Here are a few email scams you should be aware of going into the new year, think before you click on that email link. There are many ways to avoid clicking on email scams or links in email scams. The email scammers are going to great lengths to appear normal. There has been a lot of information about email scams and hackers harvesting information from your computer, but computer users continue to be victims of the email scammers.
1. Automatic Email Harvesting Scams:
If you have a website with your email address on it, someone with email harvesting software can scan the web and pick up your email address. Instead of using firstname.lastname@example.org, use myemail(at)me.com on your webpage, this will avoid automatic email harvesting software.
If you click on an email with a subject line that appears to be malicious computer code, it could include code that is unloaded onto your computer when you click on the email. If there are a lot of characters in the email, it is sure to include hacker code. When the code is unloaded on your computer, it allows the hacker to consume your email list from your computer.
When you open a bad email, you will be instructed to open a link in the email, to buy something, give personal information, or with a message to view something interesting. The link is usually malicious computer code. They usually appear to be a legitimate company.
If you click on a malicious link in the email, most of those links include code that will unload your entire email address book, along with your personal email address, onto the scammers computer database. With that information , they will send out millions of spam emails with your email address in the “from” line and your friends email address in the “to” line. Those emails will instruct your friends to open a link in the email
that is actually malicious code. The links unload something called a “bot” onto your computer, and allows them to control your email address book.
It will appear that the email is coming from a friend to you, but the message line is usually not meaningful, or the email will ask you to click on a link in the open email that will unload a “bot” or coded program to access your computer and computer email address book. Your anti-virus does not usually delete these email bots in due time.
The only way to avoid giving your email address and your email address book to strangers is to avoid opening trick emails.
2. Responding To Trick Emails:
Understand trick emails to protect your computer and your personal information, including your passwords.
Fake emails that respond to a product you are selling online, an ad you placed, for anything ranging from a job to selling a computer, will ask you to click the link in the email for more information, and the “bot”, is usually code to install a keystroke tracker. The keystroke tracker, records your pass codes on their computer. This is how online banking accounts are stolen. Large companies have had millions stolen by hackers, when just one employee clicked on a link in an email with a keystroke tracker installed. Employees must be educated, as well as personal computer users.
3. To Avoid Email Tricks and Downloading Malicious Code
Run an anti-virus update and full scan before you use online banking account.
4. Clicking on Links to Unsolicited Emails Sent to You
This sounds super easy to avoid. But, the email scammers have gotten very sophisticated. They will email you several emails that appear to be from companies. These companies we use all the time, so folks don’t get suspicious. The problem is when the emails look like an amateur put them up, and they have links that encourage you to click them. Clicking on these links will download a “hidden bot” or script also known as code that takes personal information off of your computer. Many times it disables your computer from working all together. This is serious, but if you are vigilant you can avoid being a victim of this scam. If you didn’t order anything from said company, you know it is a spoof of that company, so you don’t need to open the email. If you think you ordered something and can’t remember go directly to your account page on that website or paypal to check to see if you ordered something. But, absolutely NEVER click on a link in a suspicious email.
5. Do not open emails with [no subject], in the subject line
Do not open emails with email addresses you know are in your email address book or belongs to a friend, but that friend no longer uses that email address. This email came from a bot, downloaded from your friends computer to the email scammer.
Emails with any type of perverted information in the subject line; these are designed usually for men or those who are extremely “curious”. The information will tell the user to click on the link to get more perverted information, but the link is a malicious bot, to steal information off the users computer.
Emails that come from companies that you don’t do business with, they hope you will open the email and click on a bad link to be curious about why they are contacting you.
Emails that claim to be your bank or some other place you do business with—do not open–call the business instead, with a phone number you already have. These are called fishing emails. They are crooks, fishing for information from unsuspecting computer users. They usually send out emails appearing to come from hundreds of different banks, hoping they will land your bank name on your computer. Don’t fall for the trick.
When you place your email address on your website, place it as (at) instead of @.
6. Understanding Limitations To Anti-Virus Software:
Anti-virus software has limited use, be aware that it does not work when you answer a fishing email and/or click on a bad link to automatically download a malicious bot to your computer. The bot normally downloads information to your computer before the anti-virus picks it up. Get an anti-virus and a malware removal program.
Anti-virus usually works to keep viruses, worms, and bots off your computer hard drive, but you must be vigilant.
