How to Invest in Bond Funds or Bonds, Why You Should
When You Purchase a Bond or Bond Funds; What Happens
Investing in bond funds or bonds are two different intities. When you purchase a bond, you are loaning your money to a corporation or to the government.
In exchange for loaning your money, you will receive the promise of regular interest payments. The bond will also be given a maturity date.
When the bond matures, you will be given your principal investment back. This will include several years’ worth of interest on that principal.
You can use a bond to live off the interest (although, in such a case, you would need to have invested quite a bit of money).
Alternatively, you could reinvest the interest, or use the bond for the purpose of balancing out a stock portfolio. This would work, because bonds are generally income investments, and stocks are generally growth investments.
Individual Bonds or Bond Funds as Income Investments
Income investments give you interest, and growth (or equity-stock) investments give you capital gains investment returns, if you have chosen your investments wisely. Therefore, usually when stock prices are up, bond prices are down, and vice versa.
This is one reason stock investors add bonds or bond funds to their portfolio. As the stocks go down the bonds go up and can balance out the portfolio’s bottom line.
Many people think that because bonds pay interest, they are 100% safe, because you can never lose your principal investment. This is not true!
The price of a bond (which is separate from the paid interest of a bond) can fluctuate. You can lose your principal if the price of your bond were to fluctuate to nothing (zero).
"There is an Important Difference Between Stocks and Bonds" -Lois
This is where bond ratings come in: there are high-yield bonds, and there are high-quality bonds. You must know the difference between the two, before you start to place your money into bonds.
Bond Ratings – Some Are Called “Junk”
The higher the interest rate of a bond, the lower that bond is rated— this is known as a high yield bond. The lower a bond is rated, the higher the interest will be that is paid on that bond.
This is why some financial advisors recommend that you buy short-term bonds, so that your bond can “mature” before its price decreases.
The highest-yielding bonds are usually the lowest-rated, high-yield bonds are called “junk bonds”. These are rated “C” by ratings services.
On the other hand, the lower the interest rate of a bond, the higher that bond is rated—this is known as a high-quality bond. High-quality bonds, which usually do not have high yields, are generally rated “A” or above by investment rating services, such as “Moodys”. There are several bond
rating services.
RATING DEFINITION’S S&P MOODY’S
——————————————-
Highest quality and grade. Prime. Maximum safety. AAA Aaa
Bonds which are judged to be of the best quality. They carry the smallest degree of investment risk. The obligor’s capacity to meet its financial commitment on the obligations is extremely strong.
————————————————————————————————-
High quality. High grade. AA Aa
Bonds which are judged to be of high quality by all standards and only differ in small degree to the highest graded bonds. The obligor’s capacity
to meet its financial commitment on the obligations is very strong.
————————————————————————————————-
Upper medium quality and grade. A A
Bonds which possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. They are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. However, the obligor’s capacity to meet its financial commitment on the obligations
is strong.
————————————————————————————————
If you are an individual investor who is purchasing a bond, it is usually
best to stick with a bond that has a rating of “A” or better. (see the “Summary,” at the end of this article).
BONDS DIFFER, BASED MOSTLY UPON WHO ISSUES THEM:
- Government-issued bonds are called Treasury Bonds.
- Corporation-issued bonds are called Corporate Bonds.
- State- or Local-issued bonds are called Municipal Bonds, or “Muni’s,” for short; this type of bond is generally exempt from all state and
local taxes.
Individual Bonds Versus Bond Funds
Purchasing an individual bond can be an overly complex endeavor, and generally requires a large sum of money at hand. To fund even a single bond, you will often need at least $10,000 (but sometimes less).
Institutions, such as pension plans and insurance companies, will often purchase bonds. But they also have teams of people who can thoroughly analyze which bonds to buy, along with when it is best to buy—and sell—them.
Some Investors Use Bond Funds to Balance Their Portfolio -Lois
Individuals don’t have this kind of investigative power, and it would require an individual with a lot of individual bonds. Therefore, you need a lot of money—for your individual “bond portfolio” to be considered diversified.
An alternative would be to invest in bond funds, in Treasury Bonds or Muni’s. You can invest in bond funds, which is significantly different from an individual bond. The obvious difference is that an individual bond is just what its name implies—i.e., one bond—while a bond fund is a collection of individual bonds. Before you invest in bond funds, start a series of simple ways to save money first.
Another big difference is that, while an individual bond will mature, a bond fund never matures. (Remember, you can cash-in on your bond when it matures and get your principal investment back).
If you invest in bond funds, it is best to look for one whose individual bonds have average, short-term maturities. As investors get older the tendency to invest in bonds more than stocks, because the fluctuation in prices tends to be lower. Disclosure: I do invest in bond funds, as well as other investments.
SUMMARY
- There are high-yield bonds and high-quality bonds.
- High-yield bonds pay higher interest rates but are not very stable; the highest yielding bonds are known as “junk bonds.”
