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A stock, a.k.a. share or equity, represents one is ownership of a company. For example, a person who has 100 shares of company A, out of its total of 1000 shares, means he owns 10% of the company. As part owner of a company, the shareholder earns, when the company makes profit. In the same way, if the company loses, so does the shareholder.
A stock market is a place (real or virtual) to trade (buy and sell) one is stocks. The New York Stock Exchange (NYSE, http://www.nyse.com/home.html) and the NASDAQ (http://www.nasdaq.com/) are examples of real and virtual stock markets, respectively.
That is a brief overview. For a more comprehensive understanding, go to http://www.investopedia.com. For the stock market investment newbie, try to play a virtual game at http://investsmart.coe.uga.edu/C001759/usmarket/usmarket.htm, without spending dime. Students can practice stock market investment at www.smgww.org. and www.stocksquest.com.
Then why invest in stocks? Because it earns 10% – 12%. This is higher than any other type of investment (savings account, bonds and the like). The way to earn is to sell your stock market investment at a higher price than when you bought it; the price difference is your profit. You can earn in 3 ways:
1. Buying stocks at IPO (Initial Public Offering). When companies decide to sell stocks, they will offer it at an initial price. After some time, with the company is good performance, the initial price increases, thus the earning;
2. Dividend. As a reward for investing in their company, the company may choose to give a portion of its earnings to its investors through dividends per share. However, this not a requirement for stock market investment, but purely voluntary;
3. Trading stocks. If you intend to invest in Company A, but did not catch its IPO, you can still do so by buying at the stock market. A broker, in your behalf, will bid for the best-priced stock of Company A, according to the price you want. The same happens, when selling. Compare and find the best broker at http://www.fool.com/dbc/tables/compare.htm?ref=60broker.
The key to success stock market investment is to know everything there is to know, about the company and the factors affect its performance. Consult the following:
The official website of the company. This should show the company’s corporate set-up, financial health and organizational structure as well as historical data of their stock performance.
Investment websites such as Yahoo!Finance, MSN Central and DowJones MarketWatch;
The news. To be aware of all the factors that may affect your investment, be updated with the news. For all you know, the weather forecast is the ace up your sleeve.
Knowledge is power and so it is in stock market investment. Invest successfully, with the power of knowledge!
A stock market is a place (real or virtual) to trade (buy and sell) one is stocks. The New York Stock Exchange (NYSE, http://www.nyse.com/home.html) and the NASDAQ (http://www.nasdaq.com/) are examples of real and virtual stock markets, respectively.
That is a brief overview. For a more comprehensive understanding, go to http://www.investopedia.com. For the stock market investment newbie, try to play a virtual game at http://investsmart.coe.uga.edu/C001759/usmarket/usmarket.htm, without spending dime. Students can practice stock market investment at www.smgww.org. and www.stocksquest.com.
Then why invest in stocks? Because it earns 10% – 12%. This is higher than any other type of investment (savings account, bonds and the like). The way to earn is to sell your stock market investment at a higher price than when you bought it; the price difference is your profit. You can earn in 3 ways:
1. Buying stocks at IPO (Initial Public Offering). When companies decide to sell stocks, they will offer it at an initial price. After some time, with the company is good performance, the initial price increases, thus the earning;
2. Dividend. As a reward for investing in their company, the company may choose to give a portion of its earnings to its investors through dividends per share. However, this not a requirement for stock market investment, but purely voluntary;
3. Trading stocks. If you intend to invest in Company A, but did not catch its IPO, you can still do so by buying at the stock market. A broker, in your behalf, will bid for the best-priced stock of Company A, according to the price you want. The same happens, when selling. Compare and find the best broker at http://www.fool.com/dbc/tables/compare.htm?ref=60broker.
The key to success stock market investment is to know everything there is to know, about the company and the factors affect its performance. Consult the following:
The official website of the company. This should show the company’s corporate set-up, financial health and organizational structure as well as historical data of their stock performance.
Investment websites such as Yahoo!Finance, MSN Central and DowJones MarketWatch; The news. To be aware of all the factors that may affect your investment, be updated with the news. For all you know, the weather forecast is the ace up your sleeve.
Knowledge is power and so it is in stock market investment. Invest successfully and make money, with the power of knowledge!
Sometimes people end up with more debt than they can handle. Often it is not due to irresponsibility, but to circumstances beyond one’s control. Job loss, unexpected medical expenses and other such situations can cause finances to take a sudden turn for the worse. When such things happen, bankruptcy can ease the financial burden.
