Jan 15 2015

4 High Risk but High Profit Investment Vehicles

By |January 15th, 2015|General Personal Finance|1 Comment|

5af814e516324d1393bafb1f0d719a10Have you decided that you’d like to start making your move in the world of high risk, high reward investing? In the past, choices were slim when it comes to this type of investing. However, these days there are several exciting options for those looking to move in this direction. More importantly, these days you don’t have to be a Gordon Gekko type Wall Street professional to make a decent amount of money in the industry. Today, we’re going to discuss some of the most popular high risk, high reward investment vehicles, offer pros and cons, and point you in the direction of the industry leader for each investment type. So, let’s get right to it!

CFD Trading

One very common high risk, high reward investment vehicle is called a CFD or Contract for Difference. In essence, CFD traders don’t buy stocks. Instead, they purchase contracts with much more leverage based on underlying assets.

CFD Trading Example

Let’s say a stock is trading for $50 per share. To buy 100 shares, you would have to pay $5,000. With a standard broker, you would have to outlay at least 50% or $2,500. However, with a CFD broker, you need a 5% margin instead of 50%. Therefore, you would only have to $250 to make the trade.

When the CFD is purchased at $250, the trader will immediately show a loss equal to the spread. That’s because the trader must exit the CFD at the bid price. So, if the spread is $0.05, the stock will need to appreciate $0.05 for the CFD to reach a break-even point.

Let’s say for example that the stock bid price appreciated to $51 per share. In this case, the trader would be able to sell the CFD at the higher bid price, profiting $100.

CFD Trading Pros

  • Higher leverage than traditional stock trades.
  • Global market access from one platform.
  • Few rules and regulations that limit profitability.

CFD Trading Cons

  • Paying a spread to enter and exit a trade can get expensive.
  • Having to pay the spread can increase losses and limit profits.
  • Few regulations in the industry means you will need to choose your broker wisely.

Top CFD Broker

TradeKing.com is known as the leader in CFD trading.

Binary Options Trading

Binary option trading is becoming more and more popular over recent years. This trading vehicle asks a simple “yes” or “no” question; will the value of an underlying asset increase over a specified period of time. If the trader answers the question correctly, they stand to earn incredibly high gains. If the trader answers incorrectly, they will lose their capital. That’s why this form of trading is called binary options trading; there are only 2 possible outcomes.

Binary Options Trading Example

Let’s say that stock A is trading at $100 per share. You’ve done your research and strongly believe that the stock will increase in value over a short period of time. So, you purchase a call option that will expire at 1:30pm with a strike price of $102 per share. If the stock expires above the strike price, you’re in the money and you earn the specified dollar amount in gains. Generally, these gains range between 70% and 80% of the trade value. Therefore, profit on this trade would generally range between $70 and $80. Also, keep in mind that if you believe strongly that a stock or other asset will fall in value you should purchase a put option. I like to remember which is which by remembering the terms “Call them up” and “Put that down”.

Binary Options Trading Pros

  • High potential for profit.
  • Fast paced environment makes trading more exciting.
  • Access markets around the world from one platform.
  • One of the simplest forms of trading.

Binary Options Trading Cons

  • High loss potential; so, do your research!
  • Few regulations in the industry; so, choose your broker wisely.

Top Binary Options Broker

Anyoption.com is known as the leader in the binary options industry.

Forex Trading

For those interested in economic climates, industrial and employment reports, and economic research, Forex may be the investment vehicle for you. Forex trading is done by following currencies and making predictions on currency pairs.

Forex Trading Example

Let’s say that you’re working with a broker that gives you 1:20 leverage and you have $5,000 to trade. That means that with your leverage, you can trade up to $100,000. Let’s say you’re interested in the Euro, which paired against the USD has an exchange rate of 1.305. You think the Euro is going to increase in value, so you sell your $100,000 for 76,628 Euros.

Now, let’s say you were right and the Euro increases by 1%.  Because of leverage, you’ve no earned a 20% gain. You decide to sell your Euros for $101,000; resulting in a net profit of $1,000 to you.

Forex Trading Pros

  • High leverage means high potential gains.
  • Because currencies never stop moving, you have the ability to trade around the clock!
  • Forex generally comes with lower fees than other types of investments.