Update your antivirus and malware software a few times a day, and run a full scan, at least once a day. Don’t leave your computer off for extended periods, that is, weeks at a time. If your computer is not in use, turn it on at least once a week, update your anti-virus software, and run a full scan. If your computer is left off for too long, the hard drive can become overwhelmed with viruses, worms, and bots—and therefore the computer may not function in any capacity.
Become friends with your delete button. After you have taken a close look at each of your emails, and you are not positively sure it is from a trusted source, delete it right away.
7. This is a 2018 update to email harvesting and malicious bots. Your phone has also become a target.
Your phone has also become a target for home and business abuse. Many unscrupulous types use spoof cards to mimic a legitimate company on your caller ID. The ID can have both the name of the company and their number which has been spoofed by a spoof card used before the call is made to disguise the real caller’s information. You can get a hint that the caller ID is fake if; 1. The caller ask for a financial donation to a legitimate source, 2. The caller ask for banking information, or 3. A computer answers the phone when you pick it up. It helps to be suspicious of every single email and call. Do not give out credit card information, or any other confidential information when someone calls you. 4. Telephone calls are outrageous, always different scams asking for money for a created fraud — tell seniors – DO NOT ANSWER, they use fake phone numbers to match real businesses. Understand more about protecting yourself, in my new eBook, 67 Powerful Ways to Save Money, Now and Forever. The book is even more powerful with the companion “Budget Planner” you can instantly download.
Going to College With Student Loans
In the past 30 years as the priorities of states have shifted away from a public college education to for-profit government contract companies, the cost of college has skyrocketed and an increasingly huge number of students are being forced into student loans. College costs have soared far in excess of inflation. Thirty years ago a middle class family could easily send their child to a state funded college if they lived at home, and for some even living on campus was an affordable option. But, with today’s cost, the choice of which college to attend should be a well-researched and lengthy decision process, with cost your number one consideration. Because college cost are so high, students and parents who do not research college cost and financial aide well, find students going to college for 6 years( for a 4 year degree), or dropping out due to unmanageable cost. In-depth research and planning early in the students’ high school years can avoid these tragic problems. Get crucial information about college and student loans here.
The College Boards Research
According to the College Board, tuition and fees have increased from an average of $600 per year in 1976, to $6000 per year in 2007, for public colleges. The tuition increases are $2500 per year in 1976 to $22,000 per year in 2007 for private colleges. These numbers do not include room and board, books, lab fees, registration fees, car expenses, plane tickets, computers, clothes, bus tickets, or other hidden cost that colleges do not list.
The Real Cost of College
The total cost of college including room and board, tuition and fees, books, lab fees, registration fees, and bare necessities could easily range from $120,000 for a public college to $300,000 for a private college. This range could leave a middle class student with student loans (after Pell grants, Work Study, Summer Jobs, and Parents contribution), as much as $40,000 for a public school, to $150,000 in school loans for private schools. Many private schools have large yearly increases in tuition every single year, this must be factored in as you add up your total expected cost. If you do not qualify for government assisted subsidized loans, you may have to take out unsubsidized student loans that charge interest on loans while you are in school.
The College Acceptance Letters
College acceptance letters and financial aid information will soon be available. The average college tuition alone is $17,000 today. Most financial aide packages do not cover all of your cost, even for the poorest student. You are usually expected to come up with as much as 20-30% of the cost, after your financial aide award. Some students don’t find this out until they have traveled across the country to go to college and find themselves without enough money. Most financial aide packages don’t cover books; registration fees, lab fees, car expenses, computers, plane tickets, and other necessary items.
Do Your Research
Do your research when it comes to college cost and available financial aide. Most schools have a maximum amount of financial aide they will give to each student. For instance, if you are an out of state student, who attends a state school, your financial aide will be based on the cost for an in-state student. Therefore, you will have large gap that you will have to fill in, in order to pay all cost, no matter what you financial status. Know all of your colleges costs, this is difficult information to find, especially with private schools. Many schools hide some cost to keep students coming. Navigate the colleges’ website for cost; and also call the colleges’ registrations office, financial aide office, and housing office, and if possible talk to past alumni. It will literally take every single one of these inquiries to find out the true college cost. Most private schools will be off limits to middle income and low income students, unless they receive a full scholarship with many guarantees. Learn to Save Money here.
