Financial Ratios and Statistics – FahStats

Archive for November, 2010

If you want a risk-free investment, you will be advised to put your money in government bonds. However, does this hold true all over the world? So the bond might come with a printed promise saying that it is backed by the government but how much weight would that hold?The thing is to estimate the risk. In you were to buy government bonds in a country where the political situation was volatile to say the least, then does the ‘risk-free’ really apply? Investing in a high-risk country might mean profits at times for those who do not mind taking the gamble but for an investor, there is really no place he can go to or appeal in case of any default in payments.So let’s take a look at where you should put your money if you want the low-risk investment with returns that are moderate. Let’s look at the bonds issued by the US treasuries. These really give you the lowest risk when it comes to investments – there’s never been a defaulted payment to date and it is doubtful whether it will happen in the future either. It is backed by the fact that it the government that issues this bond which can collect taxes or inflate the currency in order to see that the actual repayment cost gets lowered.You have a wide choice when it comes to these bonds. You have Treasury Bills and you can get them in various maturity periods and interest or coupon rates. They are auctioned on Mondays and $1000 is the minimum purchase price. The ones with the 52-week maturity are sold once every four weeks. The 13 week and the 26 week bills have their interest paid when they mature while the 52 week one has the interest paid half way and at the maturity date.Then you have Treasury Notes which can be 2, 5 or 10 years and these too are sold at a minimum of $1000. The interest for these is paid twice a year.Treasury Bonds are also priced at $1000 but they have a maturity period of 3 years and you can buy them in February, August and November. The interest is paid every six months.How can you calculate the yield? You get this by dividing the interest rate by the price (current). So a $1000 bond paying $46 interest a year is $46/$1000 = 0.046 = 4.6%. The coupon rate is a given but the face value of the bond can change so you could get a different rate each time.If you are not a risk taker and you like the comfort that a risk free investment gives you, look at government bonds – you’ll be glad you did.

It is time for a new start. This article will help people analyze budgeting differently. It can be of serious help to you to use your salary to the fullest and also find what you must spend money on and what you should cut down on.First, let us understand what a budget is. It can simple be defined as a tool that helps you handle your money better by enforcing control over your expenditures. It should be able to allocate money for vacations, emergencies, retirement and education and still make both ends meet for the month.In order to fully experience the power of a good budget and intelligent spending, do the following.1. Get a collection of all your bills for your last three months Also get a list of all your pay-slips.2. Analyze your bills for the last three months and add up the fixed expenses and find the average expenditure for all expenses.3. Compare your earnings per month to your monthly expenditure. Find ways to economize it. Avoid unnecessary expenses.4. With a firm understanding of your family’s income and expenditure, develop and follow a family budget.5. Got to the nearest bank and start a savings account. Keep crediting your monthly savings to this account.6. Keep refining your budget every time you see a need for it. This helps you keep the budget working for you.7. Get a spreadsheet software or a personal budgeting application like Gnumeric or OpenOffice Calc to keep track of your budget. This helps you organize cash flow.The steps show above are basic to developing and putting any family budget into use. It gives you a hassle-free and easy to follow monthly budget. You can change certain parts to make it more tailor-made for your family and its financial background and monthly needs. Be sure however that the main goal – building up savings for a stable and bright future – is not lost amidst customization. With this as your focus, you can set up an effective budget.

Getting out of debt can be a long, drawn out process. If you spent years wrestling with financial problems, the solution will not come to you overnight. It can take months, even years to unravel debt difficulties but it can be done. You have some options to help you get started; let’s take a look at four of them:

Credit Counseling. Credit counseling companies are vying for your business. This can be a good option as you shop around to find the best plan out there, but bad as you learn that many companies will charge exorbitant fees or do work for you that you can do yourself. Some government agencies and nonprofit firms provide credit counseling too. For little or no money you may be able to find a professional who can help you navigate through your debt dilemma.

Debt Consolidation Loan. Replace your high interest credit cards with one, low interest rate credit card. You could also see if a lending institution will give you a debt consolidation loan. However, you may have to pay for an application fee, whereas with a credit card you would not.

Home Refinancing. Even with rising interest rates, refinancing your mortgage may make sense and allow for you to save hundreds of dollars per month on mortgage payments. With the monies saved with a new, lower mortgage payment you could use your savings to pay off your other debt.

Cash Out. Alternately to home refinancing, you may have enough equity in your home to cash out and pay off your debt. Importantly, although credit card debt is not tax deductible, a home equity loan is. Ultimately, you can reduce your debt as well as reduce your tax obligation by cashing out.

You have some viable solutions to help you reduce your debt. Learn all you can about each option and select the plan that is right for you.