- High-quality bonds pay lower interest rates but are usually more stable than high-yield bonds.
- Bond prices fluctuate: a low-quality, high-yield junk bond’s price could even fluctuate to zero; this would cause you to lose your principal, should you have invested in such a bond.
- The highest-quality bonds are rated “Aaa” and “AAA,” by Moody’s and Standard and Poor’s rating services, respectively; and the lowest-quality bonds are rated “C” (junk), by the same two services
- To decrease your chances of landing a bond with a price that fluctuates too low, it is best to buy short-term bonds.
- There is big difference between individual bonds and bond funds; one important difference is that, while individual bonds mature, bond funds never mature.
Lois Center-Shabazz | Course Delta Agency
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Money Strategy
You Can Create a Successful Money Strategy
If you create a successful money strategy, you can start wealth building. But, first you have to know what wealth building is and is not. Wealth building is not just making a great income or accumulating money or things.
Talk to all the movie stars, athletes, singers and those who have inherited millions only to find themselves living in poverty somewhere down the line. Why? For most of them they thought wealth-building was single faceted and existed only as a million dollar income.
Dream Finances
Build Your Dream Finances Now
I have talked about wealth building in another article. Now I will tell you about Dream Finances. I prefer to use the term Dream Finances, since more of you understand that term. The issue is Dream Finances versus Nightmare Finances.
Dream Finances is defined by me as having the finances that allow you to sleep like a baby at night. You are living below your means, and all your financial systems are in order. Bills are easily paid, savings overflow, and investments are growing.
Dream Finances Will Allow You to Sleep Like a Baby at Night.
Understanding Money
Understanding Money is Harder Than You Think
If you are going to have enough money to live off, save and invest. You first must understand money and how it works. It is not difficult to understand money, but it does take time and attention to learn the process. You need to do a lot of reading, research, take courses, and develop an understanding of all the nuances of money.
How Does Money Work?
If you do not have much money, you may need to ask yourself, “how does money work? “How do I prioritize money issues?” It sounds so simple, just make money, and spend money the right way. But spending money the right way has proven elusive to many intelligent people.
There are those who make a lot and end up with nothing. There are those who start with little, make a lot, then end with billions. What is the difference? The latter have figured out, “how money works” by understanding money and all it entangles.
7 Habits of Wealthy Women
The 7 habits of wealthy women are not what most think. The stereotype most think is that the habits of wealthy women are that of excess and waste. But, according to my experience seeing wealthy women navigate life, they do not spend most of their life in excessive spending and waste. I see wealthy women in the media working hard, as politicians, owning their own media companies, as talk show host and some working in a multi-national corporation, they have a large stake in.
Those women do not spend their time walking the aisle of expensive department stores or playing bridge or having a useless tea all day-that is the stereotype. Below I have attempted to explain some of the better habits of wealth women.
These are some of the common habits of wealthy women.
1.Wealthy Women value education
They value education and they get educated, either formal or informal. That does not mean they went to Harvard or Yale, that is not necessary. Many went to cost effective, low cost schools with no or low balance student loans. With low debt there is low stress. With the low stress they can concentrate on advancing their career.
Some go to private schools, but others to a good public institution. Some of them were taught a skill by taking inexpensive classes over time. An example learning the in’s and outs of finance to protect their money and assets.
Another example is, reaching the top level of real estate as a broker and managing director or becoming a master in the tech world. It takes career concentration, constant learning and mentorship, and mostly hard work.
2. They research everything they do.
A wise old man once told me;
“Believe nothing you hear, and only half of what you see, research everything”.
There is so much false evidence being passed on as real, that the anti-wealth building process is what I call “chasing rainbows”.
That is, do not believe mostly what a stranger tells you, professional or not. Then you get involved with it with the product or company until you find out you have overspent and believed in a false product. Some people go by the advertising copy, some go by the fake status of the person pushing bad products, and some only plain ole believe anything.
A case in point is women who get involved with either scam phone calls or dating websites where a person pretends to be something he is not. The next thing they know after 2 or 3 years they have sent the fake person their entire life savings.
Download: 7 Mistakes of New and Old Investors
A smart woman who becomes wealthy would not talk to the stranger in the first place. So, the camming could not take place. She has already learned that there is a system in place for strangers to rob other strangers over the phone.
The best way to avoid this is to avoid others in the first place. Don’t even think there is something over the rainbow that is waiting to make you happy or rich. It does not exist. If the stranger were happy or rich, he would not be on the phone all day.
3. They save and invest like their life depends on it
They understand the power of saving money and having money when they need to buy important items. That is, not everything is charged, if it is, it is paid for the same month.
Then, they go onto learn investing. Investing is the key, I can vouch for that myself, I have had several years successful investing. I first learned how to understand stocks and bonds, then I went on to focus on mutual funds.
Since there a wide variety of low cost, low risk mutual funds – it is easy to find great high value investments in mutual funds. Even if they hire investment advisors, they first learn how investments work before they trust a stranger.