Keep Student Loan Amounts Low
Choose a college where you can keep loan amounts very low. There is no guarantee a graduate will be employed before school loan payments become due, or that they won’t become sick or disabled at some time during their loan repayment period. Know the difference between private loans and federal loans. Federal loans come with more safety nets. Private lenders such as Sallie Mae charges students when their loans are in deferral. With federal loans, if you are unemployed or suffering an economic hardship, you will not be charged to defer your loans. A rule of thumb is that your total loans should not exceed your expected beginning salary. For example, if you plan to go into teaching, a beginning teacher can expect to make about $21,000 a year, so your loans for 4 years should be capped below $21,000. Since many students change their major many times during college, and no one actually knows when they will be hired, or what their salary will be, it is wise to keep total college loans as low as
How the Current Administration is Helping
President Obama has made it easier to navigate the oftentimes complicated maze of college and financial aide. He has required colleges to be more open about their cost, and the financial aide available. In the past many colleges hid some of their cost to prevent parents and students from making an informed decision, as I mentioned before.
President Obama made changes in Pell Grants so the amount awarded per student is greater, and the number of students who qualify per income is greater.
Effective January 2012, if you’re someone who has different kinds of loans’ guaranteed and direct-you’ll be able to roll them both into one direct loan and bring down your interest rate. You’ll only have to write one check a month, and you’ll see a discount. This switch saves money for taxpayers across the board and it helps pay for the second step President Obama announced in October 2011.
As a part of 2010’s student loan reform, borrowers’ loan payments could be no higher than 10 percent of their disposable income. This is a big deal-but it wasn’t going to go into effect until 2014. The President announced that he’s speeding up this program so it will affect students in 2012-two years early. This will have huge consequences for people struggling to make their student loan payments.
Federal Financial Aide Website
To get financial aide for college you can obtain a pin, and start your application process at the Federal Financial Aide Website. When all of your information is in, (check the site regularly), they will send a financial aide award letter to the colleges you submitted. Make sure you place every single college you are interested in on your FAFSA application. You will choose only one college at the end, and FAFSA will forward your information there. Read the FAFSA website carefully so you are well-informed before you start.
Choosing a College
The top colleges and universities recommended by major publications; most American students can’t afford. There for you must consider several factors when choosing a college, to make the best choice possible.
Several national magazines publish the top colleges and universities in the U.S. yearly. All of the top colleges listed have one thing in common, extreme high cost. Because the cost are so high, most Americans cannot afford to attend these so-called “top colleges” unless they acquire an uncontrollable school loan debt or a full 4 year scholarship. My number one consideration for choosing a top college or university, and what should be your number one
consideration, is simply put, cost. Not considering cost, can cost you misery later in life, for years to come.
If a poor or middle-income student choose one of the “top colleges”, their school loan balance after graduation would be outrages. Because, even after amortizing it over 20 years, the monthly payment would not be possible with the vast majority of entry level jobs in the U.S. You read that right, I said 20 years. Many students find that they have to amortize their school loans over 20 years to get a somewhat manageable payment option. Many graduates have payments more like mortgages than school loan payments, but this does not have to be the case.
Furthermore, if one of these students choose to defer school loans for graduate school, their existing outrageous balance could easily double. Interest payments are charged to the balance of the account even if the loan is in deferral.
If the school does not have a reasonable and affordable cost for your income, don’t even think about attending, unless you can get a full scholarship. Keeping a full scholarship usually requires you maintain a B+ grade point average.
Why burden yourself or your child with debt you or they can’t repay? The burden would be so high their life would be miserable trying to make the monthly payment. Figuring out the cost of a college includes a detailed analysis of tuition(for in-state and out of state residents), room and board, books, registration fees, plane fair or auto expense to get to and from school 3 times a year. Add an extra 2% to that total to cover hidden cost. Some students who choose schools they cannot afford, graduate with a college degree only to find their credit score fizzles so low they are no longer a candidate for employment, as a result of non-payment of school loans.
Most financial aide packages include a combination of large school loans, small grants, work study, and parents or students contribution. The financial aide package usually includes only about 70-80% of total cost for the poorest students, unless you are lucky enough to get one of the rare full scholarships.
Choosing a college without the consideration of debt can cause you and your child a lifelong drama of financial misery and unbearable stress. Don’t burden yourself with unsustainable debt and a low credit score, to get a college education.
Is the culture conducive to your upbringing? If not, can you assimilate into the culture? The culture includes kids from similar communities, things to do that you enjoy, your religious facilities to attend, and acclimating to severe weather you are not used too. Some straight A
students attend colleges that are so culturally different to their upbringing that they have a difficult time adjusting, hence, their grades suffer as a result.
3. Academic Standing
Is the school certified by the local, state and federal academic boards?
4. Major Fields
Does the school have a large variety of major fields, so you can choose a second or third choice if you discover you don’t like your first choice?
