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A Crash Course on Bonds

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When first getting into investing, there is a lot that you’re going to need to learn. One thing that many people don’t realize at first is that there are many different types of bonds. Understanding bonds can help you understand your investments better. Get to know some of the bonds available.

1. U.S. Treasury Bonds

3d bonds A Crash Course on Bonds

Image via Flickr by DonkeyHotey

If you’re looking for a safe investment, considering a U.S. Treasury bond. These are considered one of the safest investments available, even during the economic problems that the United States has had over the last few years. With a Treasury bond, you don’t have to worry about the risk to interest rated or default. On the down side, Treasury bonds generally have a much lower yield than many other investment options. Treasury bonds have a varying number of years until they mature, so make sure you keep this in mind when investing.

2. Savings Bonds

Even safer than Treasury bonds, savings bonds are generally the lowest yielding, but most steady bond option. This is one reason why many adults purchase savings bonds for the children in their lives. There is little to no risk of losing money with a savings bond. They are tax-free, as well. There are penalties if a savings bond is cashed in within the first five years. In addition, they can’t be cashed in at all in the first year. So, if you’re looking for something fluid, this isn’t the best option.

3. Asset-Backed Securities

If you’re interested in purchasing individual asset-backed securities, you’re going to have to do some research. These are loans that get packaged and sold. You need to be able to take a look at the loans and evaluate them to ensure that you’re getting a good deal. If you need an investment banker to help you, you can find all of Fisher Investments addresses, and contact the closest branch for more assistance with your investments.

4. Corporate Bonds

Companies need money to fund their business and operations. Because of this, many companies will issue bonds to pay for this. If you’re looking for a bond with a higher yield than government bonds offer, consider a corporate bond. On the downside to this, with a higher yield comes a higher risk. There are several options, including short-term, long-term, low risk, and high risk, as well as everything in between. It simply depends on the company and the bond being issued.

5. Emerging Market Bonds

There are many countries that are still in the developing stages. These are where emerging market bonds come from. Both the nations themselves and the companies within these nations offer bonds to those who are in more developed countries. These are generally more high risk bonds, because developing countries are more likely to have economic swings and other disruptions that can cause problems within the market. On the flip side, emerging market bonds usually offer much higher yields to help balance out the risks involved. This is a great option if you’re interested in the payout, and not too worried about the risk.

6. Callable Bonds

Callable, or redeemable bonds are an option that allow the company who issues the bond to call it back before it matures. This is an interesting option to have in your portfolio, because bonds can be called back for nearly anything. In most cases this happens when interest rates drop. This allows companies to save money on their debt. This is not usually the most beneficial option for those who are investing, because you are going to get a lower yield on the bond.

Deciding on the type of bond you want to invest in can be a frustrating process if you don’t know what you’re doing. Working with an investment firm can help you, as they are able to assess your needs and what type of bond would be best for your portfolio. When discussing this with an investment firm, it’s a good idea to go in with some information on what you’re interested in, so that you can work together to create your portfolio.

For more on this topic, check out our posting on Bond Basics


Costs of College

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Many people blame all of America’s economic problems on the recent recession but there were serious economic issues even before that, particularly when it comes to the cost of an education. The price of a college life has many factors like books, residence, tuition, and many other miscellaneous expenses. All of these contribute to a growing problem this country is facing: the huge amount of student loan debt.

College costs have been rising, especially the cost of tuition, and subsequently the amount of students graduating with exorbitant amounts of student loans is staggering. In 2012, the average student loan debt was around $25,000 and it looks like that number is just going to grow. Of course, the cost of an education is still worth the degree in the long run but it is important to know where we are headed. Take a look at this infographic that was developed by Consolidated Credit. They take a generational approach to the cost of college and the rise of student loan debt. We look all the way back to the 1940s to look at how costs have inflated in order to see where we are headed.

CC infographic Costs of College


Include These Steps In Your Debt Payoff Plan

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pay off debt 300x208 Include These Steps In Your Debt Payoff Plan

Photograph Courtesy Of Ken Teegardin of www.SeniorLiving.Org

Making a plan to pay off your debt can be a difficult endeavor, especially if you do not have a lot of experience with handling finances. A perfect example of this is a college student who is enticed into opening a credit card to pay for their living expenses and charges a significant amount of debt without realizing it. The faster that you deal with the debt, the better off you will be in the long run. When making a plan to pay off your debt, make sure that you include these steps.

Calculate Your Total Debt

Knowing what your total debt load is will make it much easier to create a realistic strategy for paying off your debt. Make a list of all your creditors that you are aiming to pay back with your payoff plan and the amounts that you owe to each of them. Totaling these amounts will give you a rough estimate of how much debt you are actually dealing with, less any future interest that will be charged to the accounts.

Rank Creditors By Highest Interest Rate Charged

The next step is to rank all of your creditors by the amount of interest they are charging you. You will pay less in interest over time if you start by paying off the debt with the highest interest rate first. Taking the time to rank the creditors gives you a roadmap of how to approach paying off your debts.

Make A Payoff Plan

Now, you should make your plan to pay off your creditors. Your plan should include the minimum payments required for each of your accounts plus an additional amount that you will be paying on the account with the highest interest rate. Paying as much as you can afford toward the debt will the highest interest rate will help you pay off your debt as quickly as possible.

Consider Consolidation

If you find that you have a lot of debts that have high interest rates, you may want to consider consolidating your debts into a single loan with a lower interest rate. Consolidation has a number of benefits, including lowering the amount that you are paying in interest, lower minimum payments, and lowering the number of payments that you must make each month. Many banks and credit unions offer loans that can be used to consolidate debts to borrowers that have a good credit score and repayment history.


Did You Remember To Budget For These Annual Expenses?

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thinking 300x300 Did You Remember To Budget For These Annual Expenses?

Photograph Courtesy Of Justin Goring

When making our budgets for the year, we usually remember to include all of the expenses that occur monthly or quarterly but rarely remember to include the expenses that only occur once per year. There are a number of annual expenses that many people are subjected to that can really mess up your budget for that month if you forget to include them. Because these expenses are annual, you already know that they will be coming and you should be prepared for them. Here are some annual expenses that you should be sure to include in your budgeting.

Holiday Gifts

Ever year during the holiday season, billions of dollars are spent on gifts to give to loved ones and each person buying gifts knew that they would be buying gifts for others much earlier in the year. At the beginning of the year, set a specific budget for holiday shopping for a total amount or for an amount to be spent on each person. Throughout the year, set some money to the side to cover the cost of your holiday gifts so that you are not scrambling to find the money in your budget at the last minute.

Vehicle Licensing And Registration

Another expense that many people forget to budget for is the cost of vehicle licensing and registration. To drive a car legally, you must have a valid driver’s license and the car must be registered with the state. These costs can be considerable, especially if you are living on a fixed budget that does not allow for a great deal of additional spending. You know that you will need to spend this money shortly before your birthday each year, so budget accordingly.

Medical And Dental Checkups

For most people, it is recommended that you get a medical and dental checkup at least once per year. This allows serious problems to be spotted early and hopefully corrected easily with a minimum amount of discomfort. Some people are lucky enough to have insurance that covers these wellness visits with a small out of pocket co-pay, but others who do not have this luxury can find that their out of pocket costs for these visits can be pretty expensive. Do not sacrifice your health because you were not prepared for the cost of a checkup. Put money aside each month so it will be available when it is time for your annual checkups.