Category: Finance

Why the Federal Reserve Matters to You

The Federal Reserve (the Fed) has been highly prominent in the news media over the last few months as they debate when to begin raising interest rates. Federal Reserve decisions can have a significant impact on the economy, but the impact on individuals is not always as clear.

By law, the Fed has two primary objectives: To maximize employment and keep inflation under control. Of course, the Fed does not have a magic wand to control economic activity, but it seeks to influence economic trends through what is called monetary policy, or the ability to push interest rates higher or lower.

Higher interest rates typically ease the pace of economic expansion by making loans for everything from homes to automobiles more expensive. The slower pace of economic growth should subsequently ease inflation pressures. Conversely, lower interest rates should encourage borrowing, which should lead to higher spending and as a result, greater demand for employees. For individuals, this can mean better job prospects or higher wages.

How do they do it?

Technically speaking, the Fed does not directly raise or lower the interest rates that individuals or corporations pay for loans or receive on savings. Such interest rates are called “market-based” rates, as ultimately they are determined by the demand for loans and the supply of savings. However, the Fed does have considerable influence over what is called the “Fed Funds” rate. This is the interest rate that banks are charged on overnight loans.

Raising or lowering the rate at which banks themselves must pay to borrow typically influences the rate that banks charge their customers for loans, or what they are willing to pay their depositors. The relationship, however, is not direct. For instance, the Fed may seek to raise interest rates, but if there is not strong enough demand for loans, banks may find it difficult or impossible to pass along the higher rates to customers.

How interest rates affect the economy

During the financial crisis in 2008, as the economy fell into a deep recession, the Fed took the drastic action of cutting the Fed Funds target rate to near zero percent. It has maintained this position since that time. Some believe the economy has recovered sufficiently and the Fed can now afford to raise rates, at least modestly. Others are concerned that if rates rise too quickly, it will dampen the rate of economic growth and potentially have a negative impact on economic growth.

What a change in rates could mean

Ultimately, any Fed decisions that affect credit markets can have an impact on us as savers or borrowers. Over time, if the economy continues to slowly strengthen, inflation pressures could become more prevalent, thus prompting Fed officials to push interest rates higher. That could mean higher mortgage rates, which might translate into having to buy a lower-priced home to afford the payments. It also may make it more expensive to obtain an automobile loan. Of course, you don’t want to make a major purchase – such as a home or car – simply because the Fed may raise rates. Ensure that any big expenditure fits within the context of your long-term financial plan.

For savers, the implications are a bit more complicated. You have savings that you want to lend (to generate interest income), but if there are few potential borrowers, or a lot of savers with funds to lend, the return on those savings could remain low regardless of Federal Reserve actions.

What’s ahead?

To this point, speculation regarding the Fed policy has had limited impact on the economy itself. Growth has remained modest but steady. By contrast, the investment markets have been much more volatile in recent months as investors tried to predict the Fed’s moves. Be prepared for continued ups-and-downs in the market, due at least in part to ongoing efforts to try to predict potential changes in direction of the Federal Reserve’s policies.

Finally, keep in mind that there a wide range of factors outside of the Fed’s control that can significantly impact the economic situation. So although the Fed’s tools can be a powerful influence over the economy, they are by no means absolute.

Article Source: http://EzineArticles.com/9197630

How Online Financial Hackers Are Stealing From Your Wallet

One moment you are happy that you are able to control your finances and your credit card debts by having discipline and control on all your transactions. The next moment, you are bombarded with a long list on your credit card bill-transactions you may not even have dreamed of making in the first place. What happened? What will you do? As you flood yourself with all the possible and endless possibilities, you will begin to realize that you have been hacked! While the rise in technology has given us a lot of convenience, it has also posed a greater potential threat if we are not careful on how to propagate its use.

How did they get your vital information?

1. Skimmers

What are skimmers? Skimmers are devices used to scan and store your personal data from your credit or debit cards. There are many forms of skimmers and various ways to transfer data from a skimmer to a hacker’s device.

One of the most popular type of skimmers are those inserted in ATM card slots. Often, you may think that you are just doing normal bank transactions only to find out the next few days that your whole account has been hacked and emptied. Another form of skimmers are those used by waiters, bar tenders and other people you may be giving your credit card to but are unable to follow or see where they are going with your card. They would simply swipe your card on their skimmer device and all your data gets stored there. Some hackers go to the extent of distracting clerks in stores and swapping the device used to swipe your card and replacing it with one of their owns. As the clerks continue to swipe in peoples cards, the device continues to store information until such time the hackers will return for the device. Skimmers are often used with devices which have the use of credit or debit cards but are unmanned. This is easier for them to manipulate and get all they need.

2. Phishing and Malwares

This is a very popular modus operandi. Somebody sends you an email-it may even come from an address you know and sends you an attachment that seems to pose no harm in it. When you open it, malware immediately gets into your device and gathers all your information. This is why you need to keep your financial information from emails that you open in public computers. Make sure that you only open important information on devices that you trust.

We can never avoid the advancement in the way people obtain and steal our information and assets as the development grows side by side with the development with technology. Hackers will do all that they can to try to squeeze out anything and everything from you. Take caution all of the time.

Article Source: http://EzineArticles.com/9116775

Are You Financially Prepared For An Emergency?

Money is not everything, but for everything you need money. It’s an established fact that money plays a vital role in present-day living. If you are financially prepared, you can easily overcome difficult situations and fix away your problems without getting frail. Life can get you into an emergency without any warning. It requires advance planning and preparation on your part to tackle these kinds of situations effectively.

Are you prepared?

Is your financial information well arranged and properly organized? Have you prepared your will? Have you told anyone about your vital financial information? In case of an evacuation, are your documents ready for the ‘grab and go’? Hurricane, flood, earthquake or theft can come at any time creating an emergency situation. If you are not prepared financially, it’s easy to get into a messy circumstance. On the other hand, if you have a stout monetary support, you can emerge out as a winner.

What can we do?

1. Get out of debt fast

Getting out of debt may seem to be a distant dream at a particular point of time. But, with proper planning, persistent efforts and by curtailing certain extras, you can definitely overcome your debt and avert monetary implications.

a. If you are in debt, you need to take steps to get rid of it, not any other loan for a temporary relief. You should focus on doing three things – Increase your income, recognize what got you into the debt (circumstances or your habits) and based on your assessments take steps to fix your debt.

b. Next, you need to pick a suitable help. Solutions, such as a debt rearrangement loan may work towards your favor, but it will work only when you take this option at the right time and under right circumstances.

c. When you are in a debt, you need to seriously sort out your spending habits and curb on unnecessary expenses. It may be possible that you are repaying your debt with so little progress that it will take a long-long time to repay it fully. By that time, you would have paid manifolds of the principal value. A debt settlement plan may work, but only when you know your priorities well. Failing to do so may sink you further. Thus, you need to control your state of affairs and manipulate your creditors effectively to pay off your debts in an easy manner.

2. Use credit wisely

First of all, don’t finance unaffordable lifestyle with your credit cards. Keeping your purchases within your limits is the key. Often, people are lured with the innumerable products available in the market and use credit cards to purchase unreasonable things only to repent at a later stage. Credit card is a marvelous facility, but works out to be beneficial only when used with astuteness.

a. If you are already into a financial trouble, avoid using credit cards. Pertaining fees and other monetary charges can add up to your debt. However, using a credit card to tackle a financial difficulty is better than to arrange funds by keeping your house on mortgage.

b. Raise your bar; don’t get hooked to the minimum payments. Paying only the minimum amount due will eventually elongate the repayment period, and by the time you repay all your dues, you would have actually paid multiple times of the amount you took on credit.

c. Don’t get fooled by the low teaser temporary rates; money borrowed during promotional low-interest rates is most likely to be carried on to the higher permanent rates. Make your credit card payments on time and avoid surcharges and penalties. This will also increase your credit score.

3. Get organized

Your spouse, anyone of your adult children or someone who is entrusted to handle your finances should know where your property papers, contracts, documents and policies etc. are located. By making plans ahead of the time, you can actually ease the stress that your loved ones would face in the event of your illness or sudden demise.

Article Source: http://EzineArticles.com/9125076

Some Basic Tips For Choosing a Bank

The bank you choose to hold your money involves some exploration and consideration. Research various institutions to find the best one that fits your account and lifestyle needs. Safety and reputation are two important factors to consider when you make this decision.

Determine Your Financial Needs

Your financial needs are an important factor in the search for a bank. Opening checking and savings accounts is a common practice for many consumers. Some people prefer to bundle all their financial activities with one institution and if you also have loans such as a mortgage, car loan, home equity line of credit, and person loan, you might prefer to open checking and savings accounts within the same business.

Credentials

The credentials and reputation of the institution should also factor into the decision. Larger banks are generally a reliable choice due to FDIC deposit insurance. Check with the Federal Deposit Insurance Corporation to find out if a business is insured under this coverage.

Think about Physical Convenience

Physical convenience can be a key consideration in this decision. You might opt for a location that’s convenient from your place or work or your residence. Consider extended hours offered by some institutions if you work alternative shifts and you cannot visit during regular business hours. Online services can help with many types of transactions, offering services such as bill payment, automated deposits, and access to balance information. Find out about the location of ATMs you can use for no or low fee transactions. Some banks are national companies, providing customers with access to service and accounts from virtually anywhere in the country. Other businesses are local, providing no ability to travel and visit brick-and-mortar branches.

Explore Fees and Service

Every bank has a unique structure for fees and services. You will need to contact any institution you consider to find out these important details. Ask about account fees, minimum balances, ATM fees, overdraft protection, and overdraft fees. Find out how the they handle international travel to see if you will be able to get assistance with foreign currencies. Some businesses offer more services than others, some involving additional fees and some not.

Consider Personalized Service

Choosing a national company can afford you many conveniences. However, it’s important to realize that you may sacrifice some personalized service with this decision. A variety of services from a national business may be fine for many consumers. If you prefer a more personalized touch with a hometown brick-and-mortar branch, you may be happier with a local entity. Anyone with a busy lifestyle and a variety of financial activities such as IRAs, loans, credit cards, and online bill payments may be better suited to a large, national company. People with simpler lifestyles might opt for a local business instead.

Weigh all information carefully to make the best choice for your financial needs. The one you choose should provide all of the services you want.

Article Source: http://EzineArticles.com/9155704

Finance Management of Small Business

Managing finances in a business is among the few important things that need to be considered when starting and carrying out a business. It is all about efficiently and effectively utilizing available funds in order to achieve the objectives of the business. Financial management is aimed at planning, observing, organizing and managing the monetary resources of a business.

Small business finance management strategies

Small business finance management is mostly concerned with procurement, allocation and control of financial resources so that a regular and adequate supply of funds is maintained to run a business. Once the funds are in hand, they should be utilized in maximum possible ways at low costs and should be invested intelligently in safe ventures. A few tips that can help you efficiently use your funds while running a small business are:

    • In the initial years of managing a small business, you need to estimate how much money you need for a decent living and pull out that money from your business income. Now invest the remaining money back into your business for its growth.
    • Early wins in the form of high profits may urge you to spend it on leisure holidaying or improve your housing status. You need to be firm and defend yourself against such ideas and wait till your business gets a little more established.
    • The main expense in a business is covering the payroll of your staff. It is advisable not to hire new employees unless you absolutely need them. When things get busy and a lot of work pressure builds up, you may get tempted to hire more people. Try and stretch the existing staff members to their full potential to get through the workload and hire only if necessary.
    • Try and save up money on applying for loans and procuring inventory. Taking up loans from banks is a common practice in the business world, but it carries an extra cost of its own in the form of interest you pay while returning. Reducing this extra cost can help you add up and save more money in the long run. This can be done by dividing the total money you need as loan and borrowing it in parts over a period of time. This reduces the overall amount of interest you pay back to the bank. Borrowing the entire amount at once will result in you paying interest for the money you are not going to use till later time.
    • Keep the money separate for paying the taxes and avoid mixing it with other funds. Paying taxes is of utmost importance and since that money is meant to be given away, it should not be kept or used for other purposes.
    • Bargain the terms of the agreement with the outside contractors and vendors like delivery services, electrician etc., such that you get a grace period in paying your bills. This grace period can be used to manage your funds and prioritize your other bills more efficiently.

Small business finance management can help you cleverly grow a successful business over time.

Article Source: http://EzineArticles.com/9151513

What Services Of The Best Banks To Look For Before You Open A Business Account

As of now, there are numerous services company owners need to opt for in order to make their business better and their ventures easier. With these solutions, business owners can also increase their profits. These third-party services can also provide you with wonderful benefits which can help your company achieve your goals. So, in order to accomplish financial tasks companies need, it is ideal to partner with the best banks and open a business account.

Surely, there are numerous banks that offer reliable services for their clients. However, you can distinguish which bank is best if you want to open a business account by knowing the benefits it can provide. Below are some of the features you need to look for.

Help you improve your businesses’ financial status

One of the benefits of opening a business account in reliable banks is you can easily improve your business’ financial status. This is essential to entice companies to partner or to work with you. Unfortunately, not having sufficient finances can affect your chances. By opening a business account, banks can help you attain the documentation and finances you need which can help improve your reputation.

Banks that make use of difference financing services

The next benefit of opening business accounts is you can make use of difference financing services. Surely, business owners may encounter numerous problems most especially financial issues. Therefore, business owners need to find ways to ensure that their finances will not be affected. By working with banks, company owners can properly choose a financial service which can match their company needs.

Allow you to keep your business consistent

Another feature of opening a business account is you can keep your business consistent. For instance, paying bills and receiving payments are some of the most common tasks business owners need to do in order to have consistent business flow. Sadly, these tasks can sometimes be stressful since you need to make sure that your personal and business accounts are separated to help you audit your expenses efficiently.

Offer effective supply chain solutions

Lastly, opening a business account can also help you obtain supply chain solutions. Supply chain solutions are important since these are specially designed to help you optimize your working capital, reduce your expenses, and have better visibility and control over receivables. With this, you can enhance business performance.

Article Source: http://EzineArticles.com/9483098

Fee-Only Financial Advisor: Understanding What Makes Them Different

Planning and managing finances requires a professional touch. When looking for a certified fiscal counselor, you have a couple of choices. You can choose to work with someone who is strictly commission based, someone who works off both commission and fees, or someone who is a fee-only financial advisor. Despite the merits behind hiring a trained planner, many consumers do not understand the benefits of working with the latter option.

Pros of Hiring a Fee-only Financial Advisor

Those who are looking for the best advisors should consider one who is compensated in a way other than commission. These planners look at your entire fiscal situation and give you an honest, objective opinion on what you need to do. While they may suggest purchases of certain products, these will be ones that they believe will assist you in your goals. There is no loyalty to a specific company or product because there is no bonus or commission to earn.

You pay a fee-only financial advisor based on how often you meet with them. You could pay an hourly expense or you could pay a retainer in order to have him or her on call. You may even negotiate payment of a percentage of the investment assets your planner is managing. Each professional has his or her own pay structure.

In addition to having flexible payment options, you can choose between services. Some work with you to provide a complete financial review for a fixed project. You can also find someone to review your investment portfolio or develop a financial plan.

Things to Consider Before Hiring a Fee-only Financial Advisor

For most clients, this type of planner is the optimum choice. However, not everyone works well with a charge-based counselor. You may work better with someone who is either commission only or commission and fee compensated.

There is no guarantee that you will not have conflict. You should check references to ensure that your new asset manager is competent. Working for only a set rate does not equal competence. Those who are experienced working with people nearing retirement would not be the best choice for someone in the private sector.

You also need to check with the counselor about their requirements. Some will work with those who have a minimum level of assets. If you have a small portfolio, then you may not qualify. It is one of the many questions you should ask before hiring a consultant.

No matter if you choose to work with a commission-based consultant, you must be diligent in your search. It is not an easy task to find the right counselor. In order to find the right consultant you should understand not to compensate the advisor but also how he or she works with his or her clients.

Even if you opt for a fee-only financial advisor over a commission-based one, any products suggested should be carefully considered to ensure they meet your needs.

Article Source: http://EzineArticles.com/9311012

How To Pick The Right Financial Advisors

What a difference a decade makes! Not long ago, everyone who invested in stocks seemed to win big. Investors watched their portfolios grow exponentially, and retirement seemed secure. The economy was so strong even the country’s best financial advisers were left wondering if they’d have a job.

But alas, the economy went into recession. Those early retirement dreams became a less realistic option. These days we need to know about yields, rates of return, and, dare we say, risk!

That leaves many people feeling pressured and over their heads. This is where businesses can step in to help their employees decide how and where to invest their money.

Where Do I Start?

That depends on what you want the financial advisers to do. Do you want help with estate planning, or is it your child’s college fund? What about advice on which stocks to pick or how to withdrawal cash from retirement funds without draining your account? Determining where to start depends on your desired outcome, and the good news is financial advisers come with many specialties.

Once you decide what you need, ask people that you trust for referrals. Seek out someone you don’t mind divulging personal financial information to.

Next, find out what your potential advisor did before becoming an advisor. Was he/she a math expert who majored in statistics at college? Do they have an advanced degree in accounting or business? The answer to these types of questions can tell you a lot about the Ivory Tower experience someone may have, and whether it’s relevant enough for your trust. You want someone with good character, much like you would in choosing a good doctor or lawyer.

How Do Financial Advisers Charge?

Many people are intimidated by costs but have no idea what they are. This is normal, and there are many ways in which an advisor might charge you.

Charging you a commission on products (or stocks) bought and sold is the most typical form of remuneration. Some, however, might charge a flat fee or yearly retainer, or a combination thereof. The best advice: do some comparison-shopping just as you would for a vehicle or any other significant purchase.

State Registered Advisors Must Be Licensed

Those who give advice on how someone should invest their money should be registered with the state in which they practice. For instance, in Washington State, all financial advisors must register with the Washington State Department of Financial Institutions in order to practice. Check with your state to see what the requirements are, and be sure to check for prerequisites pertaining to admission, such as testing and education.

You can also check the state records for complaints: legal judgments, bankruptcies, criminal charges, and government orders. All of this information is kept on file by the state and are available to the public.

Choosing from a pool of knowledgeable professionals can be a tricky business, but it can be simplified by following a few basic rules, and, more importantly, by using a little common sense.

Article Source: http://EzineArticles.com/9153124

The Financial Business Model: 5 Keys to Long-Term Success

Why do so many businesses fail to make profits and achieve their financial goals? The answer is simple because many business owners simply ignore one or more of the 5 keys to financial success. Many businesses are making sales but are not profitable. Learn how to fortify your business model and set your company up for success. Developing a financial business model provides a clear picture of your company’s financial history as well as your company’s financial future. Working from a financial business model will help to prepare your company to make better decisions for the company in the future. And analyzing your finances on a regular basis will provide you with the financial success you are seeking to achieve. Get ready to gain more flexibility and financial freedom in your company with the keys to success.

Key #1) Don’t Go It Alone
Mismanagement of finances is not reserved for start-up companies but for all businesses. Many business owners are able to produce and sell their products and services but are not able to manage their finances. If you are not able to determine where you have been you will not know where you are going. Accountants and bookkeepers are able to assist your company with establishing a financial foundation and making predictions surrounding your financial future.

Key #2) Review Historical Data
By developing a financial history of your company’s finances provides you with valuable lessons for the present that will guide you into a more profitable future. Reviewing financial history helps you to know what to do and what not to do in your business. Compiling historical financial data can help your bookkeeper or accountant to assess the reasons for your success or failure.

Key #3) Project Sales and Costs
Once you have completed the second key it will set you on the trajectory to be able to project the sales and costs. Projecting sales and costs without historical data can be challenging but not impossible. Projections for your company are not a process that begins at the start-up phase, it is an on-going process to help determine areas of growth and change. Costs are always easier to project than sales. However, sales should not be your main focus but rather on the company being profitable!

Key #4) Develop Financial Statements
Financial statements are the framework for the accounting cycle. In other words, the income statement, the balance sheet, and the statement of cash flows provide a picture of how well your company is doing financially. Financial statements structure all financial data in a manner that is easy to understand and should be prepared with accuracy. These statements assist you with assessing financial performance and determining key business decisions.

Key #5) Assess and Implementation of Changes
This is the final piece in the financial business model. Once all of the first four keys have been established you will be able to assess your company’s financial position and implement changes where it is necessary to ensure financial growth and success. Tying it all together the financial statements will reflect your company’s historic information and decisions can be made about the future from that data.

The financial business model provides clear information to assist you in making sound financial decisions that can promote long-term success. Applying these five keys to your business will set your company on the path to achieving your goals and turning profits!

Article Source: http://EzineArticles.com/9469967

7 Ways To Make Shipper-Carrier Relationships Better

Freight services are very important and load boards work great at connecting shippers with carriers. But the relationship between carrier and shippers ought to be good for the process to work out smoothly and be a win-win kind of a process. Fortunately, there are so many ways that can help improve the relationship between these two important people in the business. With stronger relationships, a reliable carrier network is maintained. By giving attention to carrier concerns, it is possible to build collaborative partnerships that are long lasting.

As a shipper, there are a few things that you can do to maintain a good relationship with your carrier.

1. Work for the good of everyone involved. This can be done by working with the carrier in determining which freights and lanes work the best. By working in conjunction with the carrier, then it is possible for profitability to be added to the network. It solidifies the relationship.

2. Honor commitment to the carriers. It is only when you honor your commitments to the carrier they will be able to honor theirs to you. Considering that carrier will usually base service price on data provided, then it is of importance that only accurate data should be provided. You should also ensure that you ship in tonnages and lanes that you say you will.

3. Be generous. This is in terms of the sharing opportunities that arise. When you bring new opportunities first to your carrier partner, then everybody will end up benefiting from an equitable agreement.

4. Start off with a plan. One of the best ways of avoiding a rocky start that could ruin an otherwise good relationship is to make sure that you start every new partnership with a plan. Allow a considerable amount of time for the carrier to get their system up and even train to take on new lanes and freights.

5. Avail all relevant data. The data that you provide during bidding process will largely determine how prepares the carrier is with regards to freight characteristics and location or even seasonal changes in terms of volume. It is therefore very important that you provide freight characteristic percentages and also monthly volume in addition to tonnage data and lane data that you give.

6. Keep communication lines open. Reviewing performance metrics, options and new services are always a good way of strengthening relationships. As a shipper consider holding regular meetings with carriers to discuss what matters most to the business. Using such meetings, you can come up with strategies to reduce costs and improve the business. Working together and communicating on a regular basis only solidifies the shipper-carrier relationship.

7. Embrace technology. In the same manner you expect real-time data on your shipments from your carriers you should make it equally easy for the carriers to transfer the data that you need. Choose programming options that offer them an accurate and smooth system of transferring the data that you need. There are so many technological tools that you can choose to make improvements to the business and relationship.

Loadboards are very helpful to both shippers and carriers and you can actually use some load boards free to find freight or carriers. You can actually even find relevant funding from some of the boards.

Article Source: http://EzineArticles.com/9524058