5. Type of School
Understand the different types of schools available. Is your school choice an in-state public college, a private college, or a for-profit college?
The best value for your education is an in-state public college. Public schools are subsidized by taxpayers dollars so children within the state can get a quality education at an affordable cost.
Private colleges and universities are usually owned by organizations and churches. For-profit colleges and universities are usually owned by corporations. Both of these choices can be outrageously expensive with a lot of hidden cost. Do your research well before you consider a college or university. Understand that most colleges have tuition increases each year, this must be figured into the ongoing yearly cost. Because school cost is being subsidized with school loans for many students, getting the lowest loan amount it imperative. Your income right out of college is not guaranteed, neither is a job. Because of this it is wise to focus on low or no school loan debt for college or trade school. The debt must be repaid, the lower your debt the better your chance of repaying your debt easily and on time.
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Read an Annual Report
If you read an annual report of an interested stock, it will be one of the most thorough analysis of a company you will find. Most annual reports are filled with beautiful pictures and testimonies from satisfied customers, but this does not deter from the real purpose of the report, which is to give an objective and thorough overview of the company. The annual report is a valuable and necessary analysis tool for both current and potential investors interested in measuring value and risk of a company. The Securities and Exchange Commission (SEC) requires companies to send investors an annual report every year.
What do annual stock reports include?
- A five-year comparison of selected financial data;
- A consolidated Balance Sheet, an Income Statement, a Cash Flow Statement, and a statement of changes in stockholders’ equity for the past two years;
- A management discussion and analysis (MD&A) of results and changes over the last two years; and
- Notes to the financial statements that describe accounting policies as well as providing more detailed information in such areas as taxes, pension plans, business segment and geographical breakdowns, related party transactions, and future financial obligations.
- Major aspects of the report an investor should review are the-Income Statement, Cash Flow Statement, and Balance Sheet.
Where should you begin your analysis and research with an annual report? To start, look at:
- Sales, earnings, and various profit margins (from the Income Statement);
- Debt levels and the composition of current assets (from the Balance Sheet); and
- Actual cash flow versus reported income (from the Cash Flow and Income Statements).
- Lawsuits and complaints about the company
The annual report is the single most complete and useful analysis of a public company available.
How do you acquire an annual report?
- Investors holding individual stocks are automatically sent an annual report of the companies they own shares in, every year.
You can call the toll-free number of investor relations department of a company and request an annual report.
- You can download an annual report from the website of some companies.
- Edgar (SEC/Edgar), the financial database of SEC filings, contains the required annual SEC filings—the 10-K report—for most U.S. companies. Search: www.sec.gov/edgar/searchedgar/companysearch.html
The annual report is probably not only the most objective view of a company you will obtain, but it also contains valuable information to help predict a companies future.
The term “microcap stock” applies to companies with low or “micro” capitalizations, meaning the total value of the company’s stock. Microcap companies typically have limited assets. For example, in recent cases where the SEC suspended trading in microcap stocks, the average company had only $6 million in net tangible assets–and nearly half had less than $1.25 million. Microcap stocks tend to be low priced and trade in low volumes.
Where Do Microcap Stocks trade?
Many microcap stocks trade in the “over-the-counter” (OTC) market and are quoted on OTC systems, such as the OTC Bulletin Board (OTCBB) or the “Pink Sheets.”
>OTC Bulletin Board: The OTCBB is an electronic quotation system that displays real-time quotes, last-sale prices, and volume information for many OTC securities that are not listed on the Nasdaq Stock Market or a national securities exchange. Brokers who subscribe to the system can use the OTCBB to look up prices or enter quotes for OTC securities. Although the NASD oversees the OTCBB, the OTCBB is not part of the Nasdaq Stock Market. Fraudsters often claim that an OTCBB company is a Nasdaq company to mislead investors into thinking that the company is bigger than it is.
>The “Pink Sheets”: The Pink Sheets–named for the color of paper they’ve historically been printed on–are a weekly publication of a company called the National Quotation Bureau. They are electronically updated on a daily basis. Brokers who subscribe to the Pink Sheets can find out the names and telephone numbers of the “market makers” in various OTC stocks–meaning the brokers who commit to buying and selling those OTC securities. Unless your broker has the Pink Sheets or you contact the market makers directly, you’ll have a difficult time finding price information for most stocks that are quoted in the Pink Sheets.
How Are Microcap Stocks Different From Other Stocks?
