Cost of Education

The following is a guest post. Enjoy!

In Bob Dylan’s memorable song Mr. Tambourine Man there are some interesting verses such as, ‘How many roads must a man walk down before you can call him a man…’. The path to growth and enlightenment, and certainly to financial independence is education. Wisdom is the sum total of our life experiences – both theoretical and practical, while success comes from a clearly formulated plan. Very little comes from haphazard behavior, unless of course it’s a windfall payday off a lucky lottery ticket.

For most of us, achievement is the result of working intelligently towards an objective. With this in mind, it’s important to formulate a blueprint for academic excellence. In the United States, tertiary education is a major expense item. By the time a young adult enters high school it is important to start planning for college. Unbeknownst to many students, the federal government offers many programs to assist students in paying for their schooling. These include grants, work-study initiatives, and loans. This federal aid is often what makes the difference between being able to pay for college education or not.

Understanding What Options Are Available for FAFSA

Depending on what type of education a student is looking for, costs can vary from a couple of thousand dollars a year to tens of thousands of dollars per year. Community colleges offer an alternative path to regular college, after completing 2 years before credits can be transferred over. This is an affordable option for many folks, and a workaround to the high costs associated with traditional colleges. There are several ways that students can enjoy federal aid, including the Free Application for Federal Student Aid. Otherwise known as FAFSA, this determines your personal eligibility for different types of student aid. The form can easily be completed online and can translate into free money for a college education. Students who apply for these forms of government aid may be enrolled in work/study programs or approved for different types of loans.

The bureaucratic red tape surrounding many federal aid programs is a disincentive to many folks. Fortunately, there are services out there that make it relatively easy to determine qualification for student aid, given specific criteria. The application process is 100% free, since there is an official federal government site available. Even universities and colleges across the United States use FAFSA applications to determine a student’s eligibility for non-federal student aid. Once the low-interest loans have been approved, students can use that as a tool to build their credit scores. The competition to enter US colleges is fierce. Students who show initiative by actively applying for student aid often fare better in admissions than others. Since the application process can typically be completed in under 30 minutes, it is an easy way to begin taking meaningful steps towards a college education.

Facts and figures:

  • Students can apply early for FAFSA loans – as early as 1 October
  • The deadline for students is 30 June
  • Corrections must be made by 15 September
  • Early applications do not guarantee early loans
  • Tax forms from the previous 2 years must be presented
  • Every year $150 billion is dispersed in federal student aid
  • You don’t need to apply to a college before you apply for Federal student aid loans

There are many benefits to receiving one of these loans, including no payment until graduation. It is also possible to temporarily postpone payments, or even lower payments accordingly. If a graduate works in public service, a significant chunk of the loan may be foregone. In an era of rising interest rates, such as the present, FAFSA loans are offered at a much lower rate than credit cards and personal loans.

What Are the Golden Rules for Investing in Gold?

The following is a guest post. Enjoy!

To many people, gold is the ultimate safe-haven financial instrument. This is only true if you understand the nature of the financial markets, and how the interactions between elements will impact the gold price. For example, the recent case of the Fed rate hike on March 15, 2017 serves to remind us that traditional theory does not always apply in practice. Typically, a Fed rate hike would increase the interest-rate and drive up demand for the USD. Since gold is a dollar-denominated asset, the demand for gold and the price of gold should decrease accordingly.

We saw a complete reversal taking place. The USD weakened dramatically, hitting 5-month lows against major currency pairs, and the demand for gold skyrocketed. Of course the Fed interest-rate decision does not disprove the correlation between the gold price and the strength of the USD. It is simply the lack of coherence between the Fed rate hike and the USD that let us down in this case. Many people today purchase gold in one form or another to hold as an investment. Some folks purchase gold ETFs such as SPDR (GLD) on the New York Stock Exchange, while others purchase physical gold coins, gold stocks and/or gold jewelry.

Is Gold an Appreciating Asset Over the Long-Term?

