Fixed Rate Savings

Fixed rate savings are an interesting beast. While they do not offer the long-term growth potential of over savings vehicles like mutual funds, stocks, and so on, they do offer a consistent rate of return over a fixed period of time. And after suffering through the stock market problems of 2007, 2008 and part of 2009, fixed rate savings offer something few other investments can — a principal guarantee (see “Risks” below).

The unattractive features of fixed rate savings are actually what allow investors to enjoy the benefits. For those reasons, this investment vehicle plays a vital role in any portfolio as a “cash” or “income” investment, depending on the type of savings you choose.

The benefits to fixed rate savings are that your principal is guaranteed by the bank or other issuer. Additional guarantees can come in the form of government insurance such as that offered by the FDIC in the United States, the FSCS in the UK and the CDIC in Canada (other governments will offer guarantees in their respective countries). With this type of additional insurance, depositors can rest assured that in the event of mass failures, their savings are safe to the maximums prescribed by each insurer.

Fixed Rate Savings

The drawbacks to this vehicle of savings, however, are that they pay poorly compared to similar-risk investments. Therefore, establishing a long-term savings objective based purely on the rates offered by fixed rate vehicles as well as the lack of growth opportunities does not make a fixed rate vehicle very attractive. There is one exception, though, and that is if the investor is able to lock in a rate that exceeds the average future rate of inflation time and again, which is unlikely if not impossible.

Additional drawbacks include the fact that many higher-rate fixed rate vehicles are locked-in, meaning they cannot be cashed in prior to maturity. This is different from bonds which can be traded at market values at any time prior to their maturity date.

Contrary to what many people believe, there are risks to fixed rate savings, even with insurance. The worst-case scenario would involve all global financial institutions failing and the government-backed insurer being unable to raise capital to compensate all depositors who make a claim. While clearly a far-fetched scenario, remember that a lot of investors never believed that an insurer like AGF could fail, yet it came dangerously close to failure in 2008. Additional risks are that the depositor invests more than the maximum prescribed under the insurance policy, but such risks are considered controlled risks in that the depositor has the discretion to limit them.

Using fixed rate savings as part of an overall portfolio/investment strategy makes the most sense in almost every instance. Depending on the investors risk tolerance, long- and short-term investment horizon as well as their overall objective, fixed rate savings are normally a part of the low-risk or risk-free income-generation portion of the portfolio. However, since fixed rate savings traditionally offer lower rates than bonds and for the most part lack liquidity, many investors will choose bonds.

An interesting bond/fixed rate strategy would involve buying bonds until the rates on fixed rate investments increase, then cashing the bonds to invest at the guaranteed rate and guaranteed principal fixed rate investment. The problem with such an approach is that yields and bond prices are inversely related, meaning that as rates increase, the value of the bond decreases. For that reasons, only sophisticated and knowledge investors should rely on such a strategy.

Ultimately, fixed rate savings vehicles make the most sense when the investor is able to lock in at high rates for extended periods of time particularly in periods where inflation is decreasing or expected to decrease.

Compounding interest

Most people don’t think too much about interest rates. They know that they are a number and the know that a lower one is better than a higher one, but they don’t take the time to think about what they really mean, or what the impact of them is on your finances. Our loans and credit cards all have interest rates attached to them and a small difference in the rates can make a huge difference in the cost of the debt over its term.

First, it is probably important to understand what compound interest is exactly. The opposite of compound interest is simple interest. With simple interest if I started with $100 and an interest rate of 10% I would get $10 in interest after one year and an additional $10 for each year after that. Compound interest works differently. I would still get $10 the first year, so I would end the first year with a total of $110. The second year I would get 10% of that $110 or $11, leaving me with $121. The third year I would get 10% of that amount, leaving me with $133.10, and so on. So after three years with simple interest I would have $130, but with compound interest I have $3.10 more. Every loan and credit card is calculated using compound interest.


To begin to understand the power of compounding interest, let’s take a look at two simple examples. Let’s we have a credit card balance of $10,000 at an interest rate of 8% and for some reason we don’t pay it for 5 years (This is, of course, a really bad idea). At the end of 5 years, the new balance would be $14,693. In other words we have built up an additional $4,693 in interest. Now let’s use the same example again, except for a 9% interest rate. This small change in interest rate makes the new balance $15,386, for a difference of $693 over the lower interest rate. That might not seem like much, but a mere 1% difference in interest rate over 5 years added an additional 7% to the original balance. That can really add up.