Lack of Public Information: The biggest difference between a microcap stock and other stocks is the amount of reliable, publicly available information about the company. Larger public companies file reports with the SEC that any investor can get for free from the SEC’s Web site. Professional stock analysts regularly research and write about larger public companies, and it’s easy to find their stock prices in the newspaper. In contrast, information about microcap companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes. The SEC has proposed new rule changes that will increase the amount of information brokers must gather about microcap companies before quoting prices for their stocks in the OTC market.
No Minimum Listing Standards: Companies that trade their stocks on major exchanges and in the Nasdaq Stock Market must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies on the OTCBB or the Pink Sheets do not have to meet any minimum standards.
Risk: While all investments involve risk, microcap stocks are among the most risky. Many microcap companies tend to be new and have no proven track record. Some of these companies have no assets or operations. Others have products and services that are still in development or have yet to be tested in the market.
I have actually sold a couple of homes as a “for sale by owner” seller. So, it is possible to do a “sell your home by owner” home sell, but It wasn’t as easy as I thought it would be. But I made the decision based on the fact that I had not owned the homes long enough to generate substantial equity to pay a real estate commission. These are the things I learned from my actual experience, my research, talking to real estate agents, and talking to others who had sold a home. I spoke with two friends who are ex-real estate agents, and they helped me quite a bit. I also took an appraisal course many years ago in anticipation of starting a real estate appraisal business. I did not start the business, but I learned a lot about appraising homes.
First of all, expect to be bombarded by real agents eager to list your home, when they see your, “For Sale by Owner” sign. They will contact you over and over hoping that you will become frustrated with the whole process, throw up your hands and say, “where is that pesky real estate agent? I’m listing my house with her or him, yesterday!” Unfortunately, sometimes you will feel like that, but don’t give up too soon.
The following information should be helpful:
1. Fix up your home to make it presentable to sell. That includes electrical and plumbing in tip-top shape, clean carpet, clean walls, clean doors, an attractive front door, and well-groomed landscaping, and maintenance painting, just to name a few.
2. Then you need to decide how much to sell your house for. If your asking price is too high, your home could stay on the market a long time. If your asking price is too low you may lose money you deserve. There are several ways to find out the right sales price. If the homes in your neighborhood are very similar, i.e. square footage, number of bedrooms (bathrooms), and similar size yard, you can use the recent sales from the last two homes similar to yours, in your immediate neighborhood. It gets a bit more complicated when the homes are all different, but appraisers use a similar method. You will have to find homes with your similar square footage, number of bedrooms, number of bathrooms, and if the home is on a lake, gulf course or ocean. You can also pay for a sales appraisal, use your local yellow pages for a listing of real estate appraisers. The next option is to check city or county records. Just call your local city records office and ask them where you can find information on the most recent home sales in your area. Verify which of these homes are similar to yours and use those comparisons to price your home.
3. Then there are the forms, those dreaded forms! They are dreaded but necessary for the legal transfer of your property to another person. You will need legal real estate sales and disclosure documents for your home sale. You can get these documents from a title company or you can pay a real estate lawyer to do the work for you. The real estate lawyer will provide you with the documents and fill them out correctly, for no more than an hourly fee. Verify his/her fee, the time it will take, and agree on a fee before he/she fills out the documents.
4. Let the buyer know that he/she can pay for an independent inspection of your home, and put it in writing. The new buyer can have an inspection for plumbing, electrical, and structural soundness as well as other things. To be on the safe side, I paid for an independent inspection on one of my homes, I had several things fixed as a result, before I sold the home.
5. Let them know that they need to choose a mortgage company, you can also talk to mortgage companies up front. Both of the buyers in my case had never purchased a home. So, I did some research on the best mortgage companies in the area and gave them several to choose from, this just helped to speed up the process. The mortgage company gave them title companies to choose from or they can search for their own title company. For safety purposes, you could have the person go to your mortgage company of choice and get pre-qualified, before you show your home. This way you will know, who the person is, and that they are serious about purchasing your home.
6. Talk to escrow companies before your put your home up for sale, (in the case of fee simple states-talk to a title company or real estate lawyer for closing).
7. Now let’s get back to those pesky real estate agents. There may be an aggressive real estate agent or two who will actually present you a buyer. If that agent is willing to take 3 or 4%, which very few actually can, and they have a buyer, then you may want to talk. The problem you may experience is trying to negotiate with an experienced real estate agent, they will most likely try to get you to reduce your price for their buyer. Make sure you add up your cost, 4% to the realtor, fixing up the home for sale, your mortgage sellers cost (sellers usually pay around 2%), and your moving cost. Do you have enough equity in your home to pay all of these costs and still have a substantial amount to put down on another home? Most homeowners who sale their own home, do so because they don’t have enough equity to pay a real estate agents cost of 6 or 7%. So, don’t let an experienced real estate agent come along and talk you into decreasing the price of your home, and giving them 3 or 4% real estate commission, in that case you could have hired a real estate agent to do everything to began with, and the agent could get full price for your home.