One of the things about gold that is almost universally accepted is its safe-haven status. But what exactly does this mean? As we have seen, strong financial markets can also lead to a strengthening of the gold price, despite protestations to the contrary. Many gold ETFs (exchange traded funds) are comprised of multiple businesses such as gold mining companies, physical gold bullion, gold ETFs etcetera. If other investments are falling in value, will the gold price rise in value? Not necessarily. At the height of the financial crisis in 2008, the gold price spiked, and it makes sense because global markets were going into meltdown. But anything other than a financial meltdown should be able to provide direction to gold traders.

Rather than worrying about whether gold is the perfect safe-haven investment when equities markets sour, it’s important to have gold as part and parcel of a balanced financial portfolio. It can be thought of as a hedge against uncertainty and equities weakness. The gold price is extremely volatile, even at the best of times. 10 years ago, the price of gold was approximately $650 per ounce, and it has doubled in price since then. Overall though, the gold price is subject to massive fluctuations.

Back in 2011, gold peaked at $1,900 per ounce, but now it’s trading around $1,250 per ounce. One of the ways to capitalize on gold price movements is with CFD Trading. If you’re not adept at trading the financial markets with institutional brokerages, it behooves you to consider contracts for difference as a better way to dabble in gold trading. CFDs are fully regulated by the FCA (Financial Conduct Authority) in the United Kingdom, and elsewhere across Europe. Rather than actually owning stocks of gold, traders are speculating on future price movements and generating profit accordingly.

A Fascinating Look at the Performance of Gold in 2016

Gold is one of the most interesting financial instruments to trade. It is revered for its safe-haven status, and it is the go-to investment option when equities markets sour. In 2016, some interesting trends were evident in gold demand. For starters, gold demand increased by 2% (year-on-year) in 2016 and reached a 3-year high figure of 4,308.7 metric tonnes. One of the biggest drivers of gold – exchange traded funds – saw annual inflows of 531.9 metric tonnes, the second best reading ever. However, there were some negatives in gold demand in 2016.

For example, central bank purchases of gold bullion dropped markedly and demand for gold jewelry also plummeted. As far as ETFs are concerned, the recent performance (2016) showed an uptick of 532 metric tonnes of gold, marking the second highest figure ever. For the year ending December 31, 2016, the gold price inched up 8%, largely due to capital inflows. On the flip side, gold jewelry demand plunged to a 7-year low and this offset many of the gains enjoyed by gold.

The Bottom Line – Making Gold Trades Count

CFD trading, ETFs, mutual funds, physical gold bullion, gold shares and other investment options are available to traders looking to capitalize off this precious metal. Gold should certainly be considered as part of a balanced financial portfolio, as it has tremendous resilience over the long-term. However, traders should be cautious not to go all-in with gold as it has proven itself highly volatile over time. Be advised that the performance of gold ETFs does not always mirror the performance of gold itself. Once you’re ready to invest in gold, consider your options accordingly.

How Hard it is to Hang Onto Your Money?

The following is a guest post. Enjoy! 

One of the main reasons that we use banks is security. Sure there are other benefits – organization, centralization of different accounts, cards, benefit programs, lending, etc. But central to a bank’s identity is the fact that they keep your money safe. The concept simply doesn’t work without that aspect.

That’s why the ongoing PPI scandal from the past several years has been so alarming. Bank customers, without their knowledge or consent, were issued policies for Payment Protection Insurance (PPI for short). PPI isn’t a bad form of insurance on its own, but when it is sold fraudulently, as it was to thousands of consumers across Europe by banks and insurers, then there is a major problem.

PPI claims have poured forth by the thousand since the scandal emerged several years ago. Multiple class action and individual lawsuits are pending, and many individuals have already received restitution. If you find PPI payments drafting from your account, it’s important that you read a PPI claims guide soon, and get in touch with PPI claims handlers.