Contact Lois For Your Investing Discovery Session
4. They do not engage in predatory loan practices at the beginning or end of wealth building
They understand how to leverage with borrowed money the right way. They do not engage in predatory loans or lending. They usually use loans as a short-term vehicle to address an immediate need. Like borrowing money for a home until an investment tops out, or they save enough from their employment, business, or an inheritance comes through.
5. They are not dependent on others for their livelihood
Women who are wealth builders do not do it on the backs of Dad’s or husbands. If they get money from their Dad’s or husbands it is a plus, not their main source. They work hard at a job or business and accumulate money by saving and investing on their own.
6. Whether they make their money during their lifetime or inherit it, they spend it very carefully
Wealthy women are frugal women for the most part. They work hard for their money and spend it wisely. No, they do not take first class flights unless they are doing it with frequent flyer miles. They prefer to save by going business class.
They do not buy in season clothes; they prefer to buy discounted high value clothes. They do not like to waste time, energy, or money on purchasing things that are not extremely useful.
7. They do not boast about the money they have
The money they have accumulated through saving, investing, and working hard is their business. They understand the dangers of letting strangers know what they have. Even telling family members can be dangerous. People who have a lot of money are frequently the target of professional scammers.
A professional scammer looks normal, they talk like they are in a profession, they have business cards, brochures, fake articles about their fake business. For naive people this sometimes works, for wealthy women, they do not allow others to come to them, they seek out their own prospects and verify everything about before getting involved. They usually do a swallow and deep background check on a person who works with a legitimate company.
Summation
In summation the habits of wealthy women suggest they are uber careful. They are not susceptible to scams and scammers. They work hard, even after they make a lot of money, and they are frugal and careful with their money. Wealthy women make sure they know investments and savings, so they can either; invest their own money or monitor an investment advisor and the investments he or she suggest. The habits of wealthy are more positive than not.
A Primer for Avoiding Financial Waste and Living on a Tight Budget
The Talk with Your Family About Avoiding Financial Waste
If you have a family, the first thing you need to do is to get them to understand how avoiding financial waste helps a tight budget. Then, discuss what it means to live on a super-tight budget. Tell them they may not get many of the things they want, but they can get some.
A super tight budget is something that does not mean misery, it means you must be careful. This is a part of life, not bad, not good — just necessary to keep the budget moving in the right direction. As a matter of fact, you can tell them, because cost of living is high, everyone, in every income bracket lives on a super tight budget.
The Talk with Yourself if You Are Single And Budgeting on a Tight Budget
Stop waiting for prince charming. He does not exist. Sure, you have the chance of meeting a nice guy. But you will be better served in preparing yourself to take care of yourself first. If you happen to find a nice person you have a lot in common with, then you will be prepared for the relationship. Until then create your own super tight budget for success.
Budgeting when you are single, will make it easier to budget when you are married. A tight budget is king and always will be for a low budget. If you develop good habits now, you have a better chance of identifying a partner who does the same, before a permanent relationship.
No one thinks they will get divorced or separated after marriage, but many do. The number one reason divorce lawyers’ site as the reason they give is financial incompatibility.
That information was there at the beginning but either, they did not get to know each other long enough or well enough to see it. Figure out how you can live on a tight budget before a serious relationship and do not get involved unless your partner does.
Trim the Fat from Your Spending Budget
Start today, trimming the fat from your budget. You are an intelligent person. There are many places where you can trim fat from your budget. It requires that you be open and honest with yourself. Take a deep dive into your spending habits and find where you can trim the fat from your budget without starving or not having enough gas or train fare to get to work.
Look in your closet and identify clothes or shoes you have not worn for months. Look in your cupboards and identify things you have not used for years. These are all things you could have done without, or you can sell off to make money. It will also help you to identify how to trim the fat from your budget by not overspending in the future.
Not All Good Things Are Good for You
There are many things that seem good for you, but if you cannot afford them, they may not be. A case in point; a great car, a comfortable dress, a new apartment – if they are not comfortably affordable – they are not good for you. Analyze everything you think you may need and may make your life better. The goods may make you feel better, but you must have the money.
Remember, when you analyze things you need include all cost. For instance, car buying may include 1. Down payment, 2. Monthly payment 3. Gas cost, 4. Monthly, Quarterly and Yearly maintenance, 5. Insurance, 6. Parking. Where many people falter is when they leave out one of these costs when the affordability analysis is done. Because of these omissions, you can end up with a product you cannot afford. You can research mostly anything on google and ask advice from family, friends, or professionals you know.
Understanding Finances Is What Makes It All Work
Understanding finances is the key and the easier it will be to improve your finances. Because engage yourself into understanding finances you can live within your means no matter what your income. The less you make the more extreme you will have to get. I call it guerrilla budgeting. I am not saying that high income people do not have financial problems, they do.
In fact, some multi-millionaires file bankruptcy because they are not careful, live far beyond their means, and do not engage in understanding finances through study.
