it is as credit markets start to freeze over again. We haven't seen volatility in equities like this for half a decade, and the bad news is that were still some way off the frantic action we saw at the height of the dot com bubble. There could be some more explosive action this coming week, with some top tier economic announcements due.

Tuesday brings a raft of manufacturing data, with UK manufacturing PMI in the morning, and US ISM manufacturing index in the afternoon. Midday on Wednesday will be a turbulent time for European traders, with the release of US ADP Non-farm Employment Change, and Fed Chairman Ben Bernanke speaking. Friday tops the bill with the release of Non-farm payroll change and US employment rates.

January 25, 2009

Investment Bank

post by dimas pratama

What to do when a savings account just isn’t enough for your spare cash!

Investment banks don’t do current accounts- they make your savings work harder (usually you need £10,000 or so to start). When choosing an investment bank, ask about their past performance for clients, what breadth of investments they operate and specialise in, and what sort of personal service they can offer you.

An investment bank is usually a smaller, specialist company than your traditional high street bank, although they do investment banking too. Your high street bank however is primarily geared to day-to-day banking; cheques going in and out, paying those bills, and offering credit and insurance. An investment bank doesn’t lend anything- it’s geared up for one specific purpose: to take your spare money, and turn it into more money.

As such, investment accounts don’t offer easy access to your cash, or a cashcard- the whole point is to leave the money for a long time and let it work for you. Often you won’t even get a chequebook, and your money is only accessible after asking in writing. An investment bank often adds offshore services (specifically tax avoidance) and private banking to the suite of products, and often the terms are interchangeable.

Be aware though that the job of an investment bank is to advise you on what to do. Expect a level of personal service. Don’t confuse this with investment trusts- which are just one of the many investments open to you. The bank is not a product in itself; it will take your money and invest it, as wisely as possible, into usually a multitude of different investment vehicles. However, you need to know that it is very, very rare that you get any compensation if the market goes down and you lose money. Compensation is almost exclusively confined to cases where clear negligence of illegal activity has occurred.

Today, with the markets low and flat, opinion is divided- some say a recovery is on the way and we should invest; others say it’s time for the safe bet of putting your money into bonds. A good investment bank will advise you on precisely such issues.

January 24, 2009

Short Term Savings - Ideas For For Short Term Savings

post by dimas pratama

For short-term savings:

Savings account - This is very often the simplest and most commonly used scheme that people invest in. While the returns are famously low, accessing the money is quick and easy.

Money market funds - A special kind of mutual fund these funds invest in very short-term bonds. They certainly offer better returns than do the conventional savings account but much less than what are called certificates of deposit.

Certificate of deposit (CD) - A specialized deposit that you are allowed to make either at a bank or at any other financial institution. Though the interest rate is typically the same as of other short-term bonds the interest is paid regularly till the certificate of deposit matures. When it does so, the original amount is repaid along with the accumulated interest payments.

The most attractive investing avenue for many is the stock market. Compared to other long-term investment tools, stocks have historically given wonderful returns on the money invested.

For long-term savings:

Bonds - Known as fixed-income securities, these are available in various forms. Issued either by the government or various corporations, they give a fixed amount of return every year.

Stocks - By far the most attractive and the most volatile of options, stocks actually allow individuals to own small parts of big enterprises. A single share of stock in reality represents a certain, proportional share of ownership for that individual in the enterprise. Though the value of the share you own rises and falls in accordance with how the value of the company changes, historically stocks have offered great returns on investment.

Mutual funds - This is a wonderful way for investors to pool their money to put in various investment schemes and at the same time distribute the risks with no one individual taking any disproportional risk. The advantage of mutual funds is that you do not have to manage your money; the fund manager who is usually a top-notch finance professional will handle your money for you.

How To Use You Know Who in Business

post by dimas pratama

" Who you know "has long been an axiom. The truth is that people like doing business with people they know. And you know people through networking. Take advantage of who you know with these steps .

list of all those in your life, now or in the past. This is your network, and each of these people have a network. Everyone is connected to everyone by a few degrees .

maintain connections with people. Sending Christmas cards to former classmates or call a friend for her birthday . Let people know they are important enough to be on your mind. Regular contacts will ensure that you're never far from their minds, whether .