PPI as Emblematic of a Deeper Banking Problem

Even if you do not personally have PPI auto-drafting from your bank account, there are a number of other ways that large banks have been recently caught in defrauding their own customers. We only have to look back at Barclays Bank as an example.

The results, in some cases, were harmless. In other cases, the bank mis-sold ppi insurance to many of its customers. Customers were confused when they had no received annual letters in the mail updating them to how much they were spending on protection and their rights to cancel.

Other large banks have had large-scale theft of customer data. These have included the loss of sensitive information, such as account and social security numbers. Wells Fargo is one of the banks that have had such breaches, but in this case, the bank responded well, by issuing free identity theft protection services for the affected customers.

In the end, banks are businesses just like any other. Just because they are large doesn’t mean that fraud and mistakes will not occur. For people with money stored in these institutions, it is important to demand that they do their due diligence in protecting the customer’s wealth and preserving the customer’s interests.

Don’t take it for granted that your money is safe in a major bank. Keep an eye on the balances of your accounts, and take action immediately if something seems amiss. Fast action will allow you to achieve quick resolution of any problem that you encounter. The sooner you bring problems to your bank’s attention, the more likely they will be to make the issue right.

Gold Investments for IRA Accounts

The following is a guest post. Enjoy! 

There’s a growing trend where many people are adding precious metals, mainly gold, to their IRAs. It’s quite a literal way to turn your retirement nest egg into gold. The IRS does allow so-called “gold IRAs,” where owners can include precious metals in place of assets like stocks or bonds. Gold is, of course, included along with cash assets.

Not all gold is eligible to be included in IRAs. For example, if you come by a very rare gold coin, it may be considered precious among collectors, but is rather useless when it comes to being included in an IRA. The IRS has a strict category for types of gold that can be included in the forms of bars or coins. There are many other requirements as well.

Reasons to Add Gold to Your IRA

Before getting onto the intricacies of adding gold to an IRA, it’s important to consider why. If you have ever paid attention to gold prices, you would know that it’s extremely volatile. It may not make sense to include gold in an IRA right away. But, it’s important to consider how gold is valued. The value of gold is measured in an inversely proportional manner to paper currency. Meaning, when the price of the dollar goes up, price of gold comes down. But when the price of the dollar stumbles, gold value picks up.

Think about this scenario: In 2001, an ounce of gold cost $271. In 2010, the same ounce was worth $1,896, which is an increase of about 700 percent. That remarkable value can be attributed to the Great Recession. Assets like gold are most important during time of economic crises. When the dollar plunges as it did during the recession in 2008, physical gold can hedge an investment portfolio against devastating losses. In this sense, many people add gold to diversify their retirement investment portfolios.  No one can predict what the market will be like in decades when you retire. So, gold assets can protect your lifelong savings in case of an economic calamity.

Add Gold with a Self-Directed IRA

You can only add gold to your IRA if it is self-directed. Investments in traditional IRAs are usually made up of currency-based assets like stocks, mutual funds, and certificates of deposits. If you want to diverge from such assets and add gold, then you need to exercise a certain amount of control over your account. This is what a self-directed IRA is. The owner of a self-directed IRA can tell the bank or another trustee what to invest in. Trustees do not usually say no to gold investments as long as there are plenty of cash investments as well.

You cannot have an entirely gold IRA. That makes little financial sense. Rather, you can add a small amount of gold to your IRA to protect cash assets in case of another economic downturn. When you have gold in your IRA, you will have to keep up with gold news and price charts. It’s very important to check gold prices today on a daily basis when adding this precious metal to your IRA.

Choose a Good Trustee

You are required to entrust your IRA to a custodian or a trustee you can rely on. There are certain federal requirements these trustees have to meet. You can get a bank, an investment firm or a certified gold dealer company to be the trustee of your IRA as long as legal requirements are met. You may have to spend some time searching for a firm that allows gold in IRAs.

Once you get through all the requirements, having gold in your IRA will protect your future wealth no matter what the political climate is.