Bankruptcy should only be used when all other alternatives have been exhausted. It remains on your credit record for ten years, making it difficult or impossible to obtain loans and other types of credit. But in some cases, it is a debtor’s only hope for relief. If you’re considering bankruptcy, it’s important to know which type is best for your situation.
Chapter 7
Chapter 7 is the most common type of bankruptcy for individuals. It requires the debtor to turn all non-exempt property over to a trustee. The trustee then liquidates the property, distributing the proceeds to creditors to lower the debt. The remainder of the debt is usually discharged, as long as it doesn’t fall into categories that are ineligible for discharge.
Those filing for Chapter 7 bankruptcy must pass a means test to show that they are unable to repay their debts. Generally, they must have a total income below the mean income for their family size in their state. Those who do not qualify for Chapter 7 usually qualify for Chapter 13.
Chapter 11
Most Chapter 11 bankruptcies are filed by businesses, but individuals are also eligible for this type of bankruptcy. This type of bankruptcy is costly and complicated, and is only appropriate for individuals under certain circumstances that involve large amounts of debt and assets.
In Chapter 11 bankruptcy, the business (if applicable) may continue to operate. A repayment plan must be written and approved by creditors and the bankruptcy court. A trustee is not appointed unless there has been some sort of wrongdoing by the filing party.
Chapter 13
Chapter 13 bankruptcy is the second most common type of bankruptcy filed by individuals. In order to qualify, debtors must have an adequate amount of disposable income and their debt must fall below limits set each year.
Instead of turning over assets and having the debt remaining after their liquidation discharged, the debtor proposes a repayment plan in which he will repay creditors over a period of three to five years. Creditors may object to the payment plan, but the bankruptcy court has the final say as to whether it is accepted. The debtor is allowed to keep his property, and he pays creditors a reduced amount.
Bankruptcy is not something to be taken likely, but sometimes it is necessary to help debtors get a fresh start. A bankruptcy attorney can help determine whether you should file, and if so which type of bankruptcy is appropriate for your situation.
It’s never too early to start thinking about your children’s college education. The sooner you start saving, the greater the chance your child will have enough money to get through college with no worries. But when considering college savings, many parents are unsure just what they should do with the money.
You could stuff it in a sock drawer, but it would have no chance of drawing interest there. A savings account might be slightly better, but any interest earned would be taxed. A 529 plan is a much better option.
529 plans are similar to 401K plans, but they’re for higher education instead of college. Parents, grandparents or anyone else can put money into one for a specified beneficiary. Any interest earned is tax-deferred, and if the money is left in the account until the child goes to college and used for college expenses, there is no tax liability.
There are two basic types of 529 plans. The College Savings Plan is the most similar to a 401K. Investors are allowed to choose from a variety of investment options for the plan, and their money earns interest according to the investments’ performance. The Prepaid Tuition Plan is different in that it allows contributors to purchase tuition credits at current prices to use in the future.
Most 529 plans are run by states. Every state offers at least one plan. Each plan is different, but most require either the plan owner or beneficiary to be a resident of the state issuing the plan. Some allow residents of any state to invest, but out-of-state residents may not be eligible for all available tax benefits. In most cases, the funds from state-run plans may be used at any college or university, even if it is not located in the same state.
There are also 529 plans offered by colleges and universities. All plans offered by educational institutions are prepaid tuition plans. Unlike state-run prepaid tuition plans, however, those run by schools are not guaranteed by the government.
The funds withdrawn from a 529 plan must be used toward eligible expenses. With prepaid tuition plans, these generally include only tuition and mandatory fees. Some plans, however, offer an option to purchase room and board credits or use extra tuition credits for these expenses. Money withdrawn from college savings plans may be used for tuition, fees, books, computers and room and board.
A 529 plan can help you save money for education without incurring a huge tax bill. These plans are easy to set up, and all of the investing is taken care of for you. All you need to do is make contributions and make sure that the beneficiary uses the funds properly when the time comes.
Understanding the nature of the stock market, including its pros and cons, doesn’t have to be confusing one. Many people fear that in order for them to know the nature of the stock market, they have to understand a gamut of stock and marketing terms and all that jazz.
On the other hand, some people saw behind the veneer of all these economic gibberish, and saw the potentials of what they could get from investing in the stock market.
