Bond Funds Explained – Safe Investments for 2014?

If you feel clueless and invest money in bond funds, you should know that your funds could bite you in 2014. Bond funds are NOT safe investments and some are riskier than others. Read this before investing money (or more money).Truly safe investments pay interest and your principal is safe, or fixed. Safe investments do not fluctuate in price or value, and may be insured or even guaranteed by an agency of the federal government. Examples include: bank savings and checking accounts, CDs, and Treasury bills. Bond funds pay interest too, in the form of dividends. Their price or value DOES fluctuate as the prices of the debt securities (bonds) they hold in their investment portfolio fluctuate (like stocks). People invest money here to earn HIGHER INTEREST INCOME vs. truly safe investments. That’s why they are also called income funds.Bond funds are RELATIVELY safe investments – compared to stock funds. But they are not even close to being as safe as money market funds, whose share price is fixed at $1 per share. You must understand this before you invest money in income funds: your investment can go up in value, and it can go down. Some funds invest money (yours) in high quality debt securities of government entities or corporations; others opt for the higher yields of lower quality or even junk bonds. In 2014 and 2015: that’s not the big issue.While money market funds invest your money in very short-term IOUs, bond funds buy and hold relatively long-term debt securities (IOUs called bonds). A money market fund may hold IOUs that mature (on average) in 25, 30, or 40 days. In other words, they invest money in high quality IOUs that promise to pay them their money back in a matter of days. Because the debt securities held in money market funds are so short-term in nature their value fluctuates little, and they are considered to be safe investments. Not so with income funds that invest money in IOUs maturing (on average) in 5, 10, 15, 20, or more YEARS.The major issue in 2014 and beyond for bond funds is called “interest rate risk”. Picture a fund that holds IOUs that (on average) mature (pay the owner back) in 20 years. If these are IOUs for $1000 that promise to pay 3% per year in interest ($30) they have a price (or value) of about $1000 when 3% is the prevailing rate for similar IOUs in the bond market. Remember that bonds trade in the bond market just like stocks trade in the stock market. Now, what would happen to the price (value) of this IOU if prevailing interest rates climbed to 6%, 7% or higher?Investors in the marketplace would still be buying and selling this IOU… but the price of it would fall significantly… because now investors can get 6% or more ($60 a year or more in interest) in other IOUs because that’s the prevailing interest rate. This is an example of interest rate risk in action, and that’s why bond funds are not safe investments. If you invest money in these income funds or plan to, you must understand this.All income funds will include a number (expressed in years) in their literature called AVERAGE MATURITY. Examples: 3.42 years, 7.15 years, 18.7 years. From left to right these three examples would be called short-term, intermediate-term and long-term bond funds. As you go from left to right the dividend yield (interest earned and paid in dividends) increases. More importantly, the interest rate risk increases dramatically as you go from short-term to long-term funds!Short-term funds are relatively safe investments, but in today’s interest rate environment they offer miserly interest income. Long-term bond funds might yield 3% or a bit more (depending on quality), but interest rate risk is HIGH. Intermediate-term funds might yield 2% to 3%, but they still have a significant amount of interest rate risk. If interest rates double or more in 2014 and beyond, investors in longer term funds could see losses of 50% or more.The last time interest rates soared was in the late 1970s, peaking in 1981. Investors who held long-term bond funds lost almost 50%. Today’s interest rates are near all-time lows. This means that when you invest money in longer-term income funds just to earn 3% or 4% in interest income, you are accepting considerable risk to earn a miserly income.Bond funds have basically been good investments since 1981… because interest rates were falling, which increases the value (price) of these funds. Now, you know the rest of the story. Bond funds are not really safe investments for 2014 and beyond. Interest rates could go up.