Forex Trading Cons

  • Currency traders are literally trading against the pros, creating a bit of a conflict of interest.
  • Requires an in depth, detailed understanding of how economies work; leaving quite a bit of room for newbies to fail.

Top Forex Broker

Plus500.com is considered to be one of the top Forex brokers around today.

ETF Trading

ETF (Exchange Traded Fund) trading is the process of trading based on indices like the Dow Jones Industrial average or the S&P 500 rather than a particular stock. However, the trades work almost exactly like traditional stock trades. Simply put, with ETFs you get the diversification of an index fund and the flexibility of a stock.

ETF Trading Example

You strongly believe that Index A is going increase. So, you purchase an ETF that’s based on the underlying Index A. After a few days, you realize that your assumptions were correct and the index is on an uptrend. At the end of the trend, you sell the ETF for a great profit.

ETF Trading Pros

  • ETFs give you the ability to invest in the performance of an index without having to purchase index funds.
  • ETFs are incredibly flexible.
  • Diversification is all but automatic.

ETF Trading Cons

  • Investing in ETFs typically requires a broker fee.
  • Because ETFs are relatively new, there are fewer options for traders.

Top ETF Broker

Thinkorswim.com from TDAmeritrade is considered to be among the top ETF brokers.

Final Thoughts

One of the reasons investing is becoming more and more fun is that there are so many new investment vehicles out there today. If you’re looking to try your hand in the world of high risk, high reward trading, you’ve got more options today than ever before!

Jan 9 2015

The Most Expensive Number Plates in UK

By |January 9th, 2015|General Personal Finance|Comments Off|

How much would you pay for a number plate in UK? If you are looking for the really rare numbers, there is a huge possibility that you will need to spend a lot. The truth is that we are faced with so many opportunities at the moment with a lot of customization but if you are looking for license plates like F1, prices go up to thousands of pounds.
Most Expensive Number Plates
Most Expensive Number Plates is an infographic that was produced by Gumtree

Dec 31 2014

Six Things About Bankruptcy Everyone Should Know

By |December 31st, 2014|General Personal Finance|Comments Off|

One of life’s truths is that the future cannot be predicted. We never know what’s coming next, and sometimes a curveball can cause drastic changes in our finances. When that happens, whether we want it or not, bankruptcy may be an option to consider. If you are considering bankruptcy, here are six things you should know before you file.

  1. You Must Pay Fees in a Bankruptcy
    Bankruptcy oftentimes can come at a big cost. More specifically, there are filing fees you must pay in order to have your bankruptcy considered in court. Effective on June 1, 2014, the federal fee for filing chapter 7 bankruptcy is $335. If you choose to hire an attorney to handle your bankruptcy, their fees will be in addition to the federal filing fee.
  2. It Stays on Your Record for Ten Years
    The relief bankruptcy can bring is immediate, but the effects of filing bankruptcy are long lasting. Chapter 7 bankruptcy stays on your credit report for up to ten years. This does not mean you will be unable to obtain credit during that time, but your rates and options will be much more limiting than before you filed bankruptcy.
  3. You Will Appear in Court for Your Bankruptcy
    As part of the bankruptcy process, you will have to go to court for a meeting of creditors. This is a short meeting but you must go. Once you have filed for bankruptcy, you will receive a notice in the mail telling you when the meeting will be (which is usually several weeks in advance so you have time to make arrangements).
  4. Does Not Ruin Your Chances for Credit
    While filing for bankruptcy will affect your ability to obtain credit, the door will not be completely closed. In fact, you may find that you receive more credit offers in the early part of your bankruptcy than you had before you file, mostly from creditors taking advantage of your distress situation. These offers will generally have much higher interest rates and will actually place you further in debt. This is not the help you need.
  5. Bankruptcy is a Life Event
    When you consider filing for bankruptcy, you might not be able to look very far into the future under the weight of the stress you are enduring. It is important to know now that bankruptcy is a major ordeal in someone’s life, one that you will not easily recover from mentally or emotionally. It will impact the way you think about money and credit for many years to come.
  6. Not all Debts are Erased
    Lastly, and perhaps most importantly, bankruptcydoes not automatically discharge all debts. Certain debts, such as student loans, child support and specific taxes, are not able to be discharged in a chapter 7 bankruptcy. It is a good idea to talk with an attorney to find out which of your specific debts will be discharged and to determine if it is worth it for you to file.

