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Category: Money Saving

Everything is For Sale, Including Debt

Everything is For Sale, Including Debt

As the saying goes, “Everything is for sale, you just have to come up with the right amount to make the purchase” and if you think about it you’ll realise that this is actually true. I’m not just talking about those scenarios where sentiment and desire seem to defy economic logic and trump real market value here. I’m talking about sales which go on without the majority of us even knowing about them. Debt is a very big seller in the world right now, yet it all happens within the darker corners of what’s otherwise plain view as most people choose to turn a blind eye to it going on.

Debt is being sold all day, every day and its trade never stops for single second. For as long as the world is turning, debt is being bought and sold somewhere around the world if not everywhere, you just don’t know it’s going on.

The basic forms of debt are rather straight-forward in their makeup and can take the shape of something like getting financed by the bank to buy your car, for which you’d make weekly or monthly repayments with added interest of course, so something like your mortgage or bond you have on your house which will take a much longer period of up to 20-30 years to pay off.

More sophisticated forms of trading debt are where the real money is made due to one of the most powerful tools of the financial sector; leverage. If a company offering financial services has been given the green light by the Financial Conduct Authority to operate within many different sub-sectors of the financial sector, they in effect hold the true power of leverage and gearing in their hands to generate insane amount of money, mostly through the business of trading debt.

Why do you think an insurance company is seemingly never satisfied with just doing insurance? They’d much rather offer financial services which span the entire insurance sector and given half the chance they’d expand into other financial services such as housing a resident banking branch or even brokerage for services such as offering the public a CFDs and stocks trading platform. In the case of offering a trading platform, licensed brokers are themselves traders and make use of leverage to make huge profits while charging traders a service fee for each trade or perhaps levying a spread fee instead of a fixed per-trade fee.

What’s ultimately at play here is debt because financial services companies can list the credit they hold on their books as assets, assets which can then be repackaged and sold or used as collateral to fund expansion operations or further investments.

Nothing sells like debt and when you earn interest on the money you have in a savings account (although it must be said that this is very little interest you earn) you are indirectly participating in the trading of debt. The money which you keep in the bank is being loaned out to other clients and some of the interest they pay on that loan is filtered down to you, but you’re really just getting scraps because banks have the authority to use leverage to loan out more money than what they physically have in reserve.

Whenever some investors or businesspeople who’ve been active in other spheres of business finally head on over to the financial sector, they often wonder just why they didn’t make the transition earlier. Because of the way in which our financial sector is set up and operates, often making insane amounts of profits is as easy as getting the right finance leads, which are known to be of high quality since financial services have become a very important if not critical part of our everyday lives.

So, the message for you today is that you should perhaps take the time to think about what exactly you’re spending your money on. You can either buy or sell debt and if you do it cleverly, you can enjoy some big financial rewards.

The First Step to Clearing Your Bad Credit Record

The First Step to Clearing Your Bad Credit Record

Given the rate at which consumers are increasingly getting listed with their country’s version of the credit bureau, one would perhaps be justified in truly believing that the rating system in use favours the creditors and is perhaps a little bit biased against the debtors. The regulations for issuing credit appear to be rather lithesome, with creditors often proving to be the instigators of bending those regulations just so that they can add that next debtor to their books.

How many times have you gone through the parameters and minimum requirements of some sort of loan or credit extension you’re trying take advantage of, realised that you actually don’t quite qualify to get the credit you want and yet you take a chance anyway? Upon filing the application, you delight in the fact that against all odds, you got approved for your financing….

A lot of the time (if not all the time), creditors are fully aware of the fact that they are approving and going ahead with the provision of credit to debtors who aren’t good for the repayments and will essentially eventually default on their loans. It’s a practice mostly instituted by the bigger financial institutions such as banks, but the reason behind them doing this is because holding lots of debt on their balance sheets is big business, perhaps even bigger than the actual interest they earn on the loan repayments. Debt can be repackaged and sold on to other creditors or even to debt collectors, but that’s perhaps a topic for another day because of its technical intensity.

What you need to know is that if you haven’t been reckless with your spending as a consumer and you find yourself sitting with an increasingly bad credit record and a growing pool of debt, it probably isn’t your fault that you have so much debt to deal with and that you’re struggling to pay it back.

That’s where you should look as the first step to clearing your bad credit record and getting out of debt and this can be done through simply looking beyond the big lending institutions by way of credit providers. Why do bad credit car financers exist, for example? They exist because they operate in that little pocket of the industry banks resort to as part of their plans to re-structure the loan repayment terms they’ve essentially shoved down clients’ throats by operating at the very edge of the regulatory parameters. If a bank can give you much better interest and repayment rates on a loan you qualify for, there’ll still try to hit you for the most favourable rates they can benefit out of, so chances are you can always go back to your bank and re-negotiate your repayment terms as a means through which to be able to afford paying the debt back.