While other multi-millionaire’s feel they must budget everything they buy and do to stay within a comfortable spending range. Understanding finances by constantly reading, studying, and monitoring their money is the key to their success. No one has an unlimited budget for spending money.
Believe half of what you see and none of what you hear, verify
Lois Center-Shabazz
You Can Change the Way You Think About Money
Old habits die hard. Becoming efficient in living within your means with a tight budget and avoiding financial waste is not easy. But you must change the way you think about money if you are having financial difficulties.
If you have a habit of money mismanagement and financial waste it is even harder. But, with that said, there is a lot of help, a mentor can change the way you think about money. It starts with buying the car you can afford, then buying the home or condo you can afford.
And then of course understanding comprehensive financial management is the major key to change the way you think about money. There are many aspects to managing money and avoiding financial waste, even when your budget is tight. When you analyze your current financial situation, you will find that there are many ways to save money by elimination of waste also. Avoiding financial waste is a major key to living on a tight budget with success.
Do not Take Your Cues from Advertising Propaganda
One of the ways we get confused about buying habits is that we take our cues from the wrong places. This is where many over spenders make their mistake. They feel they must have everything that is advertised. Advertisers sell a “feeling”, telling you this is how you will feel if you buy this product. Of course, the feeling is always, so-called, “good”.
Do not be confused, you will not feel good if you cannot afford the advertised product. In fact, you will probably feel bad. Not all advertised products are bad, many in fact are good. The problem is the amount of information you get in a 30 second ad is not enough.
Do your research if you like a product you see in an ad. Find out if the product has quality, is within your budget, and does what it says. Most of all, ask yourself if you absolutely need and can afford the product.
Before You Buy Ask Yourself; Do I need this? Do I want this? Can I afford this? And will it last?
Lois Center-Shabazz
Finally, Put it Into Action with Help from an Expert
Get help before you need it, and your finances will be in the proper order. Everyone needs help when it comes to changing behaviors and identifying best practices for spending, saving, and budgeting, investing and wealth building.
Do not feel that you are different. The most successful budgeting folks got help before becoming successful. You can get help too, that is where I come in, contact me now and we can talk about how best you will be served. If you are anxious to get started, you can start here.
Old Habits Die Hard, Change Requires a Little Work
Lois Center-Shabazz
Buy Quality Products So Your Products Last
Do not get quality confused with cost. You do not have to spend a lot of money on products or services to get quality. But, if you do not want to replace your product or service often, you must buy quality. The more you replace products the more money you spend in the long run.
This is where products that appear inexpensive cost you more money than a good product. Your affordability index goes down over time due to wasted money. Purchasing the right way is another key to avoiding financial waste, living on a super tight budget, and understanding finances. You must change the way you think about money if you are going to financially successful.
Small Business Startup Tips
You can obtain a small business by taking it over from a family member or purchasing an existing business, or by creating a first time startup business.
But, in order to be successful, you must have some beginning small business startup tips.
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The first time startup business is one you startup completely from scratch, no clients, no office space, no employees, no funding. But, you have enough education and experience in the field that makes you feel as though you could pull off a successful business venture in the next 3-5 years.
It takes at least that much time for a small business to grow to a decent amount of profitability. I have compiled a list of small business tips for you to get started.
With a brand new business, you are starting up everything for the first time in order for the business to get up and running. The totally new business is by far the most rewarding, but also the most risky of business ventures.
Women and Cars Go Together, Know How to Buy Right >
The failure rate of new start up business is very high, because most people don’t know the 500 small business startup tips you should know before starting.
They go into business with a hope and a prayer instead of; 1) Knowledge of the field, 2) Knowledge of running a business, including, city, state, and federal regulations, 3) Extensive experience working in the field 4)Business accounting principles 5) Plenty of money to last before you are profitable 6) Have the ability to deal only with facts
If you are diligent and take things slowly it could work out. But you must be patient, and willing to work concentrated long hours to get started.
Also included in a new startup venture are these small business startup tips:
Obtaining A Mentor
1. Talk to many, many people who are already in the field to get the big picture. Ask them to be completely honest when they answer your questions. Tell them you need to know all of the good and bad about the business. If you don’t know anyone in the field you may not be ready.
Get the Experience First
2. Preferably, you should have worked in the field for a few years to see if it is a viable business. Your experience in your chosen field should be deep and through, no guessing games. The amount of time and money that goes into a small business is too demanding to be a guess game. If you fail the recovery could take years, if not decades.
Research is Essential
3. Do research, lots of research about the field. Find out if regulatory agencies are getting a lot of complaints about the type of business you are considering. There is research everywhere now. You can do small business research at the small business website or sba.gov. Go to your trade association or professional website.
Know Quality Financing
4. Be careful about financing, if you can’t get a bank loan for the business that may be a hint that you are high risk, and may have a high rate of failure. There are many predatory places of financing.