Finding the Perfect Mortgage the First Time 

The following is a guest post. Enjoy! 

Every year, millions of first-time homebuyers set out on a search for the perfect piece of property. They scour advertisements; they search through real estate apps; they go on countless tours and stop by untold open houses. Then, when they finally find the home of their dreams, they are utterly unprepared to make an offer.

Buying a home is more than comparing cabinet styles and deciding whether a pool is worthwhile. You must understand your mortgage options before you even consider whether you need or want granite countertops. This guide will help you determine what features you need from your home loan, so you can find and afford your dream home in no time.

Fixed vs. Adjustable

Mortgages last a long time ― typically between 15 and 30 years. Since that is such a significant amount of time for a loan, most lenders offer two options to help you manage your interest rate: fixed or adjustable. Which option you choose depends on your current income, your credit score, and a few other factors.

Fixed Rate

Fixed-rate mortgages are the most common. With these, you can expect the same interest rate for the entire duration of the mortgage loan. The primary benefit of having a fixed rate is knowing exactly what your mortgage payment will be each and every month; your home payment will never be a financial surprise. However, fixed-rate mortgages tend to have a higher interest rate ― at least initially.

Adjustable Rate

Adjustable-rate mortgages are less common but more accessible if you have poor credit. The opposite of fixed rates, adjustable rates will change over time. Most often, adjustable-rate mortgages (ARMs) are actually a hybrid product, as lenders will promise a brief fixed period before adjusting your rate.

Some buyers find ARMs preferable because they seem to have lower interest rates. However, over time, those interest rates will rise, and you likely won’t be able to predict when or how much. Therefore, you can expect financial irregularity for the duration of your loan.

Jumbo vs. Conforming

The cost of your home will also determine the type of mortgage you can obtain. Though you might not realize it, most home loans have a size cap, and not all lenders offer conforming loans, which are the standard size, and jumbo loans, which are substantially larger.

Conforming loans earn their name because they conform to the guidelines of the appropriate government-sponsored enterprise (GSE), Fanny Mae and Freddy Mac.

In 2013, these enterprises determined that the size of home loans should be limited to $417,000 for a single-family home in the United States. The GSE can do this because it purchases and sells mortgage-backed securities, which form the foundation of the housing market. In 2007, the unreliability of these securities incited the Great Recession, so adhering to the size cap for home loans should keep the economy more stable.

Conversely, jumbo loans are available from some lenders for those looking to purchase a home worth more than $417,000. However, such sizeable loans represent a marked increase in a lender’s risk, which means you must have impeccable credit, high income, and a large down payment to qualify. As long as you are prepared for the financial responsibilities of a more expensive home, a jumbo loan is an excellent mortgage option.

Conventional vs. Government-Insured

Finally, not all potential homebuyers have the credit history or liquid assets to purchase a home. Fortunately, the government offers unconventional, government-insured loan programs to help less-advantaged citizens buy property.

The benefit of having a government-insured home loan is that the government promises to pay your mortgage if you default, so lenders see the loan as no-risk. There are three main types of government-insured mortgages:

VA Loans

Typically available only to veterans or their partners, VA loans require no down payment, offer competitively low interest rates, and do not require mortgage insurance. These loans do conform to GSE guidelines, but they are incredibly easy to qualify if you or your spouse served in the Armed Forces.

FHA Loans

The Federal Housing Administration (FHA) also offers a mortgage program to low-income, low-credit homebuyers. Unlike VA loans, FHA loans require a down payment ― though it can be as low as 3.5 percent ― and mortgage insurance. However, interest rates are low.

USDA Loans

If you are willing to move to a rural community, the United States Department of Agriculture will help you secure a mortgage. Your qualification for this program depends on your income; it can be no more than 115 percent of the regional average. However, by participating, you earn exceedingly low interest rates and the opportunity to bypass a down payment, as long as you pay mortgage insurance.