That won’t repair your credit record as quickly (if at all) as perhaps going to those specialists who do consider lending to consumers with bad credit records on a case-by-case basis though. These bad credit lenders, so to say, will only give you credit if they are confident you can pay them back after assessing your unique financial situation and working out a plan for you to further reduce the debt you currently have.

This shows up as a positive factor with the credit bureau or ratings agency and thus works towards repairing your credit rating.

5 Lesser Known Money Saving Tips for Motorists

5 Lesser Known Money Saving Tips for Motorists

Owning a vehicle in today’s economy can be a major financial drain, forcing motorists to double up as thrifty experts as well as their duties as considerate drivers.

Whichever vehicle you drive, you have the chance to make excellent savings by turning to cost-effective techniques. In this article, I’ll highlight some of the lesser known pieces of advice which may help you make the most of your budget, as well as you save time, and allow you to learn more about how to make the most of your circumstances.

  1. Fuel Saving Advice

No matter how fantastic and expedient modern vehicles become, the reality is you will still have to intermittingly find a petrol station to fill up on fuel. To delay this inevitability, the trick is to use the right techniques to make sure you save on fuel and add more mileage.

There are simple tips such as ensuring your vehicle isn’t overloaded. Superfluous weight means your vehicle isn’t performing as well as it should be and you will be wasting fuel. Additionally, the higher the gear you’re driving in the better the fuel efficiency, so bear this in mind when out on the road.

A few other pragmatic tips will ensure you become fuel efficiency experts. Double check your tyres are at the right pressure (turn to your manufacturer’s booklet for details) for your vehicle model, and be aware anything which drains your vehicle’s battery (charging your smartphone, the radio, using your air conditioning) will lead to more wasted fuel.

You can learn more about this from industry experts such as Shell, who helpfully provided details about 10 Fuel Saving Tips.

  1. Compare Insurance Quotes for the Best Deal

There are many free online tools which will let you compare insurance quotes. This can help you find the right deal for your budget. As insurance is one of the main annual costs for any motorist, it’s important to ensure you’re with the right company. Experts claim by making a comparison 51% of motorists could save up to £256 annually, which is a strong impetus for anyone to head out and have an online check-up.

  1. Try Mobile Tyre Fitting

This highly convenient and time saving service is becoming an increasingly popular option for today’s motorists. Rather than having to find a garage and sit around waiting for your fitting, these services bring the garage straight to your front door.

As a result, mobile tyre fitting offers excellent value for money (as well as a great deal of saved time) as it often comes with a free fitting and in most cases you only have to pay once your vehicle is set up with new compounds. Add in to this other discounts (such as brand membership offers) and a complimentary balancing of your wheels, and this really is the future for all of your tyre changing needs.

  1. Pick the Right Tyres

Up to 20% of fuel consumption on cars due to tyres. Which makes it important to understand what you’re putting on your vehicle. Compounds and tread patterns are becoming increasingly advanced as the world’s leading manufacturers have developed technology which ensures your tyres become environmentally friendly and offer ever improving durability.

When you’re buying a new tyre, take the take to look into which ones offer enhanced durability and fuel efficiency. Longer lasting tyres typically decrease rolling resistance and ensure less fuel wastage. This offers excellent annual savings for motorists.

In addition, swapping to the right seasonal tyre can help you save extra money by having the optimal vehicle performance. For instance, winter tyres fitted during winter months will provide you have the best braking, grip, handling, and fuel efficiency.

Another option is to fit specialist tyres such as run-flats. “Changing a tyre at the roadside can be a thing of the past”, Continental claims, with its compound providing drivers with a quick repair option. You can then drive to your nearest garage at speeds up to 50mph to get a replacement, all with a tread pattern which has been manufactured to ensure fuel efficiency.

  1. Drive Efficiently

Finally, whilst it may be tempting to floor it in certain situations and pretend you’re an F1 driver, the best way to drive road cars, vans, and SUVs is with a smooth driving style. Being ragged and convincing yourself you’re the next Lewis Hamilton isn’t a good way to save you money on your annual budget.

To get from A to B, adopt a smooth driving style which doesn’t involve dramatic accelerating. Change gear steadily at around 2,500rpm and build your speed up gradually – with your tyres maintained at the right pressure, this will help ensure you keep fuel efficiency and your tread patterns in good shape for many financial benefits.

Investing Vs. Trading

Investing Vs. Trading

Due in large part to the booming online trading market, people often get confused about whether what they’re doing via their online platform of choice is in fact trading or investing. The lines become blurred a bit when brokers operating an online trading platform offer both of these financial instruments with which to buy and sell securities.

The lines are blurred further when one takes into account the fact that someone using these financial instruments can indeed be both a trader and an investor at the same time, with a single transaction effectively doubling-up as being a trade and an investment at the same time. Fundamentally however, there is a difference between trading and investing and there is a difference between a trader and an investor.