Most of these offer high-interest loans or balloon payment loans. It is best to wait until you raise your credit score, save substantial down payment, and have a high grasp of business techniques.
Venture Capital Funding
5. Consider venture capital funding for the business. This is very difficult, but possible. You should have a mentor who can guide you through the process. There is a complicated web of business plans and contacts within the industry that you need to access.
Non-Profit Venture
6. Consider starting out as a non-profit venture and getting a grant to run your business. Be careful, you could be jailed if you can’t account for every single penny of the money within your business. Running a non-profit also includes first getting a 5013C. Hiring a grant writer to write grants for your non-profit business is a good idea. Writing a grant takes skill and experience.
Get All of the Right Business Ideas You Need to Succeed >
The Right Accountant
7. You must have a close relationship with a good CPA (Accountant), and a good bank, and a good business attorney. Your knowledge of small business accounting should be through, so you can choose a competant accountant. The wrong or missing accounting could damage your business for life.
Understand Leases
8. You must understand the different types of business leases there are, and that you could loose all of your personal property (home etc.), if you default on a business lease. Research the types of leases, they are: 1) Net, 2) Net, Net, 3) Net, Net, Net.
Many people sign Net-Net-Net leases with a 5 or 10 year commitment without knowing what it means. Business leases is an area that causes many small businesses to fail, understanding a lease is complicated.
Obtain a good real estate attorney to advise you on the different types of leases and negotiate one you can afford as a new business. You may consider starting with a month-to-month lease if you are using your own money, instead of bank financing, and you don’t have to do leasehold improvements.
Your Bank Loan Tied to Your Lease
If you have a 5 or 10 year loan, or if you expensive leasehold improvements and you are on a month to month rental. You could be asked to leave any time. The best way to start a small business is from home if that is
possible. Running a business from home also posses many risk.
There are also leases on business equipment. These are especially tricky, no all the ins and outs before you consider one.
I have signed two 5-year leases with a previous business I owned, I feel this makes me fairly competant to discuss business leases.
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How To Find High Performing Mutual Funds For A High Performance Portfolio
Finding high performing mutual funds investments for a high performing portfolio is simple when you have a little research. Great mutual funds are a result of a stock market that has been going up consistently for the past few years, and is posed to continue on the current positive course. Therefore, now may be the time to research quality mutual funds.
Mutual Funds
1. Definition of High Performing Mutual Funds
There are literally thousands of quality mutual funds to research, the small list below will get you started. First there are a few things you should know. Mutual funds are used for your 401k, regular savings or investing.
You can purchase most high performing mutual funds from an online. Buy from brokers such as Fidelity Investments, Charles Swab, TD Ameritrade. Or you can go directly to individual mutual fund company websites such as Vanguard Mutual Funds, T. Rowe Price, American Century, Parnassus, Permanent Portfolio and others. These are all low cost mutual funds.
Those I mentioned here happen to be among the largest companies, but there are many others to choose as research candidates. Most of the discount brokers offer free mutual fund research as well as Yahoo Finance, MSN Finance, and Google Finance all under the mutual fund channel.
Understand How to Research Mutual Funds From a Money Strategist
2. Finding High Performing Mutual Funds
To find high performing mutual funds you must look at cost of the fund, returns, tax Rate, and asset allocation are 4 of the major categories I look at when I research a mutual fund. There are many more you will find when you read mutual fund reports listed on the financial websites, and in the prospectus.
It is imperative that you know what you are buying before you buy it. Re-Read the prospectus of the mutual fund you are interested in several times prior to purchase decisions. All of the following mutual funds mentioned are no-load funds. The following facts are current as of March
2011, they were taken from several mutual fund rating companies.
3. Cost Or Expense Ratio of Funds
Cost is most important for high performing mutual funds because the performance of mutual funds go up and down over time as do most investments. The lower the cost, the more money goes to your investment. If your mutual fund goes way down, a high cost may be challenging. A reasonable cost almost goes unnoticed if the fund performs well over time.
Learn All The Details of Mutual Funds, Schedule a Discovery Session
Keep as much of your investment as possible by focusing on low cost mutual funds. If you are a beginner it is good to focus on mutual funds that are listed as low cost and low risk. Most of these funds do not require a load or upfront cost unless you cancel the fund before 30-90 days. Each fund varies, read the individual fund prospectus.
4. Returns of Mutual Funds
High performing mutual funds have high returns and are calculated after all costs are deducted. A great one year return may be a fluke. I like to look at the longer returns of the mutual fund. After all, an investment is the increase in value of an instrument over time.
I prefer to look at the 5 and 10 year return of mutual funds to get a broader picture. If the 1 and 3 year returns are high also, that may be the sign of a winner. Bear in mind you must read the recent news and statistics of your mutual fund, because past performance is no guarantee of future performance.
5. Allocation of Mutual Fund Assets
You don’t need a lot of mutual funds if you choose quality, since a mutual fund usually consists of a diverse mix of stocks. There are different types of mutual funds. So if you choose to own some they should be of different asset allocation groups, to avoid overlapping investments.