In a nutshell
Simply put, the stock market is the market to buy and sell stocks and shares. This is where company stock gets traded. The term is also used to describe the totality of all stocks in one country. That is why we hear reporters talking that “the stock market was up today” or that “the stock market went down after the dollar fell to the euro.”
What are the pros and cons of the stock market?
One of the reasons why we need the stock market is because it is an important factor for the US economic system to operate. Through the stock market, US companies improve their financial viability and expand their operations by raising funds from selling stocks. Without the stock market, our companies become slower in their growth and might falter in the increasing competition in the US as well as against international companies.
Another reason for the existence of the stock market is that it also has role in personal financial planning. This is because many individuals buy stock shares as part of their personal financial strategies. More importantly, most Americans have a stake in the stock market because retirement programs invest in stocks. It has shown that retirement programs earn a lot more by investing in common stocks than other options such as saving the funds in banks.
Of course, the stock market also has its downsides. Remember that the stock market is not a tool for instant success. True, there are cases of one getting wealthy by investing in the market, but this involves having shares in various company stocks, which means a lot of research, time, and money. One also gets rich when some stocks become “hotter” such as the “dot-com” bubble in the nineties, but when the initial buzz around these stocks falter, the value of these stocks tend to crash.
Understanding how stock market price rises and falls is similar to understanding the prices of other products in the market. It also follows the law of supply and demand. Price of stocks rise and fall due to the following reasons:
1. Company profit projections and image
A company growth and profit forecasts describe how capable a company is in delivering its promises to its investors. These numerical projections are carefully prepared by a company based on their past profits and projected additional profits due to new products and services, operations and infrastructure improvement.
Aside from profit forecasts, company image can also make an impact on a company profitability. Rumors of change in management, take-over, mergers, and even personal issues about the company top executives can affect the company image.
For example, a rumor of a merger between two big companies projects more stability and greater profit projections for both companies. As more investors would want to buy stocks from these merging companies, the demand for their stocks will rise. Based on the law of supply and demand: the greater the demand for stocks, the higher will their prices be.
A bankruptcy rumor about a company can send its investors to sell all their stocks. If there are more sellers than buyers of stocks then the supply (of stocks) is greater than the demand for stocks thus, stock price will fall.
2. Political Economy
General news about the local and global politics has an immediate impact on the economy and consequently to stock market prices. Politics and economics are correlated. Positive news such as lower unemployment rates, increased productivity, peace and order, and strong confidence in the government has positive impact on the economy. Such news encourages more local and international investors to open companies in a certain location or country. This in turn would generate more jobs, and as an effect, would encourage more trading in the market at higher stock prices in general due to the increase in demand for stocks of different companies.
On the other hand, negative news such as political instability and turmoil, security problems such as terrorism and insurgency, frequent strikes, and inflation has negative impact on the stock market prices. Investors are driven away by these things and close-up. As an effect, more stockholders would sell out. This creates more sellers than buyers thus stock market prices fall.
3. Interest rates
Higher interest rates are associated with a slump in economic growth. This creates a sluggish environment where investors become apprehensive in buying stocks. Either they keep the status quo or sell out their stocks. When the demand for stocks is not high, prices will go down.
Our credit scores play a big role in determining the results when we apply for a credit card or loan. A good credit score can help us get the credit we need at the best possible rate. A poor credit score could result in a higher interest rate or denial of credit. It is in our best interest to make sure our credit scores are as high as possible.
The credit bureaus keep the exact method for figuring credit scores a mystery. But there are a number of factors that are known to impact our credit scores. Here are five things you can do to improve yours:
1. Keep an eye on the information contained in your credit report. Sometimes the bureaus make mistakes, and identity theft can also wreak havoc on one’s credit report and score. Federal law requires each credit bureau to provide one free report per year to any consumer who requests it online, by phone or in writing, and we are also entitled to a free report if we are denied credit. So check your report regularly, and if you find any inaccuracies, dispute them in writing.
2. Always pay your bills on time. Even if you’ve made payments late in the past, keeping current bills paid on schedule will help raise your credit score. The longer your history of keeping payments current, the more it will improve your credit score.
3. Keep credit card balances low. Just because you have a $10,000 credit limit, that doesn’t mean you should use it all. A good rule of thumb is to keep each credit card balance at or below 25 percent of the limit. Even if you have a perfect payment history, carrying too large of a balance can adversely affect your credit score.