For a more extreme example, let’s compare 5% to 10% interest using the same example as above. 5% interest over 5 years would leave us with a balance of $12,763. Doubling the interest rate to 10% creates a balance of $16,105. Doubling the interest rate leads to considerably more than a doubling of interest.

By understanding interest rates and considering it when you are shopping for loans or credit cards you can save yourself literally thousands of dollars.

How Can An Accountant Help With your Offshore Investments

Accountants can make all of the difference when you’re trying to change your personal finance strategy, but a lot of new investors still don’t take advantage of them. Why is this? Well, it’s really straightforward — a lot of people feel that accountants are really only for people that have a lot of money. So if they feel that they are more in terms of the beginner, then they’re not going be able to find the courage to get the help that they need. That’s not something that you want to try to deal with on your own. You want to always make sure that you get the professional help that you need and deserve. Anything less than that is just going to cheat your out of the financial security that you deserve.

So let’s move on to the real question: how can an accountant help you with your offshore investments? Personal offshore investment funds are all over the news, but this isn’t something that newcomers to the world of investing should just rush into. Thankfully, there is a way to take advantage of those powerful funds without getting caught up. You can always go with an accountant’s help because they can match the right fund to your overall financial goals.

You might be thinking about retiring someday, or you just want some extra cash every quarter or every month in order to do cool things with your family. Sometimes when you really like your job, you really don’t want to retire early. it’s going to be up to you to sit down with your family and really plan this out.

Don’t be afraid to share as much as you need to with the accountant. they are licensed for a reason — you have to be able to trust them with very sensitive information. There’s nothing wrong with doing this, and it can help you really move on to a brighter financial life.

Personal finance and credit can get tricky, and you may have other tasks on your list than talking with the accountant. but the good part about a professional like an accountant is that they can look at the bigger picture in order to give you the advice that you deserve. Why not chat them up today? You’ll truly be glad that you did, in the long run!

What Does it Really Take to Break Into Day Trading

Are you thinking about stepping into new forms of investing? You’re definitely not alone. Once you learn a lot of the basics, you can get into other forms of investing without too much trouble at all. It’s all about making sure that you can focus on the bigger picture from all sides rather than getting sucked into the details. At the same time, the details definitely still matter and you will do well to remember that. It’s all about making sure that you build a solid portfolio that will last for many years to come.

So, let’s talk about day trading. Even in light of the global recession, day trading is starting to pick up speed. A lot of people feel that day trading allows them to really take faster advantage of positions that are profitable than more traditional “buy and hold” strategies. It’s just a matter of figuring out what’s going to actually appeal to you more than anything else.

Day trading is simply buying and selling financial instruments with a total focus on profit generated from the different in the buy and sell prices respectively. Essentially buying low and selling high, but the concept runs deeper than you think.

Trading positions aren’t held very long — in the span of a day would be the longest, as positions held overnight are considered too risky. And when the financial markets are closed, no positions are kept either — for much of the same reason.

What you will honestly find when it comes to day trading is that it’s not as easy as it appears. The best way to make sure that you make profits in day trading is to really figure out what it honestly takes to break in the first place. Continue reading “What Does it Really Take to Break Into Day Trading”

Could an Online Investing Club Be What You Need

Are you worried about not having enough motivation to really get your investing off to a good start? Then you need to really think about going to an online investing club. The reason is simple: accountability. An online investing club takes away your first excuse that you could think of — lack of interest in your local area. Even if you’re not surrounded by people that are interested in what you want to do, you can find plenty of interest online. Investing is one of those things that you need to be fully committed to. If you find that you’re not as committed as you would like to be, this is the perfect time to make a change. After all, it’s your money. If you aren’t interested in growing it, there’s no one in the world that’s going to care about it more than you will.

Keep in mind that online investing clubs aren’t always sunshine and roses. There are just times where you’re going to need to really make sure that you think about the type of experience that you’re ultimately trying to have. For example, if you want to be a long term investor, then you will need to align yourself with an investing club that focuses on that. Of course, just because you’re long term doesn’t mean that you aren’t going to be picking up stocks here and there. It’s just a matter of really figuring out what you want to do and following through from there.

The best indicator of a good online investing club would have to be activity. You don’t want to go into a club where nobody really wants to talk about anything. If investing is a passionate topic for you, then you want to be surrounded by like minds. There’s just no getting around that point. However, you will find that in the investing world, many people are dreamers and not executors. They’re not taking action — they’re talking about taking action. Those things are very different from each other. You want to ensure that you’re around people that are interested in active trading. Even if you’re only trading on paper and not really taking the plunge, you still want to be able to talk about setting up your portfolio properly.