Some of the different types of asset allocation groups are: Large Growth, Small Growth, Large Value, Short-Term Bond, Mid-Cap Value, Diversified Emerging Markets and many more. When you go into an online investment area read about each different type of mutual fund available. If you are a beginner it may be a good idea to study the low risk, low cost mutual funds first.
6. Taxes Paid on Mutual Fund Profits
All of the funds listed below have low turnover, and therefore low tax rates. The turnover rate is the rate at which stocks in the fund are bought and sold. If the stocks are kept long term, they will be subject to long term capital gains tax, which is amongst the lowest taxes to be paid.
7. These are current Mutual Funds with Top Standings in the Respective Categories
Portfolio 1
Parnassus Equity Income Portfolio (PRBLX)
Type: Large Blend
Risk: Below Average
Yearly Expense Fee: .99
Return To Date: 3.7%
Return 1 year: 17%
Return 3 year: 5.9%
Return 5 year: 7.3%
Return 10 year: 7.0%
www.parnassus.com
Permanent Portfolio fund (PRPFX)
Type: Conservative Allocation
Risk: Above Average
Yearly Fee: .93
Return To Date: -.07%
Return 1 year: 20.4%
Return 3 year: 8.0%
Return 5 year: 9.5%
Return 10 year: 11.0%
www.permanentportfoliofunds.com
Yacktman Fund (YACKX)
Type: Large Blend
Risk: Average
Yearly Fee: .93%
Return To Date: 1.7%
Return 1 year: 8.47%
Return 3 year: 12.1%
Return 5 year: 9.4%
Return 10 year: 11.82%
www.yacktman.com
These are just a few examples of high performing mutual funds, there are many. You will find the quality mutual funds when you do your research.
This is not a solicitation to buy a mutual fund. These are only mutual fund suggestions for you to research. Read the mutual fund prospectus before you consider purchasing a mutual fund. Most are available online, at each mutual funds website. These mutual funds were given a top rating by at least 7 different mutual fund research sites.
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The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Powerful Positive Money Affirmations
Powerful positive money affirmations are necessary to remove lifelong negative affirmations that dominate your thinking. Because negative financial affirmations start as a child, they become deeply embeded. If you have positive, thoughtful money affirmations placed by your parents and others, you will be positive about money.
Unfortunately, many of you have negative financial affirmations, placed by your family. The good news is negative affirmations can be replaced by positive money affirmations if you are willing to work at it.
What type of work does it take to replace the negative with the positive? It takes a lot of work to change old financial tapes in your head. But you can do it if you make it a concentrated task over time.
Examples of Negative Money Affirmations Growing Up:
1. You will always be poor
2. We will never get out of debt
3. You’ll never work hard enough to get ahead
4. You will always be a factory worker
5. We will never get ahead in life we were born that way
6. The money is not there, and it will never be
7. Success is not for people like us
8. It does not do any good to get an education
9. If you save and budget, the money will get away from you anyway 10. The more you try, the worse off you will be
Your First Positive Affirmation Task
The first task it to become familiar with positive money affirmations. Some of you have been programmed with negative thoughts for so long that you must search for the positive ones deep in your head. Here I have compiled a list of positive money affirmations I created, so you can move forward.
If you consistently repeat these positive money affirmations, you can rid yourself of the constant negative affirmations and thoughts about money, personal finance, and financial behaviors.
You may feel that this is basic information that most of you know. I have bad news for you, it is not. Because many of my clients I have spoken to do not understand where their bad financial behaviors come from I recommended you do a backwards analysis.
Financial Habits Backwards Analysis
This is where a backwards analysis comes in. You look back at everything people close to you have said about money, so you can change those tapes.
We do the analysis to pinpoint the exact times and places the negative thoughts were programmed in your head. Let us move forward and change your financial behaviors for the better by understanding that your money affirmations can be changed by you, and only you.
Examples of Positive Money Affirmations From Parents, Teachers, Grandparents, or others:
1. You are smart enough to be a businessperson
2. The hard work you do will be rewarded
3. If you continue to build on your abilities, you will never be poor
4. When you work hard, as you do, the rewards will follow
5. Honesty pays off, stay honest and work hard
6. A formula of a smart girl, common sense and hard work is what you have, and it will take you far and wide.
7. You will be extraordinarily successful one day and will have all the money you need.
8. You have the brain to create powerful finances, just keep doing your research
9. If you understand how to save and budget money, you will have great finances
10. Be consistent, the harder you work at it the better your chances
Here is Your Positive Money Affirmation Challenge Exercise
Choose one of the affirmations a day for two weeks, write about it and repeat it three times a day. You will slowly change the way you think. Do each of the following positive affirmations until you are done with the list. This positive affirmation challenge will take the better of 9 months to totally change financial behaviors, but sooner with many of your financial behaviors.