4. Avoid opening too many accounts in a short time frame. This is especially important if you have a short credit history, but it also applies if you have well-established credit. Opening lots of accounts in rapid succession raises concerns that you could get in over your head, hence lowering your credit score.
5. If you pay off an account, keep it open. This will help by lengthening your credit history. It can also reduce your balance to credit limit ratio, unless you transferred the balance to another card.
Improving your credit score is not as difficult as you might think. A few simple adjustments can really make a difference, but it does take some time. If you are planning to apply for credit, start working on your credit score a few months ahead of time. This will increase your chances of getting the loan or credit card, and it could save you lots of money on interest.
Sometimes unforeseen circumstances can take a toll on our finances. We may get into more debt than we can comfortably repay. Or we may experience health problems or job losses that leave us with less money. Bankruptcy may seem like the only answer, but is it?
Many consumers who are having trouble paying off unsecured debts seek credit counseling. The process often involves analyzing your financial situation and determining how you can best pay off your debts while preventing further damage to your credit. While some who seek credit counseling still end up filing for bankruptcy, others find that it is just what they needed.
How Credit Counseling Works
The first step in credit counseling is the consultation. This is often free, but some agencies charge fees. Debtors must make a list of their debts, balances and payment amounts for the counselor to work with. Depending on your individual situation, the counselor may help you rearrange your budget to accommodate your current payments, suggest debt management classes and/or help you develop a debt management plan.
A debt management plan is often suggested for those who are truly in more debt than they can pay. It involves negotiating with creditors to obtain lower interest rates and monthly payments. The credit counselor does this on your behalf, and once negotiations are complete, determines your total monthly payment and length of time it will take to pay everything off.
If you agree to the plan, you start making a single payment each month to the credit counseling agency. The counselor then forwards the appropriate amount to each creditor. Fees may be added to the payment, or they may come out of the amount you’re paying your creditors.
Good credit counseling agencies will offer more than just debt management programs. They realize that while these programs work for some people, they are not for everyone. Some merely need help creating and sticking to a budget. Others would be better off filing for bankruptcy. Even those for whom a debt management program is a good fit should be strongly encouraged to work on their money management skills.
There are a few things to look for when considering a credit counseling agency. First of all, agencies must be licensed to operate in your state before they can work with you. They should tell you their fees up front and offer free information about what they do. Their counselors should be accredited or certified by an outside organization, and should also be required to have extensive education in finance.
For some, bankruptcy is the only way to put their debt behind them. But other consumers can benefit from credit counseling. A reputable agency can help you pay off your debts while still having enough money to live on and improving your credit score.
If you’ve ever applied for a loan or credit card, you’ve probably been subjected to a credit check. It’s the thing that lenders use to determine whether or not they are willing to do business with you. This is why many consumers cringe when they hear the words “credit report.”
A credit report can help or hurt you, depending on how well you’ve managed credit in the past. If you’ve had little or no credit, lenders won’t have much to go on, so you may not be approved. If you’ve gotten behind on payments or run up more debt than you could handle in the past, lenders may determine that you’re too risky to work with. But if you’ve kept your debt manageable and made your payments on time, you shouldn’t have much trouble borrowing money.
Credit reports contain extensive information regarding your credit history. Here is what you will find on your report:
* Your name and address history – Your creditors inform the credit bureaus of changes in your name and address. This information should be up to date if you have open accounts, but otherwise it might not be.
* Your Social Security Number – This is used to track your credit information and make sure that it is included in the correct report.
* The names of your creditors, account numbers and account types – This indicates who you borrowed from and the nature of each account. Common types include installment loan, revolving credit, auto loan and home loan.
* The dates your accounts were opened – If you have closed accounts, the date closed will be shown as well.
* Your credit limit or high credit and balance – A credit limit is shown for credit cards and lines of credit. For loans, the highest balance is shown. The current balance is also included.
* The amount past due on each account – If you are behind, the creditor will report how much you need to pay to make your payments current.
* Number and length of delinquencies – Each time you are late with a payment, your creditor reports it. Delinquencies are broken down into three groups: 30-60 days late, 60-90 days late, and over 90 days late.
* Accounts in collections – If a creditor has turned your account over to a collections agency due to non-payment, this will be noted on your credit report.
* Credit inquiries – When a lender checks your credit, the credit bureau makes a note in your file. Inquiries remain on your report for 90 days.
* Public records – If you’ve had a judgment filed against you or filed for bankruptcy, the credit bureau will learn about it through public records and display it on your credit report.
This information plays an important role in a lender’s determination of your creditworthiness, but it’s not the whole story. Lenders also look at a number of other factors, including income, employment history and debt-to-income ratio. Keeping your credit report in good shape is very important, but even a perfect credit score doesn’t guarantee that you’ll be able to borrow all the money you want.
Bad credit can haunt us for a long time. Late payments we made years ago can affect our chances of getting a loan or credit card now, and possibly for years to come. Many people face this dilemma, and that is why credit repair has become such a hot topic.
The offers are enticing. For a few hundred dollars, or sometimes more, firms offer to erase bad entries from your credit report. But if it were that easy, wouldn’t more people be doing it?
Unfortunately, a great many credit repair companies are nothing more than scam operations. They promise to remove every negative entry from your credit report, and then they do something that you could have done yourself at very little cost: they write dispute letters to the credit bureaus. This will only help if those negative entries are inaccurate, incomplete or unverifiable, or if they have been on your report for more than seven years (ten years for bankruptcy).
Some credit repair firms also advise their clients to do things that are illegal, such as attempting to create a new identity. They instruct clients to apply for an Employer Identification Number (EIN) or a new Social Security Number, alter their names and addresses, and apply for credit using this information. This could subject you to both criminal and civil fraud charges.
Not every credit repair firm is bad, though. There are many that operate within the law. They help clients dispute only items that are erroneous, and use legal tactics to persuade the credit bureaus or the creditors themselves to remove those items. It is important to remember, however, that any consumer can write the required letters himself instead of paying someone else to do it.
What to Look For
When considering a credit repair firm, there are several things to consider. Those that are out to take your money usually bear a few red flags. These include:
* They guarantee to remove all negative entries from your credit report. No one can legally remove legitimate entries.
* They discourage you from contacting the credit bureaus or your creditors on your own. Often they are afraid that if you do so, you’ll realize that you could remove the same things yourself that they want you to pay them to remove.
* They advise you to use illegal tactics to improve your credit. If you’re in doubt about something they ask you to do, ask questions. If you’re not satisfied with the answers, speak to a lawyer about it.
It is entirely possible to do your own credit repair. If there is inaccurate or old information on your credit report, you can often take care of it with a single letter. A good credit repair firm may be of use if you do not have the time or inclination to do it yourself, but they cannot do anything for you that you couldn’t do on your own.
Credit can help us get the things we need and want. For most of us, credit is required to buy a home or car. We can also use it to buy everything from vacations to groceries. And increasingly, our ability to rent an apartment or get a new job hinges on our credit.
Our credit files are maintained by credit reporting agencies, also known as credit bureaus. In the United States, there are three agencies that keep track of everyone’s credit: TransUnion, Experian and Equifax. Creditors use information provided by these agencies to determine a borrower’s creditworthiness.
What Kind of Information Do Credit Reporting Agencies Keep?
Credit reporting agencies maintain a file on each person who has obtained credit. This file includes personal information such as the person’s name, address and phone number, as well as his Social Security Number. It also includes a list of accounts that have been obtained under that name, as well as the amount borrowed and payment history associated with those accounts.
The agencies get this information directly from lenders. Most report to all three agencies, letting them know if you have made your payments on time. If you haven’t, they report how late your payments were and whether any collection action was taken.
Credit reporting agencies also have access to public records. That means that they can find out if you have had any judgments against you, or if you have filed bankruptcy. This information, if applicable, is added to your credit report. The agencies do not, however, list any information pertaining to driving or criminal records.
Who Can Access Credit Reports?
Credit reporting agencies are required by law to only release credit reports to companies that have a legitimate need for a person’s credit history. These include lenders, employers, landlords, insurers, and in certain cases, government agencies. The average person cannot legally access someone else’s credit report.
You can, however, access your own credit report. By law, each individual is entitled to a free copy of his credit report from each of the three credit reporting agencies each year. In addition to this, you may also request a copy from the agency used by a creditor who denies you credit within 90 days of being turned down. You may request a copy of your report in writing or online, but you must provide identifying information to prove that you are who you say you are.
If you find information on your credit report with which you disagree, you can dispute it. The agency will investigate your claim, and if it finds that the information is erroneous, it will remove it from your report. If it maintains that the information is true, you can place a note with that information that must be passed on to anyone who views your credit report.
Credit reporting agencies simply pass on information obtained from creditors. They do not determine whether or not we can obtain new credit. They do, however, give lenders the information they need to make that decision for themselves.