8. Keep yourself safe. Consider “for sale by owner” only when you can’t justify the real estate agents commission (6-7% of sale cost). Take appointments from interested buyers, get caller ID and other information up front. Ask lots of questions on the phone. Get their name, address, and employment before you give them an appointment. Ask to see an ID before they look.
Choosing an Investment Professional
Are you the type of person who will read as much as possible about potential investments and ask questions about them? If so, maybe you don’t need investment advice. But if you’re busy with your job, your children, or other responsibilities, or feel you don’t know enough about investing on your own, then you may need professional investment advice. But, beware, choosing an investment professional may be more difficult than you think; when you think Bernie Madoff. There are many investment professionals working who you should avoid.
Investment professionals offer a variety of services at a variety of prices. It pays to comparison shop. You can get investment advice from most financial institutions that sell investments, including brokerages, banks, mutual funds, and insurance companies. You can also hire a broker, an investment adviser, an accountant, a financial planner, or other professional to help you make investment decisions.
Some financial planners and investment advisers offer a complete financial plan, assessing every aspect of your financial life and developing a detailed strategy for meeting your financial goals. They may manage, or receive commissions from the companies whose products or services you are getting, how much they will cost, and how your investment professional gets paid.
In contrast to investment advisers, brokers make recommendations about specific investments like stocks, bonds, or mutual funds. While taking into account your overall financial goals, most brokers do not give you a detailed financial plan. Brokers are generally paid commissions when you buy or sell securities through them.
Brokerages vary widely in the quantity and quality of the services they provide for customers. Some have large research staffs. Others specialize in particular types of companies, for example, companies that are new and have never been in business before.
A discount brokerage charges lower fees and commissions for its services than what you’d pay at a full-service brokerage. But generally you have to research and choose investments by yourself.
A full-service brokerage generally costs more, but the higher fees and commissions pay for a broker’s investment advice based on the firm’s research.
The best way to choose an investment professional is to know what type of services you need. Once you know that ask your friends and colleagues whom they recommend. Try to get several recommendations, then arrange a face-to-face meeting. Make sure you get along. Make sure you understand each other. After all, it’s your money.
WARNING!! Before You Invest Always Check with the SEC and Your State Securities Regulator:
>Is the investment firm registered with the regulatory agency? Go to finra.org/brokercheck
>Is the investment registered with securities regulators? Go to sec.gov
>Have investors complained about the investment in the past? sec.gov
>Have the people who own or manage the investment been in trouble in the past? Go to investor.gov
>Is the person selling me this investment licensed in my state?
>Has that person been in trouble in my state, or with other investors in the past?
You May Want to Think Carefully Before Deciding on Residential Real Estate As An Investment
Owner-occupied real estate is one of the best long-term investments one can make. History has shown owner-occupied real estate has produced tremendous long-term returns. In a few areas of the country the tremendous returns have even been short-term. In some cases homeowners have sold homes held 30 or 40 years, for 30 to 40 times their original cost. Other types of real estate investments, are the non-owner occupied rentals, and a combination of the owner-occupied/non owner-occupied rentals. The least expensive for maintenance cost is the owner-occupied real estate investment. The most costly is the non owner-occupied rental. The hardest part of real estate investing is to know when prices are inflated or down. To understand this you must do a lot of research or endure a lot of pain until prices stabilize. Residential real estate as an investment requires, skill, intelligence, research, intuition, a lot of time, very hard work, and luck.
The advantages and disadvantages for all three types of residential real estate as an investment is listed below.
Advantages of owner-occupied real estate are:
- You can qualify for the lowest interest real estate loans available
- You can qualify for low down payment consideration, of 5%-10%. There are also extra low-down payment loans for first time buyers who qualify, as low as 3% down.
- You qualify for a full array of owner-occupied tax deductions.
- Most owner occupied homeowners take pride and joy in maintaining their own home, so the long-term maintenance is usually reasonable.
- Owner-occupied real-estate profits have been tremendous when held long-term.
- There is a capital gain exclusion for taxes up to $250,000 if you have lived in the house for 2 of 5 years.
Disadvantages of owner-occupied real estate:
- The debt carried when a home is leveraged with a mortgage loan.