While filing for bankruptcy may seem like an easy way out, it’s not. Instead of forfeiting your credit, look for ways you can work towards getting out of debt without having to declare bankruptcy. Nonprofit debt management organizations like CreditGuard are here to help you get out of debt. They negotiate with your creditors on your behalf to consolidate and reduce your debts—making it easier for you to pay them off.

By being prepared and understanding what to expect, you’ll have a better idea of what bankruptcy is and why you should avoid filing.

Dec 22 2014

Why You Should Consider Structured Settlement Loans For Financial Relief

By |December 22nd, 2014|General Personal Finance|Comments Off|

When searching for remedies for financial problems, obtaining a structured settlement loan is often overlooked. With a structured settlement, the person receives a small amounts of money monthly or quarterly for a long period of time, often a decade or more. A structured settlement loan allows the person to obtain a considerable amount of money all at once and repay it over time with the future payments from the structured settlement. Even those with bad credit can qualify since the loan is secured by the future structured settlement payments, not by the borrower’s past repayment history.

There are a number of good reasons to take CIYA structured settlement loans against your settlement. Paying off high interest debt is the most common reason cited for obtaining these loans. Paying college costs, obtaining a down payment for a home, or purchasing investment property are other reasons typically given as the reason for seeking out structured settlement loans. Whatever the reason, if you need a significant amount of money within a short period of time, these loans are one of the easiest ways to get it. Verification that you are due the payments that you are claiming is typically all that is needed to obtain this type of loan.

It is not difficult to get a structured settlement loan if you are already receiving structured settlement payments. The best structured settlement loan companies will have representatives available online and on the phone to answer any questions you may have. These representatives will explain to you how the process works and what information you will need to provide for an accurate quote from their company. Different companies will have different terms, so review any information you receive carefully before determining which company has the best terms for your needs.

Most structured settlement loans are made on a short-term basis, often repaid back from the structured settlement payments within a couple of years of the loan being made. This limits the amount of interest charged on the loan and allows the resumption of full settlement payments to be made to the borrower after the loan has been repaid. Some people believe that this is a more responsible financial move than selling their settlement payments outright for a lump sum of cash and paying significant fees to the company purchasing their future payments.

Dec 17 2014

The Perils of Cut-Rate Insurance

By |December 17th, 2014|General Personal Finance|Comments Off|

A lot of people don’t like paying for car insurance; they see it as a monthly drain on their finances with no real return on their investment – especially since some policies can easily cost thousands of dollars a year. There are some insurance companies that offer substantial discounts on car insurance by offering what are called minimum coverage policies.

As the name suggests, minimum coverage polices offer the absolute minimum coverage that your state will allow you to have and still be legal. These minimums vary by state, with some states having substantially higher minimums than others.

The appeal of these minimum coverage policies is people can sometimes end up paying as little as half the cost of a similar policy from a different provider. The problem with these types of policies is that even at a discount they can cost you.

The Downside to Minimum Coverage Polices

The biggest problem with minimum coverage is that minimum coverage is often not enough. The average accident with injuries costs $126,000 – which includes injuries and property damage. If you have minimum coverage and your state only requires a minimum $3,000 for injuries, $2,500 for property, and a $60,000 per accident, there is no way that your minimum-coverage policy is going to cover the cost of the accident.

Another issue is that these policies tend to have very high deductibles, which could be impossible to meet. In some cases an insurance company will pay out their end of the claim and leave it to you to come up with the deductible. However, if you can’t come up with the money, then you won’t be able to get the repair. If you are in an accident with injuries, it could mean that the insurance company won’t pay out on the injury claim until you meet the deductible first.

Some of these policies also do not have adequate coverage for high-risk drivers. High risk drivers often have special needs, like needing an SR-22 document to be able to drive, and these minimum-coverage companies might not be able to provide that documentation. If they do provide high-risk coverage, chances are the cost is no less than you could find from another vendor, but with less coverage if you actually have an accident. It’s probably better to buy high risk insurance from a specialty vendor than from a discount company.

Keep in mind as well that if the insurance company is offering you such a great discount on coverage, it could be because it is cutting corners in other places, such as their systems, customer service or claims management. This means that you could encounter minor annoyances such as hinky phone systems; or major upsets, such as an incredibly cryptic and confusing claims process.