Investing

It’s perhaps pertinent to start off with investing because trading is essentially a spin-off of investing. An investor is fundamentally someone who takes a long term view on putting their money into something from which they expect or predict some growth – growth which will hopefully result in some financial success in the future. So even if you make use of an online brokerage platform from the point of view of an investor, your outlook is generally a long term one, which means you would buy shares in listed companies (stocks), commodities or some sort of stake in a company or venture with plans to only really cash-in properly once some growth has taken place.

Trading

Trading generally takes more of a short-term outlook in that a trader essentially seeks to take advantage of the immediate movement in the markets. The typical instrument offered to traders online is that of Contracts For Differences (CFDs). CFDs are precisely what is written on the tin – a contract you enter into as a result of your prediction of whether or not one or more share prices you’ve selected to bet on are going to increase in value or decrease. CFDs are precisely why there’s been a recent explosion in online trading platforms, quite simply because the brokerage sites don’t really own anything and they don’t produce anything either. So it’s just a matter of going through the requisite compliance processes to qualify as a broker and then make some insane money charging people commission for each trade they make.

Intraday traders are perhaps the most common types of traders, who are naturally drawn to volatile stocks so that they can take advantage of the constant movements of the values of those stocks.

So Which is Better – Investing or Trading?

In my expert opinion as someone who works in the financial industry, I’d honestly proclaim investing to be a better option, but only if it was a question of either-or. Investing is better in my opinion because if you look at the All Share Index of any stock exchange in the world, generally such a portfolio of shares increases in value over time. Your earnings would naturally be slow in this way, but they’d also generally be steady earnings which can be as good as beating inflation at times.

So even if you seek the thrill of the intraday trader and you have a preference for making (or losing) money quickly, your trading efforts should be complemented with a good portfolio of investments. That way, you can benefit from investor-advantages such as earning dividends on certain stocks you hold, while your trading efforts could play off on your investment portfolio to hedge against what would otherwise be serious, fast losses while you’re chasing your next short-term trade.

Ultimately, mixing things up is the way to go, but I seriously wouldn’t recommend for anyone to put all their eggs in the trader’s nest.

Online Trading – Who Makes the Real Money?

Online Trading – Who Makes the Real Money?

Have you noticed how over the last couple of years or so, there seems to have been a serious spike in the number of online trading platforms? In addition, more airtime on business channels seems to be allocated to shows about trading and investing, particularly trading and investing in the stock markets, whether directly (buying shares) or indirectly (trading derivatives). It’s not just a coincidence and good on you if you have indeed noticed what seems to be a serious drive to get people to invest their money in the Stock Exchange.

The truth is you’re still effectively taking a chance if you invest in the financial markets, whether as an investor who’s buying stocks outright or if you’re a trader seeking to take advantage of the liquidity of the markets (the short-term movement of the value of shares). While a lot of people make a lot of money playing the markets in this way, a whole lot more lose a lot of their money.

It’s perhaps a bit of an overly simplistic way of putting it, but it’s true that for every winner there has to be a loser. In the case of Contracts For Differences (CFDs) which are essentially derivatives, and I suppose in the case of outright shares investing as well, this view tends to be markedly skewed against the majority. For every big winner there are effectively a lot of losers, many of whom only lose a little bit of their money at a time and so don’t really feel the losses in the grander scheme of things.

The biggest winner however is the house and I refer to it as being the “house” because quite frankly, online trading is not unlike gambling. Nobody can ever say with absolute certainty whether or not a particular stock is going to go up or down. The only people who have this type of information are those operating on the inside and they’re not allowed to make use of it to trade as that would equate to insider trading, which is a criminal offence.

But yes, the biggest winner is indeed the trading platform over which everybody is chasing their own personal profits – the broker. It’s as simple as this – for every trade that is executed by each trader, whether buying or selling, the online trading platform (broker) charges a fee, so they are the ones who make the real money.

Imagine a scenario where just a modest total of 2,000 trades are made in just one hour, which is not uncommon. Say the broker charges what appears to be a very low service fee of $2 per trade. That would equate to $4,000 made in just one hour, better yet (for the brokers) if those were derivative trades such as CFDs.

The broker holds on to the value of the real shares they own, while derivatives traders slug it out over whether or not the price of those shares is going up or going down.

I’m in no way trying to discourage anyone from chasing their personal fortune through trading, but perhaps investing in brokerage companies themselves (getting a share of the ownership of an online trading platform) is a better avenue to pursue if you want a little bit more of a predictable manner in which to build up some good earnings. So I’d encourage investing in an actual start-up brokerage over the act of trading itself, although I must add that it is indeed possible to make some good money as a trader or an investor in shares. For many people, trading is just a convenient way of catering to the high risk portion of diversifying their investment portfolios.