- The responsibility of up-keep, for some this is an advantage, since they enjoy the up-keep.
The next possibility for real estate as an investment is residential real estate rental property or 100% non owner-occupied property. A few investors have very good luck with rental real estate as an investment, while most find it very costly and highly stressful to deal with tenants, even when a management company is hired to collect rents and maintain the property.
The advantages of residential non owner-occupied real estate as an investment (rental property):
- It is possible to have high returns when held long-term.
- You can depreciate the property (this is far more advantages for property purchased prior to 1987 though, the depreciation deduction is much less after that year).
- You get a deduction for up-keep.
Disadvantages of residential non-owner occupied real estate as an investment (rental property):
- Non owner-occupied mortgage loans carry a higher interest rate than owner-occupied loans.
- Required down payment for non owner-occupied loans is much higher than owner-occupied loans. In many cases requiring 20%, compared to an owner-occupied loan of 3%-10% down.
- You must pay capital gains tax on profits, when you sell.
- Yearly maintenance cost for residential non owner-occupied real estate is usually much higher than owner-occupied cost. Most people simply do not properly maintain property that does not belong to them.
- Long-term maintenance cost can be phenomenally high.
- Is difficult to find reasonably priced properties in quality neighborhoods.
- Neighborhoods with a lot of “four rent” signs are particularly difficult to avoid vacancies.
- Lost rents are not deductible.
- A low quality neighborhood (that with high unemployment), brings a low quality tenant, i.e. the default rate on rent payment is high.
- The debt carried when the rental is leveraged with a mortgage.
The combination of an owner-occupied/non owner-occupied residential real estate can be a viable consideration for those who feel some form of non owner-occupied rental real estate is a must, as an investment. An example of a combination of residential owner-occupied and non-owner occupied real estate is a four-plex where you live in one unit, and rent the other three.
The advantages of the combination owner-occupied/non-owner occupied real estate investment:
- You can qualify for the lower interest owner-occupied mortgage loan.
- You can qualify for the lower down payment of 10% allowed with your owner-occupied real estate.
- You can deduct the repairs and up keep on the rental portion.
- You are present to monitor the repairs and encourage maintenance.
- You can depreciate the rental portion.
You have a better probability of purchasing a property in a quality community since your initial cost are lower than a non-owner occupied property. A quality community brings a higher probability of a quality tenant. Attracting quality tenants is probably the most important aspect of residential non-owner occupied investments.
Disadvantages of the combination owner-occupied/non-owner occupied real estate investment:
- Your tenants may know where you live.
- You can only deduct expenses for the rental real estate portion of upkeep, but not your own.
- You will be liable for normal capital gains taxes on the non-owner occupied portion when you sell. There is a capital gain exclusion on the owner-occupied portion.
- In our example, it would be 25% of the profit up to $250,000. This is current as of 2004.
Laws change on just about everything, yearly. Consult directly with current Internal Revenue publications for the latest changes.
See IRS publication 527 at www.irs.gov: Residential Real Estate Property
See IRS publication 523 at www.irs.gov: Selling Your Home
Privatize Social Security, Update 2018 – It’s Getting Worse
Some lawmakers would have you believe that social security is a massive debt program in terrible trouble. A Ponzi scheme is how many have characterized it.
A Ponzi scheme is when a person runs a fake investment company that uses new investor funds to pay old investors, instead of actual investment returns. Most or none of the money is ever invested in anything. Because of this, Ponzi schemes collapse in a short period of time.
The Ponzi scheme collapses because the money is used to finance a lavish lifestyle of the Ponzi and runs out when the Ponzi can no longer attract new money or when the investors want their money back. An example of a well-known Ponzi schemer is Bernie Madoff.
How does social security compare to a Ponzi scheme? It does not. First of all, it has not collapsed in a short period of time; in fact, it has lasted for 72 years. Unlike a Ponzi scheme, where only a small number of investors are paid what they invest until the scheme collapses, social security has paid out what employees have invested.
Social security is a low-cost benefit program that pays inflation adjusted benefits, and has not had any missed payments.
Social security takes mandatory payments from employees while most 401k accounts have voluntary participation. Unlike 401k retirement savings accounts pre-retirees cannot take loans against social security accounts. These are a few reasons that social security is more secure than a 401k account.
Another problem with 401k plans is because participation is usually optional, many employees do not understand that they will have a limited or no retirement if they do not participate in their 401k plan.