The other issue is that the company might also do everything it can to avoid paying the claim. It’s not unusual for any insurance company to avoid paying claims, but discount companies could be more likely to do so.

Alternatives to Minimum Coverage Policies

Find out what kind of discounts available from a standard insurance company. While many of these places are not as cheap as the cut-rate providers, you can often find discounts for having a clean driving record, or for bundling services like renters and homeowner’s policies with your car insurance. You might find that you can still save money by going with a standard insurance company, without having to compromise quality.

If you absolutely must go with a minimum coverage provider, make sure to do your homework:

·  Look for consumer reviews as well as ratings to see if the company has a lot of complaints. You should also check with insurance rating companies like A.M Best, and independent consumer sites like Consumer Reports.

·  Find out what other services the company may offer beyond just the minimum coverage. For example, some cut-rate insurers do not offer amenities like roadside assistance or car rental, both of which can come in handy if you have an accident.

·  Set aside some of the money you have saved on the low premiums to pay the higher deductible if you need to file a claim.

Dec 14 2014

Is Money Actually a Good Motivator?

By |December 14th, 2014|Blog|Comments Off|

At work I’m in the process of setting developmental goals for myself for the next year, I’ve started looking into some TED talks about leadership and business effectiveness. Yes, I like this stuff. Yes, that’s a little weird.

I came across a video that really shocked me. It’s called … You can watch the video here. Actually, I highly recommend you do or else the rest of this post isn’t going to make a lot of sense.

The premise of this guy’s argument is that when considering mentally challenging tasks, money is not only a bad motivator; it actually makes people perform worse than no incentive at all.

Obviously this goes against any normal person’s thought process. And no, I don’t consider Marxists “normal people”. I agree wholeheartedly that people are worse at completing the stupid task in this experiment when there is a lot of money at stake, but completing the candle task is much different from completing tasks at your job.

Let’s look at the difference between your job and the candle wax game.

Unless this is the first day of a brand new job for you, you probably have years of experience and/or education that has prepared you to be effective at your job. You’ve almost certainly made mistakes (and hopefully learned from them) and you’ve had some great successes. When you are confronted with a particularly difficult problem, you draw on your immense wealth of experience to guide you to the correct solution.

In the candle wax game, you are placed in a room and asked to complete some brain puzzling task that has no basis in practicality and, unless you’re a member of some weird riddle society, you have no training or experience to draw upon to complete the brain teaser.

This guy presents the candle wax game as proof that financial incentives don’t make people more effective at what they are doing. Heck, prestigious universities have spent lots of money doing studies to prove this very point. The sad thing is, they could have just watched the game-show network and come to the same conclusion.

Have you ever been watching Wheel of Fortune and seen a board that says something like HAPP_ BI_TH_A_ and nobody can figure it out? You’re screaming at the TV “HAPPY BIRTHDAY YOU IDIOT!” but the guy says “I’d like to buy an O” and you just smack your head.

That guy can’t see the answer because he’s sitting on $9,200 and a trip to Costa Rica and it’s freaking him out. He has all this pressure and he fails at a task that he’s not trained for.

Furthermore, nobody in their right mind believes that you can just throw more money at someone to get their brain to work better. If that were the case then Bill Gates would have paid someone enough to come up with a cure for AIDS. Money doesn’t make people smarter. It never has and it never will. It can, however, make someone work harder.

At my old job they gave crappy bonuses. I mean really crappy. They were so bad that I literally never even considered “What might happen to my bonus?” when I was trying to decide whether or not to finish something today or wait for tomorrow. There was essentially no incentive to work harder, so most of the time I didn’t. It made me an unhappy employee because there was no difference in my pay whether I was working like a dog or sleeping like a dog.

At my current job my bonus is a huge part of my pay, and I’m working harder at this job than I ever worked at my last one.

In summary, this guy is going against common sense and saying that financial incentives are actually counter-productive in the business world because it makes people dumber. What he doesn’t realize is his study is limited to a single point in time and deals with a task that the person is not prepared or trained to accomplish.

In the world we all live in, financial incentive doesn’t make anyone smarter, but it can make them work a lot harder. And when you work harder, you get better at your job. You gain the experience and knowledge that will help you solve the next problem.

Luckly for us, financial incentive is now, and will always be, the only way for a company to get incredible results from their employees.