Of course, if you double up on your affirmation duties you can do it in half the time. The key to success with affirmations are 1. Be consistent 2. Complete the task 3. Continue to study the most powerful ones for the rest of your life 4. Document how you will use them to change your financial life forever.
22 Powerful Positive Money Affirmations by MsFinancialSavvy
Money Affirmations to Get Started, “I Will”…
Not create emergencies with irresponsible behavior
Create at least 3 savings accounts
and account for all the money I spend
Use my income for my needs first,
I realize I work to pay my bills
Only rent an apartment I can easily afford
Not let a salesperson determine my needs,
Purchase what is best for me, not him or her
Budget my budget
Marry a financially responsible person
Money Affirmations Half Way There, “I Will…”
Always understand quality items lasts long, and low quality must be replaced fast
Not go into business until I understand basic business accounting principles, customer acquisition, and business rents and leases
Spend money according to me income, not my credit card
Be prepared for most financial emergencies.
Not spoil my kids, unless I want to create a monster
Always understand that predatory loans can ruin my life for a long time, sometimes forever
Budget my time, energy, and money
Keep a budget for all phases of my life
Positive Money Affirmations That Change Your Life, “I Will”…
Create a savings account for emergencies only
Save first, invest second, keep debt low and start to build wealth
Dream it, then do it, after a lot of research preparation and thought
Understand that I alone am responsible for my finances,
Another person in the picture ads flavor to the mix
Learn basic investing skills, to protect my money and my retirement
Not believe anything I hear, and only half of what I see, I will do my research
Be the captain of my ship and the driver of my bus, I will take care of my finances
The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Should You Refinance Your Home Loan?
Should you refinance your home loan, pay off your home or buy another? Should be the first question you and your spouse ask yourselves before you decide to refinance your existing home loan.
Recent reports show that some homeowners are borrowing to the constant enticement of lower home loan rates. And, without an analysis, find that they are backing themselves into a corner of more years and more costs on their loans, including more escrow cost and higher points. The savings they “thought” they were getting on a home refinance, turned out to be huge loss.
After you purchase a home, within a few months most new homeowners will get a barrage of snail mail suggesting you refinance your nearly new home.
The reason why you will be encouraged to refinance many times after the purchase, is because of profits for mortgage companies. Just remember, your home is not an ATM machine, it is best to ignore those offers for several reasons.
When you refinance a mortgage, companies collect a whole list of payments from your refinance, as with your original loan. Refinances wildly benefit the mortgage company but can hurt you badly. In fact, the people who do not get this memo may end up purchasing their own home 3-4 times during their lifetime when refinancing.
It is Not Wise to Refinance If:
-Your purchase is new ( less than 5 years old)
-There have been years of payments on your home, the focus – pay it off
-You are not going to save enough money to make a difference
-Your home has been refinanced before
-The difference in the interest rates are small
-You will add another round of escrow cost
-You will get higher points to offset the so-called lower interest
-You are going to add years to your existing loan, losing the years you have paid
It Is Wise to Focus on Paying off Your Existing Loan:
-So you can focus like a laser beam and live mortgage free with a paid off home.
-If you continue to have a payment after several years, your payment will go down in regard to inflation.
-There are many tricks in refinance loans, because of this you can make big mistakes and increase your chances of lost.
-If the difference of total money saved and new interest rates are too small.
-When you don’t have the expertise and cannot do research to understand the loan process first.
A True Story About a Refinance Loan That Worked
I counseled a woman and her husband, who wanted to know if they should refinance their home, due to a decrease in her husband’s salary.
Here is The Analysis We Did:
1. We obtained her original loan documents and discovered her original and current loan was 33 years. They did not know this; they were told it was a 30-year loan. And because it was stated in months, they did not bother to calculate it.
At the time of the analysis they had 23 years left on her original loan.
With a new 15-year loan, she will shave 8 years off her original number of loan years. This includes the years from the remaining:
23 years (original loan) – 15 years (the new loan) = 8 less years to pay a mortagage in total, with the new loan.
2. They original loan interest was 6.7%. The interest rate on the new loan was 3.8% for a 15-year loan.
So, now they has 2 out of 3 major factors that will decrease the cost of their loan. The cost will decrease by both significant interest rate and number of years. Because of this she will not lose money in the refinance but will instead save money, lots of money.
3. Their payment will go from $3400, Principle+interest+taxes+insurance, to $2400. They will pay $1000 dollars less a month in payments. Coupled with the decrease in years, this is a real winner and takes a financial burden off the family.
Why Did the Above Mortgage Example Work?
The above 3 facts are called being in the right place at the right time. It was right because the low interest rates intersected with the savings from years.
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They saw the savings and went with the new loan. Also, 5 years later, she had enough money after their finances improved, to pay off their new loan. Now, they live loan free and shaved 10 years off their mortgage.
This is one of a few cases I analyzed where it made sense and saved money to refinance. In most other cases, the refinance costs, coupled with years lost, do not make a new loan cost effective. Usually, the hidden costs are huge.