Now lawmakers are trying to politicize social security due to the aging American population, the social security trust fund will run low in coming years. This has given some politicians the excuse to privatize social security, turning billions of dollars over to Wall Street in 401k type investments. This would be far more costly than the current system and the beneficiaries of the program would get far less money at retirement.
The solution to the social security dilemma is simple. The current social security payroll tax limit is based on the employees first $106,800 in earnings, if this limit is raised just a small amount, a large part of the problem going forward will be solved by adding substantial money to the social security trust fund. There are other viable solutions as well. Putting our social security taxes in private 401k type wall street funds is not a viable solution. Find out more about saving money here.
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At MsFinancialSavvy.com, we are occasionally asked the question, “Why a financial website targeted to women?” The following article will attempt to explain our website.
>Women are three times more likely than men to be single parents, or early widows.
>Women are more likely to transfer budgeting and saving habits to their children.
>Single mothers today are still more likely to live in poverty than single dads.
>The percentage of men who invest is much greater than women who invest.
Why Focus on Budgeting and Investing?
> Women need to know how to budget and invest for emergencies, savings, college planning and retirement.
>Women need to know how to keep the money they earn, and increase their net worth, through budgeting and investing.
>There is a significant number of women who make high incomes but do not have enough money to pay monthly bills or to invest. The main culprit, is lack of budgeting skills.
>Woman need to know the field of budgeting and investing, so they can pass it along to their children.
Why invest rather than just save in a less than 1%, simple interest, bank account?
> In order to keep up with, and stay ahead of inflation and taxes, history shows that investing in stocks long-term has given us the greatest returns.
>Our website MsFinancialSavvy.com is important because many women have retirement accounts with their employer, but do not understand the investments in those accounts. Learning and using MsFinancialSavvy.com may enable you to understand the importance of funding your 401k and 403b employer retirement accounts. It will also enable you to choose the appropriate investment, when given a choice.
>Many women are self-employed, homemaker moms, or have a job that does not provide a retirement account. Since retirement planning is a mystery to these women, they choose not to fund a retirement account.
>Many women are not familiar with college savings plans.
>Woman need to know that saving with stocks and mutual funds, you can acquire compounded interest vs. the banks low simple interest rate.
>If women choose to use a broker to invest, understanding investments will increase chances that they are purchasing investments that are appropriate for them.
>In order to purchase stocks and mutual funds for an Online Investment Account, women must understand the stock market first.
Use MsFinancialSavvy.com to learn to budget and invest money now! If you are already familiar with stocks and mutual funds you can use our tutorials for a review. Use our stock quotes and charts, financial calculators, feature articles, book reviews, and investment bookstore, whether you are a beginning, intermediate, or advanced investor.
Start an Online Investment Club at MsFinancialSavvy.com, and learn to invest money with your friends and family members.
MsFinancialSavvy.com is targeted to women, but everyone is welcome!!! Use these financial tools with our website.
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As a part of the health care reform bill President Barack Obama signed a long over due education reform bill as a part of the health reform package. College has become progressively more expensive and less affordable for the middle class in America. The education reform bill is absolutely essential.
The key points of the education reform bill is as follows:
1. Ends subsidies to special-interest private lending companies, cutting out the middle man and decreasing the cost of school loans.
Under the current program banks can act as the middle man for federally subsidized student loans, collecting billions of dollars in federal subsidies, protecting either government money or bank money from default. Under the new program, starting July 1, 2010 banks can still offer student loans, but they are not guaranteed by the government. Cutting out the banks as the middle man will create more money available for more and cheaper college school loans, coming directly from the government.
2. Doubles funding for Pell Grants to help more students afford a college education.
The extra money from decreased bank subsidies will go to more and larger Pell grants. Pell grants are targeted to low and moderate income students, more than $40 billion will go toward these grants. The maximum award will increase to $5,975 from $5,550 and the number of available grants will nearly double.
3. Will cap a graduate’s annual student-loan repayments at 10 percent of his or her income.
This will insure that every graduate can make their school loan payment, therefore decreasing the amount of school loan defaults and saving graduates credit ratings. For students who make their payments on time the government will forgive their balance after 20 years, instead of 25. Public service workers (teachers, nurses, police officers) or those in the military will see their loans forgiven after 10 years.
4. Helps an additional 5 million Americans earn degrees and certificates over the next decade, by revitalizing programming at our nation’s community colleges.
Community colleges, a growing population, will receive $2 billion over the next 4 years.
5. Increased funding to HBCU’s.
Over the next 10 years these colleges will receive an additional $2.5 billion in funding. Get more personal finance education here.