As an aside, make sure that you’re not waiting too terribly long to invest seriously. You don’t want to find that you’re only getting things done when it’s at the last minute. Rushing isn’t good, but you don’t want to hesitate forever either. The truth is that you’re going to have to take risk in order to get any type of rewards in the world of online investing as a whole. You can’t run in this crowd and hope that you’ll keep all of your money all of the time. There are going to be times where you lose money. There are going to be times where things don’t go your way.

But it’s how you react that truly shows your character as an investor. Never forget that.

There are a few places to find good clubs. You can go to, Yahoo Groups, or even just typing in “online investing clubs” can lead you to a wide listing of groups. If you’re stuck and need help, ask questions first before becoming a full-fledged member. In fact, they should let you have some sort of a trial membership before you have to commit fully. Some of these clubs are application only, while others accept just about anyone that they can find. There are some that are completely free, and others that require you to pay a subscription.

Where you fit depends on how serious you are as an investor. You can believe it that the paid-subscription groups are pretty serious. After all, why would someone want to just throw their money in the pot and get nothing in return?

Overall, good luck with all of it — no matter what you decide!

How to attract referrals

Whatever field your company is in, I think it’s safe to say you are looking to sell your products and/or services to as wide an audience as possible. Although it’s natural to want to concentrate solely on attracting new customers, I believe it’s just as important to focus on attracting referrals from existing customers. Referrals and word of mouth marketing is one of the most cost-effective forms of marketing available to marketers today.

Regardless of the frequency and/or level of spend from existing customers, you need to be proactive in establishing great relationships with your existing customers that not only ensure they want to continue to buy from you in the future, but are also keen to tell their friends and family members about how great your company is.

So, how do you go about doing this? The first step is making certain your company is one that your target audience are inclined to talk about positively. I know it sounds obvious, but if the goods you provide and the level of customer service you offer are less than perfect, why should you expect people to go out of their way and recommend you to others?

Then examine how you can generate long-lasting relationships with customers so they are encouraged to recommend you to others. Ask yourself some key questions:

• Are there complimentary products that you could offer as part of an aftersales service?
• Could you initiate a retention marketing campaign via email or via post (highlighting special offers, exclusive products or new additions to your range?)
• Could you offer a discount on a repeat purchase or some other form of customer loyalty discount or incentive?

One way to stay in contact with your customers is to send a thank you a few days after the sale. You could do this either by email or post; whatever medium you choose it’s important to personalise your message. Address your email or letter to the individual and tailor the content so that it relates to the customer’s area of interest. That area of interest may be similar products and/or services to the customer’s most recent purchase. Some marketers use “basket analysis” to help them determine what products customers may be interested in buying after their initial purchase.

If you implement a customer retention mail strategy, consider enclosing small promotional gifts with your marketing literature. Whether this is a branded printed mug or a pen, these items can reinforce a positive image of your firm. Research by the British Promotional Merchandise Association shows 56 per cent of people have a more positive opinion of a business after being given a promotional product.

Alternatively, you could run a scheme where customers receive something – perhaps being entered into a competition or getting a discount off their next purchase – for referring you to a friend. In doing so, existing clients will feel they are getting something for relatively little effort, while your business not only reaffirms its relationship with a current customer but also gains a new one!

Are referrals an important source of enquiries for your organisation? What steps is your business taking to attract referrals? Leave a comment and let us know!

Don’t Give Up on Investing – It Gets Better!

Investing is a world that a lot of people find themselves fascinated with…even though it usually ends up costing them money in the long run. Now, you might think that it costs them money because they stay in too long, but we disagree. If anything, investing costs them a lot of money because they’re only thinking about the short term. They stay in for a very short amount of time, only to find that it really doesn’t serve them any purpose. It only makes life a lot harder for them in the long run, and that’s definitely not what you want to actually deal with. It’s better to make sure that you have realistic expectations of what to expect from the world of investing.

Forget the shows like “Mad Money” and other investing spots. You have to make sure that you focus on sound investing principles. Looking at smart websites that teach you about the core principles of investing is far better than all of the stock tips in the world. You have to go beyond that in order to get an investor.

What about when you do all of the planning and you’re still having the same problems of loss, then you might need to just step back. Don’t freak out every time you have a loss. Don’t freak out every time that you don’t have things going your way.

The more that you can focus on the bigger picture, the brighter your investing future will be.