Considering the continuing low-interest rates on home loans, is it time for you to consider purchasing a home? — Or refinancing your existing home? Some homeowners are said to be refinancing their existing loan over and over.
If you are in the market for a new home, one of the best times to purchase a primary mortgage is when interest rates are low. Also, you need to find a reasonably priced home. But as far as refinancing, in my opinion, I do not feel that many of the constantly refinancing homeowners understand all the facts (and high cost) surrounding home refinancing.
A one-time refinance is appropriate if you have done your homework and analysis, before you contact a mortgage broker. Then you know that a refinanced loan will be a benefit to you.
If you do not correctly answer the question, “How does refinancing work?” before deciding to refinance, you could get yourself and your home loan security at risk. Know for absolutely, if you should refinance your home loan.
Refinancing an Existing 30-year Loan
1. Each time you refinance to a new 30-year loan, you can go over your 30-year period to 40 years, 50 years and sometimes 60. If a homeowner does this every 5 year for 20 years, then at the end of 20 years you will have 30 years left to pay on your mortgage. Instead of 10 years if you did not refinance your original loan.
The extra years of interest and principle will substantially increase the amount of money you pay on your mortgage over time. And this will increase the actual cost of your home.
The Solution:
-Calculate how many years you have already paid on your home loan.
-Look at the number of years on your new prospective loan
-Compare the interest rate of your old loan to your new loan
-Find out the total cost that will be charged to you for the loan, by the Mortgage Broker
-If you have a 30-year loan with 15 years left to pay. Then try for a 10-year loan if the interest rate is very low. There should be a significant difference between your existing interest rate and the new interest.
-Make sure every loan you get has no pre-payment penalties. Also, pay extra to principle each month to make sure you don’t go over the 30-year mark. Paying off any mortgage loan early can save thousands of dollars.
The Purpose:
The issue becomes, “Why are you getting the refinanced mortgage in the first place?” Are you desperate for money to use for medical purposes, college, or some other dire emergency?
Or, are you looking to save money on your overall cost and either put the extra savings into a general savings account, retirement? Perhaps you want to retire earlier with no mortgage, pay down other bills, or lower your existing payments due to financial stress? And Does refinancing your home work or hurt you?
These are questions you must answer and make your intentions crystal clear to yourself and your spouse before you decide to refinance.
How Much Will it Cost to Refinance Your Home Loan?
It will cost you a hefty sum of money each time you refinance your existing home loan or purchase one for a new home. And even the so-called no-cost loans will cost you. The purchase price of a new loan is either 2%-4% of the new loan. In the case of the no-cost loans; the fees are added into your loan as a higher interest rate on monthly payments.
You will, therefore, pay for the cost included in your monthly payments. It can take as long as four to six years to pay off the cost of your home refinance, so plan to stay put for a while if you choose to refinance.
Understand the Secrets to Buying a Great Home, Before You Start >
Home Loan Resources for Primary and Refinance Loans
There are several resources to help you make a wise decision when it comes to choosing a loan for a new home. Understand how detrimental repeatedly refinancing your existing home can be. Refinancing your home should be a rare consideration and carefully calculated decision before you visit a mortgage company.
Credit unions and your local banks offer the best solutions for a mortgage. If you do not have optimal credit and money saved in a bank or credit union then carefully select a mortgage company.
The U.S. Department of Housing and Urban Development offers numerous resources on its Web site, www.hud.gov, for homebuyers. It publishes an eight-page booklet, “Looking for the Best Mortgage,” which offers advice on finding the best deal. General tips include:
1. Contact several mortgage lendersand brokers for information.
2. Check hsh.com to see what the average mortgage rates are now.
3. If you have a good relationship with your local bank, start with them. Especially if you have a substantial saving or checking account with them. The mortgage division is usually a separate business in your bank, but a relationship with the bank will make getting a mortgage easier.
4. Obtain all cost information, including interest rates, points, fees, down payment requirements and private mortgage insurance.
5. Negotiate your mortgage where possible. Mortgage deals vary from day-to-day. Once you find a deal you like, lock it in.
6. Federal law prohibits discrimination in mortgage lending, know your rights.
7. Understand your credit. If it’s not good, finding a loan could be difficult. To obtain a copy of your credit report, contact free credit report .
You should know your credit score and examine your credit report before you shop for a refinance.
Contact Me For a Free Personal Finance Consultation in Home Buying>
Sometimes credit reports have mistakes on them and they can be taken off by contacting your credit reporting agency in writing, before you shop for a loan.
The primary goal for you is to make sure you answer the question thoroughly, “Does refinancing your home work?”. know should you refinance your home or buy a new one.
The More You Know, The More You Grow – Your Finances
MsFinancialSavvy, Lois Center-Shabazz
Lois Center-Shabazz| Money Strategist | Course Delta Agency
Get your FREE financial consultation from Lois here; let’s chat
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