Learn while doing internships with business contacts at the same time. Internships are a great resume builders. An additional benefit: you will become a familiar face. Many jobs are not displayed, but urged people from the employer already knows .

meet new people. Join business groups, trade associations or chambers of commerce. Volontaire. Talk to the person sitting next to you during a lunch. You never know when engaging in friendly conversation will lead to something more .

monitoring with people you meet in an informal and formal. A personal note is a memorable gesture followed. After a business meeting or an interview, take a moment to thank the other person for his time .

offers assistance to others. Think about what you can do to people you know . They will remember that you helped them and want to help in return .

Ask people you know for advice or referral to someone they know. A connection made by a friend of a friend is much more effective than cold calling.

January 21, 2009

Banking Profitability

post by dimas pratama

In the new era of banking profitability management, financial institutions face many challenges: increasing overheads, online lending, compliance regulations, competitive mortgage brokers. To meet these challenges, banks are consistently placing more emphasis on managing their profitability—specifically, on a totally integrated process of profitability management. With the recognition that profitability is the major force that drives the entire organization, banks are according top priority to a company-wide profitability management process based on planning and control. The top financial institutions worldwide are developing profitability management systems that feature the creation of quantitative objectives, the careful monitoring of progress against these goals, tighter expense control, and more aggressive pricing and collection procedures. But all these initiatives don't happen in a vacuum—they need to be based on solid, reliable business intelligence. And the most successful financial institutions globally rely on Cognos for the business intelligence that provides the fundamental bedrock for their profitability management process.

How to make your banker be your partner?

post by dimas pratama

Most businesses have a need for a line of credit or other financing with a bank. Especially when business is slow or the company is in some way struggling, relations with your banker can become strained. When the banker is worried, he may start asking hard questions. Here are some ideas on how to deal with this situation and on how to make your banker a partner all the time, not just when things are going well.

The key to excellent relations with your banker is having excellent communications. To have him on your side, he needs to understand what you are doing and to be confident of what to expect in the future. You must reach the point in your dealings with him that you tell him what is happening before it happens. The better able you are to project, the more confidence he will have.

It should be self evident that the banker's main concern is being repaid. The objective here is to inspire genuine, earned confidence, not to pull the wool over the eyes of an unsuspecting lender. Be informed, do what is right, and communicate. Since your banker expects you to know your business much better than he does, communicate on an ongoing basis the following elements of your business.

1. What happened during the period?

2. What is going to happen in the next reporting period?

3. What are the main issues facing the business and what you are doing about them?

The assumption here is that you have an ongoing relationship with your banker that you want to improve by building his confidence in you. When appropriate communication is in place you will face fewer questions, in fact you will be the one posing as well as answering most of the questions.

The first thing you have to do is to report to him on time. Do not make him wait, or remind you. In the event cannot meet the dead line tell him before you are late and tell him when you will deliver your report.

Starting with your next submission write a one- page situation assessment describing what he will be see in your financial statements. Briefly, tell him what is going on that causes the numbers to be what they are. Tell him what you are doing and what you genuinely expect to see in your next report. You might even consider calculating some of the ratios for him that he uses to monitor your company. (If you do not know what these are, ask him). If you have a problem that you do not know how to handle, seek qualified help and tell him you are doing so. He may even suggest a trusted resource.

If there are problems evident in your statement be up front about what you are doing. Do not minimize the significance of items that you do not yet have under control.

This should serve as the basis for your discussion of the period.

Do the same thing next reporting period except now you add information relative to how good, or poor your projections were. If you were close, good, if you were not, you have to discuss why you were off and what you are doing to get better. You might think this is a chance to look bad. Maybe so, but if you cannot project for your banker, how good are the projections you are using for yourself? If you are not making projections, it is difficult to understand how it is that you think you are in control of your business.

Your banker will be pleased to be your partner, once you have exhibited that you are in fact in control of your business and that you know what is going on. Remember it is hard to say 'I told you so," unless you told him so.

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