Don’t be afraid to invest in training that is for the long run either. You might have to papertrade for a while until you really understand the basics of investing. Far too often people just leap in and think that the profits are going to be automatic. If it sounds that way on your favorite financial news show, that’s because the person in question has been investing for a long time. It’s all about the level of risk that you can live with. Never invest with money that you absolutely need beyond the shadow of a doubt. This means that using your rent money is going to be really dumb. What if you lost it all? You would have a rough time making your bills. No one really wants to go through that agony if they don’t have to!

Remember that you don’t have to have it all covered at once — you can space things out and learn as you go! Good luck!

Alternative Ways to Make Money From Binary Trading

It is great to make money and many of us are looking for new ways to do so. Some people have a go at binary trading to make money or use other investment schemes. This can give a payback to some people, although it is a big risk. If you want to make more money from it, without having to risk your own, then getting involved with an affiliate scheme can help.

Affiliate schemes work by giving a person commission if they recommend something to someone else. This means that if you have a blog or website where you can promote something, then you can use it to try to encourage people to sign up. You will have a special affiliate sign up code so that you will be automatically recognised as the person who has recommended the new customer.

There will be ruled with regards to how much you paid and it will probably be a percentage of what they pay out. Sometimes it can be based on how much they earn. This can add on an additional level of earning for the person that makes the recommendation.

An example of a binary trading affiliate scheme can be seen at 24 option. They have a 24option affiliate network where you can sign up. They will provide you with banners, links and other promotional materials that you can use to promote the site. You can also use newsletters and announcements that they send to you as well.  Many people will already be trading using the website and enjoy doing so. Then they can also bring their experience to the attention of their potential affiliates, so that they can relate to them and realise that there is someone that has success with it.

You will find that once you sign up, you will be able to track how many sign ups you get. You will also see how many click throughs you get on banners and links and how many of those actually lead to someone signing up and activating your account. When they do this, you get some commission. This will allow you to monitor whether your advertising campaign is working well or not. It can be a great way to earn some extra money without having to invest any.

Many of us do not have capital to invest and so this can be a way to build some up and you may decide to spend your earnings on binary trading, to find out more about how it works and to have a go at earning more money. It can be a lot of fun watching your earnings increase and helping others to have fun and potentially make money as well. With no pay out required by you, it can be an ideal way to make some extra cash.

Do Investing Gurus Ever Get It Right – And Should You Care?

If there’s one piece of advice that we would like to pass on to newcomers to the world of investing, it’s simply this: blaze your own trail. Far too often we let the financial news outlets control us from start to finish, pretending as if we have to listen to everything that comes out of their mouths. Of course, it’s in their best interest to pull this off. After all, if they have you scared and cautious, they have you under their control. And that means that you are going to be a lot more susceptible to advertising and marketing designed to take money out of your pockets. Now, we’re not going to say that it’s against the rules to make money off investors. That’s kind of the way the world of investing is set up. However, what you do need to understand here is that it’s all about limiting the amount of fees and services that you’re paying for.

Let’s talk about financial gurus on TV — are they really what you want to listen to when it comes down to it? Is there advice really timely? We disagree in theory, actually. Yes, we think that most investors that have a national presence are good investors for their own personal portfolio. But you really can’t time the market, and the trouble is that the hot stock pick circuit is convinced that you can. Just because stocks are taking a beating now doesn’t mean that you sell off everything and move into bonds. If you can stomach a little more risk than someone else, that shouldn’t be seen as a bad thing. It’s all about how fast you want your money to grow, and how much risk that you can tolerate. If you only have 5 years before retirement, we don’t suggest going through the process of high-yield junk corporate bonds. Even though the word is charged, all it really means is that there is a risk that the company won’t pay back the money — depending on the numbers and profile of the company, this can actually be unlikely to happen. But what if it did happen Are you really willing to risk the money that you’ve put towards this effort.

This is why there are so many calls for a balanced portfolio. Because the last thing that you really want to do is find that you don’t have any balance in your portfolio. If you put all of your eggs into the proverbial basket, you’re not going to be able to actually move forward. This is because when there’s a big market swing, your whole portfolio is going to feel it.

Long term, you need to make sure that you’re choosing diversified funds over the “sure thing” that the financial gurus are touting at the moment. No matter how much time passes, there seems to be a new stock darling, or a new technique that’s designed to put lots of money into your account today — just like the last ten or twenty techniques were supposed to do.

Instead of thinking about gimmicks and fast cash, you might want to fall back on fundamental and technical analysis with value investing. Slow growth. These are things that raise portfolios.