Wednesday, December 10, 2014

Can You Invest While You Are in Debt?

Most people carry some form of debt. It could be $800 in credit cards, $120,000 in mortgage, and/or $15,000 in student loans. Everyone's debt load is different, as are the kinds of investments that you will be able to make while in debt.

When considering how much to invest while paying off your debt, it is more important to look at the rate of interest that you are paying than the total you are paying. If you are paying off your mortgage at 3.5%, that debt is growing at a very slow rate. Sure, you would save thousands of dollars in total payment if you were able to pay it off all at once, but you experience that loss very slowly and gradually, often over either 15 or 30 years. Student loan debt is similar in that it is also paid off with a low rate of interest. By paying off just the minimum amount and putting the rest of your spare money into savings and investments, you have likely made a wise decision.

The thing you have to keep an eye on is the rates. If you have mutual funds that are yielding 8.9% every year, and a student loan at 4.6%, you are making money faster than you are losing it. However, if you are paying off a credit card at 23.9%, you are losing money much faster than you are gaining it with those same mutual funds. In this situation, it is much better to kill off the big interest debt before allocating much to your other investments.

There are two exceptions I would recommend for certain individuals:

1)    Limited Funds in High Risk, High Reward Investments. Of course this won't work for everyone. But some people become very skilled at an investment form called spread betting. It's a form of day trading where the user wagers on the behavior of markets and stocks, whether they will grow or shrink within a certain time frame. Get it right, and you win; get it wrong, you lose. You can make thousands of trades a day if you want to (though I don't recommend it). If you limit your investment to between 5-10% of your investment dollars, you may see a huge return, if you're careful. Use the free tutorials to see how you do before you sink much money in risky investments, despite their excellent payoffs.
2)    Everything you can spare in tax-deferred accounts. IRAs (Individual Retirement Accounts) are a way to save money in the stock market, but avoid paying taxes on it. You can choose to pay taxes now (and not when you withdraw at retirement). You can also choose not to pay taxes now (waiting to pay when you retire). Because these monies, invested in index mutual funds, mirror the overall growth patterns of the market, you're all but guaranteed to make money over time. You'll also have compound interest working for you, you yields going back into the pot to swell with the rest of your money.


Investment is tricky for people in debt. Getting out of debt should be your first priority, unless the debt you have is very low-interest. If you've gotten rid of your bad debt, invest away. 

Wednesday, December 03, 2014

How to Save Money when you are Unemployed



When you lose your job, it can be extremely difficult emotionally, physically and financially. But, you can make being temporarily unemployed much easier by saving as much money as possible. If you don’t have a budget, now is a great time to start one. If you want to make it until you find another job, you will have to make sacrifices and you will have to create a budget. You can save money when you aren’t bringing any (or you are bringing in very little) money in. To assist you in your time of need, make sure you are receiving all the financial entitlements that are available to help you with cash flow.

Here are a few ways you can save/make a little extra money to hold you over until you find another job:

Cut out luxuries:
When you are unemployed, one of the easiest ways you can save money is cut out nonessential spending. This includes television, internet, mobiles and eating out. It isn’t fun and it isn’t going to be easy, but simply eliminating or cutting back on luxury spending will make it easier to pay your bills and keep a roof over your head.

Skip debt payments:
No one wants to default on loans or credit cards but if you have to choose between paying a credit card bill and putting dinner on the table, food wins out every time. When you are unemployed the only things you need to worry about is food, shelter and necessities (clothing, utilities and medical expenses). Catch up on your debt payments when you can. It may mean that you’ll have to give up your fancy auto in favour of public transportation, but you could save a lot of money by not having to make an auto payment, pay for gas or pay for auto insurance.

Sell items you don’t need:
When you are unemployed you may find that some things you thought were important aren’t quite as important anymore. This should make it a bit easier to sell some of those items for quick cash to help purchase groceries or pay bills. Sell old furniture (that you don’t use), DVDs, gaming systems, gently used clothing etc. Depending on how much you have to offer, you could earn enough to keep paying a few bills.

Cut back on utilities
Try cutting back on electricity and gas bills by wearing extra clothes, like a sweater and socks, instead of turning up the heater. When it’s warm, use fans instead of an air conditioner. You can also save money by shutting off lights, washing clothes at night and unplugging televisions, computers and gaming systems when they aren’t in use.

Move to a cheaper home:
This is not idea, particularly if you’ve purchased your own home, but a mortgage payment can be expensive. If you find yourself unemployed for a length of time, selling your home can save you money to be used on other necessities. If you really don’t want to sell your home, consider renting out a room to help offset the monthly payment.

Unemployment can happen to anyone. While it is most always unexpected, it doesn’t have to break you. Finding simple ways to cut back can help keep your family afloat until you are able to find work again. You may even be surprised to find that living with less creates less stress and more time to focus on the things that really matter.

Tuesday, November 18, 2014

Trading Forex: The Best Decision You'll Ever Make

A new investment market can be a scary and exciting thing.  Forex trading has been making headlines, is the subject of many books and personal finance blogs across the Internet.  While it is full of exciting possibilities, it is also the least regulated market for trading.  Don’t let worries about scams or unregulated markets keep you from investing in the Forex market.  Trading Forex can be the best decision you will ever make.
Great for nontraditional investors.  For those of us who can’t spend our 9 – 5 working day checking the markets, online Forex trading is a great option.  The Forex market is available 24 hours a day, 7 days a week, meaning the night owl, the new mom and anyone else who can’t fit into a Wall Street schedule can begin investing without having to wait for the markets to open.
More control.  Forex investing requires a broker, but that doesn’t mean you lose control of the process.  You have the choice of online or traditional brokers, and that means you can choose your level of investment control as well.  Most investors like the freedom of online trading with an online broker.  An online broker is there to offer advice 24/7 instead of during traditional working hours. 
Great software platforms.  With Forex trading software like Metatrader, investors can take advantage of practice rounds to help them fully understand the process.  This way, you are not learning your lesson the hard way by spending your money in the market.  Software platforms have a great step by step process to help new investors learn how to read the quotes, read pips and track their performance. 
These great advantages of online trading in the Forex market means there has never been a better time to experiment with the currency markets.