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Credit Cards For Bad Credit

Bad credit credit cards are offered by many banks as financial tools to help people establish or re-establish their good credit rating. Bad credit credit cards are primarily intended to make it easier to obtain and re-build credit, which is good for consumers and merchants as well. For all practical purposes, bad credit credit cards are just like regular credit cards, but they are specifically for high risk cardholders. If you have arrears, defaults and general bad credit score or bad credit rating, you may find that bad credit credit cards are available to you. Bad credit credit cards are considered the best choice for credit card deals if your credit score is below 550.If you find that there are problems in approval of a traditional credit card then you can apply for other options like prepaid debit card, First Premiere Bank Cards and Orchard Cards and secured credit cards. Applying for these cards is exactly like applying for a standard credit card, with applications available on paper and online. Bad credit credit cards typically have a higher interest rate and lower credit limit than standard credit cards, but the issuers are more lenient when looking at past credit history. The fact that bad credit credit cards carry a high interest rate (most likely 20% or more) shouldn’t prevent you from getting one in an effort to get your credit back on track. Still, it is true that bad credit credit cards must be used responsibly, or your situation will just worsen.From astronomically-high interest rates to ridiculously-exorbitant fees, erroneous information abounds. When it comes to bad credit credit cards, the myths definitely abound. In fact, bad credit credit cards are some of the most misunderstood financial tools of all time. Fortunately, the myths are oftentimes unfounded and bad credit credit cards are no longer the stigma they used to be. You might be relieved to find out that bad credit credit cards can actually have pretty decent interest rates. With so many credit card companies and so many different offers, it’s easier than ever for consumers to take advantage of reward programs. However, you must consider the factors such as financing fees, annual fees, introductory offers, credit requirements, availability of online banking, and others.In spite of the additional fees bad credit credit cards are an excellent method for the people with bad or no credit, to improve their credit rating and to enjoy the benefits of credit cards. There are many other benefits to consider, which might be more valuable than a low rate. By paying off the monthly balance and avoiding high interest rates, you steer clear of more debt and show yourself to be a lower risk borrower over time. However, as you maintain regular payments, the creditor may gradually increase the spending limit. If you use a bad credit credit card for small purchases for a year or two and consistently pay the entire balance every month, not only will you not be charged interest, but you will rebuild your credit and be able to get lower rate loans in the future.As you can see, bad credit credit cards are unique cards geared towards people who have had trouble getting approved for a standard unsecured credit card. However even with bad credit, its still possible to find a credit card for you, even if it means that you have to pay a slightly higher rate of interest. So if you are trying to rebuild your credit don’t think about it to much because bad credit credit cards when used properly are a cheap way to rebuild your credit.

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5 Best Practices For Making Money Online – Do These Properly And You Will See Success

Making money online is not easy, it requires a lot of work and time. In order to make a great income you need patience and more importantly to achieve things properly. Let’s look at some things you can do to make money online successfully.Number 1 – Add ValueMany people online try to make money without providing value. They will quickly realise that their business won’t last long. I always add value first when thinking about creating a website or setting up an advertising campaign. The money is just a bonus, my first important priority is to add value.I am very surprised at how many people online miss this important step. First impressions are everything and you should provide value and a good foundation right from the start.Number 2 – Being UniqueA big part of successful online businesses is their ability to be different and unique. Copying other people isn’t the right thing to do. Creating unique content and campaigns is a must, if you are looking to make money online.It is all too easy to be lazy and copy someone else’s ad campaign or website blog post. Unfortunately, I see this a lot online and then people wander why they don’t make an income.Number 3 – Invest In ToolsA lot of people are scared to invest in business tools to make money online. If your serious about making an income, there will be a time when tools of the trade are needed. You might need to buy a premium WordPress theme to enhance your website or a keyword tool.Sometimes the initial investment can be quite large, but smart marketers and online entrepreneur’s understand the value of their tools and resources.Number 4 – Understanding Customer NeedsPeople online are always searching for products or items, but are they really buying products? Well, they are not buying products, they are buying outcomes. They will still buy the latest diet pill, but they will buy it to lose weight… not just eat a pill.Understanding customer emotions is very important and it’s a big part of making money online.Number 5 – Being ConsistentWith anything in life it is very important to be consistent and the same applies when doing business. One of the most important tips I can give you is to be consistent. You will find it easier to be consistent when you have a plan.For example if you have a blog, then post consistently, build links slowly and you will see results. This is a big thing online, so